Driving Sustainable Growth – Aired June 2010
Botswana is a landlocked, mostly arid country bordered by South Africa, Zimbabwe, Namibia and Zambia. While the country is about the size of France, two-thirds of the land is covered by the Kalahari Desert. The capital city, Gaborone, is home to a mixed ethnic society that comprises primarily of people from various African tribes, Europeans and Indians. Although Setswana is the national language and is widely spoken in the country, English is the official language used at higher levels and for business.
And Botswana offers a good environment to live and work in.
Botswana’s economy is stable and well-managed with low rates of inflation. The country offers a stable workforce, good industrial relations and competitive labour costs. In addition, a good transport infrastructure and modern telecommunication system lend to the attractiveness of doing business in the country. Furthermore, the country enjoys a reputation as the least corrupt country in Africa with high transparency and a well-developed legal system.
Minerals, especially diamonds, have been the mainstay of the country’s economy since independence from the British in 1966. The country’s high rate of economic growth is due largely to this mining sector, which accounts for 90% of national foreign exchange earnings, and at nearly 40%, provides the single largest source of GDP as well as government revenues.
The government is keen to diversify the country’s economy, and to ease its current dependence on mining. Investment is particularly encouraged in the sectors of manufacturing, tourism, infrastructure, finance, and in building its “knowledge economy”.
To this effect, private sector development in the country is actively encouraged. An attractive tax system, abolished exchange controls, and a wide range of investment incentives are just some of the measures put in place by the government in its bid to promote economic growth.
Furthermore, there are no foreign exchange controls, and its citizens enjoy a low tax regime. Corporate tax is at 15% for manufacturing and finance companies, while all others are taxed at a comparatively low rate of 25%. In addition, products manufactured in Botswana can enter the United States and the European Union free of duty and quotas, thus immediately widening the potential market base beyond the shores of the African continent.
TRANSPORT AND TELECOMMUNICATIONS
Though sparsely populated, Botswana has managed to incorporate much of its interior into the national economy. There is a paved “inner circle” highway connecting all major towns and district capitals, and an all-weather Trans-Kalahari highway which connects the country to Walvis Bay in Namibia.
Further, the authorities in Botswana realize that a comprehensive and modern infrastructure needs to be developed and maintained in the country in order to continue upwards growth of the economy. To this effect, plans have been put in place at national level to have a positive impact on the overall growth of the country.
In order to further enhance the transportation system of the country, the Civil Aviation Authority of Botswana has been established to act as a regulator of air transport services.
The new terminal building in the capital city Gaborone is one of the ongoing projects of CA and there are many more in the pipeline. The new terminal building will improve the passenger processing at Gaborone airport. A runway of about 4 km has the capacity to allow planes like Boeing 747 or equivalent aircraft to land. The current cargo terminal in the capital doesn’t have apron which links the cargo terminal with the runway and tax way. A new one is under construction now and it will allow to park of at least 2 aircrafts in front of the terminal building and to handle cargo.
In order to further develop the aviation sector, Botswana needs capital from the investors who can establish home based operators and expand their services, not only within Botswana but also regionally within the Sadec region.
Botswana ranks among the top four countries in the region in terms of telephone penetration. A fiber-optic telecommunications network has been completed in Botswana connecting all major population centers. There have also been concentrated efforts to provide rural communities with telephones and related services.
Botswana established a regulatory authority to be known as the Botswana Telecommunications Authority which will be responsible for regulatory oversight of broadcasting, internet, postal and telecommunications. The country’s vision is to make available affordable voice communications and access to internet to all in the country, regardless of their location.
Mobile phone penetration in the country is approaching 100%, which is more than twice the continent’s average. Three mobile operators – Mascom Wireless, Orange Botswana and BeMobile – cover most of the country.
Botswana has a relatively young IT industry with about 200 registered IT companies that still leaves room for potential development. A national fiber backbone supports a wide range of services, including ADSL, satellite internet and wireless technologies. Most areas in cities have wifi networks, as well as hotspots in shopping malls and café bars, and there are 22 commercial internet service providers in the country.
Media communications in the country is open. In addition to the government-owned newspaper and national radio network, there is an active and independent local press. Foreign publications are sold without restriction.
TRADE AND INDUSTRY
The Botswana economy is fast growing. Just imagine that since independence, the average annual growth was about 9% for the first three decades. The government has consistently maintained budget surpluses. The economy is focused on mining, but has been diversifying towards a lot of other sectors.
Botswana’s financial sector is relatively well developed, with an independent central bank and minimal government intervention. The government is involved in banking through state-owned financial institutions and a special financial incentives program that is aimed at increasing Botswana’s status as a financial centre. The country’s competitive banking system is already regarded as one of Africa’s most advanced.
Generally adhering to global standards in the transparency of financial policies and banking supervision, the financial sector provides ample access to credit for entrepreneurs. Credit is allocated on market terms, although the government provides subsidized loans.
Exchange controls were abolished, and with the resulting creation of new portfolio investment options, the Botswana Stock Exchange is steadily growing. Most important sectors here are finance, financial services and resources.
With significant natural resources and a market-oriented economy that encourages private enterprise, Botswana has Africa’s highest sovereign credit rating.
Foreign investment and management are welcomed in Botswana. A top priority has been to enhance business profitability and regional competitiveness with a more efficient investment code.
This milk processing factory is one successful example of foreign investment. It is the result of a joint enterprise of investors from Botswana and Zimbabwe. The company has the capacity to supply its range of UHT Long Life Milk to the domestic and export markets. It is the largest dairy factory in Botswana.
The overall freedom to establish and run a business is relatively well protected under Botswana’s regulatory environment. Obtaining a business license takes less than the world average of 218 days. The government has established a one-stop shop for investors, and the process for closing a business is easy and straightforward.
And there are a lot of others incentives for the investors. Probably the most attractive one is the low tax regime.
With its proven record of good economic governance, Botswana was ranked as Africa’s least corrupt country by Transparency International in 2009, and is consistently ranked by international organizations as among the freest economies in sub-Saharan Africa.
Often described as Africa’s fastest-growing city, Botswana’s capital Gaborone is a vibrant, colorful and bustling modern city. There are numerous busy shopping malls offering a full range of imported and locally produced goods, excellent restaurants, top international quality hotels, sports clubs and various night clubs. New buildings and suburbs sprout like mushrooms wherever there’s a block of land to fit them, resulting in a mix of low-cost housing, blocks of flats, shopping centers and industrial complexes. The western edge of the city is dominated by Kgale Hill, which offers breathtaking views of the city from the top.
But of course, the capital is not the only interesting place to visit for tourists. Botswana has a natural beauty which lies in its wilderness, wildlife and cultural diversity, located in various parts of the country. It will give its visitors a truly unique African experience.
The national parks and game reserves, like this Mokolodi reserve situated near the capital, are major tourist attractions. It is attracting travelers from all over the world, for both hunting and photo safaris. Not surprisingly, tourism plays a large role in the Botswana economy. It is creating more than 20.000 jobs, and provides some 12% of the GDP.
With its myriad natural open spaces and wildlife nature reserves, Botswana is the perfect location for the further development of eco-tourism, which will ensure that tourism in Botswana while economically profitable will also be sustainable.
Game viewing in Botswana is usually at its best during the dry season – in winter, from May to August, and in the hot springtime months of September and October, when the animals are concentrating near rivers, pools and waterholes.
The sight of the slowly moving and elegant giraffes is only one marvel during a visit to one of the many nature parks in Botswana. With some luck, brown hyenas, warthogs, cheetahs, leopards and lions can be spotted, too.
Besides the traditional safaris, Botswana is also popular for fishing safaris, and visitors can make their way to different natural mineral spas. Not to forget the magnificent golf courses, like this Pakhalane Golf Estate, and Gaborone Golf Club.
All tourist destinations are connected to the capital by air and bus transportation.
Visitors to Gaborone now have an excellent choice of craft shops to choose from. Botswana Craft, which specializes in crafts from Botswana, has several outlets in the city. They offer handmade wooden furniture, local pottery and jewelry.
For those interested in a more thorough cultural insight, the outstanding National Museum houses important collections of archaeological artifacts and natural history exhibits. The outside compound shows different examples of transportation, from Ox carts to steam locomotives. The museum is also a research institution, working to preserve the natural and cultural heritage of Botswana.
Last but not least, tourists can enjoy the bustling entertainment premises in Gaborone and other big cities. The capital counts four casinos, of which the biggest is Gaborone Sun. They offer a gaming experience in a modern up market casino environment.
Despite continued challenges such as small market size and a landlocked location, Botswana, already one of Africa’s wealthiest nations with a thriving economy based on diamond mining and tourism, remains one of the best investment opportunities in the developing world.
A regional leader in economic reform, competitiveness and flexibility are promoted by a sensible business regulatory environment, openness to foreign investment and trade, as well as relatively flexible employment regulations.
Regulatory reform has turned the country into one of the most liberalized telecommunications markets in the region, while its political stability and fiscal freedom will continue to attract foreign direct investment.