What’s next after end of State of Emergency?
It’s a welcome development- Mandlebe COVID herd immunity will influence economy outcome S& P revises economic outlook from negative to stable
The State of Public Emergency ending next week Thursday bring its own challenges, amongst them possible job losses.
But, there is positive business outlook and an improved credit rating which shows light at the end of the tunnel. Permanent Secretary in the Ministry of Finance and Economic Development, Dr. Wilfred Mandlebe has welcomed the development saying it portends growth for the economy and a potential increase in revenue.
“As you know there is a positive correlation between the growth of the economy and the revenue. So we look forward to that. But, we also know that it is all dependent on how our fellow citizens behave because the disease is carried and spread through the movement of people as we behave in a certain way. He said that, overall they are optimistic. “We are about to close the last quarter which is end of September, and this will be the end of the many quarters that we had under the SoE that this economy has had. “Our expectation is that this year, we registered some growth in the first quarter, it was not high, and we are waiting for the second quarter figures which we hope are going to be positive. “We are projecting recovery for this economy of about 9.7 percent, but, that recovery is seemingly high because of the Base effect- which is the point in time at which growth is calculated”. Generally, Mandlebe expects the economy to recover this year and hopefully continue into the next year. But this will depend on the virus ( Covid- 19) trajectory. However, this will depend on Botswana’s ability to acquire enough to reach herd immunity, which is the minimum threshold of having vaccinated about 80 percent of the population thereby drastically reducing the spread of the disease.
DIAMONDS
Mandlebe said the country is also not doing badly on the diamond sales and attributed this improvement to De Beers’ new sales arrangement which no longer exclusively relies on sight holders coming to Gaborone to buy diamonds. “The first seven ( 7) sight meetings were quite good if you compare them to last year, and as a result we have also been getting a reasonable income of that revenue item”. Mandlebe said they are also seeing a potential for recovery in sectors that were hard hit by COVID- 19 such as the Tourism industry. “We hope that at the end of the year, we will see some life in that sector. We are quite positive that things will not be that bad, as to whether companies in light of this positive outlook will retrench their staff after the SoE ends in September, I cannot vouch and am not competent to comment on it”.
RATINGS
The central bank - Bank of Botswana has released a public statement from S& P Global Ratings affirming the economic outlook on the country. The rating agency maintained the country’s sovereign credit rating for long and short term foreign and local currency sovereign credit at “BBB+/ A- 2”. However, S& P revised the economic outlook from negative to stable on account of anticipated rebound in Botswana’s economic growth, partially led by the diamond mining recovery. According to S& P, the investment grade BBB+ and A- 2 credit ratings are underpinned and supported by the country’s robust and predictable institutional and monetary policy frameworks; modest net general government debt levels and relatively strong net external position; all of which support durable macroeconomic stability. S& P expects economic recovery to be driven by the anticipated strong recovery in the diamond market which, in turn, should result in a substantial improvement in the domestic fiscal and external sectors’ performance over the next two years.
The rating agency indicated that a change to the current rating, going forward, will depend on a variety of factors. On the one hand, an upgrade could arise if Botswana manages to rebuild the fiscal and external buffers, along with sustainable diversification of the export base, with a view to cushioning the economy from future shocks.
On the other hand, a rating downgrade, if warranted, would reflect the delay in the recovery of upstream and downstream diamond segments, because of the pandemic, as that translates into a weaker than expected fiscal or external performance.
In his update on his Ministry’s state of the Public Emergency Exit Plan, the Minister of Employment, Labour Productivity and Skills Development, Mpho Balopi indicated that the SoE has badly affected the world of work because some businesses had to stop their operations during the periods of lockdown, while others were forced to operate for limited hours and with a reduced number of employees. Most businesses experienced cash- flow problems due to reduced demand and supply of their products and services. This has made it difficult for them to pay overheads, including wages. Balopi said that his Ministry continues to receive complaints and enquiries from employees who have not been able to earn wages or are earning partial wages because the businesses are not operating or are partially operating. “My Ministry also received reports of retrenchment and dismissals of employees, particularly at the initial stages of the COVID- 19 pandemic,” he reported.
RETRENCHMENTS
Balopi said from April 2020 to July 2021, the Office of the Commissioner of Labour received a total of 320 notifications for retrenchments from employers. Twenty ( 20) businesses retrenched 204 employees. The companies involved were advised to comply with Clause 30E of Supplement C- Emergency Powers ( COVID– 19) ( Amendment) ( No. 2) Regulations, 2020- SI. No. 63 of 2020 which states that, “Where a business is unable to have employees work remotely from home or where a business is unable to pay salaries, the business may cease operations, but shall not retrench or dismiss an employee during the State of Public Emergency”. Balopi said that the ongoing review of the labour laws ( Trade Dispute Act, Employment Act, Factories Act, Workers Compensation Act & Trade Unions & Employers Organisations Act) should be fast
tracked to cater for emerging issues that are currently not covered by the labour laws. The Ministry should also fasttrack the establishment of the Steering Committee to ensure effective implementation of the Botswana Decent Work Country Programme, as well as fast- track the automation of the Work Permit System to enhance efficiency on the issuance of work permits and also facilitate the acquisition of critical skills by key sectors of the economy. Balopi said in order for Botswana to emerge as a resilient and victorious nation, the spirit of togetherness, cooperation and mutual understanding should prevail as a means to deal with the challenges brought about by the pandemic, as well as promote decent work arrangements in Botswana.