Botswana boasts attractive business development opportunities for SA investors

Several key factors make doing business in Botswana attractive, according to Botswana high commissioner Zenene Sinombe, who outlined business opportunities in the Southern African country during the launch of inter-country relations promotion platform Africa Matchmaking in May.

The launch was hosted at professional services firm PwCs’ presmises in Menlyn, Gauteng.

Botswana has

a population of about two-million people and a land mass of 582 000 km2 and Sinombe points out that the country recorded a gross domestic product (GDP) of $14.8-billion in 2014, which equates to a GDP per capita of $7 248 in the same year, making business prospects attractive for foreign investors.

Investment in business in Botswana had been enhanced by a climate welcoming foreign investment and supported by factors such as a low current inflation rate of 4% (having been 3.1% in 2015) and lending rates as low as a bank rate of 6% and a prime rate at 8%, he said.

Botswana was also significantly competitive in terms of attracting business, compared with other African countries, he added, highlighting that the country was the third-most competitive country in the Southern African Development Community region, following Mauritius and South Africa, as well as being the fourth-most competitive country in the whole of Africa.

In terms of its macroeconomic environment, the country is ranked thirteenth globally, but first in the sub-Saharan Africa region, and thirty-ninth globally in terms of both labour market efficiency and its soundness of institutions.

A zero tolerance to corruption, as ranked by nongovernmental organisation Transparency International, reaffirms sound investment capabilities for foreign investors.

Botswana ranks the highest among African countries in terms of investment-grade sovereign credit ratings, being rated A– in the short term and A–2 in the long term by ratings agency S&P Global Ratings, while Moody’s rating for Botswana is A2.

Another propellant for foreign investment in Botswana is its lack of foreign exchange controls, coupled with remittances and full repatriation of profits and dividends. The country also does not have any restrictions on business ownership.

Further, Sinombe noted that a relaxed tax regime offered foreign investors greater possibility to benefit from profits. Manufacturing, financial services companies and companies registered in Botswana’s Innovation Hub are taxed at 15%, while a 22% corporate tax is imposed on other sectors. Income tax is capped at 25%, while value-added tax is 12%.

Sinombe added that Botswana’s key sector opportunities, premised on economic diversification, included agriculture, its leather cluster, transport and logistics, manufacturing, automotives and components, financial and business services, mining, energy, information and communication technology, tourism, education and health. Importing machinery into Botswana for manufacturing purposes is also duty-free.

Botswana exported goods worth P76-billion during 2014. Export commodities were highly concentrated in the minerals sector, including diamonds, copper-nickel, gold, salt and soda ash, with diamonds and copper-nickel constituting more than 90% of exported products, he concluded.