Botswana has a population of 2.2 million and is centrally located in Southern Africa, enabling 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 provide infrastructure and social services. Economic growth was lower than expected in 2015 because of a downturn in the diamond market, but improved in 2016 with the estimated GDP growth of 2.9 percent. In recent years inflation remained at the bottom end of the central bank’s 3 to 6 percent spectrum. According to the Government of Botswana (GOB), investments within Botswana totaled $5.2 billion in 2014. Botswana is classified as an upper middle income country by the World Bank based on its per capita income of $6,460.
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. Moody’s and S&P rate Botswana’s sovereign debt as A2 and A-, respectively. Botswana has minimal labor strife. It is a member state to both the 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 commented on increasing tender-related corruption. The World Bank ranked Botswana 71 out of 190 economies in the category of Ease of Doing Business in 2017. It rose in the 2016 World Economic Forum’s Global Competitiveness Index to 64 out of 138.
The GOB created the Botswana Investment and Trade Centre (BITC) to assist foreign investors, offer low tax rates, and abolish foreign exchange controls. Its topline economic goals are to diversify the economy, create employment, and transfer skills to Botswana citizens. GOB entities, including BITC, use these criteria in determining whether to provide assistance to foreign investors. The GOB is currently drafting an investment facilitation law with UNCTAD support. The GOB has committed to streamline business-related procedures, and remove bureaucratic impediments based on World Bank recommendations as part of a business reform roadmap. Under this framework it introduced some electronic tax and customs processes in 2016 and 2017. The GOB is also setting up a Special Economic Zones authority to streamline investment in sector-targeted geographic areas in the country.
Foreign and local business managers observe difficulties obtaining work permits for foreign skilled workers and managers. Permit issues combined with local skills deficits and relatively low labor productivity are the foremost business constraints in Botswana. Limitations on foreign participation in the market exist and institutionalized preferences of procuring goods and services from local sources are increasing in Botswana. These preferences arise from various GOB directives and implementing regulations, and are at times specified in tenders. By law 35 service sectors are restricted to Botswana citizens. The Ministry of Investment, Trade and Industry (MITI) generally granted exceptions for large foreign-owned chain stores but since 2016 has only granted approvals in cases where they reached a localization agreement with the applicant company.
|TI Corruption Perceptions Index||2016||35 of 176||http://www.transparency.org/
|World Bank’s Doing Business Report “Ease of Doing Business”||2017||71 of 190||doingbusiness.org/rankings|
|Global Innovation Index||2016||90 of 128||https://www.globalinnovationindex.org/
|U.S. FDI in partner country ($M USD, stock positions)||2015||19.0||http://www.bea.gov/
|World Bank GNI per capita||2015||6,460||http://data.worldbank.org/