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Botswana

Executive Summary 

Botswana is a small country with a population of about 2.35 million (World Bank, 2020) and nestled between South Africa, Namibia, Zimbabwe and Zambia.  Its central location in southern Africa enables it to serve as a gateway to the region.  Botswana has historically enjoyed high economic growth rates and its export-driven economy is highly correlated with global economic trends.  Development has been driven mainly by revenue from diamond mining, which has enabled Botswana to develop infrastructure and provide social welfare programs for vulnerable members of the population, and these programs will be maintained despite financial challenges in the current financial year, which runs from April 2022 to March 2023.  The economic impact of the COVID-19 pandemic was significant as evidenced by an economic growth of negative 8.5 percent in 2020; economic growth was estimated to reach 9.7 percent in 2021.  Unemployment also rose from 22.2 percent in the fourth quarter of 2019 (prior to the pandemic) to 26 percent in the fourth quarter of 2021.  The fiscal impact of the pandemic has also been significant, resulting in large budget deficits of $1.4 billion in 2020 and $0.87 billion in 2021 compared to the $0.68 billion surplus that the government had forecasted for 2021 in its National Development Plan (NDP).  In the first quarter of 2021, diamond revenues recovered, but international tourism revenues did not.  In recent years, inflation has remained at the bottom end of the central bank’s three to six percent acceptable range; however, since the COVID-19 pandemic, inflation rose to a 13-year high of 10.6 percent in January 2022 and stayed at that level in February 2022.  The World Bank classifies Botswana as an upper middle-income country based on its per capita income of $6,405 in 2020, although it declined from $7,203 in 2019.

Botswana is a stable, democratic country with an independent judiciary system.  It maintains a sound macroeconomic environment, fiscal discipline, a well-capitalized banking system, and a crawling peg exchange rate system.  In March 2021, Standard & Poor’s (S&P) maintained Botswana’s sovereign credit rating for long and short-term foreign and domestic currency bonds at “BBB+/A-2” with a negative outlook, which reflects the risks COVID-19 will continue to pose on Botswana’s economic and fiscal performance over the next 12 months.  In November 2021, Moody’s revised its credit rating for Botswana from A2 to A3 with a stable outlook.  These agencies’ ratings are highly influenced by Botswana’s continued dependence on diamonds, which contribute to at least a quarter of Botswana’s GDP and are susceptible to external shocks which places the country at a much higher risk.  The diamond industry has however been experiencing a recovery, setting Botswana on a positive trajectory.

Botswana has minimal labor strife.  The country has been cited in the 2020 Global Competitiveness Report as one of 30 countries out of 141 in which hiring of foreign labor has become significantly harder than it was in 2008.  Botswana is a member state to both the International Centre for Settlement of Investment Disputes (ICSID) Convention and the 1958 New York Convention.  Corruption in Botswana remains less pervasive than in other parts of Africa; nevertheless, foreign and national companies have noted increasing tender-related corruption.  The Government of Botswana (GoB) created the Botswana Investment and Trade Centre (BITC) to assist foreign investors.  Botswana offers low tax rates and has no foreign exchange controls.  The BITC’s topline economic goals are to promote export-led growth, ensure efficient government spending and financing, build human capital, and to ensure the provision of appropriate infrastructure.  GoB entities, including BITC, use these criteria to determine the level of support to give foreign investors.  The GoB has committed to streamline business-related procedures, and remove bureaucratic impediments based on World Bank recommendations in a business reform roadmap.  Under this framework, the GoB introduced electronic tax and customs processes in 2016 and 2017.  The Companies and Intellectual Property Authority (CIPA) built and successfully integrated the Online Business Registration System (OBRS) with Botswana Unified Revenue Services (BURS) and the Immigration Office.  OBRS is designed to reduce the business registration process by more than 10 days.  On March 2022, Parliament passed the Intellectual Property Policy to leverage Botswana’s IP potential for inclusive and sustainable economic growth and development.  The Public Procurement and Asset Disposal Board (PPADB) will from April 1, 2022, be transitioned to Public Procurement and Regulatory Authority (PPRA) and no longer adjudicate on government tenders.  The GoB also established the Special Economic Zones Authority (SEZA) to streamline sector-targeted investment in Botswana’s different geographic areas.  The Ministry of Investment, Trade & Industry (MITI) is developing a Trading Service Strategy to facilitate economic diversification and is also working on the African Continental Free Trade Area (AfCFTA) Implementation Strategy.

Due to COVID-19-related economic shortfalls, Botswana drew down heavily on its foreign exchange reserves and government savings.  Sectors such as mining, tourism, trade, hotels and restaurants, construction, and manufacturing suffered significantly; however, rough diamond sales recovered somewhat in the second half of 2020.  In April 2021, the government put in place several interventions to raise revenues including a Value Added Tax (VAT) increase from 12 percent to 14 percent, an increase on Withholding Tax on dividend income from 7.5 percent to 10 percent and increases in several fees and levies charged for government services (source: 2021, Budget Speech).  The government moved swiftly to implement relevant statutory instruments to curb the likelihood of companies exploiting COVID-19 to collude to set exorbitant prices.  The 2020 statutory instrument 61 regulated the prices of essential supplies and basic food commodities for the duration of the 18-month COVID-19 related state of emergency.  Interventions like the Economic Recovery and Transformation Plan (ERTP) and the Reset Agenda augmented the short-term economic relief package that included wage subsidies, tax amnesties, waivers of certain levies due to government, loan guarantee schemes to support firms’ access to bank credit, and provision of food relief.  The president’s Reset Agenda seeks to adjust some priorities in light of new and unexpected challenges and to find smarter ways to implement projects in a timely manner and within stipulated budgets.  The ERTP aims to reinforce support already given to affected businesses and also to take advantage of opportunities that have emerged because of the pandemic such as digital services and e-commerce.

Botswana is committed to reducing greenhouse emissions to 15 percent by 2030 through renewable energy projects already underway and listed in the Integrated Resource Plan (IRP).  Botswana also adopted a Climate Change Policy in 2021 which seeks to promote access to carbon markets, climate finance, and clean technologies.

Table 1: Key Metrics and Rankings 
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 45 of 180 http://www.transparency.org/research/cpi/overview
Global Innovation Index 2021 57 of 173 https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2020 21.0 https://apps.bea.gov/international/factsheet/
World Bank GNI per capita 2020 6,640 USD https://data.worldbank.org/indicator/NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment 

Kenya

Executive Summary

Kenya has a positive investment climate that has made it attractive to international firms seeking a location for regional or pan-African operations.  The novel coronavirus pandemic has negatively affected the short-term economic outlook, but the country remains resilient in addressing the health and economic challenges.  In July 2020 the U.S. and Kenya launched negotiations for a Free Trade Agreement, the first in sub-Saharan Africa.  Despite this progress, U.S. businesses operating in Kenya still face aggressive tax collection attempts, burdensome bureaucratic processes, and significant delays in receiving necessary business licenses.  Corruption remains pervasive and Transparency International ranked Kenya 128 out of 180 countries in its 2021 Global Corruption Perception Index – reflecting modest progress over the last decade but still well below the global average.

Kenya has strong telecommunications infrastructure and a robust financial sector and is a developed logistics hub with extensive aviation connections throughout Africa, Europe, and Asia.  In 2018, Kenya Airways initiated direct flights to New York City in the United States.  Mombasa Port is the gateway for East Africa’s trade.  Kenya’s membership in the East African Community (EAC), the Africa Continental Free Trade Area (AfCFTA), and other regional trade blocs provides it with preferential trade access to growing regional markets.

In 2017 and 2018 Kenya instituted broad reforms to improve its business environment, including passing the Tax Laws Amendment (2018) and the Finance Act (2018), which established new procedures and provisions related to taxes, eased the payment of taxes through the iTax platform, simplified registration procedures for small businesses, reduced the cost of construction permits, and established a “one-stop” border post system to expedite the movement of goods across borders.  However, the Finance Act (2019) introduced taxes to non-resident ship owners, and the Finance Act (2020) enacted a Digital Service Tax (DST).  The DST, which went into effect in January 2021, imposes a 1.5 percent tax on any transaction that occurs in Kenya through a “digital marketplace.”  The oscillation between business reforms and conflicting taxation policies has raised uncertainty over the Government of Kenya’s (GOK) long-term plans for improving the investment climate.

Kenya’s macroeconomic fundamentals remain among the strongest in Africa, averaging five to six percent gross domestic product (GDP) growth since 2015 (excepting 2020due to the negative economic impact of the COVID-19 pandemic), five percent inflation since 2015, improving infrastructure, and strong consumer demand from a growing middle class.  There is relative political stability and President Uhuru Kenyatta has remained focused on his “Big Four” development agenda, seeking to provide universal healthcare coverage, establish national food and nutrition security, build 500,000 affordable new homes, and increase employment by growing the manufacturing sector.

Kenya is a regional leader in clean energy development with more than 90 percent of its on-grid electricity coming from renewable sources.  Through its 2020, second Nationally Determined Contribution to the Paris Agreement targets, Kenya has prioritized low-carbon resilient investments to reduce its already low greenhouse gas emissions a further 32 percent by 2030.  Kenya has established policies and a regulatory environment to spearhead green investments, enabling its first private-sector-issued green bond floated in 2019 to finance the construction of sustainable housing projects.

American companies continue to show strong interest to establish or expand their business presence and engagement in Kenya.  Sectors offering the most opportunities for investors include:  agro-processing, financial services, energy, extractives, transportation, infrastructure, retail, restaurants, technology, health care, and mobile banking.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 128 of 180 http://www.transparency.org/research/cpi/overview
Global Innovation Index 2021 85 of 131 https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2020 $339 http://apps.bea.gov/international/factsheet/
World Bank GNI per capita 2020 $11,067.86 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD

 

1. Openness To, and Restrictions Upon, Foreign Investment

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
Host Country Statistical source* USG or international statistical source USG or International Source of Data:  BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount
Host Country Gross Domestic Product (GDP) (USD) 2020 $96.01 billion 2019 $101.01 billion https://data.worldbank.org/indicator/NY.GDP.
MKTP.CD?locations=KE
Foreign Direct Investment Host Country Statistical source* USG or international statistical source USG or international Source of data:  BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) N/A N/A 2019 $353 M BEA data available at http://bea.gov/international/direct_investment_
multinational_companies_comprehensive_data.htm
Host country’s FDI in the United States ($M USD, stock positions) N/A N/A 2019 $-16 M BEA data available at http://bea.gov/international/direct_investment_
multinational_companies_comprehensive_data.htm
Total inbound stock of FDI as % host GDP 2019 1.2% 2020 0.1% https://unctad.org/webflyer/world-investment-report-2021

*Host Country Statistical Source: Central Bank of Kenya, Foreign Investment Survey 2020  

Table 3: Sources and Destination of FDI
Data not available.

Table 4: Sources of Portfolio Investment
Data not available.

Mauritius

Executive Summary

Mauritius is an island nation with a population of 1.3 million people. The Government of Mauritius (GoM) claims an Exclusive Economic Zone (EEZ) of approximately 2.3 million square kilometers, but its undisputed EEZ amounts to approximately 1.3 million square kilometers, in addition to jointly managing about 388,000 square kilometers of continental shelf with Seychelles. Mauritius has maintained a stable and competitive economy. Real GDP grew at an average of 4.7 percent from 1968 to 2017, enabling the country to achieve middle-income status in less than 50 years. In 2020, Mauritius’ GDP was $11 billion and its gross national income per capita amounted to $10,230. In July 2020, the World Bank classified Mauritius as a high-income country based on 2019 data, but Mauritius reverted to upper-middle income status in 2021 due to the effects of the COVID-19 pandemic.

The pandemic severely damaged the economy. Tourism, which contributed around 20 percent to the economy pre-COVID, did not return as expected following the reopening of borders in October 2021. There was a moderate rebound in exports of goods, but exports of services declined further due to the difficult situation in the tourism sector. The GoM estimated that GDP growth would increase 4.8 percent in 2021, with contractions in tourism (18.8 percent) and sugar (9.6 percent), according to Statistics Mauritius.  The IMF forecasted that the economy would grow 6.7 percent growth in 2022. Unemployment was estimated at 9.2 percent at the end of 2020, while inflation for 2021 was 4.0 percent.

One of the poorest countries in Africa at independence in 1968, Mauritius has become one of the continent’s wealthiest. It successfully diversified its economy away from sugarcane monoculture to a manufacturing and service-based economy driven by export-oriented manufacturing (mainly textiles), tourism, financial and business services, information and communication technology, seafood processing, real estate, and education/training. Before COVID-19, authorities planned to stimulate economic growth in five areas: serving as a gateway for investment into Africa; increasing the use of renewable energy; developing smart cities; growing the blue economy; and modernizing infrastructure, especially public transportation, the port, and the airport.

In November 2021 at the Conference of Parties 26 (COP 26), the GoM pledged to reduce its greenhouse gas emissions to 40 percent of the business-as-usual scenario 2030 figures. To achieve this target, the government plans to undertake major reforms in its energy, transport, waste, refrigeration and air-conditioning, agriculture, and conservation sectors. The government aims to produce 60 percent of the country’s energy from green sources by 2030, to phase out the total use of coal before 2030, and to increase energy efficiency by 10 percent based on 2019 figures. As part of the national strategy to modernize the public transport system, the light rail network that launched in 2019 is expected to be extended. The government was also working to diversify 70 percent of waste from the landfill by 2030 through the implementation of composting plants, sorting units, biogas plants and waste-to-energy plants.

In 2020 and 2021, however, officials focused on supporting sectors whose revenue disappeared due to the pandemic. In May 2020, the Bank of Mauritius (BoM) set up the Mauritius Investment Corporation (MIC) to mitigate the economic downturn due to the pandemic. The BoM invested $2 billion of foreign exchange reserves in the MIC which were largely directed towards the pharmaceutical and blue economy sectors, in addition to assisting companies that suffered during the pandemic. The BoM also intervened regularly on the domestic foreign exchange market to supply foreign currency.

Government policy in Mauritius is pro-trade and investment. The GoM has signed Double Taxation Avoidance Agreements with 46 countries and maintains a well-regarded legal and regulatory framework. Mauritius has been eager to attract foreign direct investment from China and India, as well as courting more traditional markets like the United Kingdom, France, and the United States. The China-Mauritius free-trade agreement went into effect on January 1, 2021. Mauritius also signed a preferential trade agreement with India, which went into effect in April 2021. The GoM promotes Mauritius as a safe, secure place to do business due to its favorable investment climate and tradition as a stable democracy. Corruption in Mauritius is low by regional standards, but recent political and economic corruption scandals illustrated there was room for improvement in terms of transparency and accountability. For instance, a commercial dispute between a U.S. investor and a parastatal partner that turned into a criminal investigation has raised questions of governmental impartiality.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 49 of 180 http://www.transparency.org/research/cpi/overview
Global Innovation Index 2021 52 of 132 https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2020 $8,300 https://apps.bea.gov/international/factsheet/
World Bank GNI per capita 2020 $10,230 https://data.worldbank.org/indicator/NY.GNP.PCAP.CD

 

1. Openness To, and Restrictions Upon, Foreign Investment

Nigeria

Executive Summary

Nigeria’s economy – Africa’s largest – exited recession with a 3.4% GDP growth rate in 2021 following a contraction of 1.9% the previous year.  The IMF forecasts growth rates of under 3% in 2022 and 2023 while the Nigerian National Bureau of Statistics predicts a more robust 4.2% growth rate in 2022.  President Muhammadu Buhari’s administration has prioritized diversification of Nigeria’s economy beyond oil and gas, with the stated goals of building a competitive manufacturing sector, expanding agricultural output, and capitalizing on Nigeria’s technological and innovative advantages.  With the largest population in Africa, Nigeria is an attractive consumer market for investors and traders, and offering abundant natural resources and a low-cost labor pool.  

The government has undertaken reforms to help improve the business environment, including by facilitating faster business start-up by allowing electronic stamping of registration documents and making it easier to obtain construction permits, register property, obtain credit, and pay taxes.  Foreign direct investment (FDI) inflows nevertheless declined from roughly $1 billion in 2020 to $699 million in 2021 as persistent challenges remain.  

Corruption is a serious obstacle to Nigeria’s economic growth and is often cited by domestic and foreign investors as a significant barrier to doing business.  Nigeria’s ranking in Transparency International’s 2021 Corruption Perception Index fell slightly from its 2020 score of 149 out of 175 countries to154 of 180 in 2021.   Businesses report that corruption by customs and port officials often leads to extended delays in port clearance processes and to other issues importing goods.  

Nigeria’s trade regime is protectionist in key areas.  High tariffs, restricted foreign exchange availability for 44 categories of imports, and prohibitions on many other import items have the aim of spurring domestic agricultural and manufacturing sector growth.  The government provides tax incentives and customs duty exemptions for pioneer industries including renewable energy.  A decline in oil exports, rising prices for imported goods, an overvalued currency, and Nigeria’s expensive fuel subsidy regime continued to exert pressure on the country’s foreign exchange reserves in 2021.  Domestic and foreign businesses frequently cite lack of access to foreign currency as a significant impediment to doing business. 

Nigeria’s underdeveloped power sector is a bottleneck to broad-based economic development and forces most businesses to generate a significant portion of their own electricity.  Reform of Nigeria’s power sector is ongoing, but investor confidence continues to be weakened by regulatory uncertainty and limited domestic natural gas supply.  

Security remains a concern to investors in Nigeria due to violent crime, kidnappings for ransom, and terrorism in certain parts of the country.  The ongoing Boko Haram and Islamic State in West Africa (ISIS-WA) insurgencies have included attacks against civilian and military targets in the northeast of the country.  Nigeria has experienced a rise in kidnappings for ransom and attacks on villages by armed gangs in the North West and North Central regions.  Criminal attacks on oil and gas infrastructure in the Niger Delta region that restricted oil production in 2016 have eased, but a significant rise in illegal bunkering and oil theft has left the sector in a similar state of decreased output.  

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 154 of 180 http://www.transparency.org/research/cpi/overview 
Global Innovation Index 2021 118 of 132 https://www.globalinnovationindex.org/analysis-indicator 
U.S. FDI in partner country ($M USD, historical stock positions) 2020 $6,811 https://apps.bea.gov/international/factsheet/ 
World Bank GNI per capita 2020 $2,000 https://data.worldbank.org/indicator/NY.GNP.PCAP.CD 

1. Openness To, and Restrictions Upon, Foreign Investment

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
Host Country Statistical source* USG or international statistical source USG or International Source of Data: BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount
Host Country Gross Domestic Product (GDP) ($M USD) 2021 $422,240 2020 $432,294 https://data.worldbank.org/indicator/
NY.GDP.MKTP.CD?locations=NG
 
Foreign Direct Investment Host Country Statistical source* USG or international statistical source USG or international Source of data:
BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) N/A N/A 2020 $9,405 BEA data available at BEA : Nigeria –
International Trade and Investment
Country Facts
Host country’s FDI in the United States ($M USD, stock positions) N/A N/A 2020 $132 BEA data available at BEA : Nigeria –
International Trade and Investment
Country Facts
Total inbound stock of FDI as % host GDP N/A N/A 2020 0.55% https://data.worldbank.org/indicator/
BX.KLT.DINV.WD.GD.ZS?locations=NG
 

* Source for Host Country Data: Nigerian Bureau of Statistics

Table 3: Sources and Destination of FDI
Direct Investment from/in Counterpart Economy Data
From Top Five Sources/To Top Five Destinations (US Dollars, Millions)
Inward Direct Investment Outward Direct Investment
Total Inward $74,256 100% Total Outward $13,213 100%
Netherlands, The $13,640 18% United Kingdom $2,380 18%
United States $9,405 13% Netherlands, The $1,217 9%
France $8,798 12% Bermuda $1,014 8%
United Kingdom $8,132 11% Ghana $917 7%
Bermuda $7,696 10% Norway $808 6%
“0” reflects amounts rounded to +/- USD 500,000.

Table 4: Sources of Portfolio Investment
Data not available.

Investment Climate Statements
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