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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 confirms new COVID-19 variant

17th May 2021
covid19

Botswana health officials have confirmed the new COVOD-19 variant, which was first found in India. The Ministry of Health and Wellness has through a press statement informed members of the public that a new COVID-19 variant (B.1.617), first discovered in India. The Indian variant was confirmed in Botswana on 13 May 2021.

According to Christopher Nyanga, spokesperson at the Ministry, this followed a case investigation within Greater Gaborone, involving people of Indian origin who arrived in the country on the 24th April 2021.

“As at 16 May 2021, the B. 1. 617 variant was confirmed in two (2) people. The clients are currently receiving medical care and remain stable with no life-threatening symptoms. The two (2) cases were part of 383 people (both Batswana and some Indian nationals) who were tested for COVID-19. From this number, 43 tested positive, with two (2) showing the B. 1. 617 variant as already alluded to. Contact tracing has been expanded in line with COVID-19 protocols. All contacts and confirmed cases have been evacuated to facility based quarantine and isolation respectively, for close monitoring,” Nyanga narrated.

The World Health Organization recently announced that the Indian Covid-19 variant was a global concern, with some data suggesting the variant has “increased transmissibility” compared with other strains.

Meanwhile in the wake of Botswana’s confirmation of the Indian variant, Nyanga reminded the public of the government intervention to control the introduction of new variants of public health concern into the country. He stated that all those who have travelled or transited through areas of high risk as previously communicated on 3rd May 2021 upon return shall immediately quarantine in a central area to be identified by the Ministry of Health and Wellness for a period not exceeding ten (10) days; Repeat Polymerase Chain Reaction (PCR) test after seven (7) days of quarantine and be discharged as per the outcome of the results.

He said the requirements are complementary to the mandatory requirements of producing on arrival a negative PCR test not older than 72hrs from the time the sample was collected

“The public is advised to remain vigilant and minimize the spread of COVID-19 by following the already outlined preventative measures such as washing of hands with soap or use of a hand sanitizer, wearing of face masks, avoiding crowded places/social distancing and avoiding non-essential movement,” Nyanga said.

The India variant – officially called B.1.617.2 – is one of four mutated versions of coronavirus which have been designated as being “of concern” by transitional public health bodies, with others first being identified in Kent, South Africa and Brazil.

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Khama lawyers dismiss BDP’s MacD

17th May 2021
former President Lt Gen Ian Khama

The lawyers representing former President Lt Gen Ian Khama, Ramalepa Attorneys have come forth dismissing a response letter penned down by Botswana Democratic Party (BDP) activist MacDonald Peloetletse after he was slapped with a P1.5 million lawsuit for defamation of their client.

Tebogo Tladi, an attorney at Ramalepa, said last week Thursday Peloetletse took to social media to publish a substantively false, wrongful and unlawful statement about Khama. MacDonald Peloetletse’s commentary which was posted on Gabz FM News page reads, “I am a former soldier. Everything former President SKI Khama said here is a LIE. In fact, soldiers suffered more under Khama than under his predecessors.

He actually stole money that the UN had paid to the soldiers who went for the operations and paid them less than a quarter of what was actually due to them.  “Unhappy soldiers took the BDF to court and won, the BDF is still struggling to pay the debts! Khama can fool some people, but not all the people and not all the time.

“In fact many soldiers, serving, retired and those that resigned and were in the operations during Khama’s time get even more annoyed to such disrespectful statements by Ian Khama.” Khama’s lawyer says the impugned statement was published with the intention to injure his client (Khama) in his personality rights, good name and dignity, further indicating that the statement has damaged his good reputation.

“We have therefore been instructed by Client to demand, as we hereby do, that you publish on the same forum a retraction and a full and unconditional apology to Client within three days of receipt of this letter- and that you deliver such apology in a formal letter to the Office of the Former President, Dr Khama. In the event that you have not compiled with this demand by close of business on Monday 10th May 2021, our Client will assume that you have refused to comply with this demand.”

To top it all off, Khama demands that Peloetletse pay him P1.5 million in damages for defamation. “Furthermore, we hold instructions to demand as we hereby do, that you pay our Client damages for defamation in the sum of P1, 500,000.00 within seven days of receipt of this letter.” In the event that Peloetletse fails to pay the amount of damages demanded by Khama, Tladi says they will institute legal proceedings for the recovery of the aforesaid damages.

In his response letter addressed to Ramalepa Attorneys, Peloetletse said that he requests enlightenment and clarification that he be provided with proof that the allegations and comments which they attribute to him were indeed authored by him and that the platform which the comments were placed was not hacked.

“Please also advise if whether your clients has been endowed with a “special particular privilege status” that restricts the citizens of this country from commenting or responding to public statements made by your client in the course of political discourse especially when made on public forum and relate to matters of general public concern. (I trust that your brilliant legal mind is well informed with respect to the jurisprudence in such matters)”.

Peloetletse also said he would like to share with the attorneys a video which was posted on a public forum. “Please listen carefully to the conversations and discussion herein and advice if possibly such discussions form a reasonable basis for a justifiably rebuttal by any Motswana Citizen to the public pronouncements and defamatory statements made by your client about our government (bearing in mind of course a citizens constitutional right to freedom of speech and freedom of expression).’’

Consulted for further comment on the matter on Thursday after receiving Peloetletse’s response, Khama’s attorney Tebogo Tladi said the letter doesn’t hold any water. “The only way out for him is to prove the truth of the allegations on his comment or deny publication. He does not answer substantively to the defamation and does not respond to the demand of an apology or payment of damages.

So his letter really contains largely matters irrelevant to the substance of the letter of demand. His response in fact presents no legally cognizable defence at all- it would appear he responded without the benefit of legal advice, which would not be prudent for such an important case. So we will proceed to issue summons and wait to see what defences he will plead in court.’’

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Inside the multi-million Dollar Kazungula Bridge business

17th May 2021
kazungula bridge

Botswana and Zambia this week celebrated the opening of a multi-million Dollar infrastructural project, the Kazungula Bridge, projected to contribute around P100 million annually for Botswana. This project comes after the signing of the 2012 Agreement between the two countries to construct a bridge that would ease movement of goods.

President Mokgweetsi Masisi said the Kazungula Bridge will open avenues for improved trade, job creation and economic diversification in both countries. Further, the Bridge will significantly accelerate Southern African Development Committee (SADC) regional integration agenda which Botswana and Zambia are vigorously pursuing.

“By growing our strategic partnerships through this project, we have improved the development and competitiveness of our economies to attract more private sector investment, thereby, supporting our efforts to create employment, especially for the burgeoning youth,” Masisi said at the opening ceremony in Kazungula on Monday.

The Kazungula Bridge comprises a road and rail bridge over the Zambezi River, directly linking Botswana and Zambia. It has One-Stop-Border Post facilities on both sides, which will enhance the operational efficiency at entry points, replicated on both sides of the boarder.

The Bridge was originally conceived as a critical link in the African North-South Corridor under the African Union’s New Partnership (NEPAD) for Africa’s Development programme. It has since evolved to encompass a multimodal transport plan under the Programme for Infrastructure Development in Africa (PIDA).

The PIDA programme, which encompasses liberalisation of air travel, rail links, road, water and all other modes of transport has only one objective: to unite the States of Africa in order to foster trade on the continent

“Connectivity of our nations will in no small measure, promote people to people interactions and uplifts their standard of living. I am pleased to state that the completion of this project is a clear demonstration of our commitment to PIDA.”

The 260 million US Dollar Kazungula Bridge was commissioned by Zambian President, Edgar Lungu and President Masisi. President Lungu said the bridge was a monumental effort linking Zambia internally and externally to ease the movement of goods and services.

“I have held talks with my counterpart in Botswana that this project must run daily up to 22 hours as soon as possible and you the technocrats must not play ping-pong with us after making these public procurements,” Lungu said at the official opening in Kazungula.

For his part, DRC President Felix Tshisekedi said the project was tandem with the Africa Union (AU) goals and priority areas for Agenda 2063 which called for a prosperous Africa, based on inclusive growth and sustainable development.

KAZUNGULA FERRY

The new Kazungula Bridge replaces the Kazungula Ferry, a pontoon ferry across the 400-metre-wide Zambezi River between Botswana and Zambia. It was one of the largest ferries in South-Central Africa, having a capacity of 70 tonnes.

In 2003 the ferry was the site of a disaster when a severely overloaded Zambian truck capsized one of the pontoons and 18 people drowned. The accident was blamed on the lack of weighbridges in Zambia to check the weight of trucks.

In August 2007, the governments of Zambia and Botswana announced a deal to construct a bridge at the site to replace the ferry. The existence of a short boundary of about 150 meters between Zambia and Botswana was apparently agreed to during various meetings involving Heads of State and officials from all four States in the 2006-2010 period.

The route for this new bridge crosses the boundary without entering Zimbabwe and Namibia. Zimbabwe already has a bridge into Zambia at Victoria Falls, 70KM from Kazungula. Namibia on the other hand has a bridge into Zambia at Katima Mulilo about 150KM upriver.

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