Sunday, October 1, 2023

Covid-19 delivers tough blow to Botswana’s informal sector, SMEs

As Botswana, just like the rest of the world, grapples with the consequences of the Covid-19 pandemic, it is becoming clear each passing day that vulnerable workers in the informal sector as well as the Small to Medium Enterprises (SMEs) have been the most hard-hit. 

While the Botswana government through its Citizen Enterprise Development Agency (CEDA) has availed a credit facility to both the SMEs and informal sectors, none of the two clusters appears to have benefitted from it as yet. 

This past Thursday, Francistown West Member of Parliament – Ignatius Moswaane told Parliament that “its been over two months” since some informal traders in his constituency have lodged their applications with CEDA for financial assistance but to no avail. This was after Selebi Phikwe East Kgoberego Nkawana had asked the government to apprise Parliament on CEDA-SMEs credit relations since the arrival of Covid-19. 

When responding to Moswaane, Trade and Investment Minister Serame said that she is not up to date on reasons that could have caused delay to assist the informal sector. 

She also told Parliament that CEDA has identified 1550 SMEs which were adversely affected by the Covid-19 pandemic. The SMEs in question, Serame said, have been given repayment holidays from April 2020 for a maximum of 12 months. 

“The interventions that CEDA has put in in place are considered sufficient to address the likelihood of distress faced by the SMMEs. The agency will continue to assess the situation every three months on a case by case basis and respond accordingly as part of its monitoring process”  

While some SMEs referred to by Moswaane might have tried their luck without success, some – precisely in the informal sector said at the time of the launch of CEDA’s Lethabile programme that they feel left behind. 

At the time of the launch some two months ago, the informal sector association projected that the credit scheme is out of reach for many of its members’. 

The leader of the Botswana Informal Sector Association – Mpho Matoteng told Sunday Standard at the time that their registered members, totally up to 25 000 in urban areas were hard hit by the first national lockdown declared in April 2020.

“We cannot afford to incur extra costs by borrowing money”, Matoteng said a few days after Trade Minister – Peggy Serame announced that P10 million has been set aside to assist the informal sector. 

Matoteng said that is quite clear that while necessary phases of national lockdown are threatening livelihoods in the informal economy, Botswana government relief efforts are frequently only reaching formal workers and businesses. 

The government recently confirmed that it spent P4 billion on its COVID-19 Economic Stabilisation Plan. This means the share of the informal sector from the P10 million can be pegged at P10 million, which Serame announced as loans in July 2020. 

Thousands of traders in peril 

The International Labour Organisation (ILO) estimates that around 2 billion people—61% of the world’s working population—toil in the informal economy, and have little or nothing to protect them when they are unable to go to work like it’s been the case for Botswana’s informal sector, more especially those in the capital Gaborone which has been locked down thrice to date. 

The once diamond rich – Botswana, has been ON and OFF Covid-19 sponsored lockdown. Unlike her neighbour in the south – South Africa, it appears Botswana has so far been able to prevent a major outbreak of the deadly COVID-19. The trade-off in doing so, however has resulted in hardship for those in the vast informal economy.

It has since become clear that while necessary, the past three lockdowns threatened livelihoods in the informal economy. The Botswana government’s relief efforts however frequently reached the formal workers and businesses only. This could only mean one thing: informal sectors workers in Botswana will experience a hotter summer season ahead. 


Read this week's paper