Contrary to what they said a few months back, local businesses are now said to be less hopeful about business prospects this year.
In a survey conducted by Bank of Botswana (BoB) in March this year, it has been revealed that business confidence has declined, compared to the same survey carried out in September last year.
According to the results of the survey, businesses expect lower sales, reduced capacity utilization and lower profits compared to the last survey.
Correspondents are also reported to have noted a decline in investment in buildings, citing tight access to credit.
This decline in business confidence among both domestic-oriented and export-oriented firms with respect to future prospects is anticipated to affect economic activity.
Meanwhile, the central bank expects cost pressure to decrease in the second half of the year, reflecting the anticipated downward pressure on costs of materials, wages and transport.
Local companies are said to have developed less confidence following the presentation of the 2019/2020 Budget Speech in February this year.
They are thought to think the economy will grow by 3.8 percent in 2019 compared to the 4.2 percent estimate recorded in the budget speech, and 4.5 percent recorded in 2018.
Top among the factors that have contributed to the decline in business confidence is the unavailability of skilled labour, which respondents have cited as the biggest challenge businesses are facing.
They believe this arises from the difficulty they encounter in recruiting foreign skilled labour, with the issue more pronounced in the construction sector, followed by trade, hotels, restaurants and transport.
The 2018 Global Competitiveness Report has also raised the issue of lack of skilled labour as one of the challenges of doing business in Botswana.
However, the political climate, domestic demand and regulatory framework are believed to be supportive of doing business in the country.
Although lack of skilled labour is still considered a top impediment of doing business in Botswana, the survey observed that the number of companies who view this factor as a major challenge has fallen notably when compared with the previous survey.
Interestingly, availability of water is no longer viewed as a major impediment, and is reported to be contributing positively to the business climate.
Few months back, companies cited slow growth in government spending as a major factor affecting business confidence; however government has since revealed plans to increase its spending in the just started financial year.
The Business Expectation Survey (BES) is carried twice a year by BoB, collecting information on local business community’s perceptions about the prevailing state of the economy and economic prospects.