By Staff Writer | Moakanyi Magazine

Lack of External Financing is perceived to be a major challenge to doing business. A number of firms, particularly in the manufacturing, finance and business services, trade, hotels, restaurants, transport and communications sectors, mentioned the difficulty in accessing financing from abroad as the greatest challenge to their business operations in the first quarter of 2020.

The second major business impediment cited is unavailability of skilled labour and this is predominant in the manufacturing and construction sectors, reflecting reported difficulties experienced in recruiting foreign skilled labour.

Furthermore, a number of firms (predominantly in the manufacturing sector) quoted shortage of raw materials as the greatest challenge to their business operations. On the positive side, the local political climate, domestic demand and the current regulatory framework are viewed as being the most supportive factors to doing business in Botswana.

Another observation is that water and electricity subsectors contribute positively to economic activity, reflecting an improvement in the supply of these utilities which had previously been a serious challenge. This improvement is due to the ongoing efforts to upgrade the utility supplies through measures such as the implementation of the North-South Carrier 2 water project and the North-West Transmission Grid electricity connection. The two projects are conducted in stages, hence areas in the completed segments are already benefiting from improved utility supplies due to the projects.

Overall, firms were less optimistic about business conditions in the first quarter of 2020, compared to the previous quarter. Furthermore, business conditions are expected to deteriorate in the rest of the survey horizon, consistent with the anticipated decline in sales; profitability; exports of goods and services; employment; investment in vehicles and equipment, and ‘other investments’.

The expected weakening of the business conditions is in line with the global economic hardships associated with the outbreak of the Covid-19 pandemic. Firms expect the economy to grow by 3 percent in 2020. Overall, firms expect average inflation to rise slightly to an average of 3.8 percent in both 2020 and 2021, while the Bank projects that inflation will remain below the 3 percent lower bound of the inflation objective in 2020 and revert to within the objective range in the first quarter of 2022.

Source: Bank of Botswana