Intellectual – Intellectual Property & Brand · Editorial

By Moakanyi Magazine · Global Issue · June 2026

A landlocked economy that imports every litre of its fuel cannot control the price of oil, yet most local business plans are written as though it can. The gap between that assumption and reality is where margins quietly disappear, not in a single dramatic month but across a series of small, absorbed shocks that never quite get costed. With global physical crude markets mired in discounts as Middle East supply ramps up, the headline reads as relief, and for an import-dependent country relief is genuine. The deeper point for a Botswana operator is harder to bank: a business needs margins that survive fuel and currency shocks, not margins that depend on those shocks staying calm.

Cheap crude is welcome, but it is a condition, not a strategy. A condition can reverse without warning, and the firms most exposed are usually the ones that quietly assumed it would not. The discipline, then, is to build a buffer that holds whether the pump price falls or climbs – to treat the current discount as breathing room rather than as the new baseline around which to plan.

The pass-through problem: when the Pula moves twice

Fuel reaches Gaborone, Francistown and Maun priced in US dollars and paid in Pula. A firm absorbing a haulage, generator or input cost therefore takes two hits at once: the world oil price and the exchange rate that converts it. A discount on crude can be eaten entirely by a weaker Pula before it ever reaches the depot, which is why the global price line, taken alone, is a poor guide for a Botswana cost sheet.

This double exposure is easy to miss because it nets out invisibly. A manager sees a stable landed price and assumes stability in the world, when in fact a falling oil price and a falling Pula have simply cancelled. The next time they do not cancel – when both move the wrong way together – the shock arrives all at once and feels like bad luck rather than an unhedged structural bet.

A foreign price quoted in Pula is two risks wearing one number.

The resilience margin: pricing for the bad year

A resilience margin is the cushion built into pricing so that a transport, logistics or manufacturing business stays solvent in the expensive year, not only in the cheap one. For a Botswana operator that means costing against a plausible high-fuel scenario rather than the current discounted one, and treating any saving from soft crude as a reserve to be banked rather than as profit to be spent. The firms that survive volatility are usually the ones that refused to price as if volatility had ended.

The temptation runs the other way. When fuel is cheap, competitive pressure pushes prices down to match, and the margin that should have been saved is competed away. A resilience margin is therefore as much a matter of nerve as of arithmetic: the willingness to hold a price through a good month so the business is still standing in a bad one.

Plan the budget for the year fuel turns against you.

Diversifying the exposure: contracts and hedging

Beyond pricing, the exposure itself can be reduced rather than merely absorbed. Fixed-term haulage contracts, fuel clauses that share the risk with customers, and where scale allows, hedging arrangements through a bank, all convert a wild input into a steadier one. None removes the shock entirely, but each narrows the band a business has to carry alone on its own balance sheet, and a narrower band is easier to survive and cheaper to finance.

Scale changes which tools are available, but not the principle. A small retailer in Lobatse cannot run a formal hedge, yet it can write fuel-linked clauses into delivery pricing and hold a cash reserve through the cheap months. A larger logistics operator can do both and add contracted volumes that smooth its demand. The instruments differ; the instinct – to convert a volatile input into a planned one – is the same at every size.

You cannot fix the oil price, only the size of your bet on it.

Discounted crude is good news for an import-dependent economy, and Botswana should take it without apology. But the structural task does not change with the headline. A business that builds a resilience margin, prices for the shock and shares the risk through contracts will outlast one that simply enjoys the cheap month and plans around it. The so-what for Botswana is plain: treat low fuel as a window to build reserves, not as permission to thin them – because the discount that funds the buffer today is the same discount that disappears without notice tomorrow.

Sources: Reuters