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Private sector hold keys to Botswana’s unemployment headache

Andrew Maramwidze

Gaborone–Amid the rising inflation, exacerbated by the highly infectious COVID 19 pandemic, the private sector in Botswana may be an answer to the unemployment headache that has bedevilled the southern African country of two million people.

Unemployment has gradually risen in Botswana to 23,2 percent, up from 22,2 percent, despite government efforts to plug the cancer with various initiatives, including stimulating the economy with business funding and supporting growth of local enterprises with a buy local campaign dubbed Economic Diversification Drive (EDD), hoping to create the much needed jobs.

Figures from the country’s data authority- Statistics Botswana (SB) indicate an increase in the rate of unemployment by 1.0 percentage point between the fourth quarter of 2019 and the first quarter of 2020, from 22.2 percent to 23.2 percent.

Analysts say the figure could be more due to the COVID 19 pandemic that disrupted almost all economies worldwide.

According to the SB, with the advent of the COVID-19 pandemic, there are fears unemployment has spiralled upwards, though the rising loss of work has been arrested by the State of Public Emergency Statutory Instrument invoked in October that has barred companies from retrenching.

“Unfortunately, there is no new employment data available from Statistics Botswana that cover the COVID-19 outbreak period, as the household surveys that are now used to collect employment data had to be cancelled in Q2 and Q3.

“We do, however, know that under the State of Public Emergency, firms are not allowed to retrench workers unless they cease operations. This would make it reasonable to assume that current formal employment levels are similar to pre-COVID-19,” said Sethunya Sejoe, an economic analyst at Econsult.

Sejoe, however said not allowing retrenchments during the State of Emergency, may keep unemployment levels low in the short run, though he anticipates negative impacts in the long run.

The gloomy unemployment picture is highly anticipated to be solved by a vibrant private sector, as government initiatives are only partial addressing the challenge.

Despite the limitations, President Mokgweetsi Masisi’s administration continues to implement initiatives and programmes that are geared towards empowering young people in businesses and skills development.

In the latest State of the Nation Address (SONA), President Masisi highlighted that during the 2019/20 financial year, a total of 975 businesses owned by young people were funded at a cost of  P94, 671, 778 and in the process creating 1, 918 jobs, far below what the economy needs.

Government has also funded 24 NGOs to implement character building and life skills development programs with focus on unemployed youth without formal training and 160, 962 youth were trained since April and 8, 457 were absorbed in formal employment.

With government initiatives still lagging behind in providing the much needed employment, the private sector has been challenged to assist. And Botswana Stock Exchange (BSE) Chief Executive Officer, Thapelo Tsheole believes the private sector has answers to the country’s swelling unemployment.

“Our main goal is to contribute significantly to Botswana’s economy by promoting a robust private sector and acting as a catalyst for companies to access equity or debt-finance that will ultimately lead to growth of these enterprises.

“In the long-run, the belief is that these enterprises will create employment, propel technology innovation, stimulate further infrastructure development and in attracting more foreign direct investment (FDI), amongst many benefits,” said Tsheole.

Taming the rising inflation is expected to be solved by a vibrant private sector and initiatives are slowly popping up from the companies’ corridors, as they have moved in to compliment the struggling government.

Private companies are slowly responding to the employment creation call and budding small to medium scale entrepreneurs have been identified as a vital cog in the ongoing fight to ease growing unemployment.

Though entrepreneurs have always bemoaned lack of financing, the private sector financial institutions on the other hand have cited lack of skills and capacity building as one of the challenges affecting the country’s intended growth of SMEs which can create more employment. 

“We believe that SMEs have the potential to grow into sustainable entities when afforded the appropriate tools in terms of funding, skills, an active market and machinery,” said Keletso Setimela, Head of Business Banking at Absa, one of the leading local banks pushing SME development under the Enterprise and Supply chain Development (ESD) program.

“Through ESD we have partnered with corporations in the mining, retail and other sectors in order to fund SMEs in their supply chain based on their contracts or purchase order received, in order to build a sustainable enterprise.

“This has proven to be a great success story and we have seen over 200 jobs created in the SMEs we have funded since 2018,” said Setimela.

Absa believes there is a need for proper capacity building for the SMEs to embrace sustainable operations.

Cement manufacturer, PPC Botswana, has also committed to partner with brick moulding startups across the country to assist them grow their businesses.

Tuelo Botlhole, who heads the business unit of the country’s sole cement producer, said they intend to strengthen the local economy while bolstering the success of a number of SMEs.

“It is important that as an established company, we play a role in supporting SMEs as they heavily contribute to the country’s GDP,” said Botlhole.

He said job creation is a huge driving force behind economic growth and sustainable development.

PPC Botswana has engaged various agents to travel around the country to scout for different SMEs that they will soon give a technical and financial boost.

In another intervention by the private sector, financial services giant, Letshego has hatched a new scheme with These Hands, a global social enterprise start-up, to close existing skills and funding gaps.

Under the collaboration, Letshego is going to leverage her financial muscle on These Hands’ niche, as a trainer and supporter of rural community innovators or entrepreneurs in developing countries.

The partnership is expected to deliver innovations to rural communities, after bridging the heavy financial challenges facing grassroots innovators and Small and Micro Entrepreneurs (SMEs).

The Hands with support from Letshego Botswana will help SMEs to commercialise their prototypes, creating employment, according to Fergus Ferguson, Letshego Botswana’s Chief Executive Officer commenting on finance deal worth over P1.76Million, to capitalise activities that facilitates training and mentoring of youth innovators.

The unemployment problem is not only a challenge for Botswana. It is also witnessed in other countries which include South Africa, Zimbabwe and Namibia.

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