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Businesses defer hope to 2021 as spiritus animalis deteriorates

A vintage philosophy from ancient British economist, John Myanard Keynes who pioneered the use of ‘animal spirits,’ or originally spiritus animalis in Latin, metaphor into the business literature 84 years ago by looking at human behavior in connection with economics, gets a bright reincarnation today.

Bank of Botswana on a quarterly basis offers Business Expectations Survey (BES) – a research which collects information on the domestic business community’s perceptions about the prevailing state of the economy and prospects, hence resembling the Keynes school of thought.

The current economic status involving Botswana and the globe moves governments to borrow a leaf from the father of macroeconomics, Keynes. COVID-19 forces governments into emphasizing the Keynesian economics as demand and supply is now determined by a pandemic which has affected business and consumer confidence across the globe.

According to the March BES, which is the latest offering by the central bank, the dwindling business confidence which was recorded in the last quarter of 2019 was carried onto the first months of 2020 as firms approaches the current COVID-19 economic with less optimism.

March BES which was done for the first quarter of 2020, the time when COVID-19 was declared a pandemic by WHO, paints a gloomy picture on the business confidence in this country. March is the same period when Botswana registered its first corona virus cases, forcing a declaration of a 28 lockdown which put most part of the economic activity on chains.

According to BES report of March, the results suggest that firms were less optimistic about economic activity in the first quarter of 2020 compared to the fourth quarter of 2019. Businesses which were surveyed expected a decrease in exports and imports of goods and services; production; sales; stocks; profitability; and investment in buildings, vehicles and equipment in the first quarter of 2020.

“Overall, businesses expected a decrease in exports and imports of goods and services; production; sales; stocks; profitability; and investment in buildings, vehicles and equipment in the first quarter of 2020,” said the recent BES report.

The recent BES is a product of the survey carried out in the first quarter of 2020, covering the first quarter of 2020 (Q1:2020 – the current period); the second quarter of 2020 (Q2:2020); and the twelve-month period (M12) from April 2020 – March 2021 (Q2:2020- Q1:2021). The central bank reminded that the survey was conducted at the time when the coronavirus (Covid-19) that was first reported in Wuhan (China) began to spread rapidly across the globe and was later declared a pandemic by the World Health Organization (WHO).

The current survey whose response rate is 77 percent down from 82 percent recorded in the December 2019 survey looked at 100 businesses from eight economic sectors, namely: agriculture; mining; manufacturing; water and electricity; construction; trade, hotels and restaurants; transport and communications; and finance and business services.

The response rate reduced because firms who were surveyed either took time to respond or did not respond because they were on March lockdown. According BES the mining and quarrying sector will be hard hit because its business predominantly targets the export market which makes firms in the sector less optimistic about economic growth prospects over the survey horizon.

“This is consistent with the unfavourable market conditions, especially with respect to the diamond industry, occasioned by, among others, weaker global demand for rough diamonds associated with the US-China trade war and the interruption of trading due to the outbreak of the Coronavirus pandemic,” said the Bank of Botswana survey on domestic business confidence.

According to BES, there will be stagnation which will go towards the next 12-month period. Debswana has scaled production and De Beers is no longer doing sales until further notice. Botswana economy depends mostly on diamonds as they are also a mainstay of this country’s exports. Employment is expected to
Firms also do not see the economy to improve this year or on the last three remaining quarters of 2020.

Currently most businesses are on lockdown, save for retail businesses which are categorized as essential services. Consumers at large are on lockdown while business operating hours are shrunk to go with the 8pm daily national curfew.

According to the March BES, employment, which is only recorded for the second quarter, is expected to decline in the current survey. The mind of business’s dwindling spirits when looking at business confidence in the first half of 2020 is coincides with perceptions of weaker overall economic growth in the first quarter of 2020, and the overall contraction expected in the second quarter.

“The perceived generally weaker economic performance in the current survey compared to the previous one could be associated with the disruption of business operations following the outbreak of the Covid-19 pandemic,” says the BES.

Sleeping animalistic spirit to wake next year

Keynesian metaphorically compares a business mind to a never say die instinct of an animal. Seeming to have adopted the Keynesian school of thought, the BES focus mainly on anticipated direction of change in selected indicators: that is; whether conditions will improve, worsen or remain unchanged. According to the central bank, the results are then consolidated into an overall measure called ‘net balance’. This measure is obtained by summing the positive and negative responses to each question/element by firms belonging to the same sector, which are then weighted by the sector’s contribution to nominal gross domestic product (GDP), according to Bank of Botswana.

That is why the firms’ negative projection of the economy which is dampened by low business confidence comes with a bit of optimism comes with a positive offset. For example, according to the March BES, there will be signs of increase by firms in investment in plant and machinery in the second quarter of 2020, but will be taken down by general anticipated tight access to credit in the domestic market.

While firms that were met by the BES expect the domestic economy to contract in the second quarter of 2020, there is a hope that things will improve as the year goes. Majority of firms looked at by the March BES expect business conditions to deteriorate in the first two quarters of 2020 some of the hope was deferred to improve in the twelve-month period to March 2021. The improvement which is expected to be carried towards March next year is expected to remain below the level recorded in March 2020.

“The perceived improvement in optimism is in line with the anticipated universal economic recovery in 2021 by the International Monetary Fund. Confidence in the domestic market-oriented firms is mainly driven by the trade, hotels and restaurants, transport and communications sectors,” says the recent BES.
Access to credit

The central bank last week cut the Bank rate by 50 basis points for economic stimulation and improve access to credit. Businesses wish to increase investment in plant and machinery in the second quarter of 2020, but are anticipating tight access to credit in the domestic market.

Firms in the domestic market perceived access to credit to be tight in the first quarter of 2020, mainly because they consider the domestic interest rates to be high, according to a survey on businesses. The business survey further said export-oriented market firms perceived access to credit to be normal, and the interest rates to have remained unchanged in the review period.

Some firms, especially those targeting the domestic market, prefer to borrow from both the domestic market and elsewhere (other than South Africa market) in 2020, according to BES. Most of the export-oriented firms prefer to borrow from both the domestic and South African markets, while they have no plans to borrow from elsewhere.

Firms expect the lending rates and the volume of borrowing from the domestic market to increase in the twelve-month period to March 2021 according to BES.  Lending rates in the rest of the markets are expected to decline, while borrowing from elsewhere is expected to rise considerably and marginally in South Africa. BES says firms also expected inflation to remain stable and within the Bank’s medium-term objective range of 3 – 6 percent, for both 2020 and 2021.

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UDC founder warns against merger

19th October 2020
Ex UDC Convener: Mpotokwane

Lebang Mpotokwane, one of the conveners who presided over the opposition cooperation talks that resulted in the formation of the Umbrella for Democratic Change (UDC), has advised against changing the current umbrella model in favour of a merger as proposed by others.

The Botswana Congress Party (BCP) leader, Dumelang Saleshando recently went public to propose that UDC should consider merging of all opposition parties, including Alliance for Progressives (AP) and Botswana Patriotic Front (BNF).

Saleshando has been vehemently opposed by Botswana National Front (BNF), which is in favour of maintaining the current model.  BNF’s position has been favoured by the founding father of UDC, who warned that it will be too early to ditch the current model.

“UDC should be well developed to promote the spirit of togetherness on members and the members should be taught so that the merger is developed gradually. They should approach it cautiously. If they feel they are ready, they can, but it would not be a good idea,” Mpotokwane told WeekendPost this week.

Mpotokwane and Emang Maphanyane are the two men who have since 2003 began a long journey of uniting opposition parties in a bid to dethrone the ruling Botswana Democratic Party (BCP) as they felt it needed a strong opposition to avoid complacency.

Tonota born Mpotokwane is however disappointed on how they have been ejected from participating in the last edition of talks ahead of the 2019 general elections in which BCP was brought on board.  However, despite the ejection, Mpotokwane is not resentful to the opposition collective.

He said the vision of opposition unity was to ultimately merge the opposition parties but he believes time has not arrived yet to pursue that path. “The bigger picture was a total merger and we agreed that with three independent parties, members might be against merger eventuality so the current model should be used until a point where they are now together for as long as possible,” he said.

“UDC should gradually perform better in elections and gain confidence. They should not rush the merger. We have been meeting since 2003, but if they rush it might cause endless problems. If they are ready they can anyway,” he advised. For now the constituent parties of the umbrella have been exchanging salvos with others (BCP and BNF).

“There are good reasons for and against merging the parties. Personally, I am in favour of merging the parties (including AP and BPF) into a single formation but I know it’s a complex mission that will have its own challenges,” Saleshando said when he made his position known a week ago.

“Good luck to those advocating for a merger, it will be interesting to observe the tactics they will use to lure the BPF into a merger,” former BNF councillor for Borakalalo Ward and former BNF Youth League Secretary General, Arafat Khan, opined in relation to BCP’s proposed position.

Mpotokwane, who is currently out in the cold from the UDC since he was ejected from the party’s NEC in 2017, said the current bickering and the expected negotiations with other parties need the presence of conveners.

“We did not belong to any party as conveners so we were objective in our submissions. If party propose any progressive idea we will support, if it is not we will not, so I would agree that even now conveners might be key for neutrality to avoid biasness,” he observed. Despite being abandoned, Mpotokwane said he will always be around to assist if at all he is needed.

“If they want help I will be there, I have always been clear about it, but surely I will ask few questions before accepting that role,” he said. UDC is expected to begin cooperation talks with both AP and BPF either this week or next weekend for both upcoming bye-elections (halted by Covid-19) and 2024 general elections and it is revealed that there will be no conveners this time around.

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BDP attaches Boko’s property

19th October 2020
DUMA BOKO

The Botswana Democratic Party (BDP) moved through its lawyers to attach the property of Umbrella for Democratic (UDC) President Duma Boko and other former parliamentary contestants who failed in their court bid to overturn the 2019 general elections in 14 constituencies.

WeekendPost has established that this week, Deputy Sheriffs were commissioned by Bogopa Manewe Tobedza and Company who represented the BDP, to attach the properties of UDC elections contents in a bid to recover costs.  High Court has issued a writ of execution against all petitioners, a process that has set in motion the cost recovery measures.

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COVID-19 exposes decay in the education system

19th October 2020
Education Systm

Botswana Sectors of Teachers Union (BOSETU) says COVID-19 as a pandemic has negatively affected the education sector by deeply disrupting the education system. The intermittent lockdowns have resulted in the halting of teaching and learning in schools.

The union indicated that the education system was caught napping and badly exposed when it came to the use of Information System (IT), technological platforms and issues of digitalisation.

“COVID-19 exposed glaring inefficiencies and deficiencies when it came to the use of ITC in schools. In view of the foregoing, we challenge government as BOSETU to invest in school ITC, technology and digitalization,” says BOSETU President Kinston Radikolo during a press conference on Tuesday.

As a consequence, the union is calling on government to prioritise education in her budgeting to provide technological infrastructure and equipment including provision of tablets to students and teachers.

“Government should invest vigorously in internet connectivity in schools and teacher’s residences if the concept of flexi-hours and virtual learning were to be achieved and have desired results,” Radikolo said.

Radikolo told journalists that COVID-19 is likely to negatively affect final year results saying that the students would sit for the final examinations having not covered enough ground in terms of curriculum coverage.

“This is so because there wasn’t any catch up plan that was put in place to recover the lost time by students. We warn that this year’s final examination results would dwindle,” he said.

The Union, which is an affiliate of Botswana Federation of Public, Private and Parastatal Union (BOFEPUSU), also indicated that COVID-19’s presence as a pandemic has complicated the role of a teacher in a school environment, saying a teacher’s role has not only transcended beyond just facilitating teaching and learning, but rather, a teacher in this COVID-19 era, is also called upon to enforce the COVID-19 preventative protocols in the school environment.

“This is an additional role in the duty of a teacher that needs to be recognized by the employers. Teachers by virtue of working in a congested school environment have become highly exposed and vulnerable to COVID-19, hence the reason why BOSETU would like teachers to be regarded as the frontline workers with respect to COVID-19,” says Radikolo.

BOSETU noted that the pandemic has in large scales found its way into most of the school environments, as in thus far more than 50 schools have been affected by COVID-19. The Union says this is quite a worrying phenomenon.

“As we indicated before when we queried that schools were not ready for re-opening, it has now come to pass that our fears were not far-fetched. This goes out to tell that there is deficiency in our schools when it comes to putting in place preventative protocols. In our schools, hygiene is compromised by mere absence of sanitizers, few hand-washing stations, absence of social distancing in classes,” the Union leader said.

Furthermore, Radikolo stressed that the shifting system drastically increased the workload for teachers especially in secondary schools. He says teachers in these schools experience very high loads to an extent that some of them end up teaching up to sixty four periods per week, adding that this has not only fatigued teachers, but has also negatively affected their performance and the quality of teaching.

In what the Union sees as failure to uphold and honour collective agreements by government, owing to the shift system introduced at primary schools, government is still in some instances refusing to honour an agreement with the Unions to hire more teachers to take up the extra classes.

“BOSETU notes with disgruntlement the use of pre-school teachers to teach in the mainstream schools with due regard for their specific areas of training and their job descriptions. This in our view is a variation of the terms of employment of the said teachers,” says Radikolo.

The Union has called on government to forthwith remedy this situation and hire more teachers to alleviate this otherwise unhealthy situation. BOSETU also expressed concerns of some school administrators who continuously run institutions with iron fists and in a totalitarian way.

“We have a few such hot spot schools which the Union has brought to attention the Ministry officials such as Maoka JSS, Artesia JSS, and Dukwi JSS. We are worried that the Ministry becomes sluggish in taking action against such errant school administration. In instances where action is taken, such school administrators are transferred and rotated around schools.”

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