Botswana’s Business Environment

The imminent presentation of the budget speech has made me focus on Botswana’s economic development and in particular the business enabling environment.  Botswana is judged by international institutions to be amongst the best destinations for doing business in Africa and, in perception terms the least corrupt country on the continent. These ratings quite rightly reflect the Government’s prudent fiscal policies and management of the economy, which is of course helped by Botswana’s political stability.

I applaud Botswana for the initiatives the country has put in place to diversify the economy and attract foreign investment. The need for diversification remains critical and the collaboration between the Government and the World Bank, aimed at enhancing competitiveness and doing business in Botswana by streamlining business registration, licensing and issuance of permits, and the establishment of e-Government policies and standards is commendable.

But despite such efforts, Botswana struggles to attract the foreign investment needed to make a difference in broadening the structure of the economic activity. The question that we must all ask ourselves is why?  The country’s economic indicators are relatively good. There is a sound macroeconomic framework and the government has adopted a range of policies aimed at promoting industrial development and sustainable diversification of the economy.

So, and as mentioned in my last blog, Botswana has great investment potential, but, there are business environment issues that, in my opinion, need to be effectively addressed if Botswana wants to achieve rather than just promote economic growth.  The aspiration needs to be turned into reality.

What are the issues that need to be addressed?  Education has not yet resulted in the consistent quality and level of skills necessary to drive Botswana’s economic diversification. The bureaucracy around establishing businesses and obtaining work permits are cited by foreign investors as significant obstacles to foreign investment. Corruption appears to be a growing concern. And the relative slow internet bandwidth and power situation present additional challenges to doing business in Botswana.

I say this not to dwell on the negative. But in my experience dealing with British businesses seeking to work here, I see these problems at first hand. There are simply too many barriers to inward investment that are also preventing overseas businesses already operating here from expanding.  If correctly addressed, one benefit would be increased local employment opportunities which I know is a government priority.

There are some straightforward steps that would help. According to the World Bank it takes 60 days on average to set up a business here, compared to an average of 27 days in SADC and 9 in OECD countries. Some things like the cost of cross border trade are hard to change, but streamlining the process for setting up a business shouldn’t be. Many countries have succeeded in this, and I’m sure Botswana could learn from their experience.

Procurement is another area where regulation, despite the good intentions behind it, seems overly cumbersome and opens the door to corruption. We have supported work this year with regional procurement agencies including Botswana’s to look at how procurement process can be improved. One thing that would really help encourage investment is the establishment of an online application process for international tenders and I would urge the government to prioritise this.

The United Kingdom is a country with a strong record of attracting Foreign Direct Investment and we stand ready to share our experience with Botswana as it seeks to grow and diversify its economy. In this regard, I will also make every effort to promote closer and more effective links between trade and business enterprises in the United Kingdom and Botswana. I am particularly keen that British business plays its part in supporting the important infrastructure projects that will help drive Botswana’s future growth, for example in energy, including renewables, the Trans Kalahari Rail project and associated sectors like mining.

Working to achieve greater prosperity for both the UK and Botswana is an important focus of what we do in Botswana. If you are reading this and you think there are other ways in which the UK can help to achieve this in Botswana please do get in touch with me or the team and let us know.