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Firms’ cataract view of economic activity amid lockdowns

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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Botswana imports in numbers

1st March 2021
Botswana-imports

For so many years, Botswana has been trying to be a self-sufficient country that is able to provide its citizens with locally produced food products. Through appropriate collaborations with parastatals such as CEDA, ISPAAD and LEA, government introduced initiatives such as the Horticulture Impact Accelerator Subsidy-IAS and other funding facilities to facilitate horticultural farmers to increase production levels.

Now that COVID-19 took over and disrupted the food value chain across all economies, Botswana government introduced these initiatives to reduce the import bill by enhancing local market and relieve horticultural farmers from loses or impacts associated with the pandemic.

In more concerted efforts to curb these food crises in the country, government extended the ploughing period for the Southern part of Botswana. The extension was due to the late start of rains in the Southern part of the country.

Last week the Ministry of Agriculture extended the ploughing period for the Northern part of the country, mainly because of rains recently experienced in the country. With these decisions taken urgently, government optimizes food security and reliance on local food production.

When pigs fly, Botswana will be able to produce food to feed its people. This is evident by the numbers released by Statistics Botswana on imports recorded in November 2020, on their International Merchandise Trade Statistics for the month under review.

The numbers say Botswana continues to import most of its food from neighbouring South Africa. Not only that, Batswana relies on South Africa to have something to smoke, to drink and even use as machinery.

According to data from Statistics Botswana, the country’s total imports amounted to P6.881 Million. Diamonds contributed to the total imports at 33%, which is equivalent to P2.3 Million. This was followed by food, beverages and tobacco, machinery and electrical equipment which stood at P912 Million and P790 Million respectively.

Most of these commodities were imported from The Southern African Customs Union (SACU). The Union supplied Botswana with imports valued at over P4.8 Million of Botswana’s imports for the month under review (November 2020). The top most imported commodity group from SACU region was food, beverages and tobacco, with a contribution of P864 Million, which is likely to be around 18.1% of the total imports from the region.

Diamonds and fuel, according to these statistics, contributed 16.0%, or P766 Million and 13.5% or P645 Million respectively. Botswana also showed a strong and desperate reliance on neighbouring South Africa for important commodities. Even though the borders between the two countries in order to curb the spread of the COVID-19 virus, government took a decision to open border gates for essential services which included the transportation of commodities such as food.

Imports from South Africa recorded in November 2020 stood at P4.615 Million, which accounted for 67.1% of total imports during the month under review. Still from that country, Botswana bought food, beverages and tobacco worth P844 Million (18.3%), diamonds, machinery and fuel worth P758 Million, P601 Million and P562 Million respectively.

Botswana also imported chemicals and rubber products that made a contribution of 11.7% (P542.2 Million) to total imports from South Africa during the month under review, (November 2020).

The European Union also came to Botswana’s rescue in the previous year. Botswana received imports worth P698.3 Million from the EU, accounting for 10.1% of the total imports during the same month. The major group commodity imported from the EU was diamonds, accounting for 86.9% (P606.6 Million), of imports from the Union. Belgium was the major source of imports from the EU, at 8.9% (P609.1 Million) of total imports during the period under review.

Meanwhile, Minister of Finance and Economic Development Thapelo Matsheka says an improvement in exports and commodity prices will drive growth in Sub-Saharan Africa. Growth in the region is anticipated to recover modestly to 3.2% in 2021. Matsheka said this when delivering the Annual Budget Speech virtually in Gaborone on the 1st of February 2021.

He said implementation of the African Continental Free Trade Area Agreement (AfCFTA), which became operational in January 2021, could reduce the region’s vulnerability to global disruptions, as well as deepen trade and economic integration.

“This could also help boost competition and productivity. Successful implementation of AfCFTA will, of necessity, require Member States to eliminate both tariffs and non-tariff barriers, and generally make it easier to do business and invest across borders.”

Matsheka, who is also a Member of Parliament for Lobatse, an ailing town which houses the struggling biggest meat processing company in the country- Botswana Meat Commission, (BMC), said the Southern African Customs Union (SACU) recognizes the need to prioritize the key processes required for the implementation of the AfCFTA.

“The revised SACU Tariff Offer, which comprises 5,988 product lines with agreed Rules of Origin, representing 77% of the SACU Tariff Book, was submitted to the African Union Commission (AUC) in November 2020. The government is in the process of evaluating the tariff offers of other AfCFTA members prior to ratification, following which Botswana’s participation in AfCFTA will come to effect.”

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Sheila Tlou: On why women don’t get votes

1st March 2021
Sheila Tlou

BARAPEDI KEDIKILWE

Women continue to shadow men in politics – stereotypes such as ‘behind every successful man there is a woman’ cast the notion that women cannot lead. The 2019 general election recorded one of Botswana’s worst performances when it comes to women participation in parliamentary democracy with only three women elected to parliament.

Botswana’s former Minister of Health, Professor Sheila Tlou who is currently the Co-Chair, Global HIV Prevention Coalition & Nursing Now and an HIV, Gender & Human Rights Activist is not amused by the status quo. Tlou attributes this dilemma facing women to a number of factors, which she is convinced influence the voting patterns of Batswana when it comes to women politicians.

Professor Tlou plugs the party level voting systems as the first hindrance that blocks women from ascending to power. According to the former Minister of Health, there is inadequate amount of professionalism due to corrupt internal party structures affecting the voters roll and ultimately leading to voter apathy for those who end up struck off the voters rolls under dubious circumstances.

Tlou also stated that women’s campaigns are often clean; whilst men put to play the ‘politics is dirty metaphor using financial muscle to buy voters into voting for them without taking into consideration their abilities and credibility. The biggest hurdle according to Tlou is the fallacy that ‘Women cannot lead’, which is also perpetuated by other women who discourage people from voting for women.

There are numerous factors put on the table when scrutinizing a woman, she can be either too old, or too young, or her marital status can be used against her. An unmarried woman is labelled as a failure and questioned on how she intends on being a leader when she failed to have a home. The list is endless including slut shaming women who have either been through a divorce or on to their second marriages, Tlou observed.

The only way that voters can be emancipated from this mentality according to Tlou is through a robust voter education campaign tailor made to run continuously and not be left to the eve of elections as it is usually done. She further stated that the current crop of women in parliament must show case their abilities and magnify them – this will help make it clear that they too are worthy of votes.

And to women intending to run for office, Tlou encouraged them not to wait for the eleventh hour to show their interest and rather start in community mobilisation projects as early as possible so that the constituents can get to know them and their abilities prior to the election date.

Youthful Botswana National Front (BNF) leader and feminist, Resego Kgosidintsi blames women’s mentality towards one another which emanates from the fact that women have been socialised from a tender age that they cannot be leaders hence they find it difficult to vote for each other.

Kgosidintsi further states that, “Women do not have enough economic resources to stage effective campaigns. They are deemed as the natural care givers and would rather divert their funds towards raising children and building homes over buying campaign materials.”

Meanwhile, Vice President of the Alliance for Progressives (AP), Wynter Mmolotsi agrees that women’s participation in politics in Botswana remains a challenge. To address this Mmolotsi suggested that there should be constituencies reserved for women candidates only so that the outcome regardless of the party should deliver a woman Member of Parliament.

Mmolotsi further suggested that Botswana should ditch the First Past the Post system of election and opt for the proportional representation where contesting parties will dutifully list able women as their representatives in parliament.

On why women do not get elected, Mmolotsi explained that he had heard first hand from voters that they are reluctant to vote for women since they have limited access to them once they have won; unlike their male counterparts who have proven to be available night or day.

The pre-historic awarding of gender roles relegating women to be pregnant and barefoot at home and the man to be out there fending for the family has disadvantaged women in political and other professional careers.

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SEZA’s P126 million tender heads to court

1st March 2021

Special Economic Zone Authority’s (SEZA) P126 million Master Planning of Pandamatenga Special Economic Zones Business Case, Urban & Landscapes tender is in court after one of bidders, Moralo Design challenged its disqualification from the tender.

SEZA is transforming Pandamatenga into an Agropolis which will combine modern farming with top notch industrial, residential, commercial and recreational land use. The project is measured at 137, 007 ha which comprises of 84, 500 ha for commercial production, 12 400 ha for the subsistence production, 107 ha will be for Agro-processing while 40 000 ha will be for the Zambezi Integrated Agro-commercial Project (ZIACDP).

In their court papers, Moralo Designs, represented by Jones Moitshepi Firm, said they received a letter from SEZA on or around the 12th November 2020 notifying that their bid has been disqualified at the technical evaluation stage of the tender adjudication process.

In their response, Lonely Mogara who is Chief Executive Office of SEZA said Moralo Designs is not entitled to be heard by the court as the company never participated in the disputed tender hence SEZA knows the bidder as Moralo Design Consortium.

“Moralo Designs had failed to establish any right to be heard by the court. The fact that they had submitted a tender was not guarantee that they would be awarded the tender,” he said.
“The reasons for the disqualification of Moralo Design Consortium’s bid were valid and justified because their bid was insufficient as it lacked vital information as required by the terms of reference.”

SEZA Chief said the requirements for the work plan and project programme were clearly stated in the Invitation To Tender (ITT). Moralo Design Consortium was not penalised for non-existent requirements.  In disqualifying the bid by Moralo Designs Consortium, Mogara further indicated that SEZA considered that there was a requirement for a programme and work plan.

“The purported “project programme” that was submitted by Moralo Design Consortium failed to depict the activity durations, activity phasing and interrelations, milestones, delivery dates of reports and logical sequence of activities constituent with methodology and showing a clear understanding of the terms of reference,” said Mogara in responding affidavit.

He said the ITT required that there be provision of delivery dates within the programme hence Moralo Designs Consortium failed to consult with SEZA when they felt that such a requirement would be impossible to provide.  He continued to say there was an avenue available when the tender was being prepared, but they failed to use it.

“Moralo Designs’ application for interim relief lacks merit and only seeks to delay SEZA from completing the evaluation and award of a tender that will serve the greater good of the nation,” said Mogara.

He went on to say Moralo Designs has no prospects of succeeding in its review application as the possibility of court granting the review are so remote in that the court does not possess the requisite technical knowhow on what constitutes an adequate work plan and what ought to be contained in it.

A bidder disqualified for failure to provide adequate information has no right to be protected by the court. Irreparable harm can only be suffered by one who has shown that there exists a right in so far as having stood the chance of being awarded the tender.

The financial benefit likely to be derived by Moralo Designs- which is highly unlikely- is outweighed by the nature of the project. In the unlikely event that the application for review is successful, they can claim for damages.  The availability of such remedy weighs in favour of the interdict being refused. The refusal stands to benefit the nation more than the financial interest that Moralo Designs seeks to protect.

Moralo Designs failed to establish the urgency of their application. They waited for more than a month and half after the disqualification to approach the court on urgency. Meanwhile when delivering the State of the Nation Address (SONA) last year, President Mokgweetsi Masisi revealed that the detailed design and construction of 12 steel grain silos — with an overall storage capacity of 60 000 metric tonnes — is underway at the Pandamatenga SEZ and the P126 million project will be completed by August 2021.

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