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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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More Batswana turn to social media – for better, for worse

25th May 2020

Social-media use in Botswana has doubled over the past five years despite considerable misgivings about some of its possible negative effects, the latest Afrobarometer survey shows.

According to Afrobarometer latest survey, “more than a third of Batswana now use Facebook, Twitter, WhatsApp, or other social media every day as sources of news. Most citizens praise social media as helping make them better informed, more effective citizens, but most also believe it makes people more susceptible to false news and intolerance.”

Overall, the results show that Batswana are divided as to whether social media is good or bad for society. “But a majority favour protecting unrestricted access”. According to the findings, more than one-third (34%) of Batswana say they use social media every day to get news, almost twice as many as five years ago (18%).

“Daily use of social media for news is significantly higher amongst citizens with post-secondary education (65%), the youngest respondents (53% of those aged 18-26), and urban residents (50%) (Figure 2). Six out of 10 rural residents never use it.”

Amongst the 73% of Batswana who say they have heard of social media, most say it makes people more informed about current events (91%) and helps them have more impact on political processes (77%). At the same time, large majorities believe that social media makes users more likely to believe false news (81%) and more intolerant of people with different political opinions (65%).

Overall, Batswana are almost evenly divided as to whether social media is good (35%) or bad (30%) for society. “But people who say unrestricted access to social media should be protected outnumber, by 52% to 38%, those who say it should be regulated because it’s dividing Batswana,” the survey results show.

Afrobarometer is a pan-African, nonpartisan survey research network that provides reliable data on African experiences and evaluations of democracy, governance, and quality of life. Seven rounds of surveys were completed in up to 38 countries between 1999 and 2018, and Round 8 surveys are currently underway. Afrobarometer conducts face-to-face interviews in the language of the respondent’s choice.

The Afrobarometer national partner in Botswana, Star Awards Ltd., interviewed a nationally representative, random, stratified probability sample of 1,200 adult Batswana in July-August 2019. A sample of this size yields country-level results with a margin of error of +/-3 percentage points at a 95% confidence level. Previous surveys were conducted in Botswana in 1999, 2003, 2005, 2008, 2012, 2014, and 2017.

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WUC is broke, Pay water bills – PS appeals

25th May 2020
WUC

Permanent Secretary in the Ministry of Land Management, Water & Sanitation Services, Ms Bonolo Khumotaka has appealed to Water Utilities Corporation (WUC) customers to pay their outstanding water bills.

She said this will help the Corporation to recover costs and ensure it continues to operate without hindrance. Speaking to members of the media this week, Khumotaka revealed that during the COVID-19 lockdown WUC was only able to collect around P50 million from utility fees instead of the usual P150 million. She observed that this is a whooping P100 million deficit in revenue collection during the month of April 2020.

When COVID-19 intensified President Dr Mokgweetsi Eric Masisi instructed WUC to suspend its process of disconnecting water supply for defaulting customers. President Masisi indicated that the decision was imperative and necessary to enable Batswana to comply with COVID-19 protocols and requirements. Batswana are encouraged to maintain general cleanliness especially the washing of hands and sanitization.

The Permanent Secretary reiterated that the Water Authority was therefore suffocating from overwhelming operating costs that are not recovered. “We encourage all those who can pay their water bills to do so, this will enable us to continue servicing the country with the much needed water during this period of COVID-19 pandemic,” she said.

The Permanent Secretary further noted that it is crucial for WUC customers to pay their bills so that the Corporation recovers costs and keeps its workforce. “Distributing water is very expensive, because we have to maintain our pipes and pumps to keep water supply afloat. We appeal to Batswana to meet us half way, even if its paying half of the bill, it is very much welcome,” she pleaded.

Khumotaka further added, “The Corporation is employing Batswana, so for us to avoid cutting costs and coming to drastic decisions such as laying off some employees, it is important that we recover costs from Batswana who can afford to pay their bills. We have come up with new payment platforms, including digital and cell phone payments methods to make it easy for our customers to pay,” she advised.

Khumotaka said on a monthly basis, Botswana needs 10.5 million cubic meters of water, but currently the country only provides around nine million cubic meters. Meanwhile responding to concerns that WUC was relatively ineffective in delivering water to Batswana, Khumotaka said Government was currently formulating a decentralization policy in which Central Government would be relieved of some duties and mandates.

Concerns from rural settlements are that since public water supply services migrated from Local Government (Councils) to Central Government (Water Utilities Corporation) delivery has been relatively poor. “The policy will inform Government of which services to take to Local government, water supply is one of those under review,” she said.

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Dikgosi want Khama, Tawana in Ntlo Ya Dikgosi

25th May 2020

Some Dikgosi across the country have expressed their desire and eagerness to have Paramount Chiefs who had joined politics return to their traditional roles and occupy their seats in Ntlo Ya Dikgosi (NYD). This development, they believe, will boost the integrity of Ntlo Ya Dikgosi, which has lost spark over the years.

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