Business confidence rises

Isaac Pinielo | Monday November 24, 2014 14:42

During an advisory services cocktail event held at Gaborone Sun last week, it was indicated that the positive outlook is reflected in the views held by the country’s business leaders, with 80 percent expecting to see revenue growth in the next 12 months.

Managing partner of Grant Thornton Botswana, Jay Ramesh, explained that profitability expectations are also extremely high, as 88 percent of leaders predict an increase in profits, the highest figure for Botswana in 7 years and the highest in the 34-economy survey. He said export expectations also shot up in the third quarter to 26 percent, following single digits expectations in the three previous quarters. “Following predictions of economic growth in the short and longer term, Botswana’s business leaders are prioritising investment in a number of growth initiatives,” said Ramesh.

He further noted that investing in marketing appears to be the route chosen by most at 76 percent, while 50 percent plan to develop or launch a new product and over one-third (36 percent) aim to expand their businesses domestically.

He said investment indicators remained relatively stable in the third quarter of 2014, with 50 percent of leaders indicating an expectation to increase investment in new buildings, consistent with figures from the previous quarter.

Ramesh also pointed out that expectations of investment in plants and machinery climbed to 60 percent, a 14 percentage points year-on-year increase, figures for research and development achieved similar results, up 16 percentage points year-on-year.

However, the managing partner revealed that business leaders in Botswana cited lack of skilled workers as the biggest constraint to the country’s growth prospects of 40 percent. Although this is down on the figures reported in 2013 of 55 percent, and is the lowest reported figure since 2007, Ramesh stated that it is still higher than the global average of 35 percent.

“Regulations and red tape also continue to constrain business growth. However a number of business leaders reporting it as a constraint has reached a 5-year low with 36 percent, lower than neighbouring South Africa at 39 percent and the African average of 37 percent,” he said.

Rising energy costs are also said to be problematic for 44 percent of businesses in Botswana, but Ramesh stated that this is a significant decrease from the second quarter of 2014 at 66 percent, the first quarter of 2014 at 56 percent and the fourth quarter of 2013 at 54 percent figures.

He said this is likely to reflect the stabilisation of recent power supply problems in the country.

In addition, he said, information and communications technology (ICT) was highlighted as a significant growth constraint in 2013 with 33 percent of business leaders stating that it was an issue for their businesses. He however said this figure was halved in 2014 to 16 percent, just below the global average of 19 percent.

“Improvements have also been seen in transport infrastructure with just 13 percent of businesses citing it a growth restrictor in 2014, down from 31 percent the previous year,” he said.

The Central Bank, in its Business Expectations Survey (BES) released in March this year, stated that overall confidence on current business conditions has declined considerably, but improvement is expected in subsequent periods.