COVID-19 pushes more Batswana towards informal sector
Pauline Dikuelo | Friday May 28, 2021 16:45
Throughout Gaborone, more street stalls, kitchen and food points are opening up. On social media, every other person is producing, trading and/or selling one commodity or another.
The economy appears to be slowly informalising, where people leave the formal sector for one reason or another and join informal trade. A year and a few months after first arriving in the country, COVID-19 has caused significant harm to individuals and communities both in economic and health terms. The pandemic-induced recession, which saw the economy shrink by 7.9 percent last year, has shaken the country’s foundations triggering the worst jobs crisis since the 2008-2009 economic meltdown.Statistics Botswana estimates that at least 67,000 people lost their jobs and businesses last year, a conservative figure given that the data agency’s researchers were unable to fully conduct their assessments due to COVID-19 restrictions.
From March last year, several companies put workers on unpaid leave while others had their employment contracts terminated under the ‘no work, no pay’ policy. At some companies, workers were told to sign resignation letters and take non-negotiable packages.
The country’s unemployment rate went up from 23.2% in quarter one of 2020, to 24.5% in quarter four of 2020. Analysts believe the real unemployment figure is much higher as the official statistics only include those people who are actively looking for work. Those who have given up looking are not classified as ‘unemployed’. Meanwhile, the informal sector has been growing faster than the formal sector since March last year as workers have been unable to find opportunities in the formal sector. Analysts also say the country’s rapid digitisation due to COVID-19 has also sparked the spirit of entrepreneurship amongst Batswana who are exploiting the wide popularity of social media to market their innovations and businesses.
Government has also stepped in to help the informal sector and Small, Medium and Micro Enterprises (SMMEs), providing grants of P1,000 to registered informal sector players under the P100 million facility to small businesses being disbursed via the Local Enterprise Authority. The funds are part of the P1.3 billion Industry Support Facility unveiled last year by the Ministry of Investment, Trade and Industry as part of the Economic Recovery and Transformation Plan.
Goabaone Tsonyane, however, believes the government’s interventions will only benefit stable companies, leaving out the informal sector. “Most of the country’s registered informal sector businesses earn less than P2,000 a month and most do not have a bank account.
“This will make it hard for them to access funding, even though the sector is vulnerable and highly exposed to economic shocks,” he says.
A local entrepreneur, Khumo Serai says the government needs to play a more active role in protecting the informal sector as it is a powerful potential lever for reducing poverty and creating employment.
“I believe a lot needs to be done after even the grants to help these projects. “They need monitoring and mentoring, lessons on penetrating the export market and help on promoting SMME business to business linkages. “There is a need for discussions around value chain and partnerships amongst us as entrepreneurs and government should actively lead in these discussions,” he said. On the other hand, Gaborone-based street vendor, Masego Ntseane, who sells fruits and vegetables, feels the government introducing CEDA’s Letlhabile programme has helped boost her businesses as the product specifically assists to set up and grow their business. “Lockdowns forced most of us to close shop and we ended up using our business proceeds and even savings.
“When the lockdown restrictions were eased, it was really hard as I had no stock.
“I approached CEDA and managed to benefit and can happily say that my business keeps growing every day,” she said.