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A murky horizon

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A murky horizon

Companies anticipate tough first half of the year

Local companies expect business conditions to deteriorate in the first two quarters of 2020, a recent survey has established.

The Business Expectation Survey (BES), a quarterly review conducted by Bank of Botswana (BoB), suggests the business world is pessimistic over conditions in the first half of the financial year due the current Covid-19 created circumstances.

According to the survey’s findings, companies expect sales, profitability, exports of goods and services and other investments to decline in both the first and second quarters of 2020.

Imports of goods and services are also expected to drop in the first quarter of 2020 and then remain constant in the second quarter of the year.

The plunge in confidence is consistent with the perceptions of weaker economic growth in the first quarter of the year and the overall contraction of the economy.

The bank says the perceived weaker economic performance declared in the current survey compared to previous studies is largely down to the disruption of business operations caused by the Covid-19 pandemic.

While business confidence is forecast to fade, companies also expect cost pressures to be subdued in the second quarter of the year, mainly attributable to the expected downward pressure on cost of materials, utilities tariffs, wages and other inputs of production.

When it comes to the major impediment facing companies, particularly those in the manufacturing, finance and business, trade, hotels, restaurants, transport and communications industries, firms have once again singled out the difficulty in accessing financing from abroad as the greatest challenge to their business operations.

The second major barrier cited is the unavailability of skilled workers. This is said to be most predominant in the construction and manufacturing sectors, reflecting reported difficulties experienced in recruiting foreign skilled labour.

Furthermore, a number of companies, mainly in the manufacturing space, have highlighted shortage of raw materials as the greatest challenge to their business operations.

On a positive note, the local political climate, domestic demand and the current regulatory framework are viewed as supportive factors to doing business in the country.

It has also been observed that water and electricity sub-sectors contribute positively to economic activity. This is believed to be a reflection of an improved supply of these utilities, which has previously been a serious challenge.

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Business

Inflation increases in April

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Inflation increases in April

Cities and towns experience rising rates

The latest figures from Statistics Botswana (SB) show that the annual inflation rate in April registered a slight increase.

Inflation for the month stood at 2.5 percent, up 0.3 percent from the 2.2 percent recorded in March.

However, SB stressed that data collection for the month was hampered by the on-going lockdown, enforced on 3 April.

The restriction on movement meant data collection for prices was primarily conducted through emails and telephone calls.

In the end, the data collected covered only 70 percent of goods in the Consumer Price Index (CPI) basket.

The most affected items in the basket were alcoholic beverages and tobacco – the sale of which is temporarily suspended – and clothing and footwear, as outlets were closed during the month of April.

The closure of such shops reportedly resulted in a number of missing or unobserved prices, which were imputed through variation of the observed prices.

According to SB, the biggest contributors to the April annual inflation rate were: housing, water, electricity, gas and other fuels, which went up by 1.1 percentage points, and food and non-alcoholic beverages, which increased by 0.4 percent.

By regions, the inflation rates between March and April indicates that cities and towns increased by 0.4 of a percentage point, rising from 2.3 percent to 2.7.

Rural villages’ rates rose from 2.0 percent to 2.3 percent while urban villages’ rates similarly registered an increase of 0.3 percentage point to 2.6 percent.

When addressing local media on Tuesday this week, the Competitions and Consumer Authority CEO, Tebelelo Pule said the Authority observed an increase in consumer good prices when the effects of Covid-19 started to be felt locally.

“Prices increased in an unusual manner which disturbed us as the Authority. On top of that, there was also a decrease in the quality of goods,” announced Pule, highlighting the example of sanitizers, which she noted were ‘manufactured by anybody’.

Pule revealed that the Authority went into shops around the country to compile a price list, which they published on their website and Facebook page to allow consumers to compare how different retail stores were pricing their goods.

The CEO cautioned that those found guilty of unfairly increasing prices face a possible five-year jail term or P100, 000 fine or even both.

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Business

Cutting trees, increasing profits

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Cutting trees, increasing profits

When Innocent Tlhabano set up Archgate Solutions in 2011, the business was primarily centered around landscaping and supplies.

However, a change in direction last year, to focus on tree cutting and large area grass business, proved the change in fortune Tlhabano craved.

Reminiscing on the unusual path that led to this latest venture, the 33-year-old Tonota native explained he received funding from the Youth Development Fund (YDF) for beef production in 2017.

“Due to the fact that beef production takes a while and as a way to diversify streams, we into tree cutting to supplement our income,” highlights Tlhabano, a Mechatronics Engineering graduate from the University of Sheffield in the north of England.

“The type of tree cutting we do is mostly for government and private companies, predominantly for those trees that grow to the level of power cables, as they cause lots of power cuts,” he told Voice Money.

Cutting trees, increasing profits
CHOPPING DOWN TREES: Archgate Solutions at work

The business currently has six permanent employees but can hire up to 80 workers when contracted for large-scale projects.

Although he describes business in the last year as good, Tlhabano admits it is not quite a bed of roses.

“We are looking to expand and we have recently been working with Turnstar, owners of Game City mall. They have a number of properties around Gaborone and have engaged us to help them trim their trees and keep everything tidy,” revealed the tree-trimming boss.

Tlhabano is proud of the progress his enterprise has made since their first major project at Motswedi Junior Secondary School in Gaborone.

“It gave us a boost and from the proceeds we were able to procure much-needed equipment. Since then we have grown because now we are doing large area grass cutting. We have bought tractors for such jobs and lawnmowers,” he said.

Though based in Gaborone, Archgate Solutions offers its services nation-wide and is part of the team working on the power line from Palapye to Maun.

Cutting trees, increasing profits
CHOPPING DOWN TREES: Archgate Solutions at work

“We have been engaged as a sub-contractor by another company to provide bush-clearing services because we have the right equipment.”

As for some of the difficulties encountered, Tlhabano decried, “The main challenge we face is that there is no continuity in projects. We do a project then we have to wait a little bit longer for another one to come. We also found out that the government procurement process takes long.”

He noted that even if a government department wants to engage the company, the procurement process can take up to two months.

Despite these frustrations, Tlhabano has big plans for the future –plans that include potentially expanding across borders.

“We are thinking that maybe in the coming few years, we should explore if we can get some business outside the country. We are also looking at entities such as Botswana Power Corporation (BPC) because they have lots of jobs for tree cutting to clear their power lines,” he outlined.

As for the more immediate future, Archgate Solutions intend to further engage property companies to take care of their properties as far as tree trimming is concerned.

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