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Inflation decelerates further

With inflation printing at 2.6% in August, short-term inflation fears were put to bed as risks to the downside proved to be persistent. The August reading was in line with our forecasts and 0.1% below the reading recorded the previous month. We have maintained the view that inflation is yet to reach its trough and in the month under review, the deceleration reached 2.6 percent, the lowest inflation rate we have on record.

This marks the eight consecutive month that inflation came in either at the 3.0 percent lower bound or below. The short-term inflation outlook has been easier to predict with a reasonable degree of confidence given globally low inflation rates as well as soft domestic demand demonstrated by a stable core inflation rate of 3.6 percent.

A month to month analysis of the Consumer Price Index (CPI) revealed that the sub-indices were generally stable recording changes of less than one percentage point. This was an expected result given the absence of any price shocks during the period. Stable food prices and a continued deflationary trend (albeit declining in magnitude) in the transport sector owing to low fuel prices once again ensured that inflation decelerated on a month on month basis as well as when compared to the same period of the previous year at 3.0 percent.  On the food side, FX pass-through remained limited as the pula continued to hold strong relative to the rand, resulting in contained tradeable inflation of 1.5 percent, the same rate printed in July 2016.

On a year-on-year basis, the Miscellaneous Goods & Services category showed the biggest price increase of 7.4percent, mainly due to higher Insurance and Tax license fees which contributed 0.6 and 0.1 percentage points respectively towards the headline inflation. Second to this category was the Food and Housing categories each of whom contributed 0.6 percent towards inflation.

While a call on commodity prices can be quite a difficult task, we believe the oil price should continue to hover around current levels, approaching $50 towards the end of the year as global oil inventory levels continue to decline. From a local pricing point of view we do not see any significant upside pressures on fuel prices in the short to medium term given the cushion provided by the National Petroleum Fund.

However, this benefit will be limited by the extent of the pula’s depreciation against the dollar, mainly influenced by the rand on fears of junk status, which now seems imminent. The rand has nonetheless been enjoying a rally as risk appetite recently returned to markets. Most risks to this rand strength are now more from domestic factors than global. A weaker Pula will be negative for inflation due to the higher cost of imports. Food inflation in South Africa has remained stubbornly high due to a weaker rand and regionally dry conditions. This also poses a threat to the level of inflation that could be imported into Botswana through trade.

Notwithstanding the aforementioned risks, we still expect domestic inflationary pressures to remain subdued for the year, with a gradual uptick in the first half of 2017. Barring any major shocks, we don’t anticipate significantly higher CPI rates. Inflation will likely average 3.0% for the year. Given the latest interest rate cut implemented by the Monetary Policy Committee during the month under review, we expect that rates will remain unchanged to the end of the year. While it can be argued that the benign growth and low inflationary pressures present an opportunity for the committee to ease further, we are of the view that the committee is mindful that most of its trading partners are in a hiking cycle and therefore would not want to materially deviate from historical averages that have been maintained in terms of the real exchange rate differentials to keep the local unit competitive.

Tshephang Loeto is an investment analyst with Investec Asset Management

 

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Food prices continue to rise, but at a slower rate

28th November 2022

Prices for cereals or staple foods in Botswana and other Southern African countries continue to rise at a slower pace, following trends in the global markets, according to the latest November 2022 Food Price Monitoring and Analysis by Food Agricultural Organization (FAO) of the United Nations.

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Still doing business the old way?

18th November 2022

It’s time to get business done better with MTN Business Botswana’s ICT Solutions.

Running a digital businessMTN Business Solutions Botswana, popularly known as MTN Business is an Internet Service Provider. We are a subsidiary of MTN Group Limited, a multinational telecommunications Group headquartered in South Africa, which operates in 19 markets across Africa and the Middle East.

More and more, clients are looking for ways to keep their staff productive in a dynamically changing business environment. Whether your people are working from home, the office or abroad, there is a growing recognition that digitising your operations can offer unprecedented commercial value in flexibility, productivity and growth. This new, digital reality means that it is more important than ever to stay agile – if there is anything that can slow a business down, it is being burdened by othatld technology.

Having made substantial investments in fibre technology, high-speed terrestrial and undersea networks and new frequency spectrum across the markets wherein it operates, MTN is perfectly positioned to respond to this shift in the market.

A few years ago, MTN also made the decision to build an IP capable radio network for its mobile services, giving its core network the ability to seamlessly integrate with enterprise IP networks. The mobile towers deliver services to enterprise clients absolutely anywhere it has a network, shortening the last mile and removing complexity and cost.

Now there is increasing demand from clients to connect their remote sites in all areas, including rural and semi- rural. MTN has assisted clients with overcoming this connectivity hurdle, enabling their staff to get the job done wherever they are.
MTN’s evolution

For MTN, the focus has shifted from just being a core telecommunications services provider, towards also becoming a technology solutions provider. The service offering now also includes Unified Communications, Data Hosting and Cloud Solutions, Security-As-A-Service and Managed Network Services. The scope has changed to being client and industry specific, so the requirements and service portfolio vary from one client to the next. The expectation is that a company like MTN must respond to these challenges, helping clients to get business done better as they shift from old to new technologies.

As many businesses continue to grapple with a digitally dynamic world, they face new challenges that have to be solved. This environment will benefit those that are more digitally enabled and agile. It is a brave new world that will favour online over on-site, wireless over wired and fluid over formulaic. Businesses will seek out partners and suppliers that are every bit as flexible and forward-looking as they are.
Ultimately, clients need partners like MTN Business that will invest in infrastructure, deliver the services they require, have market credibility, are financially sound and have a long-term commitment to their market presence.

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BIE to vitalize the Dignity of Engineers

9th November 2022

Botswana Institution Of Engineers (BIE), has last week hosted a gala dinner in  which they appreciated engineers who worked tirelessly and with dedication for 10 years from 1983 to steer the BIE to its current status.

The event that was held at the Phakalane Golf Estate had brought together young, experienced and veteran engineers and was held under the theme “Vitalize the dignity and eminence of all professional engineers”.

Explaining the theme, the institution’s treasurer, Thanabalasingam Raveendran said that engineers were looked upon reverentially with respect as the educated but with time it seems to have deteriorated. He indicated that there is a need to change the narrative by all means.

“The BIE exists for the welfare and the betterment of us Botswana engineers, we need to recognize specialised units within our Institution. We Engineers strongly believe in Engineers make it happen” Raveendran said.

He indicated that under the theme they appeal to all engineers to energize, to attain quality of being worthy of honour and respect and to achieve recognized superiority amongst the Society.

Raveendran stated that engineers need to ensure their end product is of good quality satisfying the end users expectations and engineers must be honest in their work.

“Approximately 8000 engineers registered with Engineering Regulatory Board (ERB) are not members of the BIE, engineers need to make every effort to recruit them to BIE” he said.

He alluded that BIE being a society, it currently needs to upgrade itself at par with professional institutions elsewhere like the UK and USA.

He further stated that BIE has to have engineering units of specialised disciplines like Civil/Mechanical/electrical etc

“As President Masisi indicated in his inaugural speech, the young people, who make 60 percent of the population of this country, are the future leaders and therefore investing in them is building the bridge to the future” said Raveendran

Kandima indicated that BIE has a memorandum of Understanding with Engineers Registration Board (ERB), where BIE is a recognised provider of CPD training, mentorship programmes and more importantly IPD undertaking to upgrade the skills and know-how of our engineers.

“For us to achieve our mandate and make worthwhile changes to engineering in Botswana, we have to be totally focused and act with intent” said Kandima.

Furthermore, Stephen Williams, past president of the BIE from 1986-1988 told the engineers that  the BIE provides a fertile environment where they can meet, share ideas and grow professionally.

“The BIE is also a nesting place for graduate engineers to learn from their peers and seniors, it also cater for engineering technicians and technologists and so nobody in the technology field is left out” he said.

He further indicated that Botswana Government provides a conductive environment for growth of engineering professionals.

“It must be stated that the Botswana Government recognises the existence of BIE and it can further be stated that the government enables ERB to carry out its mandate as a regulator of engineering professionals” said Williams

He plead with engineering companies to recognize and support BIE as it is the only source of engineering personnel’s for various Industries .

Furthermore, when giving his farewell speech, Michael Pinard , a past president of the institution  said how they are viewed as engineers by the general public might be due to some lack of appreciation as to exactly what role they play in the development of the country.

“The BIE slogan is aptly coined-Engineers make it happen, in other words, what man dreams engineers create” Said Pinard.

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