Friday, 24 September 2021

Business Opportunities in Botswana

There are vast business opportunities in Botswana for investors, of small, medium, and large scale. In major Capital markets, Botswana is a lucrative investor destination, because it is not only an untapped natural resources haven, but has a very steady economy, healthy financial economy, and human capital base.

Business Opportunities in Botswana in include industries such as Agriculture Manufacturing, Mining, Energy, Financial Services, and Tourism; within these, the Government of Botswana is ready to support all initiatives, and even provide funding or operating environments that have certain leverages for growth. Africans must invest in Botswana.

Botswana offers a stable political, fiscal, and macroeconomic environment. Botswana’s GDP per capita of $8,259 (BWP 97,279.46) makes it an Upper Middle-Income Country according to World Bank standards.  GDP for 2017 was measured at approximately $17.48 billion (BWP 189 billion) by the World Bank. The Bank of Botswana reports 2018 GDP at $18.6 billion (BWP 219.08 billion).

Botswana offers low tax rates and no currency exchange controls. The labour struggle is the smallest. As a member of SADC and SACU, has the potential to use its position in the region as a gateway to the southern African market. The recent (98% complete) construction of the Kazungula Bridge in the northern part of the country made this potential a reality.

The Botswana Trade and Investment Center (BITC) is the Belgian government's trade and investment promotion agency, which aims to provide a one-stop service to help investors conduct business and find a place to do business. BITC's ability to streamline procedures varies according to Bolivian government entities and bureaucratic requirements. BITC's support for investment projects is whether the project will diversify the economy and get rid of dependence on diamond mining, and whether it will create jobs and transfer skills to Botswana citizens.

The Bolivian government established a Special Economic Zone (SEZ) agency to implement the 2015 Special Economic Zone Law, which is export-oriented and therefore in line with the country’s national priorities for promoting export growth. This initiative aims to accelerate investment in specific geographic areas of the industry, including two special economic zones (multi-purpose, diamond processing and financial services) in the Gaborone region; two SelibePhikwe special economic zones (mineral processing and horticulture); and Other exclusive economic zones in Lobatse (beef, leather, biogas); Palapye (energy); Pandamaienen (agriculture); and Francistown (mining and logistics).

In 2017, the Parliament approved a SelibePhikwe special incentive plan aimed at promoting economic growth and diversification. Some incentives include a 5% reduction in corporate tax for the first five years, followed by a 10% reduction (compared to the 22% national tax rate), zero tariffs on imported raw materials, any tariffs and VAT refunds. Exit. Outside of SACU, and at least 50 years of land lease (instead of a standard 25-year lease). In addition, the Belgian government has pledged to purchase 30% of the shares of any business established in the region.

The mining industry in Botswana dominates the economy and is related to world market trends. De Beers dominates the Botswana diamond industry. Its mining business, Debswana, is jointly owned by GoB and De Beers, and produces 2.022 billion carats a year, including some of the best large diamonds in the world. In 2012, the government of Belize established the state-owned Okavango Diamond Company, which receives 15% of the rough diamonds mined from Debswana for its own sales.

To solve the problem of energy shortages in South Africa, the Indian government is seeking to become a net exporter of electricity and is considering the introduction of solar energy and coalbed methane into its energy structure. The government has awarded the country's first independent power project contract in recent years and is working hard to develop a normative and regulatory framework for private power producers. In March 2020, the United States Trade and Development Agency (USTDA) awarded a grant to a local company for the feasibility study of a coal bed methane power plant.

Botswana’s political stability and track record of prudent financial management show that Botswana has the potential to become a centre for certain professional financial services. The recent EU grey listing of the country may pose challenges to achieving this goal, but the government is working to normalize the situation and is already addressing the concerns of the Financial Action Task Force (FATF).

The Botswana tourism market is characterized by the concept of "high value (cost), low volume". Travel agencies and high-end hotels tend to dominate the market. The government is interested in expanding tourism services nationwide through mid-range products, especially provided by citizen-owned tourism companies.

Market challenges include regulatory constraints in certain sectors that have little or no relationship to the protection of the public, excessive red tape relating to licenses and permits, limited access to finance, the high cost of internet, poor customer service, and low worker productivity.  The government’s increasing number of SOEs and market holdings crowd out the private sector.  The GoB has implemented new programs to address each of these areas in line with IMF recommendations, but results have not yet materialized.  Privatization plans for several SOEs have stalled.

Local preferences for public procurement arise from numerous sources and are increasing.  Botswana law restricts 35 service sectors to Botswana citizens.  The trade ministry has historically granted exceptions for large foreign-owned chain stores, but since 2016 it has only granted approval in cases where a localization agreement was reached with the applicant company.  Botswana is currently in the process of implementing a Citizens Economic Empowerment (CEE) Law, which will require foreign companies to outsource at least 50% of their services/projects to citizen-owned companies.

In Botswana, personal relationships established telephonically, or preferably in person, are essential to establishing effective business relationships.  Meeting partners face-to-face is important.  Formality and respect for protocol are valued in Botswana and facilitate good relationships.

It is most effective to tie one’s project to declared GoB goals of diversifying the national economy away from dependence on diamond revenues, creating employment, and developing skills and capacity in discussions with any GoB official.

Sources: Trade.Gov

Cabanga Media Group is a media and business services company with interests in Botswana, Nigeria, Kenya, South Africa, Zambia and Zimbabwe.