Sunday, September 20, 2020

Employers urge gov’t to come clean on economic crisis as labour recession looms

At a time when government is being criticised for being mum about the impact of the global financial crisis on the domestic economy, a body representing employers urged this week that authorities should be proactive and share information with the private sector.
 
Maria Machailo-Ellis, the Executive Director of the Botswana Confederation of Commerce, Industry and Manpower (BOCCIM), a local employer federation, told Sunday Standard that government should be open about the crisis.
 
“At a time like this, we expect our government to be proactive by consulting extensively with all stakeholders and seeking their views on how best to avert this challenge,” she said.
 
Her comments come at a time when cabinet has just woken from the slumber to face the reality that Botswana has been hit by the stray missiles that originated from bad investment on Wall Street.
 
Top government officials, including the Minister of Finance and Development Planning, Baledzi Gaolathe, and the Central Bank Governor, Linah Mohohlo, have in the recent past been in denial that the crisis would affect the economy until Debswana announced it was not selling diamonds this year because buyers are broke.
 
The US, which accounts for about 50% of the diamond market, is in recession with retail and industrial market not able to purchase Botswana diamonds.
 
This has meant that the problem has a trickle down effect on the economy with other companies announcing job cuts and limited ability to hire new workers.   
 
“In the final analysis, we believe that there is need to share all the facts and whatever information is available, good and bad, so that everybody knows what is being done and why,” she argued. “Our government needs the support of its people in these trying times and, therefore, the need to involve them through and through.”
 
The BOCCIM chief is of the opinion that the current recession will slow down the ability of Botswana economy to create as many jobs as it was anticipated due to the possible reduction in spending by government.
 
This will be worsened by the thousands of jobs lost last year after the implementation of the new liquor regulation that limited the hours of selling alcohol.
 
Already, Maria Machailo-Ellis observes that government has announced that it will temporarily hold back the implementation of the next National Development Plan (NDP10) because of the uncertainty in the global markets.
 
“This surely is an indication that some of the major projects planned may not be immediately implemented as government seeks to prioritise projects,” she notes. “If government spending, especially the development expenditure, is reduced as it seems likely, business will be negatively affected resulting in fewer jobs being available.”
 
BOCCIM is concerned that Botswana is vulnerable to the current global financial crisis because of its dependence on diamonds (75% of exports, 40% govt revenues) whose market is predominately the US and other industrialised countries.
 
It is observed that this vulnerability is reinforced by the simultaneous downturns affecting other export commodities like tourism, textiles and markets.

Botswana textile exporters like Caratex export to the US market under the Africa Growth and Opportunity Act (AGOA).

“The current recession will certainly slow down the ability of our economy to create as many jobs as we would want due to the possible reduction in spending by government.”

Machailo-Ellis says the difficulty with the current global situation is that no one knows how much longer this situation will continue or even, whether it will get worse before it gets better.

“It is, therefore, not easy for one TO say whether Botswana will experience the same magnitude of retrenchments (therefore labour recession) as South Africa has experienced,” she told Sunday Standard.

South Africa has announced that it is already in the labour recession with over 30, 000 having had been lost.

In Botswana, there have been hints of possible retrenchments by some companies who are immediately affected by the contraction of the American, European and Asian markets.

She observes that the closure of the Activox Project near Francistown could be attributed to this contraction.

Copper prices have taken a dive in the international market and BCL recently said that they have retrenched 388 workers because of the lower metal prices. The same situation also negatively affects export manufacturers as markets dwindle because of reduced demand of various goods, she noted.
 
However, she is of the opinion that as much as it is not so easy to see new jobs being created at a time like this, an opportunity, however, avails itself for government to further improve the business climate in the country in preparation for recovery.

“A visit to the recommendations made by BOCCIM in the past and to the FIAS report, as well as the Doing Business report would be of great assistance in this process,” she suggests.

“It will require other stakeholders such as Trade Unions to come forward and advise on how at the very least job losses can be minimized or avoided. Greatly improving productivity will also assist and possibly result in more job openings.”
 
At the same time, the BOCCIM chief observed that there is need for prudent management of resources by government such as the cutting of costs and waste, efficient project implementation should be a priority to avoid cost overruns. 
“Members of the business community who do business with government should be paid on time to avoid collapse of businesses and, therefore, unnecessary retrenchments,” she advised.

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Sunday Standard September 20 – 26

Digital copy of Sunday Standard issue of September 20 - 26, 2020.