Tuesday, July 14, 2020

Coronavirus hits Botswana

Civil Servants who have reached retirement age will lose a chunk of their packages, hundreds of workers in the tourism and hospitality industry face job losses, government is expected to shelf some of its planned development projects and Botswana may suffer an electricity blackout  as the worst of the Coronavirus economy are felt in the country.

Botswana’s offshore investments made up mainly of pensioners money have taken a huge knock from the effect of the coronavirus. Since the coronavirus crisis gripped the international markets, the FTSE 100 (The Financial Times Stock Exchange 100 Index or, informally, the “Footsie”  which is a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalisation) has fallen from around 7,400 to 6,000, a drop of 19%. 

BPOPF’s offshore investment estimated at over P34 billion) is estimated to have recorded a decline of between 9% and 11%, more than P 3 billion.

Hundreds of Batswana working in the hospitality industry are also expected to lose their jobs following a decline in arrivals of international tourists. An insider told the Sunday Standard that cancellations in the lucrative Okavango Delta area are as high as 60% as the country goes into what should be a peak season.

The Hospitality and Tourism Association of Botswana (HATAB) whose membership include hotels, lodges, tour operators amongst others confirmed that the industry has already seen cancellations ahead of the upcoming peak tourism season, but would not give a figure. Lilly Rakorong – HATAB Chief Executive was this week bracing for the worst and hoping for the best saying, “we are hopeful that doors won’t shut on us”. 

It has also emerged that Botswana also faces a blackout due to an imminent interruption to power supply. Two weeks ago the company – EPC Contractor which has been tasked with remedial works at the country’s biggest power station – Morupule B notified the Botswana Power Corporation about its failure to mobilise its commissioning team, operational staff, original equipment manufacturer representatives as well as coded welders needed to carry on with remedial works at Morupule B due to the travel ban in China. 

The multi-billion Pula power plant has been fraught with problems since it was commissioned in 2014 and is yet to operate at full capacity.

BPC Chief Executive Officer – Cross Kgosidiile says that some of the Corporation’s suppliers are based in China, and their orders are likely to be delayed. 

“The first unit was scheduled for hand over to BPC by early September 2020 whereas the whole remediation project was scheduled to be completed by January 2023. With the current pandemic, the completion dates will change,” said Kgosidiile. It is not just change in completion dates that is imminent but also load shedding should the country’s oldest power plant – Morupule A, which was recently plugged back to the national grid also fail. Morupule A was recently refurbished giving a further gross generation capacity of 114MW to the national grid. 

The virus has also hit Botswana where it hurts most – diamond sales. As the second largest economy in the world, China is one of the biggest markets for Botswana diamonds. The country’s appetite for diamonds has however been dampened by the coronavirus pandemic. The Chinese Ambassador to Botswana – Zhao Yanbo confirmed last week that the epidemic has had an adverse effect on the international diamond trade, but it will be short-lived. 

Fresh information from the diamond trading markets shows that diamond mining juggernaut De Beers’ second sales cycle took a nosedive, with provisional rough diamonds sold valued at $355 million, which is a 36 percent decline from the year’s first sale, and 28 percent lower than 2019’s corresponding sight that netted $496 million. The fall in what is usually a strong sales cycle.

This is expected to increase Botswana’s budget deficit which was projected at P6.9 billion or 3.1 percent of GDP for the 2020/21 financial year before the outbreak of the coronavirus. Government is expected to shelve some of its planned development project to contain costs.



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Sunday Standard July 12 – 18

Digital copy of Sunday Standard issue of July 12 - 18, 2020.