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Businesses hopeful after SoE

Businesses hopeful after SoE
RAISED EXPECTATIONS: Local businesses optimistic about economic recovery

The end of the 18-month long State of Public Emergency (SoE) in September has raised hopes for local companies who are anticipating a turnaround in the year to September 2022.

The Business Expectations Survey (BES), a quarterly survey conducted by the Bank of Botswana to assess the prevailing state of the economy suggests that local companies are optimistic about the economy in the fourth and last quarter of the year following the lifting of the SoE.

“Firms in all sectors are optimistic about economic recovery in the year to September 2022, led by the Retail and Accommodation and Trade, Hotels, Transport, and Communications; Mining and Quarrying; and Finance and Professional and Administrative Activities sectors,” the survey noted.

The central bank says the perceived improvement in economic performance in the current survey compared to the previous one, likely reflects the expected resumption of economic activity following the end of the SOE.

The survey indicates that optimism among domestic market-oriented firms improves markedly in the fourth quarter of 2021 compared to the third quarter of 2021, likely because businesses expect demand for their products to improve with the lapse of the SoE.

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“The level of optimism rises further in the twelve-month period to September 2022, consistent with the anticipated continued domestic economic recovery and accommodative monetary conditions, going forward.

“Confidence in the domestic market-oriented firms is mainly driven by firms in the Manufacturing; Mining and Quarrying; Finance and Professional and Administrative Activities; and Retail and Accommodation and Transport and Communications sectors,” the BES says.

The optimism of export market-oriented firms about business conditions reportedly increases the most in the twelve-month period to September 2022.

“Firms that are predominantly in the Manufacturing and the Retail and Accommodation and Transport and Communications sectors expect good business as trade conditions improve”.

Meanwhile, the survey says companies expect cost pressures to continue rising in the fourth quarter of 2021, mainly attributable to the expected increase in input costs, due to second-round effects of the upward adjustment of Value Added Tax (VAT), fuel levy, and electricity tariffs effected in 2020.

When it comes to factors affecting the doing of business, firms that are predominantly in the Retail and Accommodation and Transport and Communications sectors, highlighted COVID-19 restrictions as the greatest challenge to their business operations for the third quarter of 2021.

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Unavailability of skilled labour was the second most commonly cited impediment to doing business, especially by firms in the Construction and Real Estate sector, reflecting reported difficulties experienced in recruiting foreign skilled labour.

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