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Botswana: manufacturers bemoan high interest rates

Published date:
Tuesday, 19 June 2007
Mmegi / The Reporter (Gaborone)

The encore of the familiar refrain of the almost-prohibitive costs of doing business in Botswana resulting from high finance costs and serious constraints in the local supply of raw materials was the order of the day at a BEDIA-sponsored seminar for manufacturers yesterday.

Participants used the occasion at Boipuso Hall in Gaborone to tell the Botswana Export Development and Investment Authority that high interest rates and the importation of raw materials were two factors responsible for pushing costs up.

"There is no fabric factory in Botswana. This means we import from other countries," said Craig Chow, the Managing Director of apparel maker Caratex Botswana, which exports knit-to-shape jerseys or sweaters to the US under the Africa Growth and Opportunity Act (AGOA). Another concern for local manufacturers is high utility costs(charges for water, power and telecommunications). Chow said he was surprised that in Botswana, utility corporations charged the same rates for household and industrial consumption, which was not the case in other countries.

As an exporter, yet another concern for him was the fact that Botswana is a landlocked country, meaning that transport costs were beyond their calculations.

Despite these difficulties, however, Chow said Caratex had grown from one to four factories since 1989 when it was first established. Chow was joined by a manufacturer in a different field: Vijay Naik of Flo-Tek, a pipe manufacturer, also deplored Botswana's interests rates for being "very high".

For instance, the Bank of Botswana's (BoB) current bank rate is 15.00 percent while commercial banks lend to depositors at 16.50 percent. By contrast, in South Africa - Botswana's largest SADC trading partner - the SA Reserve Bank rate or repo is 9.5 percent. "Interest rates are very high. This makes capital costs the biggest input costs. The government and BEDIA need to come up with a way of subsidising industry costs," said Naik.

A miller's lack of raw materials like wheat in Botswana was the miller's main bane. Lazarus Lekgoanyana told the seminar that this meant millers had to import from South Africa.

Because of the drought, this year would be worse as demand far outstripped supply, further pushing up prices millers would have no choice but to pass on to consumers. However, Lekgoanyana said he expected government schemes like the P50 million Citizen Entrepreneurial Development Agency (CEDA) Young Farmers Fund would help the country produce raw materials locally. Simon Makobo of Lobatse-based Botswana Cap & Helmet Manufacturers asked for protection from unfair competition from traders.

Mokobo, whose company makes capping goods was, concerned that most tenders were now going to traders who import cheaper goods from the Far East.

The meeting was told that the issue of investors versus traders was a serious one because it had forced some investors to close shop.

“ Latest AGOA Trade Data currently available on

Click here to view a sector profile of Botswana’s bilateral trade with the United States, disaggregated by total exports and imports, AGOA exports and GSP exports.

Other regularly updated trade statistics on include: (click each link to view)

  • AGOA-Beneficiary Countries’ AGOA and GSP Trade Aggregates

  • AGOA Trade by Industry Sector

  • Apparel Trade under AGOA’s Wearing Apparel Provisions

  • Latest Apparel Quotas under AGOA

  • Bilateral Trade Data for all AGOA-eligible countries individually.

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