As Chief Financial Officers of leading local firms prepare for the 2015 budgeting cycle, at least 34 of them have shared their thoughts on local business trends and projected business conditions for the coming year through the Deloitte annual survey. This is the second year that local CFOs have taken part in the survey.
A breakdown of the participants by sectors shows that the financial services made a 32 percent representation, Construction 15 percent while mining accounted for 12 percent of the majority of respondents.
According to Deloitte, the majority (62 percent) of Botswana’s CFO respondents represent companies with annual turnovers of less than USD25 million with a further 21 percent hailing from entities with turnovers of between USD25 million and USD50 million.
The outcome of the survey indicates that CFOs in Botswana are very concerned about competition in their local market with 60 percent ranking this among their top three industry concerns.
A sector such as banking has recorded stiff competition as new entrants entered the local market.
Bank of Botswana data shows that the banking industry recorded modest growth in 2013 as the total industry balance sheet grew by 3.5 percent during the year with banks’ total assets growing marginally to P60 billion as at December 31, 2013 compared to P58 billion on the prior year. Botswana has 13 commercial banks and there was entry of two banks in 2013; Bank of India (Botswana) Limited and State Bank of India (Botswana) Limited, that are expected to enhance competition.
Meanwhile the Deloitte CFOs survey also drilled down on regulation which was identified by 21 percent of respondents as their most pressing industry worry with a further 18 percent ranking it second and 9 percent naming it as the third most important concern.
At the same time, no less than 47 percent of Botswana’s CFOs rated margin deterioration due to lack of pricing flexibility as a “significant” risk factor to their businesses this year followed by the fragile state of the global economy (39 percent), the impact of power price increases (38 percent) and currency volatility (29 percent). A further 24 percent ranked margin deterioration due to input costs pressures as a significant risk, highlighting the tide of inflationary pressure that is adding to profitability concerns.
Deloitte’s 2014 Botswana CFO Survey was conducted against a background of prevailing economic pessimism across Southern Africa, largely driven by the general feeling of uncertainty in South Africa, the continent’s second biggest economy.
Respondents from Botswana indicated that their companies favoured expanding within their region rather than other parts of the continent. Of those looking to expand into new markets in the rest of Africa, 29 percent favoured Southern Africa while only 6 percent indicated a desire to expand in East and West Africa.