Botswana leads the pack in SADC as the major trade partner of South Africa in 2020 by listing the highest trade value of 29% (R81,3 billion) from the total trade value of R278,9 billion of some commercial border posts in southern Africa, a new report shows.
The report released by South Africa’s Cross Border Road Transport Agency shows that Zimbabwe and Mozambique became the second and third trade partners with 25% and 21%, amounting to R70 billion and R58 billion, respectively.
Zimbabwe registered the third importer of South Africa by importing approximately 12% (3,3 billion pieces of goods) of South Africa’s total export volumes (27,2 billion pieces of goods) transported by road.
Eswatini was the principal exporter to South Africa by exporting about 38% (1,4 billion pieces of goods) of the total trade volumes (3,7 billion pieces of goods), compared to the neighbouring countries.
Botswana was the second exporter to South Africa since South Africa imported around 27% (999 million pieces of goods) of its total import volumes (3,7 billion pieces of goods), transported by road.
Grobler’s bridge and Ramatlabama border post administered about 9% (349 million and 329 million pieces of goods, separately) of South Africa’s total trade volumes imported from all neighbouring countries, and this made them the highest in handling South Africa’s imports compared to other commercial border posts of Botswana in 2020.
Mozambique and Zimbabwe registered fourth and fifth exporting partners of South Africa by exporting around 15% and 12% to South Africa, separately.
In 2019, South Africa had an exceptionally healthy trade balance with Botswana. It exported around R95,3 billion to Botswana and imported about R11,2 billion from Botswana, equaling a trade surplus of R84,1 billion.
In 2020, South Africa’s exports to Botswana valued about R74,0 billion, which was 22% lower than the exports of 2019. The value of South Africa’s imports in 2020 declined 35% to R7,3 billion from R11,2 billion in 2019. Consequently, South Africa enjoyed a trade surplus of approximately R66,6 billion, although it experienced a 21% decrease from 2019 (R84,1 billion).
The report explained that the decline of inter-trade between South Africa and Botswana in 2020 was mainly driven by restrictive measures imposed by member states due to the global spread of the COVID-19 pandemic.
COVID-19 led to limited travel and freight movements to the essential goods and essential workers only. However, there was a noteworthy difference in the decline of cross-border commercial vehicle activities across South Africa and Botswana borders.
“Ultimately, these national lockdowns led to long delays in the movement of the essential goods at Botswana’s border posts due to required COVID-19 testing by the truck drivers and truck crews for COVID-19 before crossing the border, long delays of up to five days before the truckers being cleared to deliver goods in Botswana, or transit through the country, partially due to reduced business hours at the border posts and the need for trucks to be disinfected in some instances,” the report says.
South Africa’s total volumes exported to Botswana through four commercial border posts documented about 9,8 billion pieces of goods in 2019. In 2020, exports recorded about 6,5 billion pieces of goods, resulting in a decline of 34%.
The report says the highest decline in export values were realized in April 2020 compared to April 2019, with a negative 71% and all the subsequent months till the end of December 2020 also recorded a decrease.
“In 2020, Skilpadshek border posts processed the highest export volumes, constituting about 38% compared to other Botswana commercial border posts with the highest total value amounting to 36% (R26,3 billion).
Ramatlabama border post followed Skilpadshek with 25% of volumes of goods that were cleared. These goods valued the least percentage of 9% amounting to R6,9 billion concerning other commercial border posts in Botswana,” the report says.
Kopfontein border post registered the third South African exporting passage by processing volumes of goods equaling 23% of South Africa’s total exports to Botswana in 2020. The total value of goods administered in Kopfontein was approximately R28,9 billion during the year, scoring the second-highest value totalling 34% after Skilpadshek.
The last border post that processed the smallest volume of goods was Grobler’s’ bridge with 13%. The respective value of the same goods was around R15,8 billion, which was 21% of the total value of exported goods from South Africa to Botswana.
The highest volumes of South Africa’s exports to Botswana that traversed all Botswana commercial border posts in 2020 were; Crude, Coal, Petroleum and Electricity with about 1,1 billion litres contributing 17,1%; Salt, sulphur, stone and plastering material with about 934 million kilograms registering 14,4%; Cell phones, Electrical Equipment and Machinery with 92,6 million pieces documenting 14,3%.
In 2020, Grobler’s bridge border posts processed the highest imports volumes that recorded about 35% associated with other Botswana commercial border posts with the second-highest total value amounting to 26% (R1,9 billion) after Kopfontein border post, which processed the lowest volumes of goods border post with approximately high value of R2,2 billion (31%).
Skilpadshek border post followed Grobler’s bridge with 33% of volumes of goods that were cleared, and these goods valued about 25%, amounting to R1,9 billion compared to other commercial border posts in Botswana (Figure 2).
Ramatlabama border post registered third South Africa’s importing passage in 2020 by processing volumes of goods equaling 20% (329 million pieces of goods) from Botswana. The total value of goods administered in Ramatlabama during 2020 was approximately R1,3 billion, scoring the lowest with 18% after Skilpadshek.
Mowana Copper Mine in Dukwi will finally pay its former employees a total amount of P23, 789, 984.00 end of this month. For over three years Mowana Copper Mine has been under judicial management. Updating members, Botswana Mine Workers Union (BMWU) Executive Secretary Kitso Phiri this week said the High Court issued an order for the implementation of the compromise scheme of December 9, 2021 and this was to be done within 30 days after court order.
“Therefore payment of benefits under the scheme including those owed to Messina Copper Botswana employees should be effected sometime in January latest end of January 2022,” Kitso said. Kitso also explained that cash settlement will be 30 percent of the total Messina Copper Botswana estate and negotiated estate is $3,233,000 (about P35, 563,000).
Messina Copper was placed under liquidation and was thereafter acquired by Leboam Holdings to operate Mowana Mine. Leboam Holdings struck a deal with the Messina Copper’s liquidator who became a shareholder of Leboam Holdings. Leboam Holdings could not service its debts and its creditors placed it under provisional judicial management on December 18, 2018 and in judicial management on February 28, 2019.
A new company Max Power expressed interest to acquire the mining operations. It offered to take over the Mowana Mine from Leboam Holdings, however, the company had to pay the debts of Leboam including monies owed to Messina Copper, being employees benefits and other debts owed to other creditors.
The monies, were agreed to be paid through a scheme of compromise proposed by Max Power, being a negotiated payment schedule, which was subject to the financial ability of the new owners. “On December 9, 2021, Messina Copper liquidator, called a meeting of creditors, which the BMWU on behalf of its members (former Messina Copper employees) attended, to seek mandate from creditors to proceed with a proposed settlement for Messina Copper on the scheme of compromise. It is important to note that employee benefits are regarded as preferential credit, meaning once a scheme is approved they are paid first.”
A savingram the Ministry of Local Government and Rural Development sent to Town Clerks and Council Secretaries explaining why councilors across the country should not have access to their terminal benefits before end of their term has been revealed.
The contents of the savingram came out in the wake of a war of words between counselors and the Ministry of Local Government and Rural Development. The councilors through the Botswana Association of Local Authorities (BALA) accuse the Ministry of refusing to allow them to have access to their terminal benefits before end of their term.
This has since been denied by the Ministry. In the savingram to town councils and council secretaries across the country, Permanent Secretary in the Ministry of Local Government and Rural Development Molefi Keaja states that, “Kindly be advised that the terminal benefits budget is made during the final year of term of office for Honorable Councilors.” Keaja reminded town clerks and council secretaries that, “The nominal budget Councils make each and every financial year is to cater for events where a Councilor’s term of office ends before the statutory time due to death, resignation or any other reason.”
The savingram also goes into detail about why the government had in the past allowed councilors to have access to their terminal benefits before the end of their term. “Regarding the special dispensation made in the 2014-2019, it should be noted that the advance was granted because at that time there was an approved budget for terminal benefits during the financial year,” explained Keaja. He added that, “Town Clerks/Council Secretaries made discretions depending on the liquidity position of Councils which attracted a lot of audit queries.”
Keaja also revealed that councils across the country were struggling financially and therefore if they were to grant councilors access to their terminal benefits, this could leave their in a dire financial situation. Given the fact that Local Authorities currently have cash flow problems and budgetary constraints, it is not advisable to grant terminal benefits advance as it would only serve to compound the liquidity problems of councils.
It is understood that the Ministry was inundated with calls from some Councils as they sought clarification regarding access to their terminal benefits. The Ministry fears that should councils pay out the terminal benefits this would affect their coffers as the government spends a lot on councilors salaries.
Reports show that apart from elected councilors, the government spends at least P6, 577, 746, 00 on nominated councilors across the country as their monthly salaries. Former Assistant Minister of Local Government and Rural Development, Botlogile Tshireletso once told Parliament that in total there are 113 nominated councilors and their salaries per a year add up to P78, 933,16.00. She added that their projected gratuity is P9, 866,646.00.
A surge in consumer spending is expected to be a key driver of Botswana’s economic recovery, according to recent projections by Fitch Solutions. Fitch Solutions said it forecasts household spending in Botswana to grow by a real rate of 5.9% in 2022.
The bullish Fitch Solutions noted that “This is a considerable deceleration from 9.4% growth estimated in 2021, it comes mainly from the base effects of the contraction of 2.5% recorded in 2020,” adding that, “We project total household spending (in real terms) to reach BWP59.9bn (USD8.8bn) in 2022, increasing from BWP56.5bn (USD8.3bn) in 2021.” According to Fitch Solutions, this is higher than the pre-Covid-19 total household spending (in real terms) of P53.0 billion (USD7.8bn) in 2019 and it indicates a full recovery in consumer spending.
“We forecast real household spending to grow by 5.9% in 2022, decelerating from the estimated growth of 9.4% in 2021. We note that the Covid-19 pandemic and the related restrictions on economic activity resulted in real household spending contracting by 2.5% in 2020, creating a lower base for spending to grow from in 2021 and 2022,” Fitch Solutions says.
Total household spending (in real terms), the agency says, will increase in 2022 when compared to 2021. In 2021 and 2022, total household spending (in real terms) will be above the pre-Covid-19 levels in 2019, indicating a full recovery in consumer spending, says Fitch Solutions. It says as of December 6 2021 (latest data available), 38.4% of people in Botswana have received at least one vaccine dose, while this is relatively low it is higher than Africa average of 11.3%.
“The emergence of new Covid-19 variants such as Omicron, which was first detected in the country in November 2021, poses a downside risk to our outlook for consumer spending, particularly as a large proportion of the country’s population is unvaccinated and this could result in stricter measures being implemented once again,” says Fitch Solutions.
Growth will ease in 2022, Fitch Solution says. “Our forecast for an improvement in consumer spending in Botswana in 2022 is in line with our Country Risk team’s forecast that the economy will grow by a real rate of 5.3% over 2022, from an estimated 12.5% growth in 2021 as the low base effects from 2020 dissipate,” it says.
Fitch Solutions notes that “Our Country Risk team expects private consumption to be the main driver of Botswana’s economic growth in 2022, as disposable incomes and the labour market continue to recover from the impacts of the Covid-19 pandemic.” It says Botswana’s tourism sector has been negatively impacted by the Covid-19 pandemic and the related travel restrictions.
According to Fitch Solutions, “The emergence of the Omicron variant, which was first detected in November 2021, has resulted in travel bans being implemented on Southern African countries such as South Africa, Botswana, Lesotho, Namibia, Zimbabwe and Eswatini. This will further delay the recovery of Botswana’s tourism sector in 2021 and early 2022.” Fitch Solutions, therefore, forecasts Botswana’s tourist arrivals to grow by 81.2% in 2022, from an estimated contraction of 40.3% in 2021.
It notes that the 72.4% contraction in 2020 has created a low base for tourist arrivals to grow from. “The rollout of vaccines in South Africa and its key source markets will aid the recovery of the tourism sector over the coming months and this bodes well for the employment and incomes of people employed in the hospitality industry, particularly restaurants and hotels as well as recreation and culture businesses,” the report says.
Fitch Solutions further notes that with economies reopening, consumers are demanding products that they had little access to over the previous year. However, manufacturers are facing several problems. It says supply chain issues and bottlenecks are resulting in consumer goods shortages, feeding through into supply-side inflation. Fitch Solutions believes the global semiconductor shortage will continue into 2022, putting the pressure on the supply of several consumer goods.
It says the spread of the Delta variant is upending factory production in Asia, disrupting shipping and posing more shocks to the world economy. Similarly, manufacturers are facing shortages of key components and higher raw materials costs, the report says adding that while this is somewhat restricted to consumer goods, there is a high risk that this feeds through into more consumer services over the 2022 year.
“Our global view for a notable recovery in consumer spending relies on the ability of authorities to vaccinate a large enough proportion of their populations and thereby experience a notable drop in Covid-19 infections and a decline in hospitalisation rates,” says Fitch Solutions. Both these factors, it says, will lead to governments gradually lifting restrictions, which will boost consumer confidence and retail sales.
“As of December 6 2021, 38.4% of people in Botswana have received at least one vaccine dose. While this is low, it is higher than the Africa average of 11.3%. The vaccines being administered in Botswana include Pfizer-BioNTech, Sinovac and Johnson & Johnson. We believe that a successful vaccine rollout will aid the country’s consumer spending recovery,” says Fitch Solutions. Therefore, the agency says, “Our forecasts account for risks that are highly likely to play out in 2022, including the easing of government support. However, if other risks start to play out, this may lead to forecast revisions.”