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No brotherly love

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No brotherly love

Botswana falling victim to SA protectionist measures

Botswana is reportedly falling victim to protectionist measures in South Africa leading to a major decline in exports.

In its recently-released review for the third quarter of 2019, local economic think tank, Econsult attributed the weakness in exports to many factors.

Chief amongst them is newly implemented South African regulations, in which the country’s government contracts specify 100 percent local content for certain products.

“This has affected one major Botswana exporter of manufactured goods particularly badly,” stressed Econsult, which is led by renowned economist, Keith Jefferis.

While the move has impacted Botswana’s exports, it is also considered contradictory to the spirit of regional trade agreements such as the SADC Free Trade Area.

Additionally, it goes against the South African National Treasury’s own economic transformation document released in August.

The document identified regional integration through contributing towards industrial development in Africa as a major component of South Africa’s industrial policy.

For Botswana, given the significance of export-led growth to the country, its poor performance is considered a grave concern.

Other factors thought to have contributed to the unsatisfactory export levels include slower global and regional economic growth reducing export market opportunities.

Meanwhile, in more grim news, Econsult economists have also poured scorn on the country’s Ease of Doing Business environment.

Botswana’s score has remained more of less unchanged in recent years. Failure to improve has seen the nation’s ranking drop dramatically.

This year the country came 86th in the Ease of Doing Business global rankings, falling from 19 in 2005.

This lowly ranking is said to be a wake-up call to improve the Ease of Doing Business score through enhancements to the business environment.

Similarly, the country’s Global Competiveness Index (GCI), which is conducted by the World Economic Forum (WEF0), has reportedly been on a decline in recent years, despite showing signs of improvements between 2012 and 2016.

The GCI covers a set of indicators such as: macroeconomic stability, financial system, ICT adoption, infrastructure, health, business dynamism, skills, product markets, and market size and innovation capability among others.

Although government has made efforts towards the improvement of doing business, such as the adoption of the Doing Business Roadmap, Jefferis and his colleagues at Econsult feel a lot needs to be done to improve the situation.

This includes speeding up of the legislative process so improvements in the business environment that require changes in the law are implemented quickly.

Email:Kabelo@thevoicebw.com
Twitter:@Kabelo_Adamson

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Business

ABSA in the money

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Bank registers 15 percent profit increase

Two months after its official name change, Absa Bank Botswana has announced a 15 percent jump in profits.

This week, the bank’s Managing Director, Keabetswe Pheko-Moshagane revealed that despite the challenges faced by the industry, Absa registered profit after tax of P678 million for the 12-month period ending 31 December 2019.

Highlighting the bank’s success, Finance Director, Mumba Kalifungwa explained it continued on a forward momentum of driving interest income growth through prudent lending across all segments.

“On a gross basis, interest income was up by 10 percent year-on-year (YoY). However, market liquidity in the year was thin and this resulted in increased costs of funds,” he said, adding overall net interest income increased by six percent.

Furthermore, according to Kalifungwa, Absa’s net trading remained flat despite an increase in trading volumes.

“This was due to the tough trading conditions and the global geo political challenges experienced in the year. To this end, in 2019 our net fee and commission income as a portion of total income represented 35 percent of total revenue which resonates with our strategy to diversify our revenue mix,” he said.

When it comes to credit losses or impairments, the bank’s expected year-on-year credit losses decreased by 64 percent in comparison to the prior period.

Kalifungwa attributed this to the Absa’s enhanced collections capability, conservative credit extension to high risk sectors especially in the Retail segment as well as significant recovery from one of their clients.

HAPPY BANKER: Kalifungwa

The Finance Director added that as they continue to pursue growth the overall balance sheet grew by 11 percent, ending the year at a whopping P18 billion.

“For the year under review, our customer loans and advances grew by 13 percent compared to market growth of 7.7 percent. This was achieved by growth in all our segments in line with our growth strategy,” he explained, noting the main driver behind the balance sheet’s growth continues to be loans and advances and customer liabilities which remain key drivers of the bank’s total revenue.

During the period, Absa’s loans and advances to customers increased by 13 percent YoY to P13billion.

“The growth was fairly distributed across the segments in line with our strategy and continues to be focused around prudent lending in our chosen business segments,” Kalifungwa concluded.

Meanwhile, the bank has set aside a total of P231 million as dividends for the year, with shareholders set to receive 25 Thebe per share.

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Business

Local suppliers ally fears of shortages

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Fear marched menacingly into the country this week as the reality of COVID-19 began to hit home.

Botswana, which goes into lockdown this Friday, imports the majority of her basic commodities – including food, beverages and fuel – from South Africa (SA).

With SA embarking on a three-week lockdown last Thursday, it seems inevitable this will lead to a shortage of supplies here.

Although travel is restricted between the two countries, government has announced that movements of goods will be allowed.

However, it is feared the South African lockdown will lead to demand surpassing supply in the country, which in turn will drastically reduce the amount of goods available for export.

With South Africans engaging in widespread panic buying, emptying all the shelves in major stores, this could potentially prove disastrous for local supply.

The rapid spread of the virus, which has already reached many parts of the world, claiming thousands of lives in the process, has had unprecedented effects on the global economy.

While there is fear of shortage of foodstuffs, distributors have allayed such concerns, as they believe they have enough stock to supply the local market.

It will soon be seen if their confidence is well placed!

Claude Hassett, the Managing Director of one of the leading distribution companies, CA Sales and Distribution told The Voice on Wednesday this week that consumers need not worry as CA Sales has triple extra stock to supply the market.

“Besides, trucks are still allowed to get into the country,” said Hassett, adding that they are hoping that the situation will not get worse.

Hassett although the spread of the Covid-19 has affected virtually everyone they have enough stock in the inventory.

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