GABORONE ÔÇô A survey carried by the Bank of Botswana (BoB) between March and April 2016 has shown that overall confidence in current business conditions in Botswana has declined.
Official data of the survey shows that the overall confidence in the prevailing business conditions (H1-2016) is at 36 percent, 8 percentage points lower than the level that prevailed during the September 2015 survey (H2- 2015).
The Bank undertakes the Business Expectations Survey (BES) twice a year in order to collect information on perceptions among the local business community about the prevailing state of the economy, as well as future prospects.
BoB says the continued subdued level of confidence possibly reflects the recurring water shortages in the greater Gaborone area as well as the continuing risk of power outages.
Botswana has been faced with an energy and water crisis that has been ongoing for the past few years. The Botswana Power Corporation (BPC) said last year that the national power plant, Morupule B will need at least two or three more years before it could work at full capacity.
At the same time, the country has also been hit by water shortage across the country with the most impact felt in the capital, Gaborone and surrounding areas where most businesses operate. Water Utilities Corporation (WUC) said in 2015 that there have been no improvements in water levels in the southern part of the country during the just ended rainy season. As a result, the capital Gaborone and surrounding areas depend on water supplies from the North, which is transferred through the troubled North-South Carrier pipelines.
The low confidence depicted by businesses follows the central bank’s warning last year that continued power and water shortages have reached a point where they will likely restrict Botswana’s economic growth.
The national budget speech which was presented in February prior to the commencement of the Bob survey forecast overall real Gross Domestic Product (GDP) growth of 4.2 percent for 2016 and 4.3 percent for 2017.
However companies that took part in the BoB survey expect real GDP to grow by 3.3 percent in 2016 and by 3.5 percent in 2017. These are substantially lower than the government forecast as announced in the 2016 budget Speech.