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FY 1999: Botswana |
CHAPTER 1. EXECUTIVE SUMMARY This Country Commercial Guide (CCG) presents a comprehensive look at Botswana's commercial environment, using economic, political and market analyses. The CCG's were established by recommendation of the Trade Promotion Coordinating Committee (TPCC), a multi-agency task force, to consolidate various reporting documents prepared for the U.S. business community. Country Commercial Guides are prepared annually at U.S. Embassies through the combined efforts of several U.S. Government agencies. The World Economic Forum ranks Botswana as the third best economic performer in Africa as proven by the uninterrupted economic growth experienced since diamond mining began in 1971. The New York Times reported in June, 1998, that a study released by the World Bank identified Botswana as having enjoyed the greatest economic growth of any country in the world during the 31 years from 1966-97. Its annual growth rate of 9.2% exceeded that of # 2 South Korea (7.3%) and # 3 China (6.7%). An impressive growth rate of 6.9% percent was recorded in 1996/97, with a per capita GDP of about $3,200. Economic indicators look bright. The strong balance of payment position increased foreign exchange reserves by 14% to $5.7 billion in December 1997, while inflation continued its downward trend to 7.8%. The country's positive response to the opportunities and challenges of globalization, which currently faces each and every African and developing nation, is reflected by the following pointers: (a) the remarkable performance of the stock exchange (b) the approval of a new Industrial Development Policy to encourage productive and efficient export industries and (c) the rigorous implementation of educational and training programs to raise the productivity and quality of the labor force. The financial year 1997/98 marks the beginning of the country's National Development Plan 8, the theme of which is 'sustainable economic diversification.' This is an effort to reduce heavy reliance on mineral wealth, particularly diamonds, in an effort to create employment and improve the quality of life of the people. The government is actively encouraging private sector development through various investment incentives, attractive taxation system, a progressive liberal exchange control regime, and support for foreign direct investment, to improve non-mining sectors of the economy, basically manufacturing, tourism and financial services. The government has committed itself to privatizing many public sector functions. A task force organized last year to consider privatization options is due to report to Parliament shortly. External trade figures between Botswana and the U.S. are understated. Official trade statistics show that direct US exports to Botswana amounted to $27.4 million accounting for just 1.2% of the country's total for 1997. Most U.S. exports enter Botswana s re-exports from South Africa. Similarly, Botswana's exports to the US were recorded as $20.8 million not taking into account diamonds, the nation's principal export, which enter the U.S. indirectly. Export opportunities include supply of water pipes, heavy machinery for the mining sector, radar sensors and associated equipment for the aviation sector, solar energy equipment, and telecommunications products. Investment opportunities targeted by the government for special promotion include tourism, light manufacturing and financial services. Due to Botswana's limited domestic market, export-led industries are encouraged, and foreign investors should consider the country as part of the greater regional opportunities available in Southern Africa. In early 1998, Botswana ratified the Southern Africa Development Community (SADC) trade protocol, which will contribute to lowering trade barriers and extend dependable and secure market access for producers. Botswana is the only SADC country to have ratified all eight SADC protocols. Botswana is also preparing itself for increased competition as tariff barriers fall. Politically, democratic institutions are in place and functioning well. The President, Festus Mogae, succeeded to the Presidency from the Vice-President's office when the previous elected leader Sir Ketumile Masire retired in April 1998. The next general elections are scheduled for 1999. Botswana and the U.S. enjoy excellent bilateral relations.[end of document]Note* International Copyright, United States Government, 1998 (or other year of first publication). All rights under foreign copyright laws are reserved. All portions of this publication are protected against any type or form of reproduction, communications to the public and the preparation of adaptations, arrangement and alterations outside the United States. U. S. copyright is not asserted under the U.S. Copyright Law, Title17, United States Code.