Business Botswana, the countryโs leading private sector advocacy group, has raised alarm over a series of abrupt policy changes introduced without adequate consultation, warning that the reforms could erode investor confidence, raise operating costs, and hinder economic recovery.
In a strongly worded statement, Business Botswana called for better engagement with stakeholders, saying meaningful consultation is essential to align reforms with business realities and minimize unintended consequences through thorough regulatory impact assessments.
โWhile these interventions may be well-intentioned, their cumulative effect, if not carefully considered, risks increasing the cost of doing business in Botswana,โ the group said.
The private sector lobby cited several recent policy decisions with far-reaching consequences, including:
- Adjustments to the exchange rate mechanism, allowing the Pula to weaken up to 2.76 percent in a bid to boost exports and safeguard foreign reserves.
- Suspension of Government Purchase Orders (GPOs) via the Government Accounting and Budgeting System (GABS), halting their issuance from July 14 to 31.
- Amendments to employment laws, imposing new compliance burdens on businesses.
- Significant electricity tariff increases for commercial and industrial users introduced by the Botswana Energy Regulatory Authority (BERA).
The Ministry of Finance said the temporary suspension of GPOs was implemented to address fiscal pressures and curb runaway public expenditure. Speaking to reporters, Vice President and Finance Minister Ndaba Gaolathe defended the measure, calling the GPO system a โfinancial black holeโ that enabled unchecked spending outside formal procurement rules.
โThe automatic generation of GPOs, without proper oversight, created a massive loophole for abuse. Billions of pula were at risk,โ Gaolathe said. He added that permanent secretaries and accounting officers have been given oversight powers to control spending while the system is under review.
โThis is a temporary measure as we build more robust systems. We want full visibility over government expenditure,โ he said, revealing that the government plans to overhaul its financial management infrastructure with help from institutions like the African Development Bank. He hinted that the new system could include real-time monitoring and artificial intelligence.
โRight now, a lot of things go wrong without immediate detection. We want a system that offers real-time oversight,โ Gaolathe said.
On the monetary policy front, Gaolathe defended the recent shift in exchange rate policy, acknowledging that the weaker Pula could impact importers. However, he emphasized the move was necessary to protect foreign reserves and avoid a broader economic crisis.
โWithout these reserves, we risk widespread shortages, job losses and inflation that would hit the poor hardest,โ he told Parliament. โThis is a preemptive move to prevent an economic meltdown.โ
Gaolathe also cautioned against opportunistic pricing in the wake of the currency adjustment.
โSome businesses are using the exchange rate shift to justify excessive price hikes. The adjustment alone doesnโt warrant the kind of mark-ups weโre seeing,โ he said.
The recent electricity tariff hike has also drawn sharp criticism. While low-income households using under 200 kWh a month will see a 30 percent drop in energy charges, businesses will face steep increases. Medium and large commercial users, as well as mines, now face tariff hikes between 40 percent and 50 percent, alongside a 24 percent increase in fixed monthly charges and similar spikes in demand charges.
In response, Business Botswana has launched a survey to assess the impact of the new electricity rates on operations. The survey aims to understand how the changes affect business costs, pricing, production schedules, and investment in energy efficiency.
Other policy changes raising concern include recent restrictions on cement imports, viewed by some as protectionist, and a rise in rejections of work permits and visas, particularly in tourism and education sectors.
Business Botswana said it has submitted a detailed set of economic recovery proposals to the government, outlining private sector recommendations on policy and legislative reforms.
โWeโre also facilitating the submission of high-impact, transformative projects in partnership with line ministries, ensuring business development aligns with national priorities,โ the group said.
Business Botswana added that it is working to revive the Sub-High-Level Consultative Councils (SHLCCs) to restore structured dialogue between the public and private sectors. The aim is to rebuild trust and improve coordination using regulatory impact assessments to detect and address unintended policy effects.
โAlthough progress has been slow across some sectors, we remain committed to these conversations. We assure our members and the broader business community that we continue to advocate for inclusive, evidence-based solutions that restore confidence and lay the groundwork for a sustainable recovery,โ the statement read.
