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Feeling the pressure

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Feeling the pressure

Local businesses anticipate an increase in cost pressures

Local businesses have indicated that they expect cost pressures to increase marginally during the fourth quarter of this year.

This is according to a survey by the Bank of Botswana (BoB) known as the Business Expectation Survey (BES) which is conducted quarterly.

The firms attribute the anticipated increase in cost pressures to the expected rise in the cost of transport, possibly due to the recent hike in fuel prices and the anticipated rise in international oil prices.

The surveyed businesses have also indicated that they expect output to be stagnant, or zero growth for the remainder of the year which is an improvement over the 0.2 percent contraction predicted in the June 2020 survey and a more optimistic view compared to the projected 8.9 percent contraction by Ministry of Finance and Economic Development.

It is reported that firms were less pessimistic about business conditions in the third quarter of 2020 compared to the previous quarter.

The reduced level of doubt is said to reflect the anticipated lower contraction in production; sales; profitability; exports and imports of goods and services; and investment in buildings, vehicles and equipment, plant and machinery, and ‘other’ indicators in the current survey compared to the previous one.

“The expected relative improvement in business conditions is in line with the anticipated recovery in global economic activity associated with the gradual easing of Covid-19 pandemic containment measures,” states the BES.

The majority of businesses surveyed are said to have indicated that Covid-19 containment measures have negatively affected business operations in the current period.

However, firms anticipate recovering from the impact of the pandemic in more than a year from September 2020.

In terms of financing, firms, mostly those in finance and business services, cited difficulty in accessing financing from abroad as the greatest challenge to their business operations in the third quarter of 2020.

Unavailability of skilled labour was the second most commonly cited impediment to doing business, mainly by firms in the manufacturing and construction sectors, reflecting reported difficulties experienced in recruiting foreign skilled labour.

In addition, weak international demand was also seen as a challenge to doing business in Botswana, particularly by those in the mining and quarrying, trade, hotels, restaurants, and transport and communications sectors.

On a positive note, the local political climate, government spending and the current regulatory framework were viewed as being the most supportive factors to doing business in Botswana in the third quarter of 2020.

Businesses also indicated that the water sub-sector contributed positively to economic activity, reflecting improvement in water supply, which had previously been a serious challenge.

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