Informal sector businesses operators in Botswana have been largely affected by Covid 19 as currently many people are conscious about their spending and the sector is becoming saturated as more Batswana are looking for ways to generate income.
Gabane Youth Business Association Chairman, Mokganedi Malope told the Business trends that Covid 19 has encouraged Batswana to choose entrepreneurship as source of income although they are now flooding into informal sector. Many Batswana are now starting small businesses. This is a good thing but they are joining the informal sector at the wrong time when consumer spending has declined due to tough economic conditions brought by Covid 19 and loss or reduced salaries”
Local Enterprise Authority (LEA) head of Corporate Affairs and Market Access, Boikhutso Kgomanyane told the Business Trends that the Authority has received 30,929 applications from informal sector businesses across the country, 97 percent were approved and given a grant of P1000. 00. Out of these beneficiaries 79 percent were female operated businesses while 21 percent were operated by men.
During the lockdown last year government came up with initiatives to register informal and formal Small Micro and Medium Enterprises (SMMEs) with the objective of developing a centralised database. The database would be instrumental in decision-making around how the COVID-19 financial interventions from government.
Although most of the hawkers received government relief grant, they are now experiencing a major challenge of low sales and increased competition. In an interview with the Business Trends, Boitshwarelo Ntwakgolo, a hawker which benefited from governments relief fund said since beginning of this year the business is gradually crumbling as customers have declined. “This year is very terrible because many people are now starting to set up small businesses but there are no customers to buy our goods because most people are not working and others are having reduced salaries,”
She said the situation is also worsened by the government’s decision to increase tax. “Now everything is very expensive. The wholesalers have now increased their prices by up to 30 percent. We cannot increase prices because demand is low; people are not buying so we are not making profit at all,” she said.
Another hawker, Ogorogile Baleki said her business was affected by Covid19 but worsened by the increase in wholesale prices. “We are trying to increase prices a little bit but now customers are not buying. People do not have money.” A recent survey conducted by LEA indicated that the COVID-19 pandemic has adversely affected most of the small businesses assisted by the authority. According to a survey of 382 companies, 63 percent had suspended operations. The sampled companies also reported average drops in monthly revenue of 47 percent. The SMMEs still operating were struggling with importation of raw materials and the inability to pay fixed costs such as rent, salaries and loans.
Government had allocated to LEA an amount of P100 million from the Industry Support Facility (ISF), which was launched by the Ministry of Investment and Trade Industry as part of the Economic Recovery Transformation Plan last year.