Corona Virus which broke out in China, in the city of Wuhan in December 2019 has spread globally; killing thousands of people every day, restricting international travel, shaking global financial markets and eroding business sentiments across world economies.
The World Health Organization (WHO) has since declared the virus a global pandemic. This week the organisation announced that COVID19 is now a serious threat to humanity. Reports from Europe indicate British junior Minister of Health, Nadine Dorries has tested positive for the virus. As part of remedies to contain the virus, countries have redistricted travels to China, the world‘s second largest economy, with heavily hit city, Wuhan itself put on lockdown by Chinese authorities.
Ever since the spread of the virus intensified in February, global financial markets have been on fluctuating plummet and surge, responding to various business and investor sentiments. In Africa the virus has hit the continent‘s largest economies, including Botswana‘s neighbour and the country’s largest trading partner, South Africa, the region’s most industrialised economy.
Whereas the virus has not arrived in Botswana , with only suspected cases at play, the country is already catching flu from the fast spreading pandemic in the areas of trade and business. Two of the Botswana‘s largest economic sectors and biggest industries by both contribution to GDP and foreign exchange earnings are feeling the pinch.
Some of the largest consumers of rough diamonds being the United States and India have been heavily affected by the virus; Chinese market is the second largest buyer of Botswana rough diamonds after the US, while India is home to some of the largest diamond cutting and polishing operations in the world. Reports from Mumbai, India indicate that the corona virus coupled with sluggish global demands have badly hit the second biggest cutting and polishing country in the world.
The Indian cutting and polishing industry is yet to fully recover from the 2019 US-China Trade war. About 40 per cent of the country's diamond sales are to Hong Kong, where imports were halted on 15 January and have yet to resume. Speaking to Indian media Subodh Rai, Senior Director, Crisil Ratings said Exports would continue to fall in the closing quarter of the 2020 fiscal year which typically accounts for roughly a third of India's exports to the South-East Asian region.
"Given extended holidays in the region and shutdown of markets in the aftermath of the COVID19, exports worth over $1 billion may be lost in this quarter alone," he said. During the month of February alone as COVID19 spread intensified, in Antwerp Belgium, home to one of the world’s largest polished diamond industry, business slowed down significantly. Reports from Antwerp say the closure of eastern markets due to the virus has caused great uncertainty across the global diamond trade subsequently depressing manufacturing in Antwerp
According to Antwerp World Diamond Centre (AWDC), the hardest hit is its category of polished-diamond exports, the year-over-year value of which was halved due to the postponement of the Hong Kong International Diamond, Gem & Pearl Show and the Hong Kong International Jewellery Show, which are the key selling events at the beginning of the year. However, this year the stocks of diamonds were not sold, as trade with Hong Kong – Antwerp’s second largest market for polished goods, fell by nearly 94 percent.
During the first two months of the year, Antwerp’s exports of rough goods fell by 7 percent to 16.7 million carats, while their value has declined 12 percent to $1.4 billion. However, the trade still expresses concern about the impact the new coronavirus may have on the industry. Rough purchases from miners may be postponed and deferred further in the coming sale cycles as slowdown is anticipated in manufacturing in India as consumer sentiment continues to crash in China and other key markets, Creating havoc to public life and economic markets across the globe, COVID19 rapid growth in Iran has countries across the Gulf region becoming increasingly concerned.
From United Arab Emirate (UAE), one of significant markets for Botswana diamonds especially rare finds reports indicate that authorities have called on residents to avoid cross-border travel and has imposed quarantine restrictions to limit the spread of the deadly virus. This has been observed by the Financial Times as “a blow to the state’s position as a global business hub.” The Dubai Health Authority recently released a travel advisory, while several diamond traders in Antwerp with interests in Dubai restricted their travel to the UAE,
DE BEERS CYCLE 2 SALES DROWNED BY 36%
De Beers Botswana’s partner in diamond mining has during its second sales cycle received significant blow in rough-diamond sales, crashing January optimistic positive year start. Sales reported by De Beers Global Sightholder Sales which happened by in large in Botswana declined 28 percent year on year to $355 million in February as the COVID19 hit demand. Many Sightholders took up the mining behemoth‘s offer to delay buying goods destined for China, sources in the rough diamond market reveals.
According to Rapaport News, De Beers allowed its clients to reject certain 1- to 2-carat rough diamonds and reschedule those purchases for later in the year. According to rough diamonds global reports the Virus has shut down retail in China, leaving manufacturers reluctant to buy goods they can’t sell. Proceeds from the second sales cycle of the year were 36 percent lower than January’s $551 million, which was the highest tally since April 2019. The total includes the February sight in Botswana, as well as the company’s auction sales.
“Following an improvement in demand for rough diamonds during the first sales cycle of 2020, we recognized the impact of COVID-19 coronavirus on customers focused on supplying the Chinese market, and put in place additional targeted flexibility to enable customers to defer allocations of the relevant rough diamonds,” said De Beers CEO Bruce Cleaver last week
After the diamond industry, Botswana’s economy is also pivoted by the tourism industry with the sector contributing meaningfully to the country’s Gross Domestic Product , hiring over 25 000 people , supporting other value chain industries and bringing the country a lot of money in foreign income earnings. However since the outbreak of COVID 19, sentiment has slowly gone down in the tourism industry especially the safari and wilderness business. Most tourists who visit Botswana are from South Africa.
The country has confirmed 8 cases of corona virus infections this week, with the likelihood of more during the month. Other key consumers of Botswana tourism sector are United States, Germany and the United Kingdom, all of which are world’s major economies and some of the highest hit countries after China, Italy and Iran.
Last week SafariBookings.com, an elites booking site servicing Africa’s key tourists attraction places including Botswana, conducted a survey among 361 safari tour operators and after a careful analysis of the findings have concluded that more than 86% of operators are experiencing a significant decline in bookings due to fears of the COVID19 outbreak. Common amongst the comments from safari operators was “Coronavirus is affecting our safari business. We are experiencing fewer bookings as some clients are putting their bookings on hold while others have cancelled” said SafariBookings.com
Newly established wholly indigenous citizen owned retail chain Payless Retail (PTY) Ltd is set to partake in the first session of Botswana Stock Exchange (BSE)’s Tshipidi Mentorship Program (TMP) on Monday June 29th.
The TMP aims to train and capacitate SMEs so they can operate as corporates and eventually list on the local bourse. According to local bourse, BSE, the program aims to provide practical training to potential issuers through a comprehensive and interactive program that covers the key themes necessary to position a company to list on the BSE.
Payless Retail is a newly established supermarket chain whose mission is to become a convenient one-stop shopping destination as it is one of the Botswana oldest retailing brands. It started off as Corner Supermarket in January 1976, and to date boasts of nine stores in, among others, Gaborone, Mochudi, Molepolole and Tlokweng. Payless was recently acquired by Ellis Retail Group, which is led by businessman Elliot Moshoke.
The takeover catapulted Ellis Retail to the envious position of being the first wholly indigenous owned major retail chain. “We jumped at this opportunity because it gave us a chance to prove to Batswana that the retail business is open and lucrative.”
The objective is to create a proudly Botswana retail chain that fully supports our national Vision, economic development and citizen economic empowerment ambitions,” Moshoke told BusinessPost.
He further emphasized that Batswana are capable and able to run large scale businesses hence they need to accept invite foreign investors who will come in to support us not take the business. “Our win as Payless in the Fast Moving Consumer goods (FMCG) industry is a win for Batswana. We need their support in this difficult and challenging journey.
As you are aware, Payless is the only retail chain in the hands of Batswana ba Sekei. We need to take advantage of this to generate employment and create small businesses in retail and Agri businesses,” he explained.
The retailer has also partnered with Botswana Investment & Trade Center (BITC) on their #PushaBW campaign with a view to initiating earnest engagement with local producers to iron out bottlenecks and ensure seamless trading.
“Local producers have to be part of the phenomenal growth of the Payless brand. This will in turn facilitate employment creation and economic growth. We did this because we have the utmost respect for local manufacturers and producers,” he mentioned.
Payless is currently restocking all of its stores; a development that Moshoke says is testament to the retailer’s commitment to growing the brand and ensuring continuity of business. He further revealed that renowned retail suppliers like PST and CA Sales have reignited their trust in Payless, opening their doors for Payless as they have faith in the retailer’s new owners.
The takeover has reportedly saved more than 200 jobs and gave a new lease of life to the previously fledging Payless brand. According to a press release from the management team, the Payless work forces are also extremely excited about what the future holds. The TMP is a comprehensive and interactive program that covers the key themes necessary to position a company to list on the BSE.
The program is administered by experts within the listing ecosystem and seeks to bring the potential issuers closer to the listings advisers, investors and leaders of already listed companies. “As a strategic initiative, the BSE decided to set up this mentorship program in a bid to assist SMEs to strategize, corporatize and acclimatize in order to list to access equity finance and expand operations,” said the BSE.
The TMP will avail to SMEs practical insights, knowledge and feedback from institutional investors, increased awareness of the BSE listing requirements as well as an intimate network of advisors and CEOs of listed companies. After training, Payless will graduate with improve governance structures and better knowledge of articulating its business strategy. The retailer will also gain increased visibility through BSE marketing platforms.
Despite Covid-19 interrupting trade worldwide, exporting companies in Botswana which benefited from the Botswana Investment and Trade Centre (BITC) services realised P2.96 billion in export earnings during the period from April 2020 to March 2021.
In the preceding financial year, the sale of locally manufactured products in foreign markets had registered export revenue of P2, 427 billion against a target of P3, 211 billion BITC, which celebrates 10 years since establishment, continues to carry out several initiatives targeted towards expanding the Botswana export base in line with Botswana’s desire to be an export led economy, underpinned by a robust export promotion programme in line with the National Export Strategy.
The main products exported were swamp cruiser boats, pvc tanks and pvc pipes, ignition wiring sets, semi-precious stones, veterinary medicines, hair braids, coal, textiles (towels and t-shirts) and automobile batteries. These goods were destined mainly for South Africa, Zimbabwe, Austria, Germany, and Namibia.
With Covid-19 still a problem, BITC continues to roll out targeted virtual trade promotion missions across the SADC region with a view to seeking long-lasting market opportunities for locally manufactured products.
Recently, the Centre facilitated participation for Botswana companies at the Eastern Cape Development Council (ECDC) Virtual Export Symposium, the Botswana-Zimbabwe Virtual Trade Mission, the Botswana-Zambia Virtual Trade Mission, Botswana-South Africa Virtual Buyer/Seller Mission as well as the Botswana-Namibia Virtual Trade Mission.
BITC has introduced an e-Exporting programme aimed at assisting Botswana exporters to conduct business on several recommended e-commerce platforms. Due to the advent of COVID-19, BITC is currently promoting e-trade among companies through the establishment of e-commerce platforms and is assisting local companies to embrace digitisation by adopting e-commerce platforms to reach export markets as well as assisting local e-commerce platform developers to scale up their online marketplaces.
During the 2019/2020 financial year, BITC embarked on several initiatives targeted at growing exports in the country; facilitation of participation of local companies in international trade platforms in order to enhance export sales of local products and services into external markets.
BITC also helped in capacity development of local companies to compete in global markets and the nurturing of export awareness and culture among local manufacturers in order to enhance their skills and knowledge of export processes; and in development and implementation of trade facilitation tools that look to improve the overall ease of doing business in Botswana.
As part of building export capacity in 2019/20, six (6) companies were selected to initiate a process to be Organic and Fair Trade Certified. These companies are; Blue Pride (Pty) Ltd, Motlopi Beverages, Moringa Technology Industries (Pty) Ltd, Sleek Foods, Maungo Craft and Divine Morula.
In 2019 seven companies which were enrolled in the Botswana Exporter Development Programme were capacitated with attaining BOBS ISO 9001: 2015 certification. Three (3) companies successfully attained BOBS ISO 9001:2015 certification. These were Lithoflex (Pty) Ltd, General Packaging Industries and Power Engineering.
BITC’s annual flagship exhibition, Global Expo Botswana (GEB) to create opportunities for trade and strategic synergies between local and international companies. The Global Expo Botswana) is a premier business to business exposition that attracts FDI, expansion of domestic investment, promotion of exports of locally produced goods and services and promotion of trade between Botswana and other countries.
The portal also provides information on; measures, legal documents, and forms and procedures needed by Botswana companies that intend on doing business abroad. BITC continues to assist both potential and existing local manufacturing and service entities to realise their export ambitions. This assistance is pursued through the ambit of the Botswana Exporter Development Programme (BEDP) and the Trade Promotion Programme.
BEDP was revised in 2020 in partnership with the United Nations Development Programme (UNDP) with a vision to developing a diversified export-based economy. The programme focuses mostly on capacitating companies to reach export readiness status.
Prices for goods and services in this country continue to increase, with the latest figures from Statistics Botswana showing that in May 2022, inflation rate rose to 11.9 percent from 9.6 percent recorded in April 2022.
According to Statistics Botswana update released this week, the largest upward contributions to the annual inflation rate in May 2022 came from increase in the cost of transport (7.2 percent), housing, water, electricity, gas & other Fuels (1.4 percent), food & non-alcoholic beverages (1.1 percent) and miscellaneous goods & services (0.8 percent).
With regard to regional inflation rates between April and May 2022, the Rural Villages inflation rate went up by 2.5 percentage points, from 9.6 percent in April to 12.1 percent in May 2022, according to the government owned statistics entity.
In the monthly update the entity stated that the Urban Villages inflation rate stood at 11.8 percent in May 2022, a rise of 2.4 percentage points from the April rate of 9.4 percent, whereas the Cities & Towns inflation rate recorded an increase of 1.9 percentage points, from 9.9 percent in April to 11.8 percent in May.
Commenting on the national Consumer Price Index, the entity stated that it went up by 2.6 percent, from 120.1 in April to 123.2 in May 2022. Statisticians from the entity noted that the transport group index registered an increase of 7.3 percent, from 134.5 in April to 144.2 in May, mainly due to the rise in retail pump prices for petrol and diesel by P1.54 and P2.74 per litre respectively, which effected on the 13th of May 2022.
The food & non-alcoholic beverages group index rose by 2.6 percent, from 118.6 in April 2022 to 121.6 in May 2022 and this came as a result of increase in prices of oils & fats, vegetables, bread & cereal, mineral waters, soft drinks, fruits & vegetables juices, fish (Fresh, Chilled & Frozen) and meat (Fresh, Chilled & Frozen), according to the Statisticians.
The Statisticians said the furnishing, household equipment & routine maintenance group index rose by 1.0 percent, from 111.6 in April 2022 to 112.7 in May 2022 and this was attributed to a general increase in prices of household appliances, glassware, tableware & household utensils and goods & services for household maintenance.
The prices for clothing & footwear group index moved from 109.4 to 110.4, registering a rise of 0.9 percent during the period under review. Bank of Botswana has projected higher inflation in the short term, associated with the likelihood of further increases in domestic fuel prices in response to persistent high international oil prices and added that the possible increase in public service salaries could add also upward pressure to inflation in this country.