Thursday, August 18, 2022

As Wheat prices soar, SMEs looks to Gov’t for cushion

The expected hike in wheat product prices next month is likely to further cripple small medium enterprises (SMME’s) after a disastrous 18 months period posed by Covid-19.

 A street vendor in Gaborone Keletso Monametsi stated that her business of selling breakfast has been struggling to cope with the current food prices adding that the continued rise in prices of wheat products make things even more difficult.

She highlighted that even though she intends to increase prices of commodities such as fat cakes that is bound to scare away customers.

“I am lost for words because my business has been struggling to cope with inflation and now to pile more misery it is another scare,”

“Government has recently indicated that they will cushion us from all this costs but nothing has happened yet our businesses are struggling because almost commodity has gone up since the start of Covid-19,” she said.

For her part, another street vendor at Gaborone Bus rank Kagiso Motsamai appealed to government to put measures in place which are aimed at subsidizing small businesses.

She said her profits have dramatically gone down due to the continued rising prices.

“It is difficult for my business at the moment because once I hike my own prices based on the reactions of global commodity market then that goes with losing clients,”

“It seems that government is quiet about the rising prices because we are drowning almost every day trying to put food on the table,” added Motsamai.

On the other hand, Qualitative analyst at First National Bank Botswana (FNBB) Gomolemo Basele said the expected prices of wheat products are unavoidable.

He further said over the short term there is little that can be done while over the long term when the inputs are found there might be cheaper alternatives to turn to.

“There are already plans to cushion inflation and there are also plans to try and to also ensure that we are less reliant on external factors,” he said.

He said the pinch will continue to be felt adding that self-reliance will take a bit longer before it is realized.

Basele also stated that unfortunately once commodity prices go up, the easy target then becomes consumers.

Recently, Business Botswana President Gobusamang Keebine made an appeal to government saying there is need for an urgent intervention on soaring food prices.

He stated that wheat products in particular are expected to rise by at least 20 percent every month from now.

In April this year, Bolux group indicated that due to the unexpected arrival of Ukraine-Russia war that has resulted in global commodities markets being highly volatile, Ukraine and Russia combined contribute 33 percent of global wheat export therefore they have been forced to review their pricing structure again.

Last month Finance minister Peggy Serame said the government is concerned about the ever rising fuel and food prices and the impact of inflation on consumers.

 She said the government plans to announce contingency measures soon to cushion consumers. Serame was speaking on the side-lines of the Southern African Customs Union summit last week.

 The Minister said the global economic growth forecast has been revised downwards owing to the risks associated with the Russian invasion of Ukraine, which had resulted in an increase of crude oil prices.  According to official statistics, the Consumer Price Index was at 11.9 per cent in May. Serame said the current economic performance is of great concern to the entire SACU region, and each member state is looking at how best to address the economic implications brought about by the Russia/Ukraine conflict.

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