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Local businesses optimistic, despite tough trading conditions

Botswana based businesses are optimistic that business conditions during third quarter of 2022 could improve, as government continues to ease COVID 19 protocols.

Government this week announced that as the intensity of COVID 19 is declining, wearing of face mask in outdoors is not mandatory.

According to the Bank of Botswana Business Expectation Survey (BES) results released this week the confidence among domestic market-oriented firms improves markedly in the third quarter of 2022, compared to the second quarter. According to the survey firms levels of optimism has started improving during the third quarter of 2022. The level of optimism improves further in the twelve-month period to June 2023, consistent with the anticipated continued domestic economic recovery and accommodate monetary conditions, going forward. Confidence in the domestic market-oriented firms is mainly driven by firms in the Mining and Quarrying, Finance and Professional and Administrative Activities, and Retail and Accommodation and Transport and Communications sectors.

According to the survey, export companies level of optimism on business conditions during the third quarter of this year declines steadily due to the projected worsening global economic conditions. While, export oriented firms were optimistic about business conditions in the second quarter of 2022, their optimism declines steadily in the third quarter of 2022 and in the 12-month period to June 2023, possibly due to the expected worsening economic conditions and rising price pressures arising from the ongoing Russia-Ukraine war.

In the survey Bank of Botswana researchers stated that while export companies are less optimistic, overall results of the survey shows that the business sector including the export companies, anticipate improvement in business conditions in the next twelve months. Overall, firms were pessimistic about business conditions in the second quarter of 2022 compared to the previous quarter. However, they anticipate improvement in business conditions in the third quarter of 2022 and the twelve-month period to June 2023. They expect the economy to grow by 3.8 percent in 2022, even as they have elevated inflationary expectations.

BoB indicated while interest rates and borrowing costs are expected to increase in all markets, particularly in the domestic market, in the year to June 2023, firms may increase their borrowing to keep up operations and production. Lending rates and borrowing volumes across all markets are expected to increase in the year to June 2023. Firms expect borrowing costs to increase in all markets, particularly in the domestic market, in the year to June 2023. Meanwhile, firms expect borrowing volumes, to increase across all markets in the 12-month period to June 2023.

The Bank meanwhile stated that firms expect cost pressures to continue rising, mainly attributable to the increase in input costs, especially fuel price increases. Firms expectations about domestic inflation were higher than the 3 6 percent objective range in 2022 and 2023.

The bank stated that in the second quarter of 2022 there was a view, by companies in the Construction, Manufacturing and Mining and Quarrying, that the Rand/Pula exchange rate was unfavorable and therefore costly to doing business in instances where the Pula weakened against the South African Rand. The view was predicated on the fact that these companies source most of their raw materials from South Africa. The other most commonly cited impediments to operations were shortage of raw materials by the manufacturing sector, weak domestic demand and slow growth in government spending.

 

BES is conducted by BOB, on quarterly basis collected information on the domestic business communitys perceptions about the prevailing state of the economy and expectations during the 12 month period to June 2023. It covered businesses in various economic sectors, among them, agriculture, forestry and fishing; mining and quarrying, manufacturing, water and electricity, construction, wholesale and retail, transport and storage, accommodation and food services, information & communications technology, finance, insurance, pension, fund and real estate.

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Jewellery manufacturing plant to create over 100 jobs

30th January 2023

The state of the art jewellery manufacturing plant that has been set up by international diamond and cutting company, KGK Diamonds Botswana will create over 100 jobs, of which 89 percent will be localized.

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Investors inject capital into Tsodilo Resources Company

25th January 2023

Local diamond and metal exploration company Tsodilo Resources Limited has negotiated a non-brokered private placement of 2,200, 914 units of the company at a price per unit of 0.20 US Dollars, which will provide gross proceeds to the company in the amount of C$440, 188. 20.

According to a statement from the group, proceeds from the private placement will be used for the betterment of the Xaudum iron formation project in Botswana and general corporate purposes.

The statement says every unit of the company will consist of a common share in the capital of the company and one Common Share purchase warrant of the company.

Each warrant will enable a holder to make a single purchase for the period of 24 months at an amount of $0.20. As per regularity requirements, the group indicates that the common shares and warrants will be subject to a four month plus a day hold period from date of closure.

Tsodilo is exempt from the formal valuation and minority shareholder approval requirements. This is for the reason that the fair market value of the private placement, insofar as it involves the director, is not more than 25% of the company’s market capitalization.

Tsodilo Resources Limited is an international diamond and metals exploration company engaged in the search for economic diamond and metal deposits at its Bosoto Limited and Gcwihaba Resources projects in Botswana.  The company has a 100% stake in Bosoto which holds the BK16 kimberlite project in the Orapa Kimberlite Field (OKF) in Botswana.

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Global CEOs Back Plan to Unlock $3.4 Trillion Potential of Africa Free Trade Area

23rd January 2023

African heads of state and global CEOs at the World Economic Forum Annual Meeting backed the launch of the first of its kind report on how public-private partnerships can support the implementation of the African Continental Free Trade Area (AfCFTA).

AfCFTA: A New Era for Global Business and Investment in Africa outlines high-potential sectors, initiatives to support business and investment, operational tools to facilitate the AfCFTA, and illustrative examples from successful businesses in Africa to guide businesses in entering and expanding in this area.

The report aims to provide a pathway for global businesses and investors to understand the biggest trends, opportunities and strategies to successfully invest and achieve high returns in Africa, developing local, sub-regional and continental value chains and accelerating industrialization, all of which go hand in hand with the success of the AfCFTA.

The AfCFTA is the largest free trade area in the world, by area and number of participating countries. Once fully implemented, it will be the fifth-largest economy in the world, with the potential to have a combined GDP of more than $3.4 trillion. Conceived in 2018, it now has 54 national economies in Africa, could attract billions in foreign investment, and boost overseas exports by a third, double intra-continental trade, raise incomes by 8% and lift 50 million people out of poverty.

To ease the pain of transition to its new single market, Africa has learned from trade liberalization in North America and Europe. “Our wide range of partners and experience can help anticipate and mitigate potential disruptions in business and production dynamics,” said Børge Brende, President, and World Economic Forum. “The Forum’s initiatives will help to ease physical, capital and digital flows in Africa through stakeholder collaboration, private-public collaboration and information-sharing.”

Given the continent’s historically low foreign direct investment relative to other regions, the report highlights the sense of excitement as the AfCFTA lowers or removes barriers to trade and competitiveness. “The promising gains from an integrated African market should be a signal to investors around the world that the continent is ripe for business creation, integration and expansion,” said Chido Munyati, Head of Regional Agenda, Africa, World Economic Forum.

The report focuses on four key sectors that have a combined worth of $130 billion and represent high-potential opportunities for companies looking to invest in Africa: automotive; agriculture and agroprocessing; pharmaceuticals; and transport and logistics.

“Macro trends in the four key sectors and across Africa’s growth potential reveal tremendous opportunities for business expansion as population, income and connectivity are on the rise,” said Wamkele Mene, Secretary-General, AfCFTA Secretariat.

“These projections reveal an unprecedented opportunity for local and global businesses to invest in African countries and play a vital role in the development of crucial local and regional value chains on the continent,” said Landry Signé, Executive Director and Professor, Thunderbird School of Global Management and Co-Chair, World Economic Forum Regional Action Group for Africa.

The Forum is actively working towards implementing trade and investment tools through initiatives, such as Friends of the Africa Continental Free Trade Area, to align with the negotiation process of the AfCFTA. It identifies areas where public-private collaboration can help reduce barriers and facilitate investment from international firms.

About the World Economic Forum Annual Meeting 2023

The World Economic Forum Annual Meeting 2023 convenes the world’s foremost leaders under the theme, Cooperation in a Fragmented World. It calls on world leaders to address immediate economic, energy and food crises while laying the groundwork for a more sustainable, resilient world. For further information,

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