Firms’ cataract view of economic activity amid lockdowns
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Inside the blurry vision of local firms hangs a cloud of uncertainty, Covid-19 disruptions and an obstruction of view into any positive projection with regards to the future of economic activity, a fresh survey by the central bank alludes.
The Business Expectations Survey which focused on the second quarter of 2020 — the time when Botswana was on lockdown and a lot of businesses faced business activity halts and disruptions — says COVID-19 containment measures have negatively affected business operations in the second quarter of 2020.
“The most affected firms are largely in the trade, hotels, restaurants, transport and communications; mining and quarrying; finance and business services, and the construction sectors. In general, firms anticipate that it will take a year from June 2020, for their businesses to recover from the impact of COVID-19,” said Bank of Botswana, presenting gloomy results from a survey on local firms.
According to the Business Expectations Survey, firms are less optimistic about economic activity in the second quarter of 2020 compared to the previous quarter. Businesses also expect a deterioration in all business conditions. According to the survey, access to credit was anticipated to be much tighter in the domestic market compared to other markets.
However, firms expect cost pressures to fall significantly in the third quarter of 2020, reflecting the anticipated reduction in costs of wages, transport, rent and materials, according to the Business Expectations Survey. The research further stated that businesses also expect inflation to remain stable and within the Bank’s medium-term objective range of 3 – 6 percent, in 2020 and 2021.
Firms were also moderate in projection of the general economy according to the central bank survey. While Ministry of Finance and Economic Development projected a larger contraction of 8.9 percent, firms despite their pessimism on business conditions which are expected to recover after a year, saw an overall output to contract marginally by a meagre 0.2 percent. This is also lower than the 3% growth in 2019.
“On quarterly basis, firms expect the GDP to contract in the second quarter of 2020, consistent with the anticipated decline in production, sales, profitability, exports and imports of goods and services and investment in buildings, vehicles and equipment, plant and machinery, and ‘other’ investments,” said Bank of Botswana in their latest survey.
Furthermore, firms with an expectation of the economy to have contracted by 1.1 percent in the second quarter of 2020 contradicts the 3% growth reported by Statistics Botswana for the second quarter of 2019.
Firms envision the hazy performance because of perceptions of lower economic growth in the mining and quarrying, the trade, hotels and restaurants and the transport and communications sectors, as well as the finance and business services sectors between the first and second quarters of 2020.
The mining sector particularly, with its businesses mostly being of exporting market oriented nature, was the most pessimistic of all the sectors about economic growth prospects in the second quarter of 2020 compared to an expected stagnation in the first quarter. According to the survey on firms, there has always been the US-China trade war as an impediment for exports like diamonds before Covid-19 came in the ring to wipe out humanity.
This was symptomized by mostly weaker global demand for Botswana rough diamonds. Even though after national lockdown mining was immediately declared as an essential act, the Business Expectations Survey talked about the interruption of trading due to recent outbreak of the Covid-19 pandemic.
“This is followed by the finance and business services sector, which expects poor economic performance consistent with firms’ predicted decline in production and investment during the second quarter of 2020. For the third quarter of 2020, the mining, manufacturing, water and electricity sectors are optimistic about economic performance, while the rest of the sectors are pessimistic.
However, firms across all sectors are optimistic about economic recovery in the twelve-month period to June 2021, led by the mining and quarrying sector,” furthered the survey. The cataract sight suffered by firms under the survey was not all negative, there were glimpses of blurred optimism albeit being hyperopic. A lot of improvement is seen from at the far end which is to June 2021 from June 2020. And according to the Business Expectations Survey, this is in line with the anticipated economic recovery in 2021.
The survey further explains: “Confidence in the domestic market-oriented firms is mainly driven by firms in the manufacturing, water and electricity sectors. Similarly, export market-oriented firms are optimistic about business conditions in the third quarter of 2020 and the year to June 2021. These firms are predominantly in the mining and quarrying business, which is expected to increase output in the third quarter of 2020 and the next 12-month period, as trade conditions improve.”
Firms’ expectations on credit
There has been a worldwide worry that companies might collapse or fail to pay back credit facilities offered to them by banks and lending institutions. However, the central bank has not been fazed by the Non-Performing Loans reported by the banking sector, saying it is a reasonable percentage of the GDP.
In his speech when announcing lockdown, President Mokgweetsi Masisi said to “stabilize businesses” government will “guarantee loans by commercial banks to businesses mostly affected by the pandemic.” Furthermore, the President said, “give eligible businesses affected by Covid-19 access to credit to support operations in conditions where credit becomes more difficult to obtain.”
Last month Bank of Botswana Governor Moses Pelaelo reiterated what Masisi said and encouraged that access to credit would be helpful in the current economic situation. This was after the central bank reduced the Bank rate on April 2020 as one of the monetary response to Covid-19.
According to Business Expectations Survey, firms expect the cost of credit (lending rates) to decrease across all markets, with companies citing the need for affordable credit to stimulate economic activity in the wake of the adverse impact of COVID-19 pandemic, as the main reason. A few other firms based their expectation of lower lending rates on the recent policy rate cut by the Bank, according to the survey.
When looking at borrowing volumes, firms broadly expect an increase in domestic credit, and a reduction in credit from South Africa and elsewhere in the twelve-month period to June 2021, according to the central bank research.
However, firms, domestic and market oriented, perceived access to credit to be tight in the second quarter of 2020. This, according to the banking survey, is despite businesses expecting interest rates to be lower than in the previous quarter. Firms see credit accessibility determined by how the interest rate is, most prefer to borrow when lending rates are lower.
There is another startling discovery by the central bank’s latest survey: “All firms which predominantly target the domestic market, prefer to borrow from the domestic market in 2020 and have no plans to borrow from other markets. Conversely, export-oriented firms prefer to borrow from all markets, with more preference given to the domestic market.”
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BPS, Mosala Funeral Parlour butt heads over SA national remains
A squabble has broken out between Pule Mosala Funeral Parlour and the Botswana Police Service (BPS) over the remains of a South African national who has been in the Mosala mortuary for more than nineteen months. The deceased was one of 10 suspects who were controversially shot dead during a lengthy shootout with law enforcement authorities in Gaborone’s Phase 2 early last year.
The deceased individual’s family based in Soweto, has encountered difficulties in repatriating the body which has been in the care of Mosala Mortuary Services. Following the incident, it has emerged that all 10 bodies were transported to PFG mortuary in Lobatse for a brief period while the police attempted to locate their next of kin. Â It is reported that the families of the deceased were eventually identified and informed to come and identify their loved ones, including other South African nationals who were part of the criminal group. These families also witnessed the autopsy procedures conducted at Princess Marina Hospital in Gaborone.
Except for the family from Soweto, nine of the bodies were claimed and taken by their separate relatives. The Soweto family claims they lack the resources to bring the body back to South Africa and has made it known that they are looking for money. To end the supposed verbal agreement over the body’s storage for repatriation, Mosala Funeral Service has filed a case against the police at the Lobatse High Court.
According to Keakantse Mmotlhana, the company’s Sales and Marketing Manager, 10 people who were killed in Phase 2 by gunfire were all temporarily transferred to one of PFG’s branches in Lobatse by the police while efforts were made to find their next of kin. She expressed outrage at the statement made by the Minister of Defense and Security, recently.
After Assistant Police Commissioner Dipheko Motube called her office to apologize for giving the Minister wrong information during a news conference, she confirmed that they had accepted the apologies. He made it clear that one of the victims was still at Pule Mortuary in Lobatse.
Bushie Mosala, the director and owner of Mosala Funeral Services, confirmed that the body of a South African national has been in his mortuary for the past nineteen months. He expressed his desire for the police to remove the corpse from the mortuary, characterising the situation as a “nightmare.” He has instructed his legal team to file a lawsuit against the police in the Lobatse High Court concerning the body.
Mosala urged the acting Police Commissioner to come forward and apologize to the nation for the situation, asserting that the public has the right to know the truth regarding the body of the South African national, w
C -002Bhich was preserved by the police as evidence.
The South African High Commission in Gaborone had not responded to queries from Weekend Post at the time going of going to press.
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BOSETU frustrated by Gov’t new dispute winning strategy
Botswana Sectors of Teachers Union (BOSETU) has expressed alarm over a troubling trend by the government. Tobokani Rari, Secretary General of the BOSETU, stated that it appears that these days, whenever there is a dispute between workers and the government, the administration is fast to run to the courts to attempt and muffle unions.
“This is quite disturbing development, we have seen it with the Botswana Doctors Union, there was a disagreement over the shift allowance, government rushed to court, they indeed got order that was saying the doctors should go and do the work. We have seen it with the nurses, they rushed to court they got the order, we are now seeing it with the teachers, they rushed to the court and they got what they wanted,” said Rari, who also served as the Secretary General of BOFEPUSU.
Rari raised concerns that the government’s enforcement of teacher’s work, through a court order will result in reduced classroom productivity and morale. Rari added that this situation would negatively impact labour relations and teachers emotional wellbeing due to dissatisfaction in their work places leading to persistently poor academic outcomes.
“You can get an order that forces people to work, but what happens at work, it heightens emotions, it destroys relationships and the morale goes down and productivity does. Courts and judgments don’t solve productivity issues. Productivity only comes when people are satisfied at the workplace, so if you force them to work through a court order then you may not get the maximum out of the working population,” said Rari
MESD vs BOSETU COURT CASE
“As you are aware, the Ministry of Education approached courts and they were demanding three things from the court in this case between BOSETU and the ministry. First, they were demanding that the joint letter that was written by BOSETU and Botswana Teachers Union (BTU) asking members to stop doing course work because there was no agreement be declared unlawfully and BOSETU should write to its members and withdraw that letter within 24hrs. The second thing that they were looking for, was to interdict BOSETU from further issuing any instructions to that effect going forward. Lastly was that court should hold BOSETU to pay the cost of the lawsuit on a punitive scale,” Rari said.
Rari stated that the court decided to rule in favour of the Ministry of Education on all three relieves sought, that the savingram should be declared unlawful, that BOSETU should withdraw the contents savingram within 24hrs.
Court also said BOSETU should not issue any of such instructions going forward up until the case of contempt that BOSETU has taken to court, the contempt of the 2009 judgment has been decided. Court also awarded cost to the ministry on a punitive scale.
“BOSETU is a law abiding citizen and therefore we are bound by any laws and judgments that are there in Botswana and arise on the courts of Botswana hence we have complied with the order. On the 31st after the court case, we wrote to all our members and told them that the contents of that savingram as far as coursework is concerned has been withdrawn,” said Rari.
Rari said what happened in this case is that the judge decided to listen to the urgency without the responding affidavits of the opposing party, BOSETU, and went on to rule the merit of the case, which surprised the union.
“However we have been in discussion with our lawyers because if we leave things like this, we feel like we cannot leave that unchallenged. We have taken a decision to appeal the judgment,” Rari confirmed.
2023 COURSEWORK AND INVIGILATION AGREEMENT
“We would like to make our members aware that the following day after the judgment, we were able to meet the Ministry of Education and we have arrived at a conclusion that we signed an agreement that coursework rates will be increased by 5%. If court had ruled that coursework is the duty of the teachers’ means it wouldn’t have been any agreement after the court case, it tells you that the issue is still open and it is on the table. We have arrived at an agreement that there is going to be an increment on all components of coursework and invigilation,” Rari pointed out.
Rari further explained that Article 2 says union party is to submit detailed proposals on the intensity of the coursework for further engagement. Intensity of coursework means where the coursework payment starts in terms of varying from different subjects. He said the outcome based subject that are taught Maun Senior Secondary School and Moeng college which are agriculture and hotel and tourism is that ministry have agreed and acknowledge that there are some peculiarity in their coursework and  therefore should be paid in line with the peculiarities that are contained in their coursework.
CONGRESS RESOLUTION
Rari pointed out the resolutions taken at the conference where the issue of application of corporal punishment was addressed.  “BOSETU will issue out a memo to their members to advise them that they should not apply corporal punishment, they should leave it to be applied in line with the Education Act.”
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BMC sees red as mass buffaloes disrupt plans to supply schools
The Botswana Meat Commission (BMC) which had struck a deal with the Ministry of Education to supply some schools in the northern part of the country is counting losses as mass migration of buffalos jeopardize the Commission’s plans.Â
Information reaching this publication shows that the beef exporter was recently given the greenlight to supply government schools with beef. According to documents seen by this publication, as a result BMC had scheduled to buy and collect cattle in the Nata-Gweta and Boteti constituencies from 11 to 17 September.
This was after BMC and the Ministry of Education struck a deal for the former to supply government schools with beef. Letters exchanged between Ministry officials state that it has been recommended to the ministry to support BMC by allowing it to supply schools with beef products.
The Ministry indicated that it was aware that some schools have contracts that are currently running with suppliers such as local butcheries.
The Ministry revealed that at the same time BMC has 256 tins of frozen quality meat at its Maun Plant.
The Ministry requested the Director-Regional Operations to appoint an officer to manage the procurement of meat for schools that do not currently have running contracts. The Ministry further stated that Modalities of collection will be arranged between the region and the schools identified.
According to the Ministry, a list of schools including the condition of their cold rooms and their number of deliveries and kilograms per week they buy should be compiled. The Ministry also requested its officials to share the list with headquarters and the acting director-Basic Education, and engage BMC accordingly to procure.
But this plan ran into trouble after it emerged that between 300 to 500 buffalos migrated from the buffalo fence area to Nata, Dukwi and Mosetse areas.
The Department of Veterinary Services sprang into acting by revising movement protocol for cloven-hoofed animals with immediate effect following buffalo sightings in zone 3b which covers Nata/Sowa, zone 3c which is around the Dukwi areas as well as zone 6a, which covers the Mosetse area, which fall under zones, 3b, 3c, 5,6a and 8.
The Department of Veterinary Services indicated that as a result, movement of live cloven-hoofed animals and their products out of zones 3b, 3c, 5, 6a and 8 were prohibited and that movement of live cloven-hoofed animals within and into these zones is only allowed for direct slaughter at licensed slaughter facilities under veterinary movement permit issued through BAITS.
The department also indicated that the movement of fresh products derived from cloven-hoofed animals such as raw milk, skins and fresh meat into these zones is also only allowed under a similar arrangement.
Movement of live cloven-hoofed animals into these zones for rearing and other purposes will not be allowed, and farmers and the general public is requested to continue being vigilant and report any buffalo sightings to the nearest veterinary office, the police or the Department of Wildlife and National Parks, the department said.
Meanwhile the Ministry of Agriculture has stated that following the press release on prohibition of movement of live cloven-hooved animals and their products in and out of Zones 3b, 3c, 5, 6a & 8, the acting Minister of Agriculture Karabo Gare, his counterpart Acting Minister of Environment, Wildlife &Â Tourism Mabuse Pule, acting Permanent Secretary in the Ministry of Agriculture Mr. Joshua Moloi, Director of Veterinary Services Dr Kefentse Motshegwa and other government officials visited the areas of Sepako and Dukwi respectively on a mission to consult with communities regarding the invasion of the places by buffalos.
Minister Gare alluded that they have been sent by the President of Botswana, who is equally worried by the current situation. He noted that the affected areas have a total of around 300000 cattle and if the situation goes unchecked, there might be detrimental effects on the economy of this country.
He encouraged the communities to help government going forward by reporting any spotted buffalos in their areas, emphasizing that buffalos are dangerous and can kill people and that care should be exercised at all times.
The Director of Veterinary Services mentioned that they closed the above mentioned zones to allow for testing of buffalos & cattle for foot & mouth disease. The wildlife department’s Director Mr. Moremi Batshabang assured farmers and the community that they will eliminate small clusters of buffalos found within communities and translocate larger clusters to ensure their safety.