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Ray of hope for business recovery

Ray of hope for business recovery
ECONOMIC RECOVERY: Small market

A quarterly survey by the Bank of Botswana, known as the Business Expectation Survey (BES), has revealed that local businesses are optimistic about economic recovery in the period to March next year.

This follows disruptions caused by the pandemic which has been wreaking havoc for a year now.

However, the firms that took part in the survey have indicated that they are hopeful of economic recovery in the period to March 2022 led by the trade, hotels, restaurants, and transport and communication sectors.

Although they hope for the best, companies in the above sectors are said to have been more pessimistic about economic growth prospects in the first quarter of 2021 compared to the previous quarter.

“This is consistent with the continued periodic COVID-19 movement restrictions, which leads to canceled tourist activity and bookings of accommodation and restaurant facilities,” states the report.

Notwithstanding, firms across all sectors, except for the Agriculture and Finance and Business Services sectors, are reported to be optimistic about economic performance in the second quarter of 2021.

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The survey states that the perceived sluggish economic performance in the current survey compared to the previous one is associated with the resurgence of infections and the disruptions to business trade arising out of the COVID-19 pandemic containment measures and possibly the slow roll-out of the COVID-19 vaccine.

Following the recent upward adjustment in some tax rates such as Value Added Tax (VAT) and withholding tax on dividends to residents, increase in the fuel levy, as well as the introduction of the levy on sugar-sweetened beverages effected in April 2021, companies have indicated that they expect cost pressures to rise substantially in the second quarter of the year.

This is mainly attributed to the expected increased in all input costs, in line with the expected increase in inflation.

Firms, largely in the hotels, restaurants, transport, and communications sector, have highlighted COVID-19 restrictions as the greatest challenge to their business operations in the first quarter of 2021.

Access to financing was the second most commonly cited impediment to doing business, especially by firms in the financing and business services sector while the unavailability of skilled labour was also considered a challenge to doing business in Botswana, particularly by firms in the construction and mining sectors.

Also, weak domestic demand was cited as a challenge to doing business in Botswana, due to perceived slow growth in household disposable incomes following COVID-19 containment measures.

On a positive note, water supply and the local political climate were viewed as supportive factors to doing business in Botswana in the first quarter of 2021.

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