Power tariffs hike fears grip manufacturers

The exchange rate framework for 2026 is expected to support manufacturers to grow their businesses, but uncertainties remain on the electricity tariff rates front, a nag bothering the Botswana Export Manufacturers Association (BEMA).As the year closed, Botswana Power Corporation (BPC) announced intentions to lobby for tariff hike, and the manufacturers have opined that the development will cause a heavy dent on both the economy and their operations. Manufacturers have condemned BPC electricity tariff increase application, citing dire effects from the proposed hike. “We are deeply concerned that the proposed tariff increase will have severe and unintended consequences for Botswana’s industrial and manufacturing sectors,” said Botswana Exporters and Manufacturers Association (BEMA) Chief Executive Officer, Mmantlha Sankoloba. She said the tariff increase will also have an impact on manufacturing competitiveness, citing that electricity is a critical production input for manufacturing and industrial activities.“A significant upward adjustment in electricity tariffs will directly increase production costs, making locally manufactured goods less competitive in both regional and international markets,” said Sankoloba.The Association said its members face high operational costs linked to logistics, imported raw materials, compliance requirements and financing. “The proposed increase risks eroding already narrow profit margins and undermining national efforts to promote local value addition and industrial growth.” Sankoloba further warned of job losses and reduced industrial output highlighting that manufacturing remains one of the most labour-absorbing sectors of the economy, with strong potential for semi-skilled and skilled employment. “Increased electricity costs will likely force manufacturers to reduce output, postpone expansion plans, or retrench workers to survive.Small and medium-sized manufacturers will be disproportionately affected, potentially resulting in factory closures and significant job losses at a time when unemployment, particularly among the youth, remains a critical national challenge.” BEMA has called on the Ministry of Trade and Entrepreneurship to engage closely with the energy regulator, industry stakeholders and BPC to explore alternative solutions. “These may include phased tariff adjustments, differentiated tariffs for energy-intensive industries, protection for export-oriented manufacturers and incentives for investments in energy efficiency and renewable energy.Such measures would help balance the sustainability of the power sector with the need to protect jobs, investment and industrial growth.” Sankoloba said a stable, affordable and predictable electricity pricing framework is essential for sustaining Botswana’s industrial base and achieving long term economic transformation. BPC is proposing an upward average tariff adjustment of 46 percent. Despite tariffs likely to affect competitiveness of the manufacturing sector, a positive start to the year is the national Pula exchange rate maintains a stable annual domestic rate of crawl at 2.76 percent. The development supports a consistent business environment, providing clarity for financial planning and investment decision, according to analyst. Government says the development is aimed at “reaffirmation of commitment to support Botswana’s export competitiveness and ensure long-term economic stability.” In addition, the government has implored the manufacturing sector to gear up productivity.“Currently, all stakeholders must take decisive, urgent actions and collaborate to advance reforms that drive productivity, strengthen domestic production, thus improve competitiveness against imports and promote export performance and secure Botswana’s economic future,” said Acting Permanent Secretary in the Ministry of Finance, Bonniface Mpetlhe, in a statement to announce the 2026 Pula Exchange rate.

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Power tariffs hike fears grip manufacturers