Sunday, April 18, 2021

No figures yet, but economy begins to get battering from strike

The Botswana private sector is worried that the public sector employee strike is beginning to have a spill on effect that is likely to have a greater impact on the economy as a whole and possibly turn away foreign investors as Botswana is portrayed in the negative light abroad.

BOCCIM, a federation that represents private sector employers was worried on Friday that some members from small businesses sector may close shop in the next month if the stand-off continues.
“There have been delays in issuing of business licences, certificates, permits and other pertinent documents for business processes to continue effectively,” the organisation, headed by Maria Machailo- Ellis, said.

The nationwide strike, which is running into a month now, has led to a halt in the delivery of public services around the country as the civil servants want government to heed the 16 percent salary increment.

Government, on the other hand, says it has no funds to finance that proposal as it will leave P2 billion hole in the government coffers—which will make the anticipated deficit worse.

BOCCIM said there has also been a reduction in government orders for goods and services from the private sector, which has resulted in sales plummeting, potential closure of businesses, and job losses, specifically from SMME’s.

“For most companies, the government is their key client, and with the delays in payments businesses have encountered cash flow and creditor problems, including hindrances in their daily business operations,” it added.

Business sales have disintegrated across the board in all sectors and a general negative business confidence is being experienced, as some potential foreign investors and visitors have a perception that there is unrest in the country due to the ongoing strike.

BOCCIM is concerned by this effect and has been working on liaising with the necessary groups to ensure a resolution is brought to the table on as soon as possible.

One analyst who declined to be named said he is disappointed by the economic intellectual silence on the ongoing public servants strike.

He suggested that the silence has made public debate appear one sided resulting in the President Ian Khama to be unfairly abused and to be made as if he alone is the bearer of our governments’ commitment to a budget deficit reduction.

“Not long back, we were all told that for us to get back to our days of prosperity there were immediate sacrifices we needed to take. One of which was to reduce government expenditure. Central to government reducing expenditure, has been controlling the public payroll, either by reducing the workforce or freezing salary increases,” he said.

Botswana experienced its deepest recession but although the economy seems to be recovering, Batswana have been warned that one cannot get excited to think the country is out of the woods.
The fear in the market is that by no means the economy is out of the danger zone with the diamond markets remaining sluggish, so have commodity markets in general been volatile.

“However, the wisdom of reducing expenditure and freezing the wage bill is beginning to manifest itself as the economy slowly has come out of recession. As it is known to everyone, this budget deficit has been backed by many institutions, chief among these institutions were the IMF and the World Bank. The IMF has now revised its growth predictions of our economy to 6.0 percent from an earlier forecast of 4.8 percent.”

“In short, we need to do three most important things: reduce expenditure, find new government revenues by diversifying the economy and create real growth by attracting foreign direct investment. In the interim we need to lay foundation for an economy where people invest rather simply consume.”

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