Botswana Journal of Business

From the Editor's Desk

 JOSIAH Jairos — 2025-01-14

BOTSWANA’S BOND MARKET YIELDS ARE THEY DETERMINISTIC OR DO THEY FOLLOW A STOCHASTIC PROCESS?

Ishmael Radikoko — 2025-01-14

This paper examines Botswana’s bond market seeking to establish if the bond yields are predictable. The logarithmic bond index returns for the Government Bond Index (GorvI), Corporate Bond Index (CorpI) and Botswana Bond Index (BBI) are used as proxies for the bond yields. The yields are derived from a nine year index series covering a period of 2010 through 2018. The results of the Unit root tests (ADF and KPSS), and Heteroscedasticity (GARCH) model, homogeneously reject the random walk process governing the bond index series. These results suggest that Botswana’s bond returns are characterised by an anti-persistent trend reversing and deterministic chaotic process. This therefore means investors can easily predict bonds market returns hence rendering the market informational inefficient. Policy makers and capital market regulators and the Central Bank therefore need to strengthen their efforts to improve the efficiency of the bond market and hence rendering the Botswana’s Bond market to be attractive to investors. The Botswana Bond Market Association is also encouraged to continue lobbying for the bond market development so as to contribute to the improved efficiency.

BOTSWANA’S MANUFACTURING SMEs INNOVATION & BUSINESS ACUMEN

Polokano Sekonopo — 2025-01-14

Worldwide firms are engaged in a fierce battle for the hearts of the masses by trying to produce products which can appeal to them. This is because a nations’ quality of life is linked to the quantity and quality of products and services that can be generated by their entities for domestic and export markets. Exporting products and services enables firms to earn foreign exchange, continue to operate and contribute to the government coffers through taxes. The business environment is faced with tough competition from businesses targeting the same market with similar or upgraded offerings. The ability to hold the fort is dependent on innovative offerings that give customers more value than competitors. Botswana’s manufacturing Small Micro Enterprises face fierce competition from the Global North manufacturers targeting the local and regional markets. Survival of local businesses is not guaranteed, and this paper seeks to investigate Botswana's manufacturing Small Micro Enterprises' business acumen as can be witnessed from their application of product innovation best practices. This will be compared with international manufacturing firm’s product innovation best practices performance. The study adopted a qualitative approach by using a case study approach. The data collection was done through document analysis and semi-structured interviews of three local Small Micro Enterprises. The findings indicate that the business acumen of local manufacturing enterprises is very low due to their failure to observe product innovation business best practices and use of business forecast tools. The findings helped in drawing up the firms’ collective Strength, Weaknesses, Opportunities and Threats (SWOT) analysis which painted a clearer picture of the businesses position. This calls for stakeholders to introduce proactive business intervention measures especially in product innovation and its best practices as well as in the business side of things.

A CASE STUDY OF RISK MANAGEMENT IN ARABLE AGRICULTURE IN BOTSWANA.

Penny Moengele — 2025-01-14

This study investigates the risks facing arable Farmers in Botswana and the risk management strategies used to mitigate against such risks. The study used exploratory case studies of a group of Farmers in an area called Mosisedi Farms located in the Southern part of the Country. Data was collected mainly through semi-structured interviews with the farm Owner-Managers. Data from the study revealed that Farmers were largely aware of and could well articulate the various risks they faced. The major risks faced by Famers were crop damage/loss due to adverse weather conditions, crop damage by wild animals and pests, input and output commodity price risk as well as losses due to unreliable labour. The methods and strategies used to manage the risks were largely similar to generic ones used elsewhere. There were however, three areas where the findings were different. First was the use of a strategy we termed risk financing through capital injection and the second was the use of a strategy we termed hazard substitution. Another key finding was that the Botswana Agricultural Marketing Board (a State-Owned Entity) was a major contributor to the financial risks faced by Farmers. The study concludes that Farmers need to improve on their risk management strategies because some still used passive risk retention for many risks.