Lack of foreign financing impeding local businesses

Access to financing from abroad is perceived to be a major challenge for local businesses.

This emerged in Bank of Botswana’s (BoB) most recent quarterly report, conducted under the title ‘Business Expectations Survey (BES)’.

In the report, a number of businesses across various sectors cited the difficulty in accessing external funding as the greatest challenge to their operations.

The second major obstacle identified was the shortage of raw materials, a common problem in the manufacturing sector, as well as construction and trade, hotels, restaurants and transport and communications.

Despite the current uncertainty surrounding the political climate, this has not been enough to cause worry among local businesses.

Indeed, the political environment along with the current exchange rate have been deemed supportive factors to the ease of doing business in Botswana, as of the second quarter of 2019.

Furthermore, while issues of unreliable utilities have historically been fingered as major hindrances, water and electricity are now thought to contribute positively to economic activity.

Ongoing efforts such as the North-South Carrier water project and the North-West Transmission Grid electricity connection are expected to further improve supply of these utilities.

Looking forward, the report revealed the majority of local enterprises are optimistic business prospects will pick up over the last part of the year. This represents a contrast to BoB’s previous survey, in which businesses had expressed worry about economic activity.

Notwithstanding the positive prognosis, businesses anticipate costs will escalate in the third quarter of the year – an increase attributed to the rise in wages and cost of materials and transport.

It is further anticipated that domestic lending rates and volume of borrowing will also rise, locally and elsewhere in the next 12 months.

However, it is expected this will be inconsistent with the projected rise in investment, especially in buildings.

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