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P10 billion to slip through Botswana’s hands as Gov’t bans travel, tourism

Minister of Health and Wellness Lemogang Kwape this week took to mainstream media to announce Botswana’s preparedness against the rapidly spreading coronavirus with cases in South Africa, exceeding a hundred (100).

The most important part of Kwape’s announcement was evoking the  Public Health Act 2013, which temporarily bans travel of “All individuals coming to Botswana from the following high-risk countries will not be allowed entry; China, Japan, South Korea, Iran, USA, UK Austria, Belgium, Denmark, France, Germany, Italy, Netherlands, Norway, Spain, Sweden, Switzerland, and India.” Furthermore the Minister announced that Batswana and residents returning from high-risk countries will be subjected to 14-day mandatory quarantine as per protocol.

Issuance of Visa at Ports of entry and all embassies is suspended with immediate effect, according to the ministry. Current visas are also canceled with immediate effect until further notice. “International travel by all government employees, parastatals and State-owned Entities is suspended with immediate effect,” said the health ministry.

Kwape’s announcement albeit met with fear, discomfort, and chagrin by many in the travel and tourism industry was guided by the Public Health Act whose mandate is to, “make the notification of certain diseases compulsory and to control such diseases; to make provision regarding diseases subject to the International Health Regulations; to prevent the spread of smallpox; to prevent the introduction of diseases into Botswana; to control advertisements and publications concerning venereal disease; to regulate sanitation and housing; to provide for the protection of foodstuffs and water supplies; to regulate the use of cemeteries, and generally to make provision for public health.”

By banning travels the ministry could have evoked Section 3 of the Act which gives the ministry functions, “to prevent and guard against the introduction of disease from outside; and to prevent or control the communicable disease.” However a temporary ban will mean Botswana is set to fall short on the fraction of the money made on travel and tourism to the GDP. Most of these countries especially China where the coronavirus outbreak was discovered last year November, are major contributors to Botswana’s travel and tourism sectors. On the other hand, South Africa which is hit by a rapidly growing number of coronavirus cases is the major trade partner of Botswana especially in the travel or business sector. Travel and tourism’s direct contribution to GDP is P10.13 billion.

Absa Botswana economist Madala told BusinessPost the outbreak of COVID-19 has dampened the outlook for the local economy as already the travel restrictions associated with the COVID-19 pandemic complicates diamond sales, tourism and trade. She said uncertainty associated with the outbreak of COVID-19 is also likely to influence consumer and business confidence, which can potentially dent domestic spending and investment.

Cursory research already shows the negatives of COVID-19 which has spread within Botswana, affecting this country’s tourism sector. BusinessPost has seen a survey done on 361 safari tour operators just before the health ministry announced temporary travel bans. These findings have concluded that more than 86 percent of operators are experiencing a significant decline in bookings due to fear of the virus outbreak. This report was done by a safari media outlet SafariBookings with a website SafariBookings.com, which is the largest online marketplace for African safari tours.

According to the survey, a quarter of operators experienced a staggering 75 percent decrease in bookings while only 14 percent reported no decrease and for these operators it has been business as usual. It is a heavy blow for the industry and the numerous wildlife reserves that rely on its revenue. One safari operator who also owns a travel and tour company in Botswana and contributed to the survey, Kenewang Chobacho African Bush Lovers Travel & Tours Safaris, said: “So far we have four trips which have been canceled due to the virus. This is affecting us a lot.”

Jane Bettenay of Ulinda Safari Trails in Botswana said people are “shy” to send money as they are concerned they will not be able to travel. Oliver Madibela of Mosu Safari Tours said most of the clients are very sensitive about this issue (coronavirus), so it is not easy for them to confirm their bookings as they are particularly afraid to travel. However just before the ministry announced travel bans this week, Mark Hathaway of Gondwana Tours & Safaris in Botswana has been trying to preach positive information about Botswana, which has so far not registered any case.

“At the moment we are reassuring clients who ask that there have been no cases of coronavirus in the main tourist destinations in Africa. Given that many clients are coming from countries where there have been reported cases then they would be safer in Africa,” said Hathaway.
Most tourists use air transport to come to Botswana according to national statistics. Air Botswana has said it anticipates adverse impact, given its feeder status and reliance on other airlines.

There have been cancellations of major events around the world, according to Air Botswana, this paints a bleak future in the short term. “Given the depressed passenger travel patterns, the airline’s schedule has been modified to reflect the impact of the pandemic, in line with the low business activity that is currently being observed,” says Air Botswana in a recent statement.

According to World Bank, Botswana spends around P0.6 billion on travel and tourism services. The Bank says infection of coronavirus from one continent to another-one country to another- will affect trade. Global value chains are expected to suffer as they account for nearly half of global trade, according to the Bank, which further stated that this is due to global trade being disrupted by factory shutdowns and delayed resumption of operations.

That transmission is likely to occur through several channels. The first is the trade: global value chains, which account for nearly half of global trade and are being disrupted by factory shutdowns and or are delayed. Coronavirus also brings harp drops in commodity prices which will harm developing countries that rely on them for much-needed revenue. The World Bank says developing countries like Botswana are hit hard on transport and tourism, a major revenue stream for these countries. According to the Bank, transport and tourism in many developing countries are shrinking with declining demand and expanding travel restrictions.

At the beginning of this month, World Bank Group made available an initial package of up to $12 billion or P120 billion in immediate support to assist countries in coping with the health and economic impacts of the global outbreak. According to the Bank, this financing is designed to help member countries take effective action to respond to and, where possible, lessen the tragic impacts posed by COVID-19. “…What comes next will be crucial: in the coming weeks, all countries—even those without a single coronavirus patient—will need to take concrete policy steps to protect their people and limit harm to their economies,” says the World Bank.

World Bank advice President Mokweetsi Masisi and his government

To Botswana and other developing countries, there is a need to move swiftly in boosting spending on health. According to the Bank: “In many developing countries, public health systems remain weak, making their populations vulnerable to the rapid spread of the outbreak.  Governments should boost investments that strengthen these systems to enable faster treatment and containment.”

Botswana should also strengthen the safety net by making cash transfers and free medical services for the most vulnerable people available, this could help contain the outbreak and also limit its financial harm. There is also need for this country to support the private sector since all kinds of businesses are likely to be hit, according to the Bank, they would benefit from short-term credit, tax breaks, or subsidies.

According to the World Bank there should be counter financial-market disruptions where central banks in developing countries like Bank of Botswana —particularly those that are sensitive to bouts of risk aversion—should stand ready to react to disorderly financial market movements. Also, Bank of Botswana may need to lower interest rates and inject liquidity to restore financial stability and boost growth, according to the World Bank.

Business

Dark days as Aviation industry collapses

22nd November 2020
Air Botswana

As the Aviation industry takes a COVID-19 pummeling, for Africa the numbers are staggering, Chief Executive Officer of the International Air Transport Association (IATA), Alexandre de Juniac has observed.

Speaking recently at the African Airlines Association (AFRAA) has been hosting an Annual General Assembly, de Juniac said traffic is down 89% and revenue loses are expected to reach $6 billion. And this figure is likely to be revised downwards in the next forecast to be released later this month. “But the impact is much broader. The consequences of the breakdown in connectivity are severe,” he surmised.

According to de Juniac, five million African livelihoods are at risk while aviation-supported GDP could fall by as much as $37 billion. That’s a 58% fall.

“We have a health crisis. And it is evolving into a jobs and economic disaster. Fixing it is beyond the scope of what the industry can do by itself.”

He said they need governments to act, “And act fast to prevent a calamity.”

“We are in the middle of the biggest crisis our industry has ever faced. As leaders of Africa’s aviation industry, you know that firsthand. Airline revenues have collapsed. Fleets are grounded. And you are taking extreme actions just to survive. We all support efforts to contain the COVID-19 pandemic.  It is our duty and we will prevail. But policymakers must know that this has come at a great cost to jobs, individual freedoms and entire economies,” he said.

de Juniac used the AFRA general assembly platform to amplify IATA’s call for governments to address two top priorities: “The first is unblocking committed financial relief. Airlines will go bust without it. Already four African carriers have ceased operations and two are in administration. Without financial relief, many others will follow.”

Over US$31 billion in financial support has been pledged by African governments, international finance bodies and other institutions, including the African Development Bank, the African Union and the International Monetary Fund.

Unfortunately de Juniac pointed out, in his words, “Pledges do not pay the bills. And little of this funding has materialized. And let me emphasize that, while we are calling for relief for aviation, this is an investment in the future of the continent. It will need financially viable airlines to support the economic recovery from COVID-19.”

The second priority, according to IATA is to safely re-open borders using testing and without quarantines.

“People have not lost their desire to travel. Border closures and travel restrictions make it effectively impossible. Forty-four countries in Africa have opened their borders to regional and international air travel. In 20 of these countries, passengers are still subject to a mandatory 14-day quarantine. Who would travel under such conditions?” de Juniac quizzed rhetorically.

He suggested that countries should adopt systematic testing before departure provides a safe alternative to quarantine and a solution to stop the economic and social devastation being caused by COVID-19.

He admitted that it’s a frightening time for everyone, not least the millions of people whose livelihoods depend on a functioning airline industry. Right now, de Juniac said there essentially is no airline industry. He cited the example that China’s largest airlines sound optimistic, but in a vague way. “They gave no hard data about current yields, loads, or forward bookings, discussing only developments in 2019. Boy, does that seem like ages ago.”

Aviation’s darkest days

The IATA CEO said these are the darkest days in aviation’s history. “But as leaders of this great industry I know that you will share with me continued confidence in the future.

Our customers want to fly. They desire the exploration that aviation enables. They need to do international business that aviation facilitates. And they long to reunite with family and loved ones.”

He said the industry will, no doubt, be changed by this crisis, but flying will return. “Airlines will be back in the skies. The resilience of our industry has been proven many times. We will rise again,” he said.

de Juniac said Aviation is a business of freedom. “For Africa that is the freedom to develop and thrive. And that is not something people on this continent will forget or lose their desire for.”

 

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Business

Inflation increased to 2.2% in October 2020

22nd November 2020

Headline inflation increased from 1.8 percent in September to 2.2 percent in October 2020, but remained below the lower bound of the Bank’s medium-term objective range of 3 – 6 percent, and lower than the 2.4 percent in October 2019.

According to Statistics Botswana, the increase in inflation between September and October 2020 mainly reflects the upward adjustment in domestic fuel prices {Transport (from -3.9 to -2.5 percent)}, which is estimated to have increased inflation by approximately 0.29 percentage points.

“There was also a rise in the annual price increase for most categories of goods and services: Alcoholic Beverages and Tobacco (from 6.2 to 6.6 percent); Clothing and Footwear (from 2.5 to 2.7 percent); Communications (from 0.6 to 0.9 percent); Housing, Water, Electricity, Gas and Other Fuels (from 6.4 to 6.6 percent); Recreation and Culture (from 0 to 0.2 percent); Miscellaneous Goods and Services (from 0.7 to 0.9 percent); Food & Non-Alcoholic Beverages (from 4.2 to 4.3 percent); and Furnishing, Household Equipment and Routine Maintenance (from 2 to 2.1 percent). Inflation remained stable for: Education (4.7 percent); Restaurants and Hotels (3 percent); and Health (1.5 percent). Similarly, the 16 percent trimmed mean inflation and inflation excluding administered prices rose from 1.8 percent and 3.1 percent to 2.2 percent and 3.4 percent, respectively, in the same period.”

[Source: Bank of Botswana]

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Business

BDC injects further P64 million into Kromberg & Schubert

22nd November 2020
BDC

Botswana Development Corporation (BDC) has to date pumped a total of P100 million into the expansion of Kromberg and Schubert, a car harnessing manufacturing company, operating from Gaborone Old Naledi.

At the official ground breaking ceremony of the company‘s new warehouse today, BDC Managing Director, Cross Kgosidiile revealed the wholly state owned investment corporation has pumped P64 million into the expansion which entailed building of the new warehouse.

Kgosidiile explained that this follows another expansion project which was successfully launched in 2017, in which BDC invested P36 million, bringing the total investment into Kromberg at P100 million. The MD also acknowledged Botswana Investment and Trade Centre (BITC) as a partner in the project and for having facilitated the acquisition of the land.

 

Giving a keynote address, Minister of Investment, Trade & Industry, Peggy Serame highlighted the importance of infrastructural development in growing the local manufacturing sector and transforming the economy of Botswana.

Serame underscored the value of strategic partnerships between Government and the private sector, noting that when the two work together and pull together in one direction results will be evident and jobs will be created.

“With the prevailing conditions of depressed economy occasioned by COVID-19 pandemic, government is reliant on entities like BDC to bring in revenue and acceleration of private sector development in line with its mandate and strategic plan. This plan is supported by the need to invest in growth sectors and accelerate the implementation of the Economic Diversification Drive,” Serame said.

Minister Serame noted that the partnership between BDC and Kromberg & Schubert begun in 2017 when the P36 million, 4100 square metres factory expansion for the company was launched.

 

She said the launch of the 7320 square meters factory expansion, to be built at the tune of P64 million signals the continuation of the good partnership between the two companies.

 

“I must commend BDC for their continuous efforts to build partnerships with the private sector geared towards contributing to economic development of this country.”

 

Minister Serame also added that BITC through its robust investor aftercare programme continues to provide value added and red carpet to Kromberg and Schubert under their One Stop Service Centre.

 

“In this regard BITC facilitated acquisition of land to enable this expansion. I therefore would like to commend BITC for their timely facilitation to make this expansion possible,” the minister said.

 

Kromberg & Schubert was incorporated in Botswana in 2009; The Company has grown to asset its position as a significant player in the regional automotive industry value chain.

 

The company is also a critical player in the economic development of Botswana, it currently employs 2100 Batswana across its operations. Kromberg exports on average P2.0 billion worth of goods annually, contributing significantly to foreign exchange.

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