The reality of an economy going on its knees came last week with the release of Gross Domestic Product (GDP) for the second quarter of 2020 with a decrease of 27 percent. While government expects the economy to shrink by 8.9 percent this year, commercial Rand Merchant Bank maintains an expectation of 10.5 percent contraction in growth in 2020.
All industries in the domestic economy contracted, save for General Government which became the major contributor to GDP for the first time in many years by 19.7 percent. When the domestic economy was hit, “due to the impact of measures that were put in place to combat the spread of the COVID-19 pandemic,” all industries fell except Government, Agriculture and government owned utilities; Water & Electricity.
According to Statistics Botswana, Botswana Government business survived a huge contraction because it “instigated robust fiscal policy responses in order to influence macroeconomic conditions.” There was also aggregation of demand of goods and services, employment, inflation and economic growth. This was done despite contributing to deficits or drawing down of budget surpluses. Government also created new Covid-19 focused employment in the Public Administration sector in order to adhere to the disease protocols like recruitment of teachers, Safety and Health Employees (SHE) and other temporary employees across Ministries.
Most private sector players felt the scourge of Covid-19 especially in Mining and Quarrying where there was a decrease in the real value added of Mining by 60.2 percent which was mainly influenced by Diamond and Coal real value added. There are many private companies in the coal and mining business which are losing value, some are listed in the local stock exchange. Diamond production in carats went down by 67.0 percent while Coal production in tonnes decreased by 40.7 percent.
Companies in the industry of Trade, Hotels and Restaurants felt it when its real value added went down by 40.3 percent in the second quarter of 2020 compared to an increase of 5.1 percent registered in the same quarter of the previous year. The Manufacturing industry recorded a decline of 31.3 percent in real value added during the second quarter of 2020, compared to a growth of 3.5 percent registered in the corresponding quarter of 2019 and this sharp reduction is attributed to a massive decline in the sub-industries of Beverages and Other Manufacturing. These sub-industries include diamonds processing by 58.5 percent and the production of beverages (chibuku and beers) which declined drastically by 84.2 percent due to lockdown during the quarter under review.
It was tools down in the construction industry with all that was coming with the Covid-19 containment measures and lockdowns, the industry recorded a decline of 36.0 percent. The Finance and Business Services industry was also not spared and registered a negative growth of 11.9 percent due to the decline in the real value added of Business Services and Real Estate by 24.4 and 17.8 percent respectively.
All the firms in the transport business also suffered, the Transport and Communications value added decreased by 16.9 percent in the second quarter of 2020,compared to 5.4 percent recorded in the same quarter of the previous year. This steep decline was most significant in the sub-industries, and was attributed to the lockdown measures that restricted movement of passengers and permitted limited goods freight traffic.
Last week when parliament moved to extend the State of Emergency (SoE) for a further six months, the private sector took a firm stance against SoE before exposing its negative implications on the local economy. In a statement released this week, Business Botswana leader of the private sector, stopped short of calling SoE a draconian anti-progressive law which will weigh heavily on the already feeble economy.
According to Business Botswana, such an extension would, without a doubt cause further damage to an economy that is already on its knees. In the 2020/21 – 2022/2023 Economic Recovery and Transformation Plan (ERTP) much more emphasis, at least on the document, was on jumpstarting the economy by igniting the private sector. But many critics are already sceptical on the ERTP implementation, in the specified time frame. Some economists believe implementation of ERTP will further open the economy.
According to a report seen by this publication, government is expected to publish ERTP in 4Q:2020. But the implementation of ERTP is expected to begin in 2021. “With its success relying heavily on prudent project management by government,” says the report. In the ERTP BusinessPost made a scientific observation that words “sector,” “informal” and “private” were the most used, meaning the mentioned were in the minds of those who made the fiscal plan. But this is not a reflection of what is on the ground, with many companies crying for rescue.
Meanwhile the Business Expectation Survey done during this country’s first lockdown stated that the businesses are ‘credit-shy.’ Also, companies are failing to hold on to jobs, they hanging onto these jobs because they are forced to by SoE laws despite the stinging financial implication from Covid-19. Already more than 400 local companies have officialised an intent to purge jobs at the Commissioner of Labour according to information received by this publication last month.
“Several instruments were put in place to support businesses but a number of these are not in place and for those that are, it is impossible to access them; the question therefore is what is government going to do in the next 6 months different from the previous 6 months?” said Business Botswana president Gobusamang Keebine. Business Botswana President said the Covid-19 pandemic has caused a lot of damage to the economy as businesses are currently operating at bare minimum.
He said that while most companies have folded others are continuing by way of liquidations to avoid the extended debt the SoE places on these companies. “Most employees, though not retrenched as it would be contrary to the SoE are home without pay; any further disturbance to the business environment will kill enterprises and they are certainly going to find it difficult to start all over again,” said Keebine.
Keebine said it is best to deal with the results of lifting the SoE than to postpone these where there will be even greater negative consequences. He said unemployment is going to reach peak levels, crime is going to dramatically increase and social ills are going to increase when people lose their properties. Business Botswana advised that rather government should have used the Public Health Emergency (PHE) Act, which is a tool which can achieve the same objective as SoE but without exposing the economy to very stringent restrictions as it is the case now.
“Using the (PHE) tool will relief Government of the need to lay out a lot of money to mitigate loses arising from businesses having to close temporarily due to lockdowns, etc.; money that the economy and Government does not have. Government must be bold and open the economy now and rescue whatever remains and can be rescued than to extend that action by another 6 months,” said Keebine.
While there is no hard-and-fast rule in politics, former Molepolole North Member of Parliament, Mohamed Khan says populism acts in the body politic have forced him to quit active partisan politics. He brands this ancient ascription of politics as fake and says it lowers the moral compass of the society.
Khan who finally tasted political victory in the 2014 elections after numerous failed attempts, has decided to leave the ‘dirty game’, and on his way out he characteristically lashed at the current political leaders; including his own party president, Advocate Duma Boko. “I arrived at this decision because I have noticed that there are no genuine politics and politicians. The current leaders, Boko and President Dr Mokgweetsi Masisi are fake politicians who are just practicing populist politics to feed their egos,” he said.
Former Botswana Democratic Party (BDP) parliamentary hopeful, Lawrence Ookeditse has rejected the idea of taking up a crucial role in the Botswana Patriotic Front (BPF) Central Committee following his arrival in the party this week. According to sources close to development, BPF power brokers are coaxing Ookeditse to take up the secretary general position, left vacant by death of Roseline Panzirah-Matshome in November 2020.
Ookeditse’s arrival at BPF is projected to cause conflicts, as some believe they are being overlooked, in favour of a new arrival. The former ruling party strategist has however ruled out the possibility of serving in the party central committee as secretary general, and committed that he will turn down the overture if availed to him by party leadership.
Ookeditse, nevertheless, has indicated that if offered another opportunity to serve in a different capacity, he will gladly accept. “I still need to learn the party, how it functions and all its structures; I must be guided, but given any responsibility I will serve the party as long as it is not the SG position.”
“I joined the BPF with a clear conscious, to further advance my voice and the interests of the constituents of Nata/Gweta which I believe the BDP is no longer capable to execute.” Ookeditse speaks of abject poverty in his constituency and prevalent unemployment among the youth, issues he hopes his new home will prioritise.
He dismissed further allegations that he resigned from the BDP because he was not rewarded for his efforts towards the 2019 general elections. After losing in the BDP primaries in 2018, Ookeditse said, he was offered a job in government but declined to take the post due to his political ambitions. Ookeditse stated that he rejected the offer because, working for government clashed with his political journey.
He insists there are many activists who are more deserving than him; he could have chosen to take up the opportunity that was before him but his conscious for the entire populace’s wellbeing held him back. Ookeditse said there many people in the party who also contributed towards party success, asserting that he only left the BDP because he was concerned about the greater good of the majority not individualism purposes.
According to observers, Ookeditse has been enticed by the prospects of contesting Nata/Gweta constituency in the 2024 general election, following the party’s impressive performance in the last general elections. Nata/Gweta which is a traditional BDP stronghold saw its numbers shrinking to a margin of 1568. BDP represented by Polson Majaga garnered 4754, while BPF which had fielded Joe Linga received 3186 with UDC coming a distant with 1442 votes.
There are reports that Linga will pave way for Ookeditse to contest the constituency in 2024 and the latter is upbeat about the prospects of being elected to parliament. Despite Ookeditse dismissing reports that he is eying the secretary general position, insiders argue that the position will be availed to him nevertheless.
Alternative favourite for the position is Vuyo Notha who is the party Deputy Secretary General. Notha has since assumed duties of the secretariat office on the interim basis. BPF politburo is expected to meet on 25th of January 2020, where the vacancy will be filled.
Botswana Democratic Party (BDP) big wigs have decided to cancel a retreat with the party legislators this weekend owing to increasing numbers of Covid-19 cases. The meeting was billed for this weekend at a place that was to be confirmed, however a communique from the party this past Tuesday reversed the highly anticipated meeting.
“We received a communication this week that the meeting will not go as planned because of rapid spread of Covid-19,” one member of the party Central Committee confirmed to this publication. The gathering was to follow the first of its kind held late last year at party Treasurer Satar Dada’s place.