If you are to ask a miner, constructor or manufacturer what they think of the local currency, the Pula, the answer you are likely to get could sound unpatriotic. But that would not be a sign of being unpatriotic but a cry for help from the monetary policy authorities.
A survey carried by the Bank of Botswana in the last quarter of 2022 shows that companies, specifically those in the Mining and Quarrying; Manufacturing; and Construction and Real Estate sectors viewed the rand/Pula exchange rate as unfavourable and, therefore, costly to doing business as the Pula was not strong enough against the South African rand.
The central bank says the sentiment is justified by the fact that, “…..these firms source most of their raw materials from South Africa”.
For 2022, the Bank of Botswana’s implementation of the exchange rate policy entailed the maintenance of an annual downward rate of crawl of 2.87 percent.
The downward rate of crawl was implemented from May 1, 2020 with a view to enhancing domestic industry competitiveness in response to the adverse impact of the COVID-19 pandemic on the economy. The Pula basket weights were also maintained at 45 percent for the South African rand and 55 percent for the SDR, guided by Botswana’s trade pattern and international transactions. According to figures shares by the central bank, in the twelve months to November 2022, the Pula depreciated by 3.8 percent against the South African rand and 2.1 percent against the SDR. Against the SDR constituent currencies, the Pula depreciated by 8.1 percent against the US dollar, while it appreciated by 12.4 percent against the Japanese yen, 3 percent against the Chinese renminbi, 2.3 percent against the British pound and 0.4 percent against the euro.
Meanwhile for 2023, Olesitse Masimega – Permanent Secretary at the Finance Ministry said that the government has decided to maintain the Pula basket weights at 45 percent South African rand and 55 percent SDR for 2023, and adopt a downward rate of crawl of 1.51 percent per annum, “in view of the projected favourable inflation differentials, for Botswana, and also with a view to promoting Botswana-produced goods’ competitiveness, domestically and internationally”.