COVID-19: Small businesses suffering
Business
The month of August is known for strong winds and sunny, long days. In front of Lentsweletau Sub-land board offices lies small, worn-out shacks of three women trying to make a living out of something.
For some, these old cottages can be deemed hogwash, but these women see them as their ‘saving grace.’ They have been dented by the strong winds, in any case.
These women sell fat cakes for students who attend Lentsweletau Junior Secondary School, which is adjacent to land board offices. During lunch hour, students are not allowed to go outside the school premises. Therefore land board employees will visit these shacks to buy something to eat.
COVID-19 came over, and there have been sequential closing of schools. This was done to prevent the virus from spreading among students. On this particular sunny day, upon arrival at the small shacks, the women looked so hopeless. There are no students; therefore, that means there is less business. The fat-cakes are still wedged inside the Mango Achar bucket.
Lunch hour is approaching, but land board employees are not coming for lunch. Twenty minutes later, one man hopped out of his car and asked what was in there to eat. He was told that there was no meat, he then continued with his journey. This man came to ask for services from the land board offices; he is not a regular customer. An hour later, two officers from the land board came and sat in one of the three shacks. They ate their lunch.
Sebonetse Modise is one of the three old women trading in this place. Besides selling food, she vends sweets, oranges and snacks for students. Now that COVID-19 is here, none of what she sells goes. When times are hard, she returns home with all her food. She has no choice but to feed her children.
“Ke itshetsa ka gone go apaya abo ke rekisetsa bana ba sekolo di sweets. Jannong COVID-19 e re amile. Dikolo sale di tswalwa. Kana re tsaya ma P1 mo banning, yaanong fa dikolo di tswetswe jaana, ga gona sepe se re se bonang. Re kotama jaaka o re bona re kotame jaana. Le tsone dijonyana tse re kgona go apaya, batho ba le boutsana go sena theko mo e leng gore o kgona go bowa ka tsone bana ba go ja ko lapeng, kamoso ga gona sepe se o se rekang.”
In an interpreted description, Modise said, “I survive by selling food and sweets for children who attend school here. Now that the COVID-19 is here, schools have been closed. We get P1.00 to buy sweets, but since schools are closed, absolutely nothing is coming in. We spend time sitting here, as you can see.
Even with the food that we are selling, people come in small numbers to buy. At times we are forced to go back with the food that we eventually give to children; tomorrow, you have nothing to use to buy stock.”
COVID-19 (coronavirus) has exacerbated existing growth challenges, leading to an estimated real gross domestic product (GDP) contraction of 7.9% in 2020 (the largest on record). The economy should expand robustly in 2021, supported by sturdier domestic demand; this is according to experts.
Moreover, pent-up foreign demand and higher commodity prices bolster exports, particularly key diamond sales. Risks are tilted to the downside, however, amid continued uncertainty over the course of the pandemic and the speed of the vaccine drive.
FocusEconomics analysts project the economy to grow 7.2% in 2021, up 0.3 percentage points from last month’s forecast and 6.4% in 2022.
Since COVID-19 hit the country, the government introduced food relief packages and funds for those severely affected by the pandemic. In Lentsweletau, this is news to Modise. “Ga gona, ga gona. Ga re ise re bone le faele sepe. Re tlhola re kokomaletse gore gongwe mongwe o ka tla ka pula a reka sweets gongwe tse pedi. Go thata tota, re a sotlega tota.”
“We haven’t received anything from the government. Absolutely nothing. We spend all days waiting for a customer and hoping they purchase a sweet or at least two of them. It’s rough; we are suffering.”
Similarly, feeling the COVID-19 high temperature like Modise, Magdeline Barobetse survives on zero revenue. Having been operating as an entrepreneur in this place in 2016, this is the first time since COVID-19 that she goes home with nothing.
“Ke sale ke dira madi fa ka 2016. Mme e rile go simologa ga COVID-19, ke wetse ko tlase. Fa ele gompieno gone, go worse. Ke ne ke duba borotho ka sekotlele se setona, e re nako e, abo bo fedile. Ke ne ke duba 12.5kg, gompieno ke duba 2.5kg. Ke ne ke apaya nama ya P250.00, le koko
“I started operating here in 2016, and I was making much money. Ever since COVID-19 came over, I have fallen flat. Today is extremely worse. I used to make bread with a larger bowl, and the bread will sell out. Nowadays, I only produce a quarter of that, and I have also cut down on the size of meat I used to cook.”
She denies ever having help from the government, particularly the Member of Parliament. The Lentsweletau-Mmopane MP is Naniki Makwinja. “Nna mopalamente ga re mo itse. Re bone, motho go mo tlhopha. Maabane nkile ka bona manobonobo a dikoloi a feta yaana, gotwe ke tsa ga mopalamente di ya Dikgatlhong. Le ekare a feta fa, ga a kake a fapoga. O ka tlala leswe.”
Barobetse said, “We don’t know our Member of Parliament. We only voted her into power, but we don’t know her. Yesterday I saw luxurious vehicles passing by going towards Dikgatlhong village. I was told that they were the MP’s convey. Even if she can pass by many times, she wouldn’t stop by t east to see us who voted her to be where she is now. She will get dirty.”
She further indicated that the food relief package was just predisposed and evenly distributed. For some prominent families, they were given food in small quantities. There was no consideration of what people eat or do not eat.
LENTSWELETAU MP SPEAKS
When reached for comment, area MP Makwinja said, “There are social workers and councillors in my constituency. These people have my mobile number and every time they need something, they call. I am trying, by all means, to be there for my constituents, but this is made difficult by the COVID-19. Every weekend I am out checking on my voters. But of course, people never complain, but I do try my best.”
When asked to comment on issues raised by small business owners, Makwinja acknowledged that many problems are arising from the COVID-19 crisis. She also indicated that these street vendors are not the only ones affected by the contagion.
“The fact of the matter is that if these people cannot find help at council offices, there is a ward councillor. If the councillor cannot help them, they can reach me so that I link them with relevant officers. They should get my number, and we map how we can help them.”
LEA AIDS THE INFORMAL SECTOR
The government introduced the Informal Sector, Stimulus Fund, through the Ministry of Investment, Trade and Industry. The Fund was relief support for individuals who are fully dependent on their informal businesses for livelihoods.
All formally employed individuals in Government, Parastatals and Private sector operating informal businesses part-time were not eligible to apply or receive the Informal Sector, Stimulus Fund.
Administered by the Local Enterprise Authority (LEA), all registered and eligible Informal sector business owners were credited with P1 000.00 once-off grant. However, these small business owners in Lentsweletau denied ever being assisted under this Fund.
“We do not have a source of information about these particular initiatives. It’s a surprise that government communicates these initiatives on social media. We do not even know what that is. We don’t have phones to receive such information. All we know is that our representatives in Parliament quarrel all day without agreeing on any tangible solutions.”
UNDP, COVID-19 AND INFORMAL SECTOR
Unlike workers in the formal economy, who benefit from legal and social protections, informal workers earn their living without a safety net. They are mostly women and primarily self-employed, engaged in occupations such as street vending, domestic work, transportation, and garbage collection.
Some also work as off-the-books day labourers in factories, farms, and other formal businesses that don’t extend full rights or protections to all employees. Measures taken by many countries to fight the pandemic—including lockdowns implemented without significant assistance for those whose jobs are affected—have threatened the livelihoods of informal workers and pushed them further into poverty, hunger, and homelessness. Millions of informal jobs have been lost in just a few weeks, and millions more have been put at risk.
According to United Nations Development Programme (UNDP), Botswana’s seven weeks of national lockdown and closure of facilities had immediate adverse effects on the domestic economy as consumer demand declined and the supply chain was disrupted.
Business revenue-generating activity within the informal sector was paused due to the inability of businesses to trade during this period. Affected sectors were widespread across Botswana’s economy and included public transport, hawkers and street vendors, hair salons, liquor stores and restaurants.
In particular, the informal sector bore the major brunt of the national lockdown as staying at home and social distancing is antithetical to the nature of its economic activity and the means of livelihood for participants in this sector. Their plight is expected to worsen.
In its June 2020 forecast, the International Monetary Fund (IMF) states that the “pandemic’s still rapid spread indicates that social distancing measures will need to remain in place for a longer time, depressing economic activity in the second half of 2020.
STATISTICAL QUICK REFERENCE FINDINGS
(Data from 2015 Multi-Topic Household Survey Report 2015/16, and 2015 Project to Conduct an Informal Sector Study for Botswana)
- Total estimated number of persons employed in the informal sector: 191,176
- Total estimated number of informal sector businesses: 116,571 (Avg. 1.64 persons per company)
- Total Estimated Annual Economic Output from the Informal Sector in Botswana: P7, 875,730,039
- Portion of Botswana Gross Domestic Product (Ministry Interviews): 5.3%
- The percentage change in the number of informal sector businesses 2007 – 2015: +233%
Business
Botswana ranks most attractive for investment in mining
The Canadian research entity, Fraser Institute has ranked Botswana as the most attractive country for investment in mining in Africa.
In a new survey the entity assessed mineral endowments and mining related policies for 62 mining jurisdictions including Botswana.
The entity noted that in addition to mineral potential for mining jurisdictions, policy factors examined during the survey include uncertainty concerning the administration of current regulations, environmental regulations, regulatory duplication, the legal system & taxation regime, uncertainty concerning protected areas, disputed land claims, infrastructure, socio-economic & community development conditions, trade barriers, political stability, labor regulations, quality of the geological database, security, as well as labor & skills availability.
According to the survey Botswana is the highest ranked jurisdiction in Africa and the second-highest in the world for investment in mining, as a result of its favorable mining policy when compared to other jurisdictions. The survey report noted that Botswana increased its score in policy perception index and added that the score reflects decreased concerns over uncertainty concerning protected areas infrastructure, political stability, labor regulations & employment agreements. “Botswana is also the most attractive jurisdiction in Africa and top 10 in the world when considering policy and mineral potential. With the exception of Botswana, policy scores decreased in all African jurisdictions featured in the survey report.
The survey shows that Morocco is the second most attractive jurisdiction in Africa both for investment and when only policies are considered. However, Morocco’s policy perception index score decreased by almost 18 points and globally the country ranks 17th out of 62 mining jurisdictions this year, dropping out of the top 10 jurisdictions after ranking 2nd out of 84 jurisdictions in 2021 in terms of policy. The survey report noted that investors recently expressed increased concerns over the uncertainty of administration and enforcement of existing regulations, labor regulations & employment agreements, uncertainty concerning disputed land claims, socio economic agreements, community development conditions and trade barriers in the country.
The top jurisdiction in the world for investment in mining is Nevada, which moved up from 3rd place in 2021. At 100, Nevada has the highest policy perception index score this year, displacing the Republic of Ireland as the most attractive jurisdiction in terms of policy. Botswana ranked 31st last year, climbed 29 spots and now ranks 2nd. South Australia ranks 3rd, entering the top 10 jurisdictions in terms of policy after ranking 16th in 2021. Along with Nevada, Botswana, and South Australia, the top 10 ranked jurisdictions based on policy perception index scores are Utah, Newfoundland & Labrador, Alberta, Arizona, New Brunswick, Colorado, and Western Australia. “Nevada ranked first this year with the highest PPI score of 100. Botswana took the second spot held by Morocco. The top 10 ranked jurisdictions are Nevada, Botswana, South Australia, Utah, Newfoundland & Labrador, Alberta, Arizona, New Brunswick, Colorado, and Western Australia. The United States is the region with the greatest number of jurisdictions (4) in the top 10 followed by Canada (3), Australia (2), and Africa (1).”
In the survey report Fraser Institute noted that this year, Angola, Ivory Coast, Mozambique, South Sudan, and Zambia received enough responses to be included in the report. Eight African jurisdictions are ranked in the global bottom 10. Out of 62 mining jurisdictions, Zimbabwe ranks (62nd), Mozambique (61st), South Sudan (60th), Angola (59th), Zambia (58th), South Africa (57th), Democratic Republic of Congo (55th), and Tanzania (53rd). Zimbabwe has consistently ranked amongst the bottom 10 and has held that position for the previous nine years, according to the institute.
The institute noted that considering both policy and mineral potential Zimbabwe ranks the least attractive jurisdiction in the world for investment. “This year, Mozambique, South Sudan, Angola, and Zambia joined Zimbabwe as among the least attractive jurisdictions. Also in the bottom 10 are South Africa, China, Democratic Republic of Congo (DRC), Papua New Guinea, and Tanzania. Zimbabwe, China, Democratic Republic of Congo, and South Africa were all in the bottom 10 jurisdictions last year. The 10 least attractive jurisdictions for investment based on policy perception index rankings are; (starting with the worst) Zimbabwe, Guinea (Conakry), Mozambique, China, Angola, Papua New Guinea, Democratic Republic of Congo (DRC), Nunavut, Mongolia, and South Africa.”
The Fraser Institute on annual basis conducts an annual survey of mining and exploration companies to assess how mineral endowments and public policy factors affect exploration investment.
Over half of the respondents who participated in the recent survey (57 percent) are either the company President or vice-president, and 25 percent are either managers or senior managers. The companies that participated in the survey reported exploration spending of US$1.9 billion in 2022, according to the institute. The institute indicated that as part of the survey, questionnaires were sent to managers and executives around the world in companies involved in mining exploration, development, and other related activities, to assess their perceptions about various public policies that might affect mining investment.
The institute noted that the purpose of the survey is to create a report card that governments can use to improve their mining-related public policy in order to attract investment in their mining sector to better their economic productivity and employment.
The institute noted that while geologic and economic evaluations are always requirements for exploration, in today’s globally competitive economy where mining companies may be examining properties located on different continents, a region’s policy climate has taken on increased importance in attracting and winning investment. “The Policy Perception Index or PPI provides a comprehensive assessment of the attractiveness of mining policies in a jurisdiction, and can serve as a report card to governments on how attractive their policies are from the point of view of an exploration manager.”
Business
Inflation drops to 7.9 percent in April
Botswana’s inflation rate dropped to 7.9 percent in April 2023, a 2.0 percentage drop 9.9 percent in March 2023, Statistics Botswana’s consumer price index reported on Monday.
The main contributors to the annual inflation rate in April 2023 were Transport (2.7 percent), Food & Non-Alcoholic Beverages (2.2 percent), and Miscellaneous Goods & Services (0.9 percent).
The inflation rates for regions between March 2023 and April 2023 indicated a decline of 2.3 percentage points for Cities & Towns’, from 9.9 percent in March to 7.6 percent in April.
The Urban Villages’ inflation rate registered a drop of 1.8 percentage points, from 9.7 percent in March to 7.9 percent in April, whereas the Rural Villages’ inflation rate was 8.6 percent in April 2023, recording a decrease of 1.8 percentage points from the March rate of 10.4 percent.
The national Consumer Price Index realised a rise of 1.1 percent, from 128.2 in March 2023 to 129.7 in April 2023. The Cities & Towns index was 129.7 in April 2023, recording a growth of 1.2 percent from 128.2 in March.
The Urban Villages index registered an increase of 1.2 percent from 128.4 to 130.0 during the period under review, whilst the Rural Villages index rose by 0.9 percent from 127.9 in March to 129.0 in April 2023.
Four (4) group indices recorded changes of at least 1.0 percent between March and April 2023, specially; Miscellaneous Goods & Services (5.5 percent), Alcoholic Beverages & Tobacco (1.8 percent), Food & Non-Alcoholic Beverage (1.2 percent), and Recreation & Culture (1.2 percent).
The Miscellaneous Goods & Services group index registered an Increase of 5.5 percent, from 125.5 in March to 132.5 in April 2023. The rise was largely due to a growth in the constituent section indices of Insurance (11.2 percent) and Personal Care (2.1 percent).
The Alcoholic Beverages & Tobacco group index rose by 1.8 percent, from 126.5 in March 2023 to 128.7 in April 2023. The increase was owing to the rise in the constituent section indices of Alcoholic Beverages (1.9 percent) and Tobacco (1.1 percent).
The Food & Non-Alcoholic Beverages group index increased by 1.2 percent, from 136.6 in March to 138.2 in April 2023. The rise in the Food group index was attributed to the increases of; Vegetables (3.9 percent), Fish (Fresh, Chilled & Frozen) (1.7 percent), Coffee, Tea & Cocoa (1.5 percent), Milk, Cheese & Milk Products (1.5 percent) Fruits (1.4 percent) Meat (Fresh, Chilled & Frozen) (1.1 percent), Mineral Waters, Soft Drinks, Fruits & Vegetables Juices (1.1 percent) and Food Not Elsewhere Classified (1.0 percent).
The Recreation & Culture group index registered a growth of 1.2 percent, from 108.9 in March to 110.2 in April 2023. The rise was owed to the general increase in the constituent section indices, particularly; Recreational & Cultural Services (8.2 percent).
The All-Tradeables index recorded an increase of 0.9 percent in April 2023, from 134.2 in March 2023 to 135.4. The Non-Tradeables Index went up by 1.5 percent, from 120.1 in March to 121.8 in April 2023. The Domestic Tradeables Index moved from 131.8 in March to 133.3 in April 2023, registering a rise of 1.1 percent.
The Imported Tradeables Index realised a growth of 0.8 percent over the two periods, from 135.0 in March to 136.2 in April 2023. The All-Tradeables inflation rate was 10.3 percent in April 2023, registering a drop of 2.4 percentage points from the March 2023 rate of 12.7 percent.
The Imported Tradeables inflation rate went down by 3.1 percentage points from 12.4 percent in March to 9.3 percent in April 2023. The Non-Tradeables inflation was 4.6 percent in April 2023, a decline of 1.4 percentage points from the March 2023 rate of 6.0 percent. The Domestic Tradeables inflation rate registered a drop of 0.3 of a percentage point, from 13.4 percent in March to 13.1 percent in April 2023.
The Trimmed Mean Core inflation rate went down by 2.1 percentage points, from 9.2 percent in March 2023 to 7.1 percent in April 2023. The Core Inflation rate (excluding administered prices) was 8.3 percent in April 2023, a decrease of 0.6 of a percentage point from the March 2023 rate of 8.9 percent.
Business
IMF warns of GDP decline in Sub Saharan Africa
A new report by International Monetary Fund (IMF) has warned that countries in Sub Saharan Africa including Botswana could record significant losses in Gross Domestic Product (GDP) as a result rising geo-political tensions among major economies in global trade.
Recent trends show that there is a deepening fragmentation in global economy, following US-led NATO war against Russia in Ukraine and trade war between US and China.
According to some local trade analysts the fragmentation of global economy leading to competing (US/EU bloc and China bloc could result with Sub Saharan Africa losing markets for some of its export commodities. The trade analysts noted that US & China are failing to implement an agreement, intended to stop the trade war and address some of the US fundamental concerns that instigated the war. USD34 billion worth of Chinese goods intended for the US market reportedly expired in July 2022 while US President Joe Biden administration was still reviewing import tariffs while another USD16 billion worth of goods expired in August, and a third batch of goods worth approximately USD100 billion expired in September. The analysts indicated that as a result of the trade war, the manufacturing sector at the US and China could lower production of goods, resulting with subdued demand for exports of raw materials and other commodities such as minerals from Botswana and other Sub Saharan countries.
In its April 2023 regional economic outlook report titled, “Geo-economic Fragmentation: Sub-Saharan Africa Caught between the Fault Lines” IMF indicated that recent data shows that rising geo-political tensions among major economies is intensifying economic and financial fragmentation in the global economy. The IMF cautioned that countries in Sub Saharan Africa could lose the most as a result of fragmented world.
The IMF stated that while countries in Sub-Saharan region benefited from increased global integration during the last two decades, the emergence of geo-economic fragmentation has exposed potential downsides. “Sub-Saharan Africa has benefited from the expansion of economic ties over the past two decades. The region has formed new economic ties with non-traditional partners in the past two decades. Riding on the tailwinds of China’s globalization since the early 2000s, the value of exports from Sub-Saharan Africa to China increased tenfold over this period, largely driven by oil exports, according IMF adding that China has also emerged as an important source of external financing.  The US and EU still supply most of the region’s foreign direct investment (FDI) stock, with China accounting for only 6 percent of it as of end-2020, according to IMF.
IMF stated that overall, the expansion and diversification of economic linkages with the major global economies benefited the region. “The region’s trade openness measured as imports plus exports as share of GDP doubled from 20 percent of GDP before 2000 to about 40 percent. This doubling, together with buoyant commodity prices, among other factors, contributed to the growth take-off during this period, boosting living standards and development.”
IMF noted that overall, sub-Saharan Africa is now almost equally connected with traditionally dominant (US and EU) and newly emerging (China, India, among others) partners and warned that the downside of increased economic integration is that sub-Saharan Africa has become more susceptible to global shocks. “Sub-Saharan Africa stands to lose the most in a severely fragmented world compared to other regions. In the severe scenario of a world fully split into two isolated trading blocs, sub-Saharan Africa would be hit especially hard because it would lose access to a large share of current trade partners. About half of the region’s value of current international trade would be affected in a scenario in which the world is split into two trading blocs: one centered on the US and the EU (US/EU bloc) and the other centered on China.”
IMF indicated that under a severe “geo-economic fragmentation” scenario, trade flows would adjust over time. “But as the region loses access to key export markets and experiences higher import prices, the median sub-Saharan African country would be expected to experience a permanent decline of 4 percent of real GDP after 10 years. Estimated losses are smaller than the losses during the COVID-19 pandemic but larger than those during the global financial crisis.”
IMF warned that disruptions to capital flows and technology transfer could bring additional losses. “Separately from the trade simulation results, in a world where countries were to cut off their capital flow ties with either bloc consistent with the preceding severe scenario, the region could lose about $10 billion of Foreign Direct Investment (FDI) and official development assistance inflows, equivalent to about half a percent of GDP a year, based on an average 2017–19 estimate. In the long run, trade restrictions and a reduction in FDI could also hinder much needed export-led growth and technology transfers.”
IMF meanwhile said not all is bleak as some milder scenarios of shifting geopolitics may create new trade partnerships for the region. “In a scenario in which ties are cut only between Russia and the US/EU while sub-Saharan African countries continue to trade freely (referred to as “strategic decoupling”), trade flows would be diverted partly towards the rest of the world and intra-regional trade in sub-Saharan Africa may increase.”
IMF recommended that countries in Sub Saharan Africa should build resilience that requires strengthening regional integration and expanding the pool of domestic resources to counter potential external shocks: According to IMF trade experts strengthening the ongoing regional trade integration under the African Continental Free Trade Area could help build resilience amid external shocks. Greater integration will require reducing tariff and non-tariff trade barriers, strengthening efficiency in customs, leveraging digitaliÂzation, and closing the infrastructure gaps, according to the experts.
The experts also recommended that countries in the region should deepen domestic financial markets as that can broaden the sources of financing and lower the volatility associated with excessive reliance on foreign inflows. “By upgrading domestic financial market infrastrucÂture including through digitalization, transparency and regulation, and expanding financial product diversity, sub-Saharan African countries can expand financial inclusion, build a broader domestic investor base. Improving domestic revenue mobilization is critical to reducing the share of commodity-linked fiscal revenues.”