CCA dispatches price monitoring teams after pula decision
Mbongeni Mguni | Monday July 28, 2025 10:07
Since government adjusted the pula’s rate of crawl downwards and increased banks’ trading margins for foreign currency trade with the Bank of Botswana, several businesses have adjusted their prices by up to 10%.
The moves are expected to be inflationary and add to consumers’ woes in a year in which the economy is under pressure and where government’s own finances are strained.
“The CCA is aware of these reports, and we have dispatched teams which are going around doing some price monitoring of commodities on the shelves,” the authority’s director of communications and stakeholder relations, James Molosankwe told Mmegi in an emailed response to enquiries. “The CCA is empowered by law and regulations to investigate any perceived unfair or misleading pricing. “The CCA can investigate and if necessary, impose penalties for anticompetitive conduct and unfair business practices by businesses.”
Molosankwe said inspections and investigations have already established that some suppliers have put disclaimers that they shall charge consumers more than the price displayed at the shelves.
“CCA warns that this is a contravention of Section 11(3) of the Consumer Protection Act of 2018, in that a supplier shall not charge a consumer more than the price displayed. “A supplier who contravenes this section shall be liable, upon conviction, to a fine not exceeding P50,000 or to imprisonment for a term not exceeding three years, or to both,” he said.
Molosankwe added that businesses that were hiking the prices on stock purchased before the pula adjustment were exploiting customers “under the guise of exchange rate adjustments”.
“Consumers are encouraged to be vigilant, compare prices, question unexplained increases, and report suspicious prices to the CCA,” he said.
Molosankwe further said the authority will intervene where businesses mislead consumers by falsely attributing price hikes to the exchange rate and where there is evidence of collusion or anti-competitive behaviour amongst suppliers and service providers.
As the debate rages in the country about the prudence of the recent pula adjustments, prominent economist and former Bank of Botswana deputy governor, Keith Jefferies, said whilst the rate of crawl adjustment was minimal, the increase in the trading margins was the prime driver behind businesses’ decision to hike prices.
“The spread is normally so small (0.5 percent each side of the mid-rate) that it is hardly noticed,” he wrote in an opinion piece published on LinkedIn. “But this change is huge and essentially means that those buying foreign currencies (such as importers) will pay seven percent more – effectively a devaluation of that amount. “Those selling foreign currencies, such as exporters, will receive seven percent less – so for them its effectively a seven percent revaluation of the pula (making it more expensive).”
Jefferies said the change is effectively a devaluation for those buying foreign currencies with pula and a revaluation for those selling foreign currencies to buy pula.
“And of course the number of firms and households that buy foreign exchange is far higher than those selling. “This results in the worst of both worlds – more expensive imports and therefore a jump in inflation, and a disincentive for exporters and investors, who we should be trying to encourage. “A devaluation is typically used to encourage exports, but this time we don't even have that benefit,” he wrote.
The Finance Ministry recently announced that the pula’s rate of downward crawl will be increased to 2.76 percent over the next six months, from its current 1.51 percent, meaning the local currency will be allowed to fall gradually in daily changes amounting to 2.76 percent by December.
In addition to the rate of crawl adjustment, the trading margins for the pula between the buy and sell rates for currencies quoted by the Bank of Botswana (BoB) were increased from ± 0.5 percent around the central rate to a margin of ± 7.5 percent. This change, combined with increasing the minimum threshold of foreign currency commercial banks can approach the central bank for, from $1 million to $5 million, is part of attempts to preserve the official foreign exchange reserves managed by the BoB.
Botswana’s official foreign exchange reserves, held by the BoB, were last measured at P46.4 billion in March, from P64.8 billion a year earlier, with the drop attributed to the prolonged downturn in diamond sales.
“The idea behind increasing the margins is to minimise or make it more expensive for banks to come to the BoB for foreign exchange,” central bank deputy governor, Kealeboga Masalila told Mmegi at a recent briefing. “The result should be more trading of foreign currency amongst the banks themselves and motivating their clients to exchange foreign currency with them, through various products, and that way preserve the official foreign exchange reserves.”