The Business Expectations Survey published by the Bank of Botswana (BoB) demonstrates that business confidence deteriorated from 52 percent in September 2014 to 44 percent in March 2015, further below the 50-point threshold that separates pessimism from optimism.
The March deterioration which was 8 percent lower was driven by the continued uncertainty regarding the strength of the global recovery, modest domestic economic growth and increasing challenges in the supply of key inputs that are water and electricity, posing threats to business confidence.
The survey sample covered 100 businesses in agriculture, mining, manufacturing, water and electricity, construction, trade, transport, and financial and business services.
The deterioration was significantly lower than the 62 percent expected for this period in the earlier survey, a clear indication that expectations have been revised downwards. Nevertheless, the anticipated level of optimism will rise for the rest of the survey period to 62 percent over the next 12 months.
The survey revealed that confidence among domestic-oriented businesses is 45 percent, almost unchanged from 46 percent in the previous survey. However, there has been a substantial decline in the current confidence levels of export-oriented businesses from 88 percent to 43 percent, and this falls further to only 29 percent over the rest of the year.
“This signals serious worries about prospects for local exports, possibly reflecting continued concerns about the strength of the global economy; however, there is a significant rebound in confidence later in the survey period, when export volumes are expected to increase,” states the report.
Data on GDP released recently indicate that the economy grew by 4.4 percent in 2014, down from 9.3 percent in the previous year. The slowdown has been attributed to the weakening of the mining sector which expanded by 4.5 percent, compared to growth of 23.9 percent in the previous year.
Non-mining GDP slowed down from 6.8 percent in 2013 to 4.4 percent in 2014. In addition, businesses expect real GDP to grow by 4.6 percent in 2015, slightly lower than the 4.9 percent indicated in the 2015 Budget Speech. GDP is expected to increase marginally by 4.9 percent in 2016.
According to the survey, the recent sustained falls in global oil prices and projected strengthening of global growth should provide a broad base for recovery in demand for Botswana’s mineral exports, while government expenditure will provide some stimulus to the economy. At the same time, continued shortages of electricity and water will continue to be a recurring burden on both businesses and households during the survey period.
In addition, sentiments amongst firms regarding rising costs of inputs is still strong, although somewhat lower than in the September 2014 survey, with the exception of utilities and wages. Naturally, expectations of higher costs rise in the second half of 2015 and first half of 2016. The overall easing of expectations of rising costs of inputs is consistent with moderating inflation expectations.
As part of the challenges they are currently facing the businesses listed insufficient domestic demand, skilled labour shortages and inadequate electricity supply as the top three factors that constrained their businesses. Additionally, domestic demand was the most cited challenge by businesses due to perceived slow growth in government spending and household disposable income. Another most cited challenge is availability of skilled labour.
“These issues have been consistently highlighted in previous survey rounds. However, respondents have now ranked electricity shortages as the third most significant challenge facing businesses, an indication of the recent deterioration in the provision of reliable and adequate power supply,” reads the report.
This week Minister of Finance & Economic Development, Dr Thapelo Matsheka approached parliament seeking lawmakers approval of Government’s intention to increase bond program ceiling from the current P15 Billion to P30 billion.
“I stand to request this honorable house to authorize increase in bond issuance program from the current P15 billion to P30 billion,” Dr Matsheka said. He explained that due to the halt in economic growth occasioned by COVID-19 pandemic government had to revisit options for funding the national budget, particularly for the second half of the National Development Plan (NDP) 11.
Botswana Stock Exchange (BSE) has this week revealed a gloomy picture of diamond mining newcomer, Lucara, with its stock devaluated and its entire business affected by the COVID-19 pandemic.
A BSE survey for a period between 1st January to 31st August 2020 — recording the second half of the year, the third quarter of the year and five months of coronavirus in Botswana — shows that the Domestic Company Index (DCI) depreciated by 5.9 percent.
Botswana Diamond PLC, a diamond exploration company trading on both London Stock Exchange Alternative Investment Market (AIM) and Botswana Stock Exchange (BSE) on Monday unlocked value from its shares to raise capital for its ongoing exploration works in Botswana and South Africa.
A statement from the company this week reveals that the placing was with existing and new investors to raise £300,000 via the issue of 50,000,000 new ordinary shares at a placing price of 0.6p per Placing Share.
Each Placing Share, according to Botswana Diamond Executives has one warrant attached with the right to subscribe for one new ordinary share at 0.6p per new ordinary share for a period of two years from, 7th September 2020, being the date of the Placing Warrants issue.
In a statement Chairman of Botswana Diamonds, John Teeling explained that the funds raised will be used to fund ongoing exploration activities during the current year in Botswana and South Africa, and to provide additional working capital for the Company.
The company is currently drilling kimberlite M8 on the Marsfontein licence in South Africa and has generated further kimberlite targets which will be drilled on the adjacent Thorny River concession.
In Botswana, the funds will be focused on commercializing the KX36 project following the recent acquisition of Sekaka Diamonds from Petra Diamonds. This will include finalizing a work programme to upgrade the grades and diamond value of the kimberlite pipe as well as investigating innovative mining options.
Drilling is planned for the adjacent Sunland Minerals property and following further assessment of the comprehensive Sekaka database more drilling targets are likely. “This is a very active and exciting time for Botswana Diamonds. We are drilling the very promising M8 kimberlite at Marsfontein and further drilling is likely on targets identified on the adjacent Thorny River ground,” he said.
The company Board Chair further noted, “We have a number of active projects. The recently acquired KX36 diamond resource in the Kalahari offers great potential. While awaiting final approvals from the Botswana authorities some of the funds raised will be used to detail the works we will do to refine grade, size distribution and value per carat.”
In addition BOD said the Placing Shares will rank pari passu with the Company’s existing ordinary shares. Application will be made for the Placing Shares to be admitted to trading on AIM and it is expected that such admission will become effective on or around 23 September 2020.
Last month Botswana Diamond announced that it has entered into agreement with global miner Petra Diamonds to acquire the latter’s exploration assets in Botswana. Key to these assets, housed under Sekaka Diamonds, 100 % subsidiary of Petra is the KX36 Diamond discovery, a high grade ore Kimberlite pipe located in the CKGR, considered Botswana’s next diamond glory after the magnificent Orapa and prolific Jwaneng Mines.
The acquisition entailed two adjacent Prospecting Licences and a diamond processing plant. Sekaka has been Petra’s exploration vehicle in Botswana for year and holds three Prospecting Licenses in the Central Kalahari Game Reserve (Kalahari) PL169/2019, PL058/2007 and PL224/2007, which includes the high grade KX36 kimberlite pipe.