17 Mar 2020

Volatility across financial markets and businesses going into lockdown due to the COVID-19 outbreak has caused instability in the world, and Botswana is no exception.

With the epicentre of the virus at the world’s economic superpower, and China starting to get on top of the pandemic, the same cannot be said about the rest of the world.

In an interview, economist and strategist consultant, Mr Moatlhodi Sebabole said despite the significant spread of COVID-19, the extent of the impact on the local economy was unclear.

He said there was likely to be disruptions to the supply chain for trade given the linkages of the different sectors of the economy to China, including manufacturing and logistics.

He said because new cases in China have slumped and the mortality rate was low, it meant the economy could bounce back quickly because of restrictions put in place by authorities to contain the virus impacting economic activity.

Mr Sebabole said the prolonged effects of the virus could also limit the recovery of base metal prices, and that China’s overseas spending would remain limited thus resulting in pressures on base metals like copper and coal.

He said the volatility of the local currency to the American dollar could make US imports more expensive in local currency hence affect prices of some commodities.

With regard to the outbreak in South Africa, Mr Sebabole said it might disrupt supply chain linkages if the situation affected logistics, adding that the impact could be catastrophic to production.

On the local stock market, Mr Sebabole said it was unlikely that there would be a tanking in the market as most local investors bought and held their shares rather than frequently trading them.

He emphasised the need to contain the virus, saying it would lead to the removal of restrictions that have been put in place, and that business activities would function as normal.

He said the expectation was for the impact to be temporary and to be mitigated by broad policy stimulus. Mr Sebabole highlighted that there was a likelihood of disruption in the tourism industry as people took extra precautions on travel, thus affecting earnings from the second largest revenue earner for the country.

Hospitality and Tourism Association of Botswana (HATAB), CEO, Ms Lily Rakorong also shared the same sentiments, saying  the COVID-19 outbreak has put the tourism sector at cross roads as the sector continued to experience cancellation of bookings at hotels and lodgers.

She said it was premature to weigh the impact of the virus as the industry was still on its first quarter which was normally characterised by a low turnout in tourism activities. Ends