Sunday, June 11, 2023

Economist warns SMMEs not to be over-optimistic about 2010

A recent Bank of Botswana (BoB) Business Expectations Survey, or BES, carried out between September and November 2009 optimistically suggested a more positive outlook, compared to the bleak conditions of the same during a previous survey.

The survey, which sampled 100 businesses in different business sectors, further discovered that as a result of prospects for global economic growth in 2010 having improved, Botswana will see an improved economy particularly due to renewed exports of diamonds, where output has recovered significantly faster than had been anticipated.

Small business owners expressed mixed reactions regarding the new year of 2010 in terms of businesses gaining momentum while others maintained that the recession had little impact on their businesses.

Kgosietsile Mariri, the Managing Director of C’est Magnifique Dry Cleaners and Laundry Services, revealed that the recession had little impact on his business which targets executives and middle managers.

He said the reason was that, despite the recession, people still had to put on neat and clean clothing when going to work.

He optimistically expressed confidence in growth of business in 2010, saying “already things are looking good in terms of customer turnover”.

Consumers, still recovering from last year’s recession impact, cautiously embraced the new year as Lona Nthibe, a Botswana Accountancy College graduate who during the previous year had lowered his buying habits, said it was too early to predict whether 2010 would be any better.

Another consumer, Karabo Tladi, a Commerce graduate from Monarsh, South Africa, said this year there is a bit of business and consumer confidence as there might be a lot of spending, though he said he is still practicing cautious spending.

However, Botswana’s renowned Economist, Dr Keith Jefferis, expressed a different view altogether as he believes small businesses are going to have a tough time in 2010 as its consumers, being government and household, have some budget constraints.

He stated that household’s previous year’s debts are going to limit their spending, thus affecting small business recovery while the government has a budget deficit that forces it to cut on other things.

Jefferis further predicts that the non mining economy will be lower in 2010 than 2009 compared to the mining sector, which will experience the opposite as demand for minerals is increasing.

“Things will get better as companies will find it easy to raise money for mineral exploration to meet the demand,” argued the former Bank of Botswana deputy governor.

He, however, revealed that the general economy will get a partial recovery “as economic conditions will be quite difficult. It will not be a complete return to 2008”.

In advising households to cope with 2010 and the impact of the previous year’s economic meltdown impacts, Jefferis urged them to adjust their spending with their income, he said they should avoid borrowing money unnecessarily and should stop purchasing luxurious assets such as cars.

The BES survey stated that there appears to have been a significant upturn in overall business confidence.

It stated that, at the time of the previous survey, only 40% regarded prevailing business conditions as satisfactory, while even fewer (26%) were optimistic about conditions in the next six months.

“In contrast, although still relatively low, the satisfaction with current business conditions has risen to 47 percent, and this is maintained for the first half of 2010. For 2010 as a whole, confidence rises to 59 percent. This suggests that businesses are now more confident in both domestic and international economic conditions,” the survey stated in part.


Read this week's paper