GOVERNMENT COVID-19 ECONOMIC RESPONSES

Key notes

• Global Economy enters a recession • The most hard-hit economies are those most

affected by COVID-19 infections• Botswana economy projected to enter a recession • BITC cancels and postpones investment and trade

promotions activities; and• Botswana Government implements COVID-19 relief

TABLE OF CONTENTS

Background Information1.Global Economic Overview1.1Botswana Economic Performance1.2BITC COVID-19 Operations2.Botswana Economic Response3Matrix of Proposed Interventions3.1

BITC Head OfficePrivate Bag 00445Gaborone, Botswana

Plot 54351Off PG Matante RoadExponential BuildingCentral Business District (CBD)Gaborone, BotswanaT:+267 363 3300F:+267 317 0452 E: enquiries@bitc.co.bw

BITC Head OfficePrivate Bag 00445

Gaborone, Botswana

Plot 54351Off PG Matante RoadExponential Building

Central Business District(CBD)Gaborone, Botswana

T: +267 363 3300F: +267 3181941/ +267 3170452E: brandbotswana@bitc.co.bw

GOVERNMENT COVID-19 ECONOMIC RESPONSES

BACKGROUND

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1.1 GLOBAL ECONOMIC OVERVIEW

1.2 Botswana Economic Performance

1.0INFORMATION

As the world continues to combat the COVID-19 pandemic, the repercussions are felt way beyond the health systems. Economies continue to take hits with many analysis converging on the suggestion that we are in a recession. Global economy is projected to decline by 3% (IMF, April 2020), which is far worse than a decline experienced in 2008 after the global financial crisis.

Predictably, most economic decline is higher in economies hardest hit by the pandemic, with advanced economies projected to decline by over 6%. Countries such as Spain, Germany, Italy and France will experience a decline of over 7% while USA will experience a decrease of about 6%. Developing economies will decline by an average of 1% but with growth in China and India. The growth in China (1.9%) is attributable mainly to speedy recovery from COVID-19 virus infections and opening of the economy in the 1st quarter of 2020.

Owing to the pandemic, international trade will contract by 11% according to International Monetary Fund (IMF), with exports hardest hit due to restricted movement of goods and export restrictions imposed on essential products. The outbreak and spread of COVID-19 will negatively affect global foreign direct investment (FDI) flows. With scenarios of the spread of the pandemic ranging from short-term stabilization to continuation throughout the year, the downward pressure on FDI will be -5% to -15% (compared to previous forecasts projecting marginal growth in the FDI trend for 2020-2021).

Global Economy to decline by

Developing countries will decline by an average of

IMF, April 2020

Amidst of this health crisis, Botswana has so far recorded twenty-three (23) cases, with one (1) death (as at May 04th, 2020) . To reduce the spread of the virus, the country is on lockdown resulting in a restricted movement of people, goods and services. This has subsequently resulted in stoppage of economic activities, but several interventions are being implemented by the Government to cushion the economy. The projection is thus the economy will decline by 2% before rebounding to about 3.8% in 2021 depending on the duration and the intensity the pandemic.

BITC COVID-192.0OPERATIONS

As an Investment Promotion Agency, BITC has been negatively affected and has had to suspend its activities in compliance with national extreme social distancing measures. All investment and trade promotion activities were canceled or suspended.

This has influenced the Botswana economy and more specifically BITC affiliated and assisted companies. The negative effects include loss of opportunities to secure potential export markets, partnerships and other benefits related to company participation in Export and Investment Promotion Missions. The pandemic has also led to the cancellation of the annual Global Expo Botswana which presents an opportunity for the companies to meet with potential buyers, investors and joint partners. The Expo also presents businesses with an opportunity to explore each other as sources of raw materials as well as exposing the National Brand to the international market. The cancellation also led to the revenue loss by the hotels for accommodation, conference facilities, meals and transport providers who would have provided services during the Expo.

While there are some few companies who would have benefited by ramping up production of essential services and products even during lockdown, the unintended travel restrictions affected their ability to smoothly source production inputs. The limitations around issuance of permits and other social distancing guidelines had also affected production.

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BOTSWANA3.0ECONOMIC RESPONSE

Botswana’s economic response to the COVID-19 has been ranked in the top 10 responders to COVID-19 economic challenges ranking after Egypt and most specifically, commended for the Government wage subsidy initiative. BITC remains committed to ensuring that its facilitated companies access the relevant relief measures offered by Government as articulated in the matrix below. Companies are advised to deal with specified administrators of the specific relief interventions and liaise with the BITC contact person or BOSSC if they may encounter any challenges while seeking assistance.

GOVERNMENT COVID-19 ECONOMIC RESPONSES

INTERVENTION OBJECTIVES CONDITIONS ELIGIBILITY RESPONSIBLE ORGANISATION

Wage Subsidy • To enable eligible businesses affected by COVID-19 to keep workers employed (i.e. to avoid retrenchments) and keep income flowing into households.

• To give businesses some cashflow relief.

• Easy to administer (based on rules, discretion minimized)

• Quick to implement

• Subsidy of 50% of basic salary of citizen employees, with minimum subsidy of P1000/month and maximum of P2500/month

• Pay to eligible businesses on condition that:

• No retrenchments (i.e. employment at least at level of December 2019)

• Salary payment to each employee, even if temporarily laid off, is at least at the level of the subsidy

• Businesses to supply copy of payroll register, including name, Omang, TIN and basic monthly salary for each employee

• Subsidy paid through BURS to company bank account

• Claims by businesses may be audited by BURS

• Payments will be paid through BURS to businesses in April, May and June 2020

• Must have TIN• Must be in a

sector identified as negatively affected by COVID-19

• Parastatals and businesses with direct Government shareholding are not eligible

BURS Contact persons:

Mr Tutu Bakwena 7300 3602

Mr Gaitsiwe Motsewabagale7680 6967

Mr William Nkitseng 7301 4534

Mr Kunyalala Thapisa 7358 6764

Mr Gofaone Baleseng 7361 7519

Mr Oabile Simon 7358 7229

Loan guarantee • To give eligible businesses affected by COVID-19 access to credit to support ongoing operations, in conditions where credit becomes more difficult to obtain

• Guarantee to be administered by BECI but to be a Government liability

• Banks to undertake full loan recovery process (including “in the matter between”) before calling on guarantee

• No guarantee fee• Duration of

guarantee will be 24 months

• Ceiling on loan size P25m per borrower

• Borrower to be in eligible sector

• Terms and conditions to be negotiated by Government and Banks

BECI

MATRIX OF3.1PROPOSED INTERVENTIONS

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Support by Government Agencies

• CEDA to support SME’s affected by the COVID-19

• CEDA to restructure loans waiving interest payments for 12 months

• NDB to come up with intervention packages following same core principles

• BITC three to six months rental deferral for tenants in our factory shells

• Contact - CEDA• Contact - NDB• Contact - BITC

• Business affected by COVID–19

Go to CEDA website (http://www.ceda.co.bw/)

Apply online or download and email to reliefapplications@ceda.co.bw

• Mr. Jerry Mwendapole 71339890

• BITC contact Boniface Bobi 71478 172

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GOVERNMENT COVID-19 ECONOMIC RESPONSES