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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

Surviving on the streets of Maun

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Surviving on the streets of Maun

Making Ends Meet

As the economy sags with the decreasing number of tourists in Maun due to the long dry spell, hawkers and street vendors are feeling the pinch.

Taking to the streets of this tourist town, which is a gateway to the Okavango Delta, Voice Money finds out how the ordinary Ngamilander battles on a daily basis to keep bread on the table.

On a ‘very good day’, all five vendors say they can make up to P500.

Surviving on the streets of Maun
THEBES FOR MY TSWII: Ngongorego Kapwe

I am in the business of selling twii, a native food of people living in the north western parts of Botswana.

I started my business in 2013 and I have been able to sustain myself since then.

Despite being able to make ends meet, the business is not as profitable as before.

Since the river dried up I now buy tswii from Shakawe unlike before where I went into the river to harvest it myself.

Tswii together with Mapakiwa are my means of putting food on the table!

Surviving on the streets of Maun
CRAFTING A LIVING: Kurika Diakuwa

I make a living from selling Art crafts. I started the business in 2016, taking over from my parents.

Most of the crafts that I sell are handmade by my wife and I.

I have been able to sustain myself and my family through this business.

The only challenge is that there is no proper wood for carving in Maun so I travel to my home village, Etsha 6, to get the raw material which is costly.

Recently, the business has not been doing that well due to the decline in the number of tourists in the area.

The main target market of my business is tourists since local people are hardly interested.

Surviving on the streets of Maun
GOLDEN OLDIE: Josephine Nlhabano

Rather than staying at home doing nothing, as an old age pensioner I believe self-sufficiency is key.

I originate from Mabudzwane village near Francistown and make a living out of dress-making.

I have been in the business since 1995 and I was able to send my kids to school and sustain myself as well as the business.

I buy cloth and sew dresses to sell.

My only challenge is that some dresses can take a long time in the stall without a buyer.

Surviving on the streets of Maun
DREAM TEAM: Livefon Maphindu and Adrien Moyo

We are partners. The two of us are in the art crafts business.

We do batik, screen panting, potato printing, metal works and wood curving to mention a few.

We started operating in 2003 and according to us the business is not doing well like previous years.

We believe that the decline in the number of tourists is the cause of our ordeal.

Ever since the river dried up, the number of tourists dropped due to the fact that attractions like boat cruising, mokoro riding, fishing and others have been halted.

We are, however, hopeful that things will get better in the festive season as some people will be coming over for their holidays.

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Amended income tax act finally in effect

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Amended income tax act finally in effect

The Minister of Finance and Economic Development, Thapelo Matsheka has finally signed for the commencement of the amended Income Tax Act.

This follows the amendment of the Act in December last year,with the act now deemed to have come into effect as of 1 July 2019.

Tax expert, JonathanHore said some businesses can afford to have an early Christmas following Matsheka’s announcement that Micro, Small or Medium Enterprises (SMMEs) and Variable Rate Loan Stock Companies (VRLSCs) will not have their interest expenses limited for tax purposes as of July.

The December 2018 law limited tax deductions on all forms of interest, whether from banks, shareholders or any other source.

“This caused a lot of debate in the business world as any excess interest above the 30 percent cap is added back to profits, thereby increasing tax costs. It became apparent that most corporates would be affected as financing is pivotal to the operations of businesses,” explained Hore, adding the law was of great concern to the major of property developers who operate through the VRLSC vehicle as they naturally incur massive debenture interest bills due to their capital composition.

The SMMEs and VRLSCs were exempt through Income Tax Amendment Act of 2019, which was enacted on 28 Augustbut could only commence after the issuance of a notice, which was done on 6 December.

The tax expert says commencement brings a lot of relief to most SMMEs, as the majority cannot operate without financing.

“Whilst owners of SMMEs may afford to put smiles on their faces, their degree of relief wanes when compared to that of the VRLSC sector, which was under intense pressure from the said law than anyone else,” he stressed.

Meanwhile, Hore warned that some capital-intensive sectors such as mining, manufacturing and non-VRLSC property developers need to brace themselves for interest expenses limitations and heavier tax bills.

“From an implementation perspective, it is yet to be seen whether the taxman accepts that the law will not be applicable if a taxpayer is in a loss situation,” he said.

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Lack of certifcates plague SME’s

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Lack of certifcates plague SME’s

Majority of local SMEs not certified to International quality and standards

Botswana’s Small Medium Enterprises (SMEs) have been found lacking when it comes to quality performance.

A study conducted by the International Trade Centre (ITC) in partnership with Local Enterprise Authority (LEA) on 616 local SMEs, discovered only a small number are certified.

The study, whose results were released this week, further scored the majority of SMEs low in terms of meeting quality requirements for buyers.

Indeed, 77 percent of the firms surveyed indicated they are not certified to any quality, sustainability or other standard.

The majority of those certified are reported to hold schemes such as International Safety Certificates offered by Botswana Bureau of Standards (BOBS). Others hold certificates such as the Public Procurement and Asset Disposal Board (PPADB) Certificates and Horticultural Guidelines.

In terms of sectors, certification is much higher in the services sector compared to the agricultural sector.

This trend is reportedly in contrast with other countries, where certification is generally more widespread among agricultural companies.

The report found that just five percent of the interviewed agricultural enterprises were certified to international quality, safety and sustainability standards. This is said to be enough evidence to prove that Botswana farms lack the certificates increasingly required by international buyers.

Furthermore, the report states that importers of Botswana beef may prefer quality characteristics that differ from Batswana preferences such as meat tenderness, storage and safety procedures, packaging and certification.

Farmers who were interviewed for the survey reportedly indicated that water shortages prevented them from being able to meet the quality required by the market.

However, although few local firms are certified, it is believed they maybe following quality practices and communicating them to buyers in other ways.

“Some 70 percent of surveyed firms said they produced according to buyer requirements. This indicates that buyers are telling their Botswana suppliers about their market requirements, and Botswana companies are adjusting their production processes accordingly,” the report says.

This is backed up by the fact that 62 percent of the interviewed companies said they compete primarily by offering high quality products and services.

The report further notes that although most firms are seemingly aware of the quality requirements of the market and are thought to be responding to the current buyers’ requirements, their failure to adopt certification schemes means most are not signaling their quality to potential new buyers.

In light of this, the report by ITC, which is a joint agency of the World Trade Organization (WTO) and United Nations, says support for certification could help improve the quality competitiveness of Botswana SMEs for international trade.

Email:kabelo@thevoicebw.com
Twitter:@Kabelo_Adamson

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