Scores of Batswana may go on strike against soaring unemployment figures which have reached highest levels in decades it is feared.
This is according to a report released by a country risk team at Fitch Solutions which states that; “Over 2023, we forecast Botswana’s unemployment to grow to 24.1%.”
When considering the small population of just 2.48 million, the report warns that; “This poses a significant downside to the prospects of large growth in consumer spending.”
According to the report: “Furthermore, protests and industrial action are likely over the coming quarters given rising public frustration with high levels of unemployment, inflation and income inequality.” It says a further downside to Botswana’s outlook will come in the form of the weakening of the pula against the US dollar, making imports more expensive for consumers and retailers.
“Over 2023, we hold a restrained outlook for Botswana’s consumer base. While we forecast real household spending to accelerate to 4.8% y-o-y, downsides to our outlook will come in the form of sticky inflation and elevated interest rates, which will reduce consumer purchasing power and make debt servicing more expensive,” says the report.
The report reiterated that: “Furthermore, with almost a quarter of the labour force unemployed, protests and industrial action are likely over the coming quarters, given rising public frustration with high levels of unemployment, inflation and income inequality.”
Over 2023, the researchers at Fitch Solutions also note that, “we project an uptick in real household spending, rising from 4.0% y-o-y in 2022, to 4.8% year-on-year.”
They also indicated that; “Structural challenges such as high unemployment, the prevalence of communicable diseases and income inequality will weigh on the general consumer in Botswana and we therefore hold a moderate outlook for consumer spending in Botswana over 2023.”
“We believe that the Bank of Botswana (BoB) will increase its policy rate by another 50 basis points to 3.15% by the end of 2022 and over 2023, and our Country Risk team forecasts the BoB to hold the policy rate at 3.15% as inflation eases, while economic growth falls below trend,” the report says.
It says rising consumer price inflation has been the key risk to consumer spending over 2022, and it has been eroding purchasing power and shifting consumer spending away from discretionary spending.
“This is the economic reality for consumers entering in 2023. Inflationary pressure started to rise globally in 2021, as localised shortages were created by base effects, higher commodity prices and supply chain challenges,” the report says. It adds that the Russia-Ukraine conflict has also significantly impacted the global supply prices of key commodities, such as oil and gas; fertiliser; wheat; corn; and barley.
According to Statistics Botswana’s Labour Force Module Report for Q421, wholesale and retail trade was the largest employer in Q421, with the sector employing 147,412 people or 20.1% of the employed population, followed by public administration which employs 133,071 people (18.1%), and education with 73,347 people (10.0%) employed.
“Traditionally large-scale employing sectors such as manufacturing, construction and agriculture are modest in Botswana and, with a small and ageing population in Botswana, the government will be hard-pressed to improve the wide employment outlook over the near term,” researchers at Fitch Solutions said.
