The figure is one that many consumers would have thought would take years to achieve, looking at the fact that just two years ago, inflation touched historic highs at 14.6%. While inflation has fallen by over 80% between August 2022 and November 2024, the thebe value of what consumers can buy has not improved and most Batswana complain that they are less and less able to afford their needs. Inflation is the general increase in the prices of goods and services, and in a healthy economy, it is necessary to ensure sustainable and growing businesses. In fact, the Bank of Botswana has an objective range of inflation of three to six percent, which it considers appropriate for the healthy growth of the economy.
The challenge, however, is when general incomes in the economy are not growing at similar levels. Mathematically, inflation has come down, but in reality, prices continue to rise but only at a slower pace than the historic highs of two years ago. Stagnant wage growth and rising unemployment mean that while the inflation numbers this year appear great, the effect is not felt by the majority of Batswana. According to figures from Statistics Botswana, between the third quarter of 2023 and the first quarter of 2024, estimated average cash earning in the formal sector fell by an average of 7.1 percent. Earnings in sectors such as retail, manufacturing as well as accommodation and food services, were at the bottom of the ladder, together with other elementary occupations and were also generally down between the two periods.
The economy’s ability to create jobs has also been weakening, with unemployment rising from 25.3% in the third quarter of 2023 to 27.1% in the first quarter of 2024. Youth unemployment, in particular, is deteriorating, with the unemployment rate rising from 34.4% to 38.2% over the same period. The numbers are confirmed by the tighter economic conditions this year, with the Finance Ministry now projecting that the economy will contract by 1.7 percent, the sharpest decline since the COVID-19 year of 2020. Within the inflation figures, consumers have also noted that while the broader figures are down, food inflation has not been declining as quickly as the other items measured by Statistics Botswana to produce the inflation figures. The November inflation figures show that food inflation was at 4.8 percent compared to the broader 1.7 percent for inflation. Within that figure, average vegetable prices had risen by 10% in the 12 months to November, representing one of the highest movers across all items of the inflation calculation. Consumers, however, may have some relief next year, after the Ministry of Lands and Agriculture, announced on Friday that it was partially relaxing the two-year moratorium on horticultural imports.
According to the notice, with immediate effect, the import ban is lifted on turmeric, patty pan, pumpkin, sweet potato, sweet corn, green peas, broccoli, cauliflower, germ squash, baby marrows, sweet melon, mushroom, calabash, cantaloupe and eggplant. Potatoes, onions, tomatoes and other vegetables remain restricted and will be lifted next year April. Consumers will also be hoping that the diamond downturn, which has been largely responsible for the tightening economic conditions this year, will improve and allow room for increased business activity.
