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      Botswana’s women boxing on the rise 

      Boxers Finally Receive their Prize Money from 2022 African Championships

      Darts Expects Only P50K from BNSC for 2023/24

      Darts Expects Only P50K from BNSC for 2023/24

      Botswana athletes to train in USA

      Botswana athletes to train in USA

      Debswana’s BAA Sponsorship Plays Critical Role in Developing BW Athletics – Theetso

      Debswana’s BAA Sponsorship Plays Critical Role in Developing BW Athletics – Theetso

      Boxers yet to Receive Prizes from 2022 African Boxing Championships 

      Boxers yet to Receive Prizes from 2022 African Boxing Championships 

      April will see 2nd Instalment of Summer Kids Marathon

      April will see 2nd Instalment of Summer Kids Marathon

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      Home Columns Host on the capital

      Are we taking the right measures to combat inflation in Botswana?

      We need to consider our decision-making by looking through the demand side of things that reduce pressure on the supply side of things.

      mm by Chilo Ketlhoafetse
      July 20, 2022
      in Host on the capital
      Reading Time: 3 mins read
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      Understanding interest rates and the recent Monetary Policy Changes

      GABORONE 8 October 2020, Bank of Botswana (BOB) Governor Moses Dinekere Pelaelo briefing the media on the outcome of the Monetary Policy Committee (MPC) in Gaborone 8 October 2020. The deputy Governor of the bank Dr Kealeboga Masalila was present among the others during the briefing. (Pic:MONIRUL BHUIYAN/PRESS PHOTO)

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      The never-ending cry is in every household in Botswana where P100 isn’t enough to buy bread, cooking oil and milk. What is the government doing about this?

      April 2022 ended with the Bank of Botswana’s Monetary Policy Committee increasing the Monetary Policy Rate (MoPR) by 51 basis points from 1.14 percent yield on the 7-day Bank of Botswana Certificates to 1.65 after we had had a decline in inflation from 10.6 percent (Feb-22) to 10 percent in March. This is still above the central bank’s medium-term objective to keep inflation between 3-6 percent hence the need to interject further. This need is primarily fuelled by the anticipation of a further rise in inflation, which indeed rose to 11.9 percent in May, driven by the upward adjustment in fuel prices announced in May itself.

      However, economists at the central bank anticipate a downward trajectory of inflation by the fourth quarter of 2022, bearing in mind several factors like an increase in international commodity prices, Botswana’s very own import restrictions, and administrative factors from the government itself, all supply-driven factors. I believe that we may need to look at this from the exact opposite perspective, i.e. the demand side.

      The central bank anticipates economic growth through enhanced transformation reforms and implementation of supportive macroeconomic policies that led to the growth in real GDP of 11.4 percent in 2021 compared to South Africa’s growth of 4.9 percent in the same period. Further prospects of growth are heavily reliant on consistency in yet again supply-driven factors like adequacy of electricity and water and non-disruptions to logistics in value-chains. But the visible indicators prove this will not be an easy tide to ride. South Africa is currently going through one of the worst times with electricity supply, with households and businesses being degraded by the daily loadshedding. This largely affects the SME community which, coupled with the significant rise in fuel prices in South Africa as well, makes it difficult to run any business. South Africa being Botswana’s biggest trading partner, we should expect the after-effects to spill over to us.

      But are there other factors that we may be overlooking to combat inflation? Yes, it is just like a seesaw and we need to consider our decision-making by looking through the demand side of things that reduce pressure on the supply side of things. One way of achieving this is by enhancing productivity in production of goods and services by pushing the government to incentivise investment by relooking at the fiscal policy from the household level to businesses, as well as strategic plans for the country’s various regions.

      SEZA and SPEDU need to be particularly held accountable for fulfilling their mandates, which too have contributed to the slow development of economic diversification as investment arms of government. The in the MoPR makes life a whole lot more difficult as debt repayment becomes heavier and deters prospective clientele, especially for the SME community where working capital remains constrained as the cost of debt grows, resulting in liquidity and solvency issues. With fears of a recession looming, each economy needs to protect its interests through deliberate trade and economic policies.

      I for one am quite happy with implementation of the Economic Recovery and Transformation Plan (ERTP), not just as an avenue to encourage productivity in the private sector but also how it will feed into the daily lives of Batswana and the private sector. Now, how government can roll this out is through offering tax relief and setting better rules through this tax amnesty and possibly re-looking at the new taxes set in earlier this year if we want to encourage growth in the private sector, especially the SME? Economic diversification should be more than just a catchy slogan.

      Public investment needs to be strategised and aligned to growth prospects throughout the economy, and this includes technological trends and the notions of the Botswana Digital and Innovation Hub on 4IR (Fourth Industrial Revolution), therein begging the questions around infrastructure development and Internet accessibility that probes the need for the development of start-ups and whether we’re catching on with the world to the needs to FinTech and Digitalisation.

      We can go on and on, but these remain as part of the issues that discourage growth as there is little to no synergy among key decisions and their ripple effect on one another, hence we find ourselves in this economic tide that’s so hard to ride.


      Commentary can be sent to ctketlhoafetse@gmail.com.

      Tags: Bank of Botswana CertificatesEconomic Recovery and Transformation Plan (ERTP)Monetary Policy CommitteeMonetary Policy Rate (MoPR)SEZASPEDU

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