Businesses less optimistic about 2010 - Survey

Brian Benza
Staff Writer | Tuesday September 14, 2010 00:00

According to a survey carried out by international accounting and consultancy firm, Grant Thornton, Botswana business expectations for employment growth, revenues and profitability remain positive while bureaucracy and a lack of skilled workers are holding businesses back.

As a result, the country's optimism level has fallen 19 percentage points from +81 percent in 2009 to +62 percent in 2010.This compares unfavourably with optimism among businesses globally, which rose by 40 percentage points to +24 percent from -16 percent.

The Grant Thornton International Business Report (IBR) is an annual survey of views of senior executives in privately-held businesses (PHBs) all over the world.

In Botswana, 100 businesses were surveyed across all industry sectors. These businesses ranged from small to medium in size, employing between 25 and 149 workers.

According to the survey, expectations for businesses have fallen this year because of constraints such as regulations/red tape (45 percent), which was cited as the major constraint restricting expansion by businesses in Botswana.

'The lack of availability of a skilled workforce (43percent) emerges as the second greatest constraint,' reads the report.

The global picture is that the greatest concern for businesses worldwide is shortage of orders/reduced demand (39 percent), a factor that is cited by only 26 percent of businesses in Botswana.

Despite these constraints, the majority of businesses in Botswana still expect healthy profits for the year and most of them actually plan to expand through mergers and acquisitions this year.

'+50 percent of businesses expect employment to increase this year, comparing favourably with a global figure of just +20 percent of businesses that expect to increase employment,' says the report.

'Profitability expectations amongst businesses in Botswana have risen by 10 percent this year. A balance of +31 percent of businesses expected profits to rise in 2009, compared with +41 per cent this year.

'On the other hand, the global average has bounced back even more sharply, climbing by 34 percentage points from -5 percent to +29 percent.'

Looking ahead, the Grant Thornton report says diversification of the economy and creating an environment for private sector investment in sectors other than diamond mining will be key to growth, which could average 4.9 per cent up until 2014.

The report says a return to global economic growth, particularly in the euro zone, provides the biggest risk to this forecast. 'The government - which relies on diamond exports for around two-fifths of its revenues - is also faced with a swelling fiscal deficit and resurgent inflation,' it goes on. 'Further diversification into industries such as tourism will be needed to reduce inequalities and drive consumer demand.'

The report further reckons that as the economy exits the recession, all businesses will face new challenges and will need to take advantage of new opportunities to achieve consolidated growth and lead the way to recovery.

In global rankings, for the first time in six years, India has been overtaken as the most optimistic country. The country that has toppled India, Chile, now tops the league table with a net balance of +85 percent (-24 per cent in 2009).

But India's tenacity places the country in a very close second with +84 percent, while Japan remains at the bottom with a balance of -72 per cent.

Launched in 1992 in nine European countries, the report now surveys over 7, 400 businesses in 36 economies, providing insights into economic and commercial issues affecting a segment often described as the 'engine' of the world's economy.