Traders and Retailers who fail to pass the benefit of the exchange rate differential between the Pula and Rand currencies to local consumers will be punished, President Ian Khama has warned. Khama sounded the warning on Thursday when addressing the 40th High Level Consultative Council (HLCC) meeting in Gaborone. The HLCC is forum where Government and the private sector and other stakeholders engage in an exchange of views on the nation's development programme. The warning follows complaints from local consumers that some Traders and Retailers were simply sticking the Pula price over the numerically identical Rand price. At an exchange rate which fluctuated between 1.32 and 1.40 Rand to a Pula during the last quarter, this is certainly not playing fair with consumers. Khama reported that Ministry of Investment, Trade and Industry (MITI) has been visiting traders and retailers and cautioning them, after declaring this to be an 'Unfair Trading' practice. "I trust that Business Botswana has cautioned the business community accordingly. The (MITI) will now check on traders and retailers to ensure that the exchange rate differential is indeed being passed on to the consumer, and appropriate action will be taken against those who persist in this unfair practice," said Khama.
Business Botswana and the MITI had been tasked by the previous HLCC to check on the development, and recently reported that the phenomenon of the Pula price over the identical Rand price appears to be no longer visible. President of Business Botswana Lekwalo Mosienyane said on Friday that they act as an arbiter in the matter and have engaged the retailers to address the concerns, which have been ongoing from time immemorial. He said beyond engaging their members, who are corporate citizens despite their SA origins, Business Botswana has also engaged the recently formed SA Business Forum and their Ambassador to Botswana. "We have seen the flactuation of the Rand over time, with the Pula remaining on the strong side. Despite that we have differences in VAT rates, and that commodities cross the border, both countries are still members of SACU. Therefore local consumers should enjoy the benefit of such differences even as much as the business community are reluctant to make the adjustment arguing that prices are determined by market forces- the so-called supply and demand phenomena," said Mosienyane, expressing optimism that the retailers will comply and operate more ethically. To intensify efforts to curb the practice MITI will also embark on a consumer education programme so that consumers may challenge the practice and report obvious malpractice for action.
There is growing tension between South Africa and Botswana after the latter recently announced measures to protect local industries, through a reservation policy. The two countries clashed over an announcement by MITI regarding the reservation of 51 per cent of retail businesses for locals sparking accusations of sabotage by South African businesses. Two weeks ago SA High Commissioner to Botswana Mduduzi Lembede blasted other SACU member states including Botswana, for mismanaging their share of revenues from the union and blaming his country for their failures. Lembede accused other SACU members of using his country as a cash cow, and failing to develop strong industries in their economies. A month earlier, during the launch of SA Business Forum in Gaborone, Lembede complained about unfavourable operating environment in the local retail market. He took as swipe at Botswana government, saying bureaucrats should leave the running of businesses to businessmen. Providing an update on global and national issues at the HLCC, Khama said in 2015, global economic activity remained unresponsive and an uneven recovery is expected to continue in advanced economies while growth in emerging markets and developing economies continues to decline. In the case of Botswana, economic recovery has been challenged, GDP growth turned slightly negative in 2015 owing to a decline in the global demand for diamonds and copper. Though the non-mining activities such as Trade, Transport and Communications and Financial and Business Services recorded positive growth over the year, this growth was mitigated owing to negative growth from mining activity, a regional drought, and electricity and water challenges.
Diamond sales have picked up in recent months and there is cautious optimism in this regard. "External commentators (the IMF) forecast that Botswana will recover from the mild contraction in 2015 and will average growth of 4.3% a year from 2016 to 2020. Due to our stable Macroeconomic policies, our inflation has remained low at around 3 percent which is at the lower end of the targeted range of 3-6 percent, partly due to the effect of a firm Pula exchange rate against a volatile and weakened Rand which helped to curb imported inflation from the region," said Khama. Khama said the Economic Stimulus Programme (ESP), whose implementation was launched in February, has been adopted to address prevailing unemployment. He said ministries are working tirelessly to ensure that the Programme is successfully implemented and called on the Private Sector to join hands with government in implementing the programme. "Bold decisions to ensure the success of the Programme have been taken. However delivery of the results is largely the responsibility of the Private Sector. It is through its successful implementation that our economy can transform to a competitive, highly productive and environmentally sustainable economy providing sustainable jobs for its people," he said.