Mmegi Online :: Businesses upbeat on 2019 prospects
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Last Updated
Tuesday 18 June 2019, 14:47 pm.
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Businesses upbeat on 2019 prospects

Businesses generally expect better prospects this year, with stable inflation, reliable water and power supply anchoring greater borrowing, investment and expansion, the Bank of Botswana’s (BoB) latest business expectations survey shows.
By Mbongeni Mguni Fri 11 Jan 2019, 18:00 pm (GMT +2)
Mmegi Online :: Businesses upbeat on 2019 prospects








Conducted and published twice a year, the survey involves a questionnaire distributed to 100 companies to gauge their confidence in certain macroeconomic indicators for the current and forthcoming periods.

The latest survey, released last week but conducted between September and October last year, shows that the majority of the 100 businesses sampled were optimistic about the conditions necessary for their sustenance and growth in 2019.

The BoB’s survey shows that surveyed businesses have stronger optimism in overall business conditions both for the period of the survey and for the first half of 2019, with a marginal dip for the 12-month period to December 2019.

For 2019, businesses are also confident in investment in buildings, plant and machinery as well as vehicles and equipment. Part of the confidence surrounding investments in 2019 stems from the higher expectations amongst businesses that lending rates will decline this year and domestic borrowing increase.

“Looking ahead, domestic lending rates are expected to decline, thus consistent with the anticipated rise in domestic borrowing in 2019,” the BoB report says.

“On the other hand, lending rates in South Africa are expected to rise, while borrowing from South Africa by Botswana firms is expected to fall in 2019.” Boosting local borrowing has been a thorn in the side for the BoB, whose accommodative monetary policy involving interest rate cuts over the years, has not translated into

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higher business borrowings. Businesses expect inflation to trend below four percent, which is within the BoB’s three to six percent medium term target range.

Local businesses are however wary of wage increases in the first half of 2019, which they expect to apply cost pressures to their enterprises. Businesses expect cost pressures to chiefly come from materials, followed by wages and then transport.

However, businesses in consumer-related services such as retail trade, hotels and restaurants are banking on the anticipated wage increase to prop up their activities in 2019, together with an overall stronger economy.

Overall, BoB researchers said business conditions are perceived to have improved since the last survey in March, and were expected to become even better in the first half of 2019.

The country’s private sector will be looking at February’s unveiling of the budget to gauge the prospects for 2019. The budget speech guides expectations on government expenditure, revenues and policy direction for the next financial year and beyond.

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