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Inflation rises to 14.3 %

Botswana’s inflation rate continues to soar. Given the fears about Consumer Price Index (CPI), it’s reasonable to assume that in order to fight inflation, which has recently been at multi-decade highs in many countries, central banks will continue to implement rate hikes in the foreseeable future in order to prevent inflationary pressures from becoming entrenched – another that dilemma that consumers should brace for.

As a measure to cushion consumers against high inflation, government recently came up with interventions such as reducing Value Added Tax (VAT) from 14% to 12%; and exempting certain commodities from VAT.

Meanwhile, a report by Statistics Botswana on ‘Consumer Price Index: July 2022’ has revealed that; “the annual inflation rate was 14.3 percent in July 2022, as opposed to 12.7 percent in June 2022, registering a rise of 1.6 percentage points.”

The report further observes that; “contributing significantly to the annual inflation rate in July 2022 were the increasing prices for the major components in the Consumer Price Index (CPI) basket, specially:  Transport (9.2 percent), Food & Non-Alcoholic Beverages (1.7 percent), Housing, Water, Electricity, Gas and Other Fuels (1.2 percent) and Miscellaneous Goods & Services (0.9 percent).”

On the one hand, as for the regional inflation rates between June and July 2022, the Urban Villages inflation rate recorded an increase of 1.8 percentage points, from 12.4 percent in June to 14.2 percent in July. The Rural Villages inflation rate rose by 1.7 percentage points, from 13.1 percent in June to 14.8 percent in July 2022, while the Cities & Towns inflation rate stood at 14.3 percent in July 2022, a rise of 1.6 percentage points from the June rate of 12.7 percent.

The document continues that the national Consumer Price Index went up by 2.3 percent, from 124.8 in June to 127.7 in July 2022. The Rural Villages index stood at 127.2 in July 2022, compared to124.0 in June 2022, which is a rise of 2.6 percent. The Urban Villages index went up by 2.3 percent from 125.1 to 128.0 during the period under review, whereas the Cities & Towns index advanced from 125.0 in June to 127.7 in July 2022, recording a growth of 2.2 percent.

Two group indices recorded changes of at least 1.0 percent between June and July 2022, specifically; Transport (6.4 percent) and Food & Non-Alcoholic Beverages (2.1 percent).

The most debated; the Transport group index registered a growth of 6.4 percent, from 148.7 in June to 158.1 in July. The rise is said to be mainly attributable to the increases of the constituent section indices of Operation of Personal Transport (9.4 percent), Purchase of Vehicles (2.4 percent) and Transport Services (2.3 percent). The increase in the Operation of Personal Transport section index was due to the rise in retail pump prices for petrol (95) and diesel (50ppm) by P2.04 and P1.28 per litre respectively, which effected on the 28th of June 2022.

For the Food and Non-Alcoholic Beverages group index rose by 2.1 percent, from 123.8 in June 2022 to 126.4 in July 2022. Contributing to the increase in the Food group index were most of its constituent section indices as follows; Oils & Fats (6.1 percent), Bread & Cereal (3.3 percent), Milk, Cheese & Milk Products (1.8 percent), Fish (Fresh, Chilled & Frozen) (1.6 percent), Mineral Waters, Soft Drinks, Fruits & Vegetables Juices (1.6 percent), Vegetables (1.1 percent), Food Not Elsewhere Classified (1.0 percent) and Meat (Fresh, Chilled & Frozen) (1.0 percent).

On the other hand, the Competition and Consumer Authority (CCA) has also released their own retail price survey that focuses on the monitoring of retail prices before and after adjustment of VAT.

The survey depicts a general decrease in retail price at the current retail price at 12% VAT. However, among the listed commodities, White Star Maize Meal has recorded a significant rise in value from P35.95 under the 14% VAT to P37.95 for the current retail price.

The announcement by government to zero rate cooking oil and Liquefied Petroleum Gas (LPG) seems has beared fruit.

The document shows that the current retail price of sunflower cooking oil is P74.95 as compared the previous price of P 91.95 under the 14% VAT. It proceeds to illustrate that the retail price of LP Gas has also decreased significantly for the 9Kg 19Kg and 48Kg product.

The authority has advised that the survey is based off an indicative average price from different stores that sell the products in question.

It went on that “in the next price survey, the data compiled will reflect prices per retailer. This would be meant to monitor if retailers have complied with the government VAT adjustment for the benefit of the consumer.”

Reverting to the Statistics Botswana document. The Restaurants and Hotels group index moved from 113.4 to 114.5, registering a rise of 0.9 percent during the period under review. The rise was credited to the increase in the constituent section indices of Restaurants, Cafes & the Like (0.9 percent) and Accommodation Services (0.7 percent).

As for the Miscellaneous Goods & Services group index, it showed a growth of 0.7 percent, from 123.0 in June to123.9 in July. This was owed to the increases of the constituent section indices, particularly; Personal Care (1.1 percent), Financial Services (0.7 percent) and Insurance (0.6 percent). Says the document.

The All-Tradeables index also rose by 3.7 percent in July 2022, from 129.4 recorded in June 2022 to 134.2. The Imported Tradeables Index moved from 131.9 in June to 137.6 in July 2022, a rise of 4.3 percent. The Domestic Tradeables Index realized a growth of 2.0 percent between the two periods, moving from 122.4 in June to 124.8 in July. The Non-Tradeables Index moved from 118.7 in June to 119.0 in July, an increase of 0.3 percent.

Furthermore, The All-Tradeables inflation rate was 19.4 percent in July, registering a growth of 2.6 percentage points from the June rate of 16.8 percent. The Imported Tradeables inflation rate rose by 2.7 percentage points moving from 20.3 percent in June to 23.0 percent in July 2022. The Domestic Tradeables inflation rate showed a rise of 2.6 percentage points, from 7.3 percent in June to 9.9 percent in July. The Non-Tradeables inflation went up by 0.2 of a percentage point, from 7.1 percent in June to 7.3 percent in July 2022.

Elsewhere, 50% of investors believe that inflation will remain stubbornly high in the next 18 months, despite signs that the surge in consumer prices might have peaked.

A pulse-check survey of 538 investors on LinkedIn carried out by deVere Group, one of the world’s largest independent financial advisory, asset management and fintech organisations with 80,000 clients, reveals that in 18 months’ time, 50% believe that the headline consumer price index (CPI) will be above 7%. Some 35% said between 4 and 7%; 11% said between 2 and 4%; 3% said it would fall under 2%; and 1% said they didn’t know.

Most advanced economies’ central banks have a target of or near 2%.

Of the poll’s findings, Nigel Green, deVere’s CEO and founder said: “Clearly, most investors are still concerned that inflation will remain a major issue in the short to medium term.

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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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Business

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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Business

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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