Botswana is a landlocked country in Southern Africa. It is bordered by South Africa,
Namibia and Zimbabwe.
The capital city is Gaborone.
Botswana was a British Protectorate from 1885 until it achieved independence in 1966. Sir Seretse Khama was elected the country's leader under the banner of the Botswana Democratic Party (BDP). He was succeeded in an orderly transition by Ketumile Quett Masire, who retired in March 1998. The country's current president is Festus Mogae, who came into office on April 1, 1998. Most of Botswana's population is composed of Batswana.
Botswana is a democratic republic with a 63-member national assembly, 57 of whom are elected every five years on the basis of universal adult suffrage; the other four members are appointed by the elected members of the Assembly. The country's president is elected by the National Assembly for a concurrent term of office, and the vice president is appointed by the president. Botswana has three main political parties: the ruling Botswana Democratic Party (BDP), Botswana National Front (BNF), and Botswana Congress Party (BCP). Botswana's political landscape is dominated by BDP, which in October 2004 won 44 of the 57 elected parliamentary seats. Opposition parties operate freely and are represented in the National Assembly.
Botswana’s economy is one of the strongest in Africa and the country has one of the world’s highest growth rates, largely attributed to abundant diamond resources coupled with sound macroeconomic policies. Botswana is relatively peaceful and has practiced fiscal discipline and sound management.
The government has managed the country's resources prudently and has kept its recurrent expenditure within its revenue, allowing for investment in human and physical capital. Botswana remains heavily dependent on its diamond sector, accounting for more than one-third of GDP and 70% of export earnings.
Botswana's economic growth rate-averaging slightly over 7 percent over the past two decades-has been among the highest in the developing world. The mining industry, particularly diamonds, contributes about 35 percent of Botswana's GDP. At independence, mining contributed only 1 percent of GDP. Manufacturing, construction, and agriculture each contribute about 3-6 percent of GDP, and there has been growth in financial and government services in recent years.
With a GNI per capita of $4,340 (2004 estimate) using the "atlas method", Botswana is classified as an upper middle-income country. The government has managed the country's resources prudently and has kept
its recurrent expenditure within its revenue, allowing for investment in human and physical capital. The government's revenue from diamonds, as well as profits from large foreign exchange reserves of the Bank of Botswana, has largely cushioned Botswana from the recessions that have buffeted most countries in the region.
The economy has been hit by several negative shocks, including a temporary decline in global diamond demand and the near 40% depreciation in the South African rand in 2001. Manufacturing, construction, and agriculture each contribute about 3-6% of GDP, and there has been growth in financial and government services in recent years.
There is no arrangement for donor coordination in Botswana. While Botswana has experienced extremely high rates of growth, it also experienced the most acute ravages of the HIV/AIDS epidemic, with an estimated 38 percent (2004) of the adult population infected.
Botswana became a member of the World Bank and the International Development Association (IDA) in 1968, and is now a contributor to IDA. Cumulative commitments to Botswana include US$281 million from
IBRD for twenty-two loans, and US$16 million from IDA for six credits. Currently, there are no active IBRD/IDA projects in Botswana. The Bank provides analytical and technical support in the areas of livestock and export diversification, and HIV/AIDS.
Botswana joined the International Finance Corporation (IFC) in 1979 and the Multilateral Investment Guarantee Agency (MIGA) in 1990. The IFC portfolio amounts to $12.7 million in the tourism, financial markets, and mining sectors (four projects). No MIGA guarantees for investment in Botswana have been issued to date; however, Botswana has benefited from a number of MIGA's technical assistance activities and has participated in several of MIGA's annual African Mining Investment Symposia. Botswana is included in MIGA's Africa Mining CD-ROM, and its organizations are using MIGA's Internet-based Investment Promotion Network (IPAnet).
Botswana is rated 125th on Human Development Index in 2003. HIV/AIDS is the foremost economic and social challenge. Health spending was increased by 50% in 2002/03, but the long-term cost implications of HIV/AIDS are unclear.
The most important industry sector in Botswana is the country's diamond industry. Tourism, and agriculture are also important.
Botswana is the world’s biggest diamond producer in the world.
Agriculture in Botswana manifests itself mainly in the form of subsistence farming and cattle raising. Beef exports are an important source of revenue for the country.
The government actively seeks to improve the level of FDI in the country. To this extent, it provides the foreign investor with equal access to general incentive schemes. This occurs in most sectors, although the investment of foreign capital in job-creating industrial sectors is encouraged the most.
The IMF has characterised Botswana’s economy as one that is market-friendly. Bank practices in the country were also lauded by the IMF which stated that the implementation of prudent banking activities has had a positive effect on the sector. This knowledge provides the potential investor with the assurance that the banking sector is a solid one, it is thus safe to utilise local banks for conducting transactions.
Foreign firms are treated in the same manner as domestic ones. There are no policies of a discriminatory nature towards them. The absence of strict screening mechanisms is a favourable sign. As a result, there are no impediments to investment, competition or the over protection of domestic firms.
The country continues to move towards the abolition of exchange controls. Foreign investors are allowed to trade in the local currency and are in fact encouraged to do so on the Botswana Stock exchange.
A reassuring feature is the fact that the nationalisation of property is against the country’s constitution. This means that the risk of expropriation is extremely low. This will provide another form of security for the foreign investor.
Botswana is a member of the Southern African Customs Union (SACU) and as a result shares common tariffs with the members. But the government has taken steps to protect the country’s basic industries and as a result follows the stipulations of the infant industry clause of the SACU. In terms of this they provide tariff protection by levying import duties on the member countries. The aim of this is to allow domestic industries to compete effectively with the SACU.
The country’s main exports include diamonds, vehicles, nickel, copper and meat. These products are bought mainly by the EU, SACU member states as well as Zimbabwe.
Botswana imports products such as foodstuffs, machinery and transport equipment as well as textiles and petroleum products. SACU members fulfill the majority of these import requirements, although South Korea and Europe are also meaningful trading partners.
In order to enter the country a passport is required. But US citizens are able to stay in the country for 90 days without requiring a visa.
Medical facilities in urban centres such as Gaborone and Francistown are adequate but the same quality is not present in rural areas.
The telephone system in the country has been characterized by some industry officials as “sparse.” One organisation has stated that the number of main phone lines between 100 people is an estimated 3.5. The waiting list for main lines is this large. There is a small system of open-wire lines as well as a few radiotelephone communication stations. There are two international exchanges.
Roads are unpaved for the most part, although this is restricted mainly to rural areas. The low ratio of roads in the country is as a result of governments to protect indigenous wildlife.
The problem of HIV/Aids in Botswana is as serious as those experienced by its neighbours. The social and economic consequences of the disease have the potential to be catastrophic. The country’s infection rate is on of the world’s highest and poses a threat to the economic prosperity of the country.
The government’s response to the problem has been to initiate Aids education programmes as well as medical measures. These medical intervention measures are aimed mainly at pregnant women. This is to try and reduce the number of mother-to-child infections.
Risk in Botswana is minimal. The sound economic policies and the encouraging signs of long-term investment in the country, confirm this fact. The government continues attempts to improve the situation even further.
The government has not pursued a programme of forced nationalisation in the past and there are no indications that they will in the future. This, coupled with the unconstitutionality of expropriation serves to lessen the degree of risk even further.
Aids does remain a significant risk however and those wishing to conduct business in the country are advised to keep abreast of developments in this arena. But this is the only significant internal risk in the country. The risk that lies with sharing a border with Zimbabwe is perhaps the most worrisome. But this has not had far-reaching effects in the past analysts are hopeful that this will remain true for the future.
The government has taken measures to attract FDI and as a result there are many ways in which foreign investors are assisted with their operations in the country. An independent statutory body was established for the promotion of investment as well as the export of goods made in Botswana. It is called the Botswana Export, Development and Investment Authority and can be of great assistance to foreign companies
Legislation regulating income tax is contained in the Income Tax (Amendment) Act of 1995. All income accruals and specified capital accruals are liable to tax. The tax laws in the country are well enforced and are also clearly laid out. There are not often instances of confusion in this regard
Botswana has a number of chambers of commerce and industry and details of these can be found via our Organisation Search, as can details of relevant government departments. MBendi’s Company Search allows interested parties to find details of many companies in Botswana.
