NOTE: External links to other Internet sites should not be construed as an endorsement of the views contained therein.
| The State Department web site below is a permanent electronic archive of information released prior to January 20, 2001. Please see www.state.gov for material released since President George W. Bush took office on that date. This site is not updated so external links may no longer function. Contact us with any questions about finding information. NOTE: External links to other Internet sites should not be construed as an endorsement of the views contained therein. |
|
FY 1999: Botswana |
CHAPTER V. LEADING SECTORS FOR U.S. EXPORTS AND INVESTMENT Botswana's major imports in terms of value for 1997 were food and beverages, machinery and electrical products, vehicles and transportation goods, chemicals and rubber products, wood and paper, textile and footwear and mineral fuels. The increase in development expenditures due to contributions to major government-sponsored projects this year should generate export leads for U.S. firms. Tendering opportunities for secondary education facilities, construction of schools, water and sewerage by district councils, procurement of radar sensors and associated equipment in the aviation sector, the major Village Water and Sanitation Development Project, the North-South Carrier Water Project, the development of computer facilities in several Government departments and power generation projects are examples of leads that could generate large orders. A number of district hospitals are scheduled for major upgrading and trade prospects for the refurbishment and provision of medical equipment is expected during the National Development Plan 8 period, 1997 - 2003. In the private sector, commercial opportunities are generally small in scale. However, opportunities do exist for trade and investment, and U.S. firms have discovered profitable market niches. The improved political and economic prospects for southern Africa have also brought new opportunities for assembly or service operations targeting the much larger regional market. In addition to the sectors highlighted below, we consider the following areas as potentially interesting to U.S. firms: franchising, particularly fast foods and auto repair; investment in assembly operations aimed at the regional market (the government is actively pursuing this type of investment and offers generous incentives); and vehicle sales (as regional duties come down). Information on Government tenders and reports on market insights are available from the World Wide Web address below: www.usia.gov/abtusia/posts/BC1/wwwhcomm.html 1 - Trade Opportunity: Water Pipes and Infrastructure For a country where the specter of drought has always spelt disaster, Botswana took the initiative to plan for the year 2010 by developing the National Water Master Plan. The most significant feature of this Plan is the North South Water Carrier Project, which has been identified as one of the ways in which existing resources could be augmented to ensure security of water supply. Currently underway, the project, classified as the biggest single construction project ever undertaken in Botswana at an estimated cost of Pula 1.2 billion ($280 million) covers the construction of Lestibogo Dam, a 360-kilometer raw water pipeline and ancillary works with treatment plants. The first phase of the project, which is scheduled, for commissioning in early 1999 will cater for the country's water needs up to approximately 2005. The planning for future demand to 2010 and on towards 2020 has already been considered with Phase II of the Project. This project should generate opportunities for the supply of pipelines, construction and/or provision of materials for pumping stations and a dam. 2 - Trade Opportunity: Heavy Mining Machinery As minerals remain the mainstay of Botswana's economy, the demand for heavy machinery to service the mining industry is inevitable. Botswana's three diamond mines have extensive reserves with mining life expectancies well into the 21st century. Following recent negotiations between the government and De Beers Centenary Ag., a massive new expansion project which will double the capacity of the treatment plant at the open pit at the Orapa mine has been undertaken. Similarly, the introduction of the continuous operations systems at all three mines (Jwaneng, Orapa and Letlhakane) involving a seven-day production week as opposed to a six -day production week has been introduced. Such developments will consequently create increased and consistent demand for off-highway mechanical trucks to sustain expansion projects. American models are not new in this field, with Caterpillar capturing a sizable portion (65%) of the market. Equipment is supplied by distributors, and recorded as imports from the country of supply and not as imports from the country of origin hence the under stated value of imports from the U.S. Other competitors are Euclid, Dresser and Komatsu. All heavy equipment and machinery are imported, as there is no local production or assembly. Best prospects remain earth moving trucks, dump trucks, bull dozers, road graders, forklifts, and spares. Heavy Duty Machinery 1996 1997 1998 ($ MILLIONS) A. Total Market Size 35.89 67.93 74.72 B. Local Production .002 0.045 0.049 C. Total Exports 2.48 4.3 4.73 D. Total Imports 35.89 67.93 74.72 E. Imports from the U.S. 1.59 2.48 2.73 The above statistics are unofficial estimates. Figures cover equipment for heavy-duty equipment only. Data are computed at an estimated annual growth rate of ten percent and at an average exchange rate of P1 = $0.2744 & 0.2625 (Dec 1996 & 1997 respectively) Source: Trade Statistics Unit, Ministry of Finance. 3 - Trade Opportunity: Consumer Telecommunications Botswana's telecommunications infrastructure is one of the most modern in Africa. The industry is undergoing an enormous change and, with the amendment to the Telecommunications Act in mid-1996 enabling private sector participation in the industry, liberalization of the industry is seen as an opportunity to introduce new services and to use the network more effectively. The Botswana Telecommunications Corporation will undertake a number of projects in 1998. Projects include: - upgrade and synchronization of the backbone network - installation of an AXE switch - Intelligent Network Application - ATM platform implementation - introduction of Electronic Data Interchange - Switching Network Upgrade (ISDN) - upgrade of the existing application software - introduction of new customer care billing system Details of tender invitations for these projects will be made available on the Internet using the World Wide Web address below when tender notices are published: www.usia.gov/abtusia/posts/BC1/wwwhcomm.html The telecommunications industry also has potential for telecommunications products such as feature and cordless phones, car phones and pocket service phones. Two cellular telephone licenses have been issued in Botswana and the advent of cellular phones in Botswana presents sales prospects. It is anticipated that a market of at least 10% of the present subscription of over 72,000 will be generated before the turn of the century. The conventional way for U.S. businesses to access the market will be through joint ventures with either the Botswana Telecommunication Corporation or local investors, although not mandatory. (Note that sales to the BTC have been dominated by European firms due to government assistance and technical standards used.) Electrical Apparatus for line telephony & telecommunications equipment 1996 1997 1998 ($ MILLIONS) A. Total Market Size 6.15 15.39 16.93 B. Local Production Negligible C. Total Exports 0.16 0.23 0.25 D. Total Imports 6.15 15.39 16.93 E. Imports from the U.S. 0.126 0.18 0.2 The above statistics are unofficial estimates. Data are computed at an estimated annual growth rate of seven percent and at an average exchange rate of P1 = $0.2744 & 0.2625 (Dec. 1996 &1997 respectively). Source: Trade Statistics Unit, Ministry of Finance. 4. - Trade Opportunity: Solar Energy Equipment Botswana has abundant renewable energy resources, mainly in the form of solar energy. The government is looking into how to increase the contribution of solar energy to the national energy balance. The government has developed the National Rural Photo-Voltaic Electrification Program to assist communities with loans repayable over four years, to purchase and install quality Photo-Voltaic systems for household use, mainly for lighting. The demand for solar energy equipment including PV components is rising. Imports are mainly from the U.S., Europe and South Africa. Botswana is also seeking joint ventures or licensing agreements between U.S. and Botswana companies for the manufacturing and or assembling of PV components. 5. - Trade Opportunity: Consulting, Resource Management and Design Engineering Services Provision of design and consultancy services, including feasibility and impact studies, and the sale of follow-on project management skills, remains an area of great potential in Botswana for U.S. firms. Ongoing and planned infrastructure development projects in the areas of water resources, roads and power generation are likely to proceed even if economic growth remains flat. A reputation for quality, international experience, and cutting edge technology are the U.S. design and consulting firms' biggest advantages in bidding on major infrastructure development projects in Botswana. European, particularly British, and South African design and consulting firms with long established ties to the market through Botswana-based affiliate offices can have a strong advantage over U.S.-based competitors. A U.S. firm may find it useful to enter into partnership with a locally based firm. 6 - Trade Opportunity: Computer Hardware and Software The Botswana computer market came to almost $22 million in 1997, and with the government and parastatals constituting70 percent of the end-user market, demand has developed independently of general economic trends. The Government budget allocated for computers this fiscal year will create an opportunity for consultancy and support services. Most systems in the government sector also need to be updated. Recent invitations to tender for the supply of computers and accessories and computerized business and accounting solutions for government departments and local authorities, respectively, have been issued. Implementation support and contractual maintenance is a prerequisite. Details on tenders can be located on the Internet using the World Wide Web address below: www.usia.gov/abtusia/posts/BC1/wwwhcomm.html Local production of computers is virtually non-existent in Botswana, and the industry consists of re-sellers. Another area of interest is an assembly plant for personal computers in Botswana. Semi-knock down components can be imported and assembled for resale. The project would only be viable if the assembly plant were a regional base and an outlet supplying southern Africa. The size of the formal sector work force alone would not justify such a venture. The conventional way to access the market would be to enter into a joint venture with an existing prominent local computer firm. Computers (Hardware, Parts, Accessories and Software) 1996 1997 1998 ($ MILLIONS) A. Total Market Size 1.02 1.13 1.24 B. Local Production Negligible C. Total Exports Negligible D. Total Imports 1.02 1.13 1.24 E. Imports from the U.S. 0.21 0.23 0.25 The above statistics are unofficial estimates for portable, digital and automatic data processing machines only. The great majority of products in the computer industry sold in Botswana are of U.S. origin. Typically, the products are exported to a distributor in South Africa and then sent to an affiliate in Botswana for sale, recorded as a South African export to Botswana. Data are computed at an estimated annual growth rate of ten percent and at an average exchange rate of P1 = $0.2744 & 0.2625 (Dec 1996 & Dec 1997 respectively). Source: Trade Statistics Unit, Ministry of Finance. 7 - Trade Opportunity: OffShore Banking and Insurance The Government of Botswana and the Bank of Botswana continue to make efforts to further diversify services to facilitate the development of the financial sector. One of the initiatives is the establishment of Botswana as an International Financial Services Center (IFSC). Renowned for its high foreign exchange reserves, liberal exchange control regulations and minimal regulatory interference, Botswana has enormous potential for expansion of its financial sector and development into an IFSC. A Collective Investments Undertakings Bill as well as an International Business Companies Legislation has been passed by Parliament. The intention is to adopt a phased approach to the development of the Services Center, concentrating on the development of niche markets and marketing that attracts high quality clients in Botswana. After all the necessary policy reforms and regulatory framework have been set up, Botswana will present a potentially lucrative business opportunity for U.S. companies interested in operating off-shore banking facilities in Southern Africa. 8 - Investment Opportunity: Tourism Botswana affords many possibilities for tourism investment and development and, while there is a push for more ownership and investment by local people, foreigners are welcome, especially those with experience and the ability to provide employment and ecologically sustainable development of Botswana's precious natural resource. The National Development Plan 8 (NDP 8), the five-year plan for the economy (1997-2003), has identified wildlife and tourism as a key sector for economic growth. The Minister for Commerce and Industry predicts tourism will be a one billion Pula ($250 million) industry within five years. The government makes funds available through the Financial Assistance Policy (FAP) for tourism development. Tourist facilities that could benefit from FAP include hotels, motels, guesthouses, tourist camps, lodges, caravans, hunting camps, safari and tour operators. In addition to FAP financing, the government is embarking on a Tourism Development Program during NDP 8. In 1996, the last year for available figures, tourist earnings were up 15% to nearly 600 million Pula ($178 million) and visitor arrivals were up 39% to 707,000. Data for tourists received in Botswana with corresponding money receipts are as follows: 607,000 ($120 million), 625,000 ($124 million), 644,000 ($162 million) and 707,000 ($178 million) for 1993, 1994, 1995 and 1996 respectively. At present, joint venture partners are being sought for hotel expansions and start-ups along the Trans-Kgalagadi Highway joining Botswana and Namibia. Dynamic growth sectors with unique areas for multipurpose use are in areas such as Kgalagadi Desert, Okavango Delta and Chobe National Park. 9 - Investment Opportunity: Motor Vehicle Assembly The automobile industry remains one of the priorities sectors through which the government hopes to intensify its economic diversification efforts. Vehicle assembly in Botswana is now the country's second most important industry and by 1997, the industry contributed more than Pula 1 billion ($250 million) to the country's export earnings. The growth of the vehicle assembly industry is also stimulating significant spin-off business. Opportunities identified include (a) automobile assembly, (b) brake linings, pads, pressure and clutch plates, (c) car batteries, and (d) tire manufacturing. 10 Other Investment Opportunities: Mining, Agro-industry, and Manufacturing Botswana welcomes investors who provide opportunities for inward investment, as well as technology transfer, to investigate segments within the economy that offer prospects for import substitution and export potential. The 1998 Official SADC Trade, Industry and Investment Review presents the following sectors as having potential for foreign investment: Mining: Investment resources are currently sought for specific on-going and new projects countrywide for exploration work and feasibility studies. These include: - gold exploration and mining at the Rainbow gold mine - exploration and completion of a feasibility study for the Nkuke quartz deposit - preparation of a detailed feasibility study and development of a gypsum mine at the Bojanamane gypsum mine - mining and beneficiation of dimension stone at Manyana Granite for building and monumental industries - completion of an exploration program on a VMS copper/lad/zinc and copper-nickel deposit with associated gold and platinum minerals at Mogogapathe Several other mineral deposits offering good prospects for development, ranging from copper, nickel and silver to coal, particularly in the eastern part of the country where well-developed infrastructure is easily accessible. Agro-industry: Opportunities in this sector include: (a) the processing of hides and skins into finished products. The annual stock of raw skins from the Botswana Meat Commission (BMC) is about 250,000. Skins are processed up to the wet blue stage and then exported for final processing; ( b) processing of edible vegetable oil; (c) manufacturing of livestock feed for poultry and cattle. Botswana's cattle population is about 2.5 million; (d) cattle by-products from the BMC. Manufacturing: Botswana welcomes foreign investment and technology in viable projects the following identified areas: apparel manufacturing, paper and stationery, leather goods manufacturing, jewelry manufacture (diamonds) and computer assembly /manufacturing. Due to the small domestic size of the economy, export-led industries are a must, relying on direct foreign investment backed by expansion and reorientation of existing domestic entrepreneurship. The southern Africa region constitutes an immediate export market. Several firms -- Owens-Corning (pipes to cater primarily for the North South Water Carrier Project), Hyundai (mainly responsible for Botswana's substantial export figure for vehicles and parts in 1997) and numerous apparel firms -- have been successful in penetrating into the regional export market. The Government of the United States acknowledges the contribution that outward Foreign Direct Investment makes to the U.S. economy. U.S. Foreign Direct Investment is increasingly viewed as a complement or even a necessary component of trade. For example, roughly 60% of U.S. exports are sold by American firms that have operations abroad. Recognizing the benefits that outward investment brings to the U.S. economy, the Government of the United States undertakes initiatives, such as Overseas Private Investment Corporation (OPIC) programs, Investment Treaty Negotiations and Business Facilitation Programs that support U.S. investors. 11 - Trade Opportunity: Corn, Sorghum, Wheat, Rice There is a high likelihood of cereal shortfall during the 1998/99 marketing year due to an anticipated poor 1998 crop harvest. Dry weather spells coupled with high temperatures have adversely affected the cropping season, not to mention the low crop cultivation by farmers, which in February 1998 was estimated as low as 7,700 MT comprising of 6,540MT of sorghum and 1,160 MT of pulses and other crops. A shortfall of about 230,000 MT was estimated for the domestically produced sorghum and maize at the beginning on the 1997/98 marketing year. As a large importer of cereals (maize, sorghum, wheat and rice), Botswana grain dealers (Botswana Agricultural Marketing Board, BAMB and Food Relief Services, FRS) have imported 124,000MT of sorghum and maize to date. There is an indication that the total import gap of about 95,000 MT has already been fully covered by other importers as cereal demand has been met. Local importers have expressed interest in diversifying supply and seeking U.S.-sourced products. Trade statistics show that, last year, cereal imports (wheat, meslin and grain sorghum) from the U.S. amounted to $0.309 million compared to $1.72 million the previous year. South African suppliers have traditionally dominated supply of foodstuffs to Botswana; either with South African produced goods or through re-exports of imported goods.[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.