Botswana Focus Report

Botswana
Focus Report
In collaboration with
oxfordbusinessgroup.com July 2022

Content Guide
I 23 4
PART PART PART PART
ECONOMY & KEY ECONOMIC ESG
INVESTMENT SECTORS TRANSFORMATION TRENDS
4 Overview 13 Agriculture 26 Investor Support 36 ESG Principles
5 Facts and Figures 14 Automotive 27 Overview of SEZs 37 Current Investments
6 Business Environment 15 Logistics 28 Interview: Lonely Mogara, 38 Environmental Sustainability

CEO, SEZA
7 Development Strategies 16 Financial Services 39 Social Impact
29 Incentives to Invest
8 Recent Performance and 17 Education 40 Governance Focus
Diversification 30 Technology and Efficiency
18 Health
9 Interview: Keletsositse 31 Investment in Targeted Sectors
19 ICT and Innovation
Olebile, CEO, BITC
32 Job Creation and Skills
20 Tourism
10 Trade Snapshot Development
21 Mining
11 Supply Chain and 33 Trade Agreements
Transport Infrastructure 22 Manufacturing
34 Integration and Export
23 Energy Opportunities
24 Water
2 OBG Botswana Focus Report July 2022

I 23 4
PART PART PART PART

CEO, SEZA
18 Health
Olebile, CEO, BITC
20 Tourism
21 Mining
24 Water

Part 1: Economy & Investment
Overview
ANGOLA ZAMBIA Botswana, officially known as the Republic of Botswana the Botswana Democratic Party (BDP), which led the
since it gained independence from British colonial rule in independence movement. The political framework is
1966, occupies a land area similar to that of France in the a multi-party representative democracy in which the
south of Africa. Its population is far less than the European president – currently BDP leader Mokgweetsi Masisi
country, however, at 2.35m, making it one of the world’s – is both head of state and head of government. The
ZIMBABWE most sparsely populated countries. Botswana is landlocked; president is elected by and accountable to the unicameral
Maun
it is surrounded by South Africa to the south, Namibia Parliament, which comprises a 65-seat National Assembly.
Nata to the west and north, and Zimbabwe to the north-east. An independent judiciary oversees the rule of law under
NAMIBIA There is also one border point with Zambia. the constitution. The Ntlo ya Dikgosi – which means
Ghanzi Francistown “House of Chiefs” in Tswana, the most widely spoken
The capital, Gaborone, sits close to the border with South language in Botswana – serves as an advisory body to the
Africa in the south-east. It is officially home to around 12% Parliament, primarily when it comes to tribal affairs.
Mamuno
BOTSWANA Serowe of the population, although many more people live in the
surrounding area. Other major cities include Francistown In the last election, held in October 2019, 57 National
Mahalapye and Maun, which is popular with tourists who wish to visit Assembly seats were directly elected, with the remainder
the Okavango Delta. Indeed, the landscape of Botswana is consisting of officials appointed by the president and ex-
Molepoloe defined by the vast Kalahari Desert and the alluvial fan of officio members. The BDP took 37 seats; 17 were secured
the Okavango Delta, across which seasonal floods create by the Umbrella for Democratic Change, a coalition of
Werda Kanye Gaborone a lush habitat that hosts Africa’s “big five” mammals: lions, opposition parties; and three were won by the Botswana
leopards, elephants, cape buffalo and rhinoceroses. Patriotic Front, which was formed in July 2019 with support
Tshabong
from Masisi’s predecessor as leader of the BDP, Ian Khama.
SOUTH Botswana is the African continent’s oldest democracy The party Alliance for the Progressives also campaigned,
AFRICA and one that is renowned for its political stability. All but failed to capture a seat in what was described as
five presidents elected since 1966 have come from Botswana’s most competitive election since independence.

Facts and Figures

Botswana’s development is widely seen as an African that fiscal year. Non-mineral income tax, meanwhile, is Composition of GDP, Q3 2021 (%)
success story. The country moved from a state of poverty forecast at BWP11.5bn. In the third quarter of 2021 public
at independence to a middle-income country by 2020, administration and defence contributed 18.6% to GDP, Public administration & defence Finance & insurance Taxes
when GDP per capita was $6400 despite the Covid-19 followed by mining and quarrying (12%), construction Mining & quarrying Manufacturing All other
pandemic. This performance was driven by the long- (11.7%), and wholesale and retail trade (11.2%). The sectors
Construction Education
standing arrangement to share the benefits of the world’s contribution of other sectors was below 6% each. That
third-largest diamond reserve – estimated at 90m carats in quarter nominal GDP, including taxes, was BWP49.6bn, Wholesale & retail trade Real estate
2020 – with the company overseeing the mining, the Anglo- compared to BWP48.7bn the previous quarter. GDP at
American De Beers Group, through the 50:50 Debswana current prices for the whole of 2020 was BWP171bn, down
Diamond Company joint venture. Over the years the from BWP179.6bn in 2019. 20.4 18.6
government has invested the returns from diamond mining
in education, health and transport infrastructure, which is Ecotourism based around game reserves, wildlife and
among the most developed in Africa. wilderness exploration in the Okavango Delta and Kalahari
Desert accounts for some 13% of economic activity and 9%
Diamonds account for some 80% of total export value and of employment. Agriculture represents a sliver of national 4.8
brought in roughly $4bn in 2020. Diamonds are also the output given that 70% of Botswana is desert, although 12
primary import on account of a significant local cutting bovines are a notable export. Manufacturing is currently
4.8
and polishing industry. Counted in Botswana pula, the underdeveloped: the sector’s share of GDP stood at 5.6% in
national currency that maintains a crawling peg with the late 2021, although exports of insulated copper wire amount
South African rand and the IMF’s special drawing rights, to almost $100m per year. In light of this relatively narrow 5.1
mineral revenues were expected to contribute BWP23.2bn economic base, the government has pursued diversification 11.7
to government revenue in FY 2021/22, or about 37% strategies focused on boosting non-mining activity, aiding 5.6
of the total. The second-largest source of government the growth of small and medium-sized enterprises (SMEs), 5.8 11.2
income is Customs and excise tax, estimated at BWP13.5bn and developing advanced manufacturing and services.
5 OBG Botswana Focus Report Graph source: Statistics Botswana July 2022
Business Environment
Botswana offers potential investors many advantages, Businesses can also benefit from a safe environment. A low
Doing business in Botswana including the fact that English is widely spoken and crime rate ensures that attacks on visitors are few and far
the country has one of Africa’s highest rates of female between, and the country is free of terrorism. The strength
Sound fiscal policy participation in the labour force, at 65%. Businesses can of Botswana’s rule of law saw the country ranked 51st out
Stable and rely on a young, motivated and cost-competitive workforce of 139 nations and fourth in the region in the World Justice
and economic
transparent that is highly connected and tech savvy – Botswana’s Project’s 2021 Rule of Law Index. Botswana leads Southern
freedom
mobile penetration rate is above 160%. While more needs Africa in criminal justice through a legal system that is a
to be done to improve the supply of skilled labour, the blend of the constitution, customary law, common law,
government launched the Education and Training Sector government legislation and judicial precedent.
Base to serve Motivated workforce Strategic Plan 2015-20 to address challenges. Components
Southern Africa with high female of the plan included boosting private sector participation More specifically, and particularly important for foreign
market participation and expanding technical and vocational education. investors, Botswana does not implement currency controls.
This ensures that businesses can easily repatriate profits
The stability of politics in Botswana is another notable from their investments. The Botswana Investment and
feature of the business environment, ensuring strong Trade Centre (BITC), for its part, has a mandate to attract
English as a primary Competitive continuity of policies. Botswana scored among the foreign direct investment (FDI) and promote the country’s
language cost structure highest sub-Saharan African countries in Transparency exports. In its first full year of operation in 2013, the BITC
International’s 2021 Corruption Perceptions Index. That attracted FDI of BWP699m, exceeding its target by 16%.
said, its score fell from 65 in 2012 to 55 in 2021, reflecting The BITC provides a one-stop shop for investors to sort
rising concerns over the impunity of senior government business registration, entry visas, work and residence
Extra incentives in officials. Public perceptions of corruption rose following permits, and tax registration, among other things. Ancillary
One-stop shop
special economic the alleged illegal appropriation of money from the services include banking, environmental assessments and
service centre
zones National Petroleum Fund in 2016-17 and a subsequent legal support. Investors also benefit from preferential
court ruling in favour of the accused officials. policies in nine special economic zones (see Part 3).
6 OBG Botswana Focus Report Infographic source: SEZA Botswana July 2022
Development Strategies
Ambitious national and sector development plans two countries, to link the Democratic Republic of including mineral beneficiation. Special economic
guide Botswana’s growth. Chief among these the Congo, Tanzania and Zambia to South Africa zones are to play a leading role in this.
is National Vision 2036, which is being pursued and Namibia via Botswana. Indeed, the Southern
through a series of medium-term plans. The African Development Community (SADC) has its Following a mid-term review of the NDP 11,
vision’s overarching goal is to turn Botswana into headquarters in Gaborone, placing Botswana at the government is committed to improving the
a high-income, export-led country within the the administrative centre of a market that aspires implementation of projects that support the plan’s
next 15 years via sustainable growth based on to establish a currency union. goals. For example, October 2021 saw the launch
four pillars: economic development; human and of a national e-commerce strategy designed to
social development; a healthy environment; and Botswana’s current medium-term plan, the support exports, empower citizens and create
governance, peace and security. National Development Plan 11 (NDP 11), runs jobs, as well as boost productive capacity,
from 2017 through to 2023. It is aligned with the global competitiveness, diversification and the
The vision targets annual GDP growth of at UN Sustainable Development Goals, the African knowledge-based economy.
least 6%, predicated on a stable macroeconomic Union’s Agenda 2063 development blueprint
environment comprising low inflation, fiscal and the SADC’s Regional Indicative Strategic The NDP 11 is being supported by a $250m World
prudence, supportive monetary policy and a Development Plan 2020-30. Steps to transform Bank loan funding Botswana’s Economic Recovery
competitive exchange rate. Notably, the vision Botswana include improving the skills of the and Transformation Plan to strengthen the
posits Botswana as a regional transport corridor, labour force; reducing reliance on diamond mining business environment for SME-led job creation and
the realisation of which was brought one step and related activities; and lowering government economic diversification through improved access
closer with the completion of the Kazungula expenditure in line with greater investment from to finance. The entire estimated cost of the plan is
Bridge, which opened to road traffic in 2021. the private sector on export development. The $1.3bn (or 7.6% of GDP) over two and a half years
Zambia and Botswana funded the $259m road export strategy aims to develop a cluster model starting from the second half of 2020, funded by
and rail infrastructure project, which crosses with an initial focus on tourism, agriculture, both domestic and foreign sources. Key projects
the Zambezi River at the point that connects the manufacturing, financial services and mining, centre on agriculture, tourism and ICT.

Recent Performance and Diversification

Botswana’s economy is recovering reasonably well from the effects BWP10.2bn – equal to 5.1% of GDP – compared to a budgeted countries around the world, inflation was driven by a recovery in
of the Covid-19 pandemic. In the 12 months to September 2021 real shortfall of BWP6bn, driven by pandemic-induced spending and domestic demand amid the deployment of Covid-19 vaccines, fewer
GDP expanded by 8.6%, compared to a contraction of 7.3% in the lower-than-forecast mineral revenue. Despite this, in September movement restrictions, higher administered prices and government
year to September 2020, according to the Bank of Botswana, the 2021 Botswana retained its long- and short-term foreign and local taxes, and rising prices for imported products. An unemployment
central bank. The rebound was primarily facilitated by the lifting of currency sovereign credit rating of “BBB+/A-2” from Standard & rate of 26% in the fourth quarter of 2021, including over one-third
Covid-19 containment measures. Poor’s, with the outlook revised from negative to stable. for young people, is another issue.
That said, the pandemic has left challenges, including a substantial Inflation breached the upper bound of the central bank’s medium- Meanwhile, the NDP 11 has had some success in achieving its
fiscal deficit. For FY 2021/22 revised estimates show a deficit of term objective range of 3-6%, averaging 6.7% in 2021. As in many economic diversification objectives. In 2021 the non-mining private
sector comprised around 70% of GDP, compared to 63% in 2015 and
around 50% in the late 1990s. While mining and quarrying remains
Year-on-year GDP growth, 2019-21 (%) the largest non-public sector of the economy, it is closely followed
40 by construction, and wholesale and retail trade.
30
20 Economic activity is expected to accelerate in 2022 in line with
a strengthening outlook for minerals and increased demand for
10
diamonds from China and India. However, fallout from Russia’s
0 invasion of Ukraine in February is expected to weigh on growth, as
-10 global food and fuel price inflation disrupts business activity and
-20
planning, dampens consumer demand and increases pressure on
Botswana’s fiscal position. The IMF forecasts GDP to grow at 4.3%
-30 in 2022, with an inflation rate of 5%. Various analysts anticipate
-40 Botswana’s current account deficit will narrow over 2022 and 2023
Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021
as service exports rebound and diamond production and prices rise.
Interview
Keletsositse Olebile
CEO, Botswana Investment and Trade Centre (BITC)
How do you assess Botswana’s role as a economic tax system by regional standards. This enhances including in natural resources. The identification
player, and where do you see opportunities to Botswana’s prospects as a destination for foreign of such opportunities should then be supported
leverage regional synergies? investment and supports existing value chains. by efforts to strengthen relevant infrastructure,
a reform of current official procedures and the
Botswana enjoys a advantageous geostrategic What needs to be done to further improve the adoption of a more coordinated approach by all
position in the centre of the Southern African business environment and attract investment? agencies that are involved in investment promotion
Development Community, with connections to South activities throughout the country.
Africa, Zambia, the Democratic Republic of the Despite the favourable business environment,
Congo, Malawi and other countries in the region. This challenges still remain in terms of dealing with In which of the key investment sectors prioritised
suggests that there may be potential to transform construction permits, getting electricity, registering by the BITC do you see the most potential for
Botswana into a regional land-air multi-modal centre, property and enforcing contracts. It will be attracting foreign investment?
with opportunities for inland transport and logistics. important to review the regulatory framework
For example, the construction of the Kazungula to ensure improvement in these areas. Agencies There is significant potential in agriculture,
Bridge connecting Botswana and Zambia is a responsible for these activities should design education, ICT, manufacturing and tourism, all
strategic project that not only enhances Botswana’s mutually enforcing initiatives to promote investment. of which have been prioritised by the BITC. The
role as a critical inland player, but also as a gateway It will also be important to design a monitoring and government is making concerted efforts to put in
to the north-south trade corridor. evaluation system to regularly assess the business place policies that allow players in these sectors
environment and identify areas for further reform. to thrive. These efforts will also help the country
Botswana has many favourable attributes, including transition from middle- to high-income status. In
the fact it was among the top-three African Local authorities should continually review order for this transition to be successful, it will be
countries in Transparency International’s 2021 regulations to improve the investment climate, important to increase productive output. At lower
Corruption Perception Index. It also has the most especially in terms of construction permits. It would levels of development, this involves a structural shift
comprehensive intellectual property protection also be helpful for local governments to understand from agriculture to the manufacture of goods and,
in sub-Saharan Africa and a relatively efficient investment opportunities in their respective regions, increasingly, the provision of high-value services.

Trade Snapshot
In 2020 Botswana exported products worth a total of 2020, as are electricity and vehicles. South Africa is far Value of trade, 2018-20 (BWP bn)
$4.58bn, down from the $5.94bn recorded five years and away the largest source of imports, at 56% of value in
prior, in line with declining demand for, and therefore 2020, followed by Namibia, Belgium and the UAE. Exports Imports
production of, diamonds. Diamond mining has recovered
90
20m-25m carats per annum in recent years – markedly In line with the objectives of the NDP 11, the Botswana
lower than the peak output of more than 34m in 2006. Export Development Programme works to connect
domestic companies with international markets by 80
Diamonds and gold are Botswana’s leading exports, providing a platform for business-to-business discussions
accounting for $4bn and $87.2m, respectively, in 2020. and deal-making, and had registered around 100 firms by 70
Insulated wire, bovines and carbonates are also important September 2021. In addition, Botswana hosted a pavilion
exports. Belgium was the number-one destination for at Dubai Expo 2020 that ran from October 2021 through 60
shipments, at $951m in 2020, as it is among the top to March 2022 to promote the recovery and diversification
diamond buyers globally. It was followed by the UAE, India, of its products and services. The event showcased mined 50
South Africa and Singapore. After declining 30% in 2020, and finished diamonds, financial services, arts and crafts,
sales of uncut diamonds by Debswana Diamond Company innovation and technology, tourism and food. 40
jumped 41% year-on-year in the first half of 2021 due to
higher demand from the US and China. As a member of the Southern African Customs Union, 30
Botswana benefits from a duty-free trading area with
Botswana imported goods worth $6.15bn in 2020 amid a common external tariff. More significant, however, is 20
disrupted trade flows due to the pandemic. This compared Botswana’s participation in the African Continental Free
to $7.5bn in 2015. Diamonds, again, were the top category Trade Area (AfCFTA), which came into force in January 10
by value, at $1.83bn, feeding the local industries for 2021. AfCFTA will boost Botswana’s access to markets
sorting, cutting, polishing, trading and valuing. Refined across the continent, widening the country’s potential 0
petroleum is another essential import, worth $604m in consumer pool to more than 1bn people. 2018 2019 2020
Supply Chain and Transport Infrastructure

Botswana sits along several crucial industrial The Trans-Kalahari Corridor, for its part, is a centre; and improving the layouts of several
trade routes. Almost all these links are roads, direct route for the transport of base metals intersections. Improvements to roads between
although state-owned Botswana Railways from Walvis Bay and Windhoek in Namibia Francistown and Nata, Nata and Maun, Maun
operates a rail network consisting of a main through Botswana to Pretoria, South Africa, as and Mohembo, Palapye and Martin’s Drift, and
line that runs from Ramatlabama to Bakaranga well as for coal exports out of Botswana. There Mmathethe and Bray are also under way.
via Gaborone and three branch lines. are complementary rail lines, but the middle
section between Gobabis in Namibia and As a landlocked country, Botswana has pursued
The north-south corridor linking the Lobatse in Botswana remains incomplete due deals with neighbouring nations to operate
Democratic Republic of the Congo and Zambia to funding gaps. Botswana also exports out of dry ports along their coastline to improve the
with the Port of Durban in South Africa the Port of Maputo in Mozambique. flow of goods into and out of Botswana that
through Botswana via road and rail is a key require maritime shipping. Sea Rail Botswana,
route for minerals, primarily copper and cobalt. Other noteworthy road projects include the a subsidiary of Botswana Railways, inked a deal
The corridor, which also connects the SADC BWP1bn, 1.16-km Mohembo Bridge over the with the Namibian Ports Authority in 2013 to
with the Common Market for Eastern and Okavango River, built by Italian contractors operate a dry port at Wavis Bay, and is now
Southern Africa, received a new lease of life in Itinera and Cimolai under the supervision partnering with the BITC to provide logistics
2021 with the opening of the Kazungula Bridge of CPP Botswana. The roads around solutions to businesses that wish to set up
and associated one-stop border posts, which Gaborone are also being upgraded to resolve in Botswana and need a direct link to the
make up part of the broader Trans-African congestion issues. Projects include building ocean. The government, meanwhile, operates
Highway network. The road and rail bridge is three interchanges along the city’s Western three dry ports in Gaborone, Francistown and
set to dramatically reduce traffic congestion at Bypass; installing a new traffic-signalling Palapye, with upgrades for these facilities
the Kazungula border crossing. system and a centralised traffic-control included in the FY 2021/22 budget.

I 23 4
PART PART PART PART

CEO, SEZA
18 Health
Olebile, CEO, BITC
20 Tourism
21 Mining
24 Water

Part 2: Key Sectors
Agriculture
The agriculture sector in Botswana currently imported agriculture implements and a Customs since its inception in 2014, raising their revenue Food import bill, 2014-19 (BWP bn)
accounts for a relatively small share of GDP, duty exemption on imported raw materials. by 39% and sustaining over 2000 jobs.
so there is considerable untapped potential 10
in both the primary and secondary markets. Furthermore, the government’s Economic Other projects include the horticulture-
A heavy reliance on imported food, which Recovery and Transformation Plan (ERTP) has focused SEZ at Tuli Block and its counterpart
amounted to BWP9.3bn in 2019, has prompted allocated funds to upgrade fish hatcheries and for integrated agriculture operations at
the government to designate agriculture as a horticulture nurseries, mobile poultry abattoirs, Pandamatenga, where the establishment of a 8
strategic sector for economic diversification, livestock facilities and small-stock multiplication potato farm, a 107-ha agro-processing zone
employment creation and income generation. farms. The Ministry of Agricultural Development and 12 flagship steel grain silos are set to
and Food Security is also reviewing a subsidy increase the share of cereals produced locally.
The bulk of the import bill comprises processed programme to improve efficiency. Sunflower processing is another target industry 6
foods, driving the current focus on the for the Pandamatenga area. The Zambezi Agro-
development of agro-processing and value- While there are a variety of support commercial Development Project, meanwhile,
added industries, such as meat processing, mechanisms available across agricultural seeks to leverage the Zambezi River to irrigate
rawhide processing and leather tanning at the value chains, key areas include horticulture, 20,000 ha of agricultural land. 4
Lobatse Special Economic Zone (SEZ). grain, honey, dairy and sheep production. For
example, in the mixed-use SEZ at Selebi Phikwe, With more extreme temperatures and reduced
Spurred by the Covid-19 pandemic, the the government partnered with the Debswana average rainfall impacting the health and
government has introduced several policies mining joint venture to roll out the Tokafala sustainability of crops, solutions to mitigate the 2
to support the sector’s development. These enterprise development programme, which effects of climate change are in high demand.
include border closures designed to protect targets entrepreneurs operating in the mining, The government is particularly interested in
local industry from competition from imported tourism and agro-processing sectors. As of May technologies such as marketing platforms,
fresh produce substitutes. Fiscal incentives 2021 the programme had supported more than precision farming and the use of drones to 0
include value-added tax (VAT) rebates on 350 micro-, small and medium-sized enterprises enhance agricultural efficiency. 2014 2015 2016 2017 2018 2019
13 OBG Botswana Focus Report Graph source: MADFS July 2022

Part 2: Key Sectors
Automotive
As one of the more affluent economies Trans-African Highway and other overland trade development of mineral reserves of strategic
in Southern Africa and home to a rapidly routes for exports to the rest of Africa. metals used to make batteries for EVs.
improving network of roads, Botswana is
looking to leverage its automotive market to There are also opportunities to tap into the The Ministry of Investment, Trade and Industry
bolster related industries. The country has a expanding leather-processing industry to has taken a lead in this area, having invited
vehicle ownership rate of 206 vehicles per 1000 design and produce leather car seats. Other relevant companies to express their interest in
people, considerably higher than the African areas of interest include research and design manufacturing EVs and related components in
average of 43 vehicles per 1000 people. This is services, the diversification of after-sales Botswana, with an eye to drawing up policies
forecast to grow as demand for both personal services for private and commercial vehicles, conducive to fostering an e-mobility industry.
and industrial vehicles increases as a result of and the establishment of skills development Partner agencies cited in the expression of
economic diversification and expansion. and training facilities for mechanics and interest include the Botswana Investment and
technicians in the country. Trade Centre (BITC), the Botswana Institute
In the meantime, the government is for Technology Research and Innovation, the
encouraging local component manufacturers to In the longer term, Botswana is positioning Citizen Entrepreneurial Development Agency
supply the auto industry in neighbouring South itself as a centre for the development of and Botswana Development Corporation.
Africa, where Nissan, Ford, BMW and Toyota electric vehicles (EVs), with plans to increase Supported by international backers, the
have plants in relative proximity. Replacement the mining of metals that are essential potential for expansion in Botswana’s EV
parts manufacturers, such as those making to the EV market, such as manganese. In industry is significant. Chinese company Baylee
bumpers, carpets and brake pads, are also 2019 Botswana joined the Energy Resource Enterprises announced in March 2021 that it
being encouraged to establish a base in Governance Initiative, an international alliance is on track to produce the first homegrown EV,
Botswana to leverage the recently revitalised that aims to support the discovery and made from imported motors and other parts.

Part 2: Key Sectors
Logistics
Botswana is working to leverage its central location in the Meanwhile, a long-awaited rail project could be operational Botswana’s proximity to strategic ports
Southern African Development Community (SADC) as it seeks by 2025. In November 2021 Botswana Railways committed to
to improve transport links and diversify the economy to drive inaugurate a 150-km cross-border railway link to Lephalale in
growth in its logistics and cargo freight sector. The 2021 opening Limpopo, South Africa, from where coal can be shipped onwards
of the Kazungula Bridge linking Botswana and Zambia is expected via existing rail infrastructure to the Port of Richards Bay. This
to decongest alternative cargo routes, such as that from South infrastructure will provide the foundation to accommodate
Africa through Zimbabwe and further north to Zambia and the the increasing demand for cargo, freight and logistics services
Democratic Republic of the Congo, opening up the region as the driven by Botswana’s growing manufacturing, mining, agriculture,
African Continental Free Trade Area (AfCFTA) comes into effect. consumer goods and tourism-led service sectors, as well as the
expected increase in regional trade on the back of Southern
Elsewhere, the Trans-Kalahari Corridor from the Port of Walvis Africa’s economic recovery from the Covid-19 pandemic and the
Bay to Johannesburg via Gaborone provides an alternative to the launch of AfCFTA. To achieve this, the government of Botswana Beira
highly congested Durban Port. Botswana operates four dry ports, is seeking investment in areas such as consolidation, de-
including one each in Gaborone, Francistown and Palapye, as well consolidation, distribution, handling, packaging, and warehouse Walvis Bay Gaborone
as a coastal dry port in Walvis Bay that Botswana Railways has management and integrated systems. Maputo
leased from neighbouring Namibia. OR Tambo Airport
Investors can take advantage of the various incentives offered
Further improvements to Botswana’s transport network include by the BITC and within SEZs to reduce costs and streamline the
a planned 1700-km Techobanine Corridor heavy-haul railway line process of setting up a business in Botswana. While each SEZ will Durban Botswana
connecting the eastern coal fields at Selebi Phikwe with a new require logistics services that meet their individual needs – for Namibia
deepwater port in Mozambique’s capital, Maputo. These corridors example, cold storage in the horticultural and meat-processing Mozambique
will enable Botswana to draw cargo away from traditional SEZs – dedicated freight and logistics zones at Francistown South Africa
maritime entry ports in South Africa, making it an attractive and Sir Seretse Khama International Airport (SSKIA) provide an
trans-shipment and consolidation centre in the SADC. immediate area of interest for industry investors.
15 OBG Botswana Focus Report Map source: Frontier Advisory Analysis July 2022
Part 2: Key Sectors
Financial Services
Botswana plans to leverage its established rule freely across borders in any currency. Overseas as Spark by Absa, which targets both banked
of law and track record on transparency and investors also enjoy a tax rebate on costs and unbanked citizens, as well as businesses that
corruption to grow its financial services and incurred while training local staff. transact in cash, such as car washes, grocers
business process outsourcing (BPO) sector. and street food vendors. The services offered
The country is looking to build on the success by Spark include digital transactions such as
In 2003 the government established the of the Financial Inclusion Roadmap and Strategy money transfer, bill payment, payment via QR
Botswana International Financial Services Centre 2015-21, which focused on developing the code, wallet on point-of-sale payments, bank to
(IFSC) in Gaborone to galvanise sector growth, payments ecosystem and expanding access wallet, wallet to bank, ATM withdrawals and card
offering licensed companies exemptions from to low-cost savings products. It also sought to to wallet. That year also saw Nigeria’s Access
capital gains and withholding tax, and zero- nurture digital payment platforms, cross-border Bank acquire Botswana’s BancABC as part of an
rated VAT. With the IFSC being incorporated remittances, and accessible risk-mitigation and Africa-wide expansion drive, setting the stage
into the Gaborone SEZ, new businesses in the investment products for pensioners, with an for a new digital banking strategy targeting
zone can also benefit from a reduced corporate eye to lowering the proportion of financially trade finance and international banking.
income tax rate of 15%. IFSC companies include excluded people from 24% to 12%.
international insurance firms, international In April 2022 the sector received a welcome
banks and finance companies, BPO and call The pandemic has accelerated the adoption of boost after the African Development Bank made
centres, and multinational investment funds. digital banking solutions in Botswana, opening available BWP1.4bn to support programmes
up new investment opportunities for companies aimed at fostering economic diversification,
The absence of foreign exchange controls that provide software and cybersecurity services including one that seeks to facilitate the
allows international investors to repatriate to banks. For example, in 2021 Absa Bank execution of key capital market development
profits and capital gains from their investments Botswana launched a new digital wallet, known activities on the Botswana Stock Exchange.

Part 2: Key Sectors
Education
The education sector consistently receives the participation of the private sector and parents; Education partnered with Young 1ove, one of Priorities of the ETSSP
largest share of government funding in the and technical and vocational education, with the largest NGOs in the country; UNICEF; and
national budget, equivalent to about one-fifth of corresponding opportunities for investment. the US Agency for International Development
total spending, or 7-8% of GDP, which is among For example, the plan targeted a 52% hike in to facilitate the delivery of basic education via Improve quality Enhance Strengthen
the highest proportions in the world. tertiary education attendance, and a more than mobile phone and SMS to students nationwide. & relevance of learning skills
Despite this, the sector faces significant four-fold increase in technical and vocational education outcomes development
challenges, underscored by a 2017 survey enrolment. Moreover, the government is keen Investment opportunities also exist in
by two professors from the University of to attract leading tertiary institutions, scholars, Botswana’s 15 higher education institutions,
Botswana’s Department of Primary Education researchers and students. led by the University of Botswana in Gaborone, Utilise & Better planning Improve
that found significant deficiencies among grade- or in the establishment of private, for-profit integrate ICT & budgeting management of
five students in maths and literacy. Over the last decade Botswana has heavily establishments such as the London College of
for the sector education
invested in the construction of secondary International Business Studies. The government
The government recognises the importance schools, universities and a teaching hospital. has highlighted a need for specialised
of improving education standards in order to Developers are now being sought to assist with institutions that can provide financial services
Develop new
transition to a knowledge-based economy. the building of complementary infrastructure, training to students, covering topics such as Focus on More
& alternative
To address gaps in learning, it released the such as student accommodation and staff transactional banking and student loans, as well life-long equitable
pathways for
Education and Training Sector Strategic Plan housing, ICT connectivity and catering facilities. as medical, life and property insurance. learning access
education
(ETSSP) 2015-20. The ETSSP encouraged Contracts are also available for equipment and
a shift towards outcome-based education, property maintenance service providers. Botswana hosts specialist technical colleges and
which has implications for investment in institutes for post-harvest technology and food- Develop a Better monitoring
curricula, teaching methods and assessment. The pandemic led to widespread school quality research; mining and energy; medical responsive tertiary & evaluation of the
The plan emphasised laying a solid foundation closures, and highlighted the need for and health sciences; safari photography and education system sector
at the pre-primary education level; teacher investment in digital education solutions and veterinary science; and democracy, governance
education and professionalism; enhanced equipment. To this end, the Ministry of Basic and economic management, among other areas.
17 OBG Botswana Focus Report Infographic source: MESD July 2022

Part 2: Key Sectors
Health
Health care in Botswana is delivered by both public With the goal of improving the regulatory and based health care conglomerate NantWorks to
and private sector service providers, with the investment environment, the government is rolling establish biotechnology resources in the country.
government offering a basic standard of health out or amending legislation for the sector, including NantBotswana will set up a manufacturing
care free of charge to citizens. Foreigners are the Health Professions Bill, the Health Research Bill, plant to conduct research on Covid-19 vaccines,
required pay for health care via subsidised fees. the Health Quality Bill, the Tobacco Bill, the Mental cancer treatment and next-generation cell-based
Health Bill, the Food Safety and Quality Bill, and the immunotherapy, among others.
Although the sector benefits from high levels of Medicines and Related Substances Amendment
government spending, a 2018 World Bank study Bill. Ongoing infrastructure projects include The health sector’s needs were especially acute
underscored the productivity gains that could be the refurbishment of three hospitals located in during the Covid-19 pandemic. The government
unlocked through higher-quality education and Mahalapye, Sefhare and Serowe. is consequently pursuing an e-health strategy
health care. According to the survey, children in that has seen the establishment of a digital
Botswana are roughly 42% as productive as they The government is targeting investment in its two communication platform in several hospitals that is
could be in adulthood based on current learning acute referral hospitals, psychiatric hospital, district intended to raise awareness and provide education
and health outcomes in the country. hospitals, primary hospitals, mine hospital and to patients through video streaming of health
regional clinics. Specific requirements comprise content in the waiting rooms.
To achieve these gains, the second half of the investment in diagnostic facilities (imaging and
National Development Plan (NDP) 11 targets laboratory), pharmaceutical manufacturing to An integrated patient management system,
improvements in the quality of health service curb the reliance on imports, medical tourism meanwhile, has been implemented in all 28
provision and disease-prevention measures, and biopharma equipment. For example, in March public hospitals and 23 clinics across the country.
notably for HIV/AIDS and non-communicable 2022 Botswana’s Digital & Innovation Hub signed Additional investment in ICT will help Botswana
diseases such as cancer and diabetes. a memorandum of understanding with California- meet its public health and social welfare goals.

Part 2: Key Sectors
ICT and Innovation

Botswana is pursuing improved connectivity under its National of South Africa’s MTN; Orange Botswana, backed by France’s National broadband network, 2018
Broadband Strategy, which began in 2018. The strategy calls for Orange Group; and BTC. In an example of operators’ ongoing
the deployment of mobile broadband access networks (3G/4G/ efforts to improve connectivity and service offerings in
LTE) in urban centres, major villages, and rural and agricultural the country, Orange has launched a digital schools project
areas, coupled with the rollout of fixed broadband and ultra- extending the reach of LTE-A services, alongside a cross-border SHAKAWE
fast broadband (xDSL, FTTx and fixed wireless). Affordable, mobile payments platform. Meanwhile, Mascom is piloting 5G GUDINGWA
high-speed internet access is essential to enable innovation and sites in Gaborone, with plans to launch the network in 111 areas MAUN
growth across national priority areas such as e-government, nationwide. Demand growth is stemming from the proliferation MOTOPI NATA
including the national identification system, the births and of smart city services, with street lights, traffic signals and
deaths registration system, e-health and e-education. security flagged as high-growth areas, particularly in SEZs.
The Botswana Digital & Innovation Hub, for example, is ICT research, innovation and development, local content and
pioneering a SmartBots strategy to accelerate digital digital literacy education have also been highlighted as priority
KAUDWANE
transformation. In the first phase of the initiative, $12.7m will areas for investment. In October 2021 the government launched
TSETSENG
be spent on connecting some 500 villages to the internet. a national ICT policy review and e-commerce strategy with the NCOJANE
Ultimately, the project is expected to enable 1.2m Batswana support of the UN Conference on Trade and Development. The
MOTOKWE
to access broadband internet and digital services through review identified eight areas for investment to enable an ICT
Wi-Fi hotspots in public places. At the same time, a draft Data environment conducive to e-commerce: ICT infrastructure and
Protection Act is anticipated to spur investment in data centres telecoms services; payments and financial services; logistics and
TWO RIVERS
and related ICT infrastructure in the country. trade facilitation; legal and regulatory environment; e-platforms; MABULE
PHITSHANE
skills development; awareness-raising; and e-procurement. MOLOPO
Regulatory reform has fostered a highly liberalised telecoms Other ICT investment opportunities include BPO, call centres Existing fibre network
sector, with a service-neutral licensing regime and several and e-commerce; innovative money operations; e-waste; TV Planned fibre network
operators in the market, including Mascom Wireless, a unit broadcasting; software and app development; and agri-tech.
19 OBG Botswana Focus Report Map source: BoFiNet July 2022

Part 2: Key Sectors
Tourism
The bulk of Botswana’s non-mineral exports standalone foreign investment are welcome, Conservation Area, which seeks to link Visitors by country of residence, 2018 (000)
stem from tourism services, and the sector Vision 2036’s focus on growing the national protected areas in Zambia, Botswana, Namibia,
usually accounts for close to 10% of GDP. economy and employment means that tourism Zimbabwe and Angola to drive tourism US
Prior to the pandemic, Botswana attracted licences and safari concessions are reserved across Southern Africa via the introduction
1.8m visitors in 2018, the latest year for for local operators. of a unified visa scheme. Key public sector GERMANY
which official data is available. Of the total, stakeholders relevant for investment
90% were tourists, primarily from the US, That said, the government has called for include the Ministry of Environment, Natural UK
Germany and the UK. Visitors are drawn by investment to help introduce new products Resources Conservation and Tourism; the
the natural riches of the Okavango Delta, and and expand the geographic spread of services, Hospitality and Tourism Association of AUSTRALIA
the wildlife and beauty of the Central Kalahari particularly through the provision of additional Botswana; the Botswana Tourism Organisation;
Game Reserve, Chobe National Park and the mid-market options. Ongoing improvements the Botswana Tourism Board; and the Ministry FRANCE
Kgalagadi Transfrontier Park, among other in transport and other infrastructure are of Investment, Trade and Industry.
national reserves. However, the pandemic expected to spur growth by making entry, exit NETHERLANDS
significantly impacted the industry, leading and domestic travel easier. Other segments with high investment
tour operator revenue fall by as much as 95%. potential include ecotourism, mid-range CANADA
Opportunities in the sector include hotel excursions, hotels, lodges, resorts, direct
In 2020 the government launched a new expansions and start-ups along the Trans- flights and restaurants. Notably, Gaborone SWITZERLAND
tourism policy aimed at establishing Botswana Kalahari Corridor joining Botswana and is viewed as having insufficient hotel and
JAPAN
as the top wilderness destination in the Namibia, and lodges in the Kgalagadi conference facilities to accommodate plans
world by 2036. The policy seeks to encourage Transfrontier Park, the Central Kalahari Game to expand business travel. Hilton and Marriott
SPAIN
growth of tourism related to sport; health Reserve, the Makgadikgadi Pans National International entered the local hotel market
and religious retreats; meetings, incentives, Park and forest reserves surrounding Chobe in 2019 and 2020, respectively, indicating that OTHERS
conferences and exhibitions; game farming; National Park. There are also opportunities global brands view Botswana’s tourism sector
and research. While joint ventures and in the Greater Mapungubwe Transfrontier as an area of high growth potential. 0 10 20 30 40 50 60 1000 2000
20 OBG Botswana Focus Report Graph source: MFED July 2022

Part 2: Key Sectors
Mining
The diamond and mining sector is experiencing a resurgence, Macroeconomic performance, 2018-22F
underpinning the broader economic recovery. While the government Non-mining private sector value-added (%) Mining value-added (%) Total GDP growth rate (%)
is intent on economic diversification, diamond-related activities still 15
account for about 80% of total goods exported by value. 10
5
According to analysts, diamond production has returned to pre- 0
pandemic levels of around 22m-24m carats per year, about half -5
of which is sourced from the large Jwaneng Diamond Mine. The -10
-15
recovery in prices is being driven by demand from the US, China and -20
India. This should give a boost to the ongoing development of the -25
national Diamond Hub in the SSKIA SEZ in Gaborone, which seeks to 2018 2019 2020 2021E 2022F
develop a sustainable secondary diamond industry in Botswana.
private equity firm Cupric Canyon plans to produce 60,000 tonnes communications, health, transport, logistics and banking.
There is potential for providers of automation and artificial of copper and 2m oz of silver per year at the mine. In a related Botswana hosts untapped deposits of semi-bituminous coal,
intelligence equipment and services to help Botswana keep pace development, Australia’s Sandfire Resources has set aside $259m to which Botswana Stock Exchange-listed Minergy began to mine in
with seismic change across all stages of the diamond value chain, fund the construction of a new mine in the belt. 2019. Peers Kibo Energy and Maatla Energy have also submitted
covering mining, extraction, sorting, valuing, cutting and polishing. applications for mining licences and are hoping to commence
The government is also working to attract new diamond trading, In September 2021 Canada’s Premium Nickel Resources (PNR) operations in the near to medium term.
cutting and polishing players, as well as ancillary services such as pledged to purchase Botswana’s state-owned BCL copper mine
banking, security, insurance, certification and brokerage. with a view to restarting operations within three years, requiring Other new mineral producers that could start production in the
some $400m in infrastructure investment to prepare for operations. second half of the NDP 11 – that is, from FY 2020/21 to FY 2022/23
Elsewhere, the copper mining industry is being re-energised by the Given the abundance of new supply coming on-stream, new copper – include Kalahari Energy and Tlou Energy (coal bed methane), Giyani
2021 opening of the Khoemacau mine in the Kalahari Copper Belt, smelters and refineries could prove a competitive investment. There Metals (manganese) and A-Cap Resources (uranium). Vision Ridge
which stretches from north-east Botswana to western Namibia. US are also opportunities for investors in subsidiary services, such as Investment has also opened a new iron ore mine in Ikongwe.
21 OBG Botswana Focus Report Graph source: MFED July 2022

Part 2: Key Sectors
Manufacturing
As part of Vision 2036, Botswana is committed to growing its manufacture of mineral and glass products, is being encouraged as for investment. Improvements to the investment landscape include
manufacturing sector, which expanded by an annual average of 0.6% Botswana grows the contribution of value-added processed goods clarifying the roles of competing implementing agencies, such
in the 2019-22 period. Manufacturing currently accounts for around and materials to total exports. Targeted fiscal incentives will be made as the Special Economic Zones Authority and the Selebi Phikwe
5.7% of total value added in the economy, a share that has been slowly available to major manufacturing projects in order to enhance value Economic Diversification Unit, both of which are driving infrastructure
declining from a peak of 7.2% in 2009. Manufacturing value-added addition and boost competitiveness. development in the city, as well as differentiating incentives for simple
activities are concentrated in meat and food products, textiles and manufacturing activities versus more complex processes.
apparel, and leather and leather products. Several new SEZs provide opportunities for investment, such as
the metal beneficiation zone at Selebi Phikwe, which also provides While the private sector in Botswana is fragmented, with few business
However, there is room to reduce Botswana’s sizeable import bill space for garments and textiles, and pharmaceuticals and medical relationships and no established partnerships between producers and
for goods such as machinery and electrical equipment, processed device manufacturing. The meat and leather processing SEZ at distribution networks, the NDP 11 is helping to promote links across
foods, beverages, tobacco, chemicals and rubber products, vehicle Lobatse; the mineral beneficiation SEZ at Francistown; and the beef, dairy, pork, poultry, goat, leather manufacturing, horticulture
and transport equipment, and metal products. Beneficiation of diamond, pharmaceuticals and medical devices, and engineering and and tourism. The government is also intent on growing the automobile
raw materials – from diamonds to leather hides – as well as the electronic equipment zone at SSKIA are also attractive destinations manufacturing industry, particularly EVs (see Automotive analysis).
NATIONAL STRATEGIES FOR MANUFACTURING & IMPLEMENTING BODIES

BOTSWANA EXCELLENCE INDUSTRIAL NATIONAL EXPORT BOTSWANA TRADE & SPECIAL ECONOMIC AGRICULTURAL VALUE CLUSTER
NATIONAL TRADE POLICY
STRATEGY DEVELOPMENT POLICY STRATEGY INVESTMENT CENTRE ZONES AUTHORITY CHAIN STRATEGY DEVELOPMENT
Beef & beef products; Agro-based Beef & beef products; Arts & crafts; garments & textiles; Automotive parts; Meat & meat products; Beef & beef products; Diamonds; beef; tourism;
high-value agricultural manufacturing; jewellery; garments & jewellery & semi-precious stones; leather processing; finance & technology; horticulture; leather & financial services;
products; agro- mineral beneficiation; textiles; leather & light manufacturing; leather & leather mineral beneficiation; ICT trade & logistics; textiles; dairy education; health
processing; tourism; textiles & clothing; leather products; hides & products; meat & meat products; diamond beneficiation;
diamond beneficiation; footwear; automotive skins; arts & crafts indigenous products with a focus on cereals
banking & financial arts & crafts
services
22 OBG Botswana Focus Report Infographic source: CEDA July 2022

Part 2: Key Sectors
Energy
Botswana Power Corporation controls the local of power to the region. In 2021 Botswana and to benefit from SEZ status even if they deploy
electricity market and sets tariffs, offering firms Namibia launched the Mega Solar initiative renewable power plants outside the geographic
one of the lowest electricity prices in the region. in order to enable them to export power to boundaries of the existing zones.
However, a lack of reliable and stable access neighbouring countries, and Botswana received
to power due to the need for infrastructure funding from the African Development Bank’s On the exploration front, the discovery of a
upgrades and a reliance on unstable imports, Sustainable Energy Fund for Africa to pursue new oil field straddling the border with Namibia
primarily from South Africa, poses a risk to firms both wind and solar expansion. that contains an estimated 12bn barrels of
in Botswana that require a constant supply of oil has gained considerable international
electricity. In terms of future energy policy, the Following the passage of the Energy Regulatory attention. Canada-based ReconAfrica was
country’s authorities are currently determining Act in 2016, the government is developing an granted permission to drill a test well in Namibia
whether to aggressively pursue investment in Integrated Resource Plan, which will guide in December 2021, and licences for similar
renewables or tap coal resources as a short- future power generation options and foster exploration are pending in Botswana.
term fix to the supply-demand gap. competition in power generation by facilitating
the involvement of independent power In the meantime, the government has been
The country is well positioned for either producers (IPPs). For example, in July 2021 the pushing for investment in additional oil storage
strategy; its estimated 212bn tonnes of coal Botswana Energy Regulatory Authority granted facilities to improve fuel security. A feasibility
reserves and high levels of direct normal a generation licence for a 100-MW solar project study is also ongoing to determine the
irradiation, coupled with its central position in to local firm Shumba Energy, making it the first commercial viability of a $4bn coal-to-liquids
the SADC’s Southern Africa Power Pool, mean IPP to set up a large-scale solar plant in the project, led by state firm Botswana Oil, and the
that, given the right investment, Botswana country. Two other 50-MW IPP projects are government has approved a coalbed methane
has the potential to become a net exporter also under way, and solar investors are able project that is set to come on-stream in 2022.

Part 2: Key Sectors
Water
Drought and rising temperatures pose a challenge for 2022/23 budget, with roughly one-third of total expenditure Water & electricity GDP growth, 2019-22F (%)
businesses operating in Botswana, particularly those in water- allocated to the sectors. The allocation was determined in
20
intensive sectors such as agriculture and tourism. anticipation of a draft Botswana Climate Change policy passing
into law and guiding more sustainable budgetary spending in
Investment in water-storage facilities will therefore be required, line with the UN Sustainable Development Goal of providing
as will additional spending to upgrade related infrastructure, adequate water and sanitation to citizens.
building on the recent completion of the large-scale North-
South Carrier pipeline linking reservoirs in the north with In June 2021 the WUC pre-qualified five consortia for the 15
growing water demand in arid southern cities. $100m Glen Valley wastewater project under a public-private
partnership (PPP) framework, the first of its kind in the sector.
In October 2021 President Mokgweetsi Masisi inaugurated a Should the model prove successful, investors can expect further
100-km water transmission pipeline and associated works from tenders for PPP bids. Water treated at Glen Valley will be used
the Masama wellfields to the Mmamashia Water Treatment for sprinkler irrigation of nearby crops. 10
Plant, underscoring the importance of secure water supply for
the development of industry. Major ongoing projects in Botswana include the development
of water and sanitation infrastructure, which dovetails with
There is potential to boost Botswana’s overall competitiveness the master plan for the Lobatse SEZ; pipelines connecting the
should investors commit to building infrastructure linking villages of Tswapong and Mahalapye; and upgrades to the water 5
the SADC and the more abundant water resources in the supply network for the capital Gaborone.
Democratic Republic of the Congo and Angola.
Going forwards, there are ample opportunities for irrigation
The government-run Water Utilities Corporation (WUC) provides system providers to take advantage of the incentives on offer at
water and wastewater management services in the country. agriculture-focused SEZs in Tuli Block and Pandamatenga, where 0
Improving water and electricity supply is the focus of the FY water-management solutions are a designated area of interest. 2019 2020E 2021F 2022F
24 OBG Botswana Focus Report Graph source: MFED; Statistics Botswana July 2022
I 23 4
PART PART PART PART

CEO, SEZA
18 Health
Olebile, CEO, BITC
20 Tourism
21 Mining
24 Water

Part 3: Economic Transformation
Investor Support
The Special Economic Zones Authority (SEZA) SEZA also regulates activities within each challenge facing small and medium-sized
was established with the aim of reversing a zone to ensure a business environment that enterprises (SMEs) in the country.
drop in foreign direct investment, which had is conducive to both domestic and foreign
fallen to 0.6% of GDP in 2018 from about 5% investors. This includes providing custom SEZA is also charged with bringing together
in the 2000s as Botswana’s diamond industry infrastructure such as bonded warehouses, entities interested in pursuing public-private
matured. SEZA carries a mandate to support shared business premises, and social partnerships (PPPs) within the zones. The
the planned development of the country’s nine infrastructure like accommodation, schools, authority is actively seeking overseas industry
special economic zones (SEZs), and a broader health and recreation facilities. leaders capable of investing more than
remit to accelerate export trade growth and BWP200m, particularly companies that are
economic diversification. On a micro level, the authority provides a willing to empower local staff and expand
one-stop shop for enterprises, offering travel their business operations in Africa. Interested
On a macro scale, SEZA is tasked with and visa support for foreign investors, help parties are required to submit a business
overseeing the master planning for each zone, relocating their staff and families to Botswana, proposal with the appropriate documentation
with an eye to providing businesses with long- and assistance with obtaining the permits and in order to receive approval from SEZA’s
term leases of 99 years and pre-built factory licences needed to trade. licensing board. If successful, a licence is issued
shells, as well as reliable access to electricity, and retained provided subsequent investments
water, sewage, and telecoms such as high- SEZA also helps to identify suitable plots of meet the specific threshold.
speed internet and security services. The land for development and facilitates access
plans begin with the relevant business case for to appropriate talent according to the Lastly, SEZA is responsible for strategic
each economic zone and then proceed with requirements of each business. The former is planning across the zones, and is drawing
technical soil investigations, land-use schemes essential in Botswana, where access to suitable up a standards manual with performance
and strategic environmental assessments. serviced land is persistently flagged as a major expectations for its staff and businesses.

Overview of SEZs
SEZs in Botswana There are currently nine SEZs in Botswana, for the first tenant companies, many of The fourth and final priority SEZ is the
all of which are at different stages of the which have already been signed. integrated farming, agri-business and food
Pandamatenga Sowa planning process. These stages include processing cluster at Pandamatenga. The
Integrated agriculture Industry
Cereals; agro-processing; Salt processing; sodium land acquisition; master planning and The Gaborone Fairgrounds SEZ, meanwhile, construction of 12 steel grain silos that form
water management solutions carbonate mining infrastructure development; utilities and is located within the capital city itself on the backbone of the zone was under way in
zonal distribution; and construction and urban land occupied by financial services the first half of 2022 ahead of the cultivation
occupation by licensed companies. SEZA is companies, many of which were previously of cereals like maize, sorghum, millet and
Selebi Phikwe prioritising the development of an initial four accredited under the International Financial wheat; legumes such as beans, chickpeas and
Mixed use Francistown
Metal beneficiation; agro-
zones before focusing on the remaining five. Services Centre. The zone’s purpose is to groundnuts; oilseeds; fruits and vegetables;
Mixed use stimulate the development of the financial animal feeds and fertilisers.
processing; garments & Mineral beneficiation; cargo,
textiles; pharmaceuticals freight & logistics; aerospace Botswana’s primary SEZ, which houses technology industry, with the goal of
& medical devices & aviation SEZA headquarters, is situated in Gaborone, increasing financial inclusion in Botswana The remaining five SEZs include an
adjacent to the Sir Seretse Khama and facilitating trade financing services for integrated coal complex at Palapye; a mineral
Tuli Block International Airport (SSKIA). The master companies operating in SEZs. and metal beneficiation SEZ at Selebi Phikwe;
SSKIA Horticulture
Mixed use plan is complete for the creation of an an agro-processing and water management
Agro-processing; water
Aerospace & aviation; cargo,
management solutions
international mixed-use zone and diamond In Lobatse, south of the capital, an SEZ cluster at Tuli Block; and a mining supplies,
freight & logistics; agro- centre that connects existing mines to the focused on elevating the meat value chain services and logistics centre at Francistown.
processing; pharmaceuticals Palapye airport via a dedicated road. The SEZ has the beyond cattle slaughtering for export is The Francistown SEZ features an inland
& medical devices; engineering Energy
& electronic equipment; Coal beneficiation; oil & overarching objective to attract polishing taking shape. The master plan for a zone dry port to facilitate the transit of raw
diamond beneficiation gas; renewable energy and other mineral beneficiation facilities. dedicated to the processing of food and and finished products to the rest of Africa.
Lobatse Gaborone Fairgrounds Under phase one of the project, 100 ha of leather products has been completed, and The newest SEZ at Sowa, approved for
Livestock Financial services a total 900 ha of land has been developed, the land is being prepared for businesses to development in 2022, will focus on salt
Meat processing; leather International finance & with power, water and internet utilities ready plug into finished infrastructure. processing and sodium carbonate mining.
processing; leather goods technology

Interview
Lonely Mogara
CEO, Special Economic Zones Authority (SEZA)
What role can special economic zones (SEZs) play water management, energy, financial services, attracting investment. Foreign investors will bring
in boosting economic growth and diversification? applied ICT, health and general manufacturing skills and knowledge to various areas in Botswana,
sectors. The cereals, horticulture, meat, dairy and which will be transferred to our citizens by way of
SEZs present an investor-friendly business agro-processing subsectors, in particular, are key employment, joint ventures and partnerships.
environment that supports timely company to increasing value added and fostering import
registration, the issuance of business and residence substitution. An abundance of land – coupled with How can SEZA encourage the implementation
permits, and the opening of company and utilities a growing population, both locally and abroad – are of environmental, social and governance (ESG)
accounts, among other benefits. We forecast an factors underpinning agriculture’s potential. principles in its SEZs, in line with global trends?
initial investment of $20m in SEZs, which is expected
to drive economic growth, diversification, job Manufacturing is another sector with significant SEZA recognises that investors are increasingly
creation and technology transfer. potential, particularly mineral beneficiation of applying ESG principles in their analysis processes
diamonds and base metals. Africa, and Botswana to identify material risks and growth opportunities.
The main challenge related to the development of more specifically, is home to an abundance To this effect, the authority is committed to
SEZs is that many investors scaled down investment of minerals, the bulk of which are exported ensuring that the establishment, development and
budgets following the onset of the Covid-19 unbeneficiated. We are therefore on a beneficiation management of SEZs are ESG-compliant.
pandemic. To attract additional investment, our SEZs drive to maximise the potential of these minerals.
will need to offer prospective investors the same In terms of environmental and social standards,
incentives found at other SEZs around the world. In what ways can foreign investors bolster local SEZA ensures that the entire development process
skills and knowledge, especially in terms of efforts of its SEZs is compliant with the best international
In which sectors do you see the most potential for to attract further investment to SEZs? environmental and social practices.
boosting value added and import substitution?
Nation branding, proper marketing of our SEZ Meanwhile, the principle of governance will be
Potential for boosting local value addition and offerings to potential investors, and a supportive upheld by key stakeholders in the establishment,
import substitution exists in the agri-business, regulatory and incentives framework are key to development and management of SEZs.

Incentives to Invest
While eligible businesses enjoy many incentives designed Eligible businesses are SEZA-licensed investors or those SEZA’s investor targeting & lead generation strategy
to attract investment in the SEZs, SEZA’s ability to leverage who are 100% focused on exports. Exemptions are possible,
market intelligence to identify key industry players will however, if granted by the minister of investment, trade and
be key to zonal growth. Once engaged, business-owners industry, who can also grant tax relief to firms and individuals
have indicated that their primary concern is the red tape that facilitate the entrance of other investors into the SEZ. 12-month lead generation campaign
associated with setting up a comany in Botswana. “SEZA
circumvents the red tape that often frustrates investors,” As each SEZ has a defined focus – for example, financial
Joel Ramaphoi, director of investment attraction at SEZA, services in the Gaborone Fairgrounds SEZ – businesses 3000 targeted investors
told OBG. “The one-stop service has been legislated and undertaking a relevant development project or activity are
shows that commitment. SEZA is empowered to make its own also able to take advantage of the reduced tax rate. The
decisions as a regulatory body.” same applies to infrastructure developers doing work within 600 potential investors
an SEZ. Eligible parties also benefit from fast-tracked land
The SEZ master plans are specifically designed to prevent allocation and value-added tax exemptions on the purchase
any single company from dominating. This ensures investors of raw materials for use in the manufacturing of goods for 120 leads
in the zones work collaboratively, with a focus on backwards export, avoiding the usual 14% charge.
and forwards linkages along the associated value chain. 60 qualified leads
Meanwhile, foreign investors can benefit from a liberalised & meetings
In 2021 the government promulgated a new law that offers exchange rate regime, which allows for the full repatriation
income tax incentives for investors and developers operating of profits and capital investments. SEZ businesses are also 12 contestable
in the SEZs. The Income Tax SEZ Development Approval Order exempt from paying duty on land and property, and can projects
specifies that income accrued within the SEZs will be taxed import specialised plants and machinery for manufacturing
at a special rate of 5% for the first 10 years, increasing to 10% purposes without having to pay Customs duty. Furthermore, 2-5 investments
thereafter, compared with the usual flat rate of corporate a 200% tax allowance is available for training costs for the realised
income tax of 15% for manufacturing firms in the country. development of local managers and employees.
29 OBG Botswana Focus Report Infographic source: OCO Global July 2022
Technology and Efficiency

One of the objectives of SEZA is to leverage In November 2021 Botswana’s energy coordinate both within and between the
various technologies in order to create regulator granted a generation licence to various SEZs, saving time and improving the
smarter and more sustainable living and local company Shumba Energy for a 100- efficiency of regulatory process.
working environments in the SEZs. MW solar project. This marked an important
first step to reducing the country’s reliance Businesses operating outside of the SEZs
In the process, the zones should act as an on coal and imported electricity to meet the are subject to several risks, including
important catalyst for Botswana to meet the national peak energy demand of 600 MW. vulnerability to disruptions to the supply of
UN Sustainable Development Goals under its fuel, electricity, water and internet access.
Vision 2036 blueprint. Furthermore, building out additional capacity
will improve efficiency by reducing power To negate these risks, the SEZs have been
For example, the SEZ law encompasses a downtime and lowering businesses’ reliance envisioned as smart cities that incorporate
special provision that is expected to help on expensive generators. sustainable principles into the design of their
facilitate renewable energy projects if buildings and infrastructure networks.
needed. “We are able to license single- SEZA has also been working to ensure that all
factory SEZs that are established outside its operations are digitalised. The authority For example, the buildings in the zones
the geographical boundaries of the zones is in the process of procuring a system that will require relatively less energy and
if absolutely necessary,” SEZA’s Ramaphoi will enable paperless end-to-end processing water to operate, while the water drainage
told OBG. “For example, if power provision is of all the documentation related to licence infrastructure ensures that less water is lost
insufficient from existing sources, new solar enquiries and applications. to leaks and seepage.
installations are able to qualify as single-
factory SEZs. This is because the space they A dedicated investor service centre will be Moreover, businesses will be able to enjoy
require is larger than what the existing zones established in each zone, with the central reliable access to high-speed internet and
can accommodate, and they would need to operation based in the SSKIA SEZ. This will secure data storage, with the latter hosted
plug into existing power grid infrastructure.” allow potential and existing investors to by a new data centre in the SSKIA SEZ.

Investment in Targeted Sectors

The SEZs have been conceived with the related services such as security, banking, health and education standards, each zone
aim to attract investment in priority insurance, certification and brokerage. will function as a self-contained unit with
sectors that are outlined in the country’s opportunities to provide civic services.
Vision 2036 plan. By attracting a variety of The SSKIA and Francistown SEZs, the coal
industries, the country’s economic zones value-added complex at Palapye, and “We have land reserved for pharmaceuticals
are able to enhance export diversification the mineral and metal beneficiation SEZ at the SSKIA SEZ, but the zones will act like
and support linkages with local economies. at Selebi Phikwe provide environments small cities,” Orekolotse Koloi, strategist and
The sectors identified as key to driving for investors in these services to focus consultant at SEZA, told OBG. “There will
economic growth are mining and mineral their attention and develop networks of be jobs for 8000 people and their families,
beneficiation; education; agriculture; ICT; expertise that link industry knowledge with and opportunities along the health and
health; automotive; cargo, freight and legal and financial acumen. education value chains.”
logistics; manufacturing; infrastructure; and
financial and business services. Elsewhere, the agro-processing SEZs at Over time SEZA will be responsible for
Tuli Block and Pandamatenga, which focus growing clusters, or connected networks,
The Botswana Investment and Trade on horticulture and cereals, respectively, of capital, know-how and talent in specific
Centre (BITC) has a mandate to attract are instrumental in reducing the food industries, and introducing SEZ companies
foreign direct investment and promote import bill, boosting food security in the to the national and international networks
the country’s exports. The BITC has been face of rising climate and health-related necessary to grow their businesses.
seeking to develop new and existing threats, and minimising poverty and youth
gold, uranium, copper, nickel, coal, unemployment in rural areas. In November 2020 President Mokgweetsi
manganese and other mined resources; Masisi told regional press that SEZA had
as well as diamond trading, cutting and While there are no zones solely dedicated 15 potential investors with an estimated
polishing; jewellery manufacturing; and to improving human capital by raising investment value exceeding BWP10bn.

Job Creation and Skills Development

When determining whether to issue an operational considered necessary. Managerial development and
licence, SEZA considers whether applicants meet five skills sharing is a high-priority area as Botswana seeks
preconditions, namely a $20m initial investment for to maximise the market potential of its SMEs.
developers bringing in their own networks or $5m for
standalone companies; how the business will empower According to SEZA’s Ramaphoi, the zones also aim
local firms; the value of potential technology transfer; to attract companies that can improve Botswana’s
a plan to facilitate skills transfer in line with the Vision capabilities in the downstream processing of raw
2036 goal of becoming a knowledge-based economy; materials to create value-added products for export.
and how many new jobs are set to be created.
“In terms of infrastructure development, most projects
Supportive government policies are intended to will be open to international tenders, but priority will be
attract businesses that will require the use of skills and given to domestic companies except in areas where we
technology that are not yet available in Botswana. For lack the necessary capabilities,” he told OBG. The 2-km
example, the government aims to improve the growth road with internal junctions at the SSKIA SEZ is a case in
of its dairy herd and, therefore, reduce its reliance on point, having been built by local firm Bothakga Burrow.
imported dairy products by partnering with specialists
in embryo-transfer technology. The successful debut of projects operating under the
PPP model, such as the ongoing Glen Valley wastewater
As under the SEZ model adopted by China, the intention project in Gaborone, presents an opportunity for state-
is that foreign businesses will share intellectual property run Batswana companies – in this case, the Water
and skills with local enterprises and workers. With this Utilities Corporation – to work alongside international
in mind, SEZA has issued policies that offer businesses counterparts and learn from their expertise and best
the flexibility to import talented labour should it be practices in terms of business arrangements.

Trade Agreements
SACU members’ contribution to GDP at current prices
Businesses investing in Botswana can take advantage of (EPA) with the EU, providing duty- and quota-free access on by economic activity, 2019 (%)
the country’s participation in multiple international trade goods to EU markets without requiring reciprocal access. The EPA Wholesale trade, retail trade, Construction Agriculture,
agreements. Botswana is a member of the Southern African also applies to the UK. The intention is for the SADC to eventually hotels & restaurants Transport, storage hunting,
Customs Union (SACU), which permits it duty-free and largely transition to a similarly liberalised trade regime as the SACU. The Mining & quarrying & communications forestry &
permit-free trade with fellow members South Africa, Lesotho, SACU and the SADC provide a platform for regional parastatal General government fishing
Community, social &
Namibia and Eswatini. The SACU had a population of almost 70m organisations to further infrastructure and trade cooperation, Financial intermediation personal services Electricity,
and GDP of about $387.7bn in 2019, which ensures that investors and serve as a guide for external funding partners such as the EU. & business services gas & water
Manufacturing
within the bloc can rely on a market that is sufficiently sizeable Taxes, less product subsidies supply
to grow their business. Notably, Botswana has the lowest income Botswana also benefits from the African Growth and Opportunity
and corporate tax rates in the bloc, even excluding its SEZs. Act (AGOA), a non-reciprocal unilateral trade preference 1 1.6 0.6 0.9
1.9 2.7 0.1 3.8
programme that provides duty-free access to the US for 5.2 4.7 4.7
5.6 19.7 20
The SACU provides relatively more powerful external trading qualifying exports from eligible sub-Saharan African countries. 7 5
6.1 29.7 5.1
entities a cohesive structure with which to negotiate. For The opportunities presented by the AGOA have so far been 8.5 5.6
6.8 Botswana Eswatini Lesotho 16.5
example, the US and the SACU signed a Trade, Investment and underutilised as a result of various challenges. These include such 15.2
9.1 14.9 11
Development Cooperation Agreement to establish a forum for factors as poor awareness of the programme, the inability of 16.8
consultative discussions on a wide range of trade and investment local manufacturers to meet technical and intellectual property 14.2 15.1 15 12.4 15.1
issues. The SACU also has a deal with the European Free Trade specifications, a lack of complementary investment from the 1
2.4 3.4
Association and the Southern Common Market, or Mercosur, US, and muted competitiveness among domestic suppliers due 3.4 2.3
3.4
which comprises Argentina, Brazil, Paraguay and Uruguay. to high production and transport costs. However, in an effort to 4.3
5.3 17.5
25.3
raise awareness, the US Embassy in Botswana and the Ministry 7.3 7.4
The SACU sits within the larger Southern African Development of Investment, Trade and Industry launched a revised AGOA 7.4 South
Namibia 8.7 16.2
Community (SADC), which provides a framework for negotiations Utilisation Strategy in 2021. The strategy aims to help firms Africa
9.1 14.2
with other trading partners, such as the EU. Within the SADC, access US markets by supporting them with certification and 10.9
12.1 13.5
Botswana has signed an interim Economic Partnership Agreement label review, and listing on e-commerce platforms, for example. 12.2 11.8
33 OBG Botswana Focus Report Graph source: SACU July 2022

Integration and Export Opportunities

The African Continental Free Trade Area (AfCFTA) for 14.4% of total African exports, though this is Negotiations on the AfCFTA are set to take place
seeks to create a single continental market likely an underestimate due to undocumented over three phases. Phase one, comprising trade
for goods and services, and enable the free trade across borders, particularly in agricultural in goods and services, is already under way, with
movement of business persons and investments, produce. That compares with the 68% share held further talks aiming to eliminate tariffs on 90% of
underpinning the establishment of an Africa-wide by Europe and 59% by Asia – largely a legacy of goods over a five-year period, and over 10 years
Customs union. The AfCFTA has the potential to colonial-era trade relationships that favoured for least developed countries (LDCs). However,
become the largest in the world, encompassing European destinations. rules of origin have yet to be finalised due to
1.3bn people and an economy worth $3.4trn. disagreements between LDCs and their more
A 2021 UN Conference on Trade and Development developed counterparts about input sourcing.
The agreement aims to reduce tariffs among report found that Africa’s untapped export Phase two negotiations are also under way, and
members and covers policy areas such as trade potential amounts to $21.9bn, equivalent to 43% cover intellectual property rights, investment
facilitation and services, as well as regulatory of intra-African exports. Moreover, the AfCFTA, and competition policy. Phase three will focus on
measures such as sanitary standards and to which Botswana became the 51st signatory e-commerce. Notably, Botswana is offering its
technical barriers to trade. in February 2019, has the potential to unlock an tariff submissions under the SACU framework.
additional $9.2bn of export potential through
As of April 2022, 54 of the 55 African Union partial tariff liberalisation over the next five years. President Masisi announced in March 2021 that
(AU) nations had signed on – with the exception the Economic Commission for Africa will support
of Eritrea – and 41 of the 54 signatories had The report notes that non-tariff barriers to intra- government efforts to develop a national AfCFTA
deposited their instruments of ratification with African trade – including costly infrastructure and implementation strategy for the country, with a
the chairperson of the AU Commission, making market information gaps – need to be addressed focus on accelerating the integration of micro-,
them state parties to the agreement. through joint efforts under the AfCFTA. This small and medium-sized enterprises into the
will require the leadership of African heads of regional economy; supporting the empowerment
The free trade area has the potential to spur government, who have recognised the potential of women; and facilitating higher levels of youth
intra-African trade, which currently accounts of the AfCFTA to drive inclusive growth. employment in the services sector.

I 23 4
PART PART PART PART

CEO, SEZA
18 Health
Olebile, CEO, BITC
20 Tourism
21 Mining
24 Water

Part 4: ESG Trends
ESG Principles
Environmental, social and governance (ESG) spanning compensation for employees and human and physical capital instead of financing
concerns are moving to the fore globally, and board executives, diversity of thought within the recurrent spending. The sustainability theme
this is true in Botswana as well. Broadly speaking, company and on the board, accounting standards, runs through other long-term policy and planning Vision 2036
ESG principles require investors to consider how anti-bribery and anti-corruption rules, ethics and documents that underpin Botswana’s efforts
a company or a project’s practices impact the values, and shareholder rights. to improve social performance, including those
environment and local community. related to education, settlement policy, water
Sustainable economic
Various ESG-compliant development goals are management, agriculture and health.
development
Within the environmental pillar, waste generation integrated into the four pillars of Botswana’s
and disposal, carbon emissions and energy needs Vision 2036 roadmap: sustainable economic At the sovereign level, Moody’s Investors Service
are among the primary concerns. Investors often development, social development, sustainable rates Botswana’s ESG Credit Impact Score as
consider the extent to which a company has environment and governance, and peace and moderately negative, balancing exposure to
incorporated renewable power sources, worked security. For example, the sustainable environment environmental and social risks against a sound Social development
to reduce its carbon footprint and adopted more emphasis aims to improve Botswana’s governance profile, moderate wealth levels
efficient practices to lower raw input volume. performance across water and energy security, and relatively strong fiscal metrics. The credit
land use management and climate resilience. ratings agency notes that Botswana is vulnerable
The social pillar, meanwhile, focus on employment to water scarcity and recurrent droughts, and Sustainable environment &
equality, gender and racial diversity, product Meanwhile, Botswana’s National Development has made limited progress in reducing a youth governance
safety, employee health and safety, training and Plan (NDP) 11 supports 17 UN Sustainable unemployment rate of over 30% and high
development, supply chain transparency, and Development Goals, including no poverty, income inequality. That said, the government’s
human rights and privacy issues, among other affordable and clean energy, and sustainable cities management of income from natural resources
areas. The governance pillar, for its part, refers and communities. The NDP 11 also mandates that has supported the rollout of robust infrastructure Peace & security
to good corporate and government behaviour, revenue derived from minerals be reinvested in projects across various sectors of the economy.

Part 4: ESG Trends
Current Investments
Energy transition projects are among the most popular
undertakings that align with ESG principles, and is an
solar power generation project. The plan is to build up
to 5 GW of solar capacity in the region, charting a path
Southern Africa’s largest solar power project
area in which Botswana has advanced in recent years. towards decarbonisation and allowing Botswana to
“The Covid-19 pandemic has brought a considerable become a net exporter of clean energy to the Southern Parties involved: Botswana,
level of awareness and appetite for ESG-compliant Africa Power Pool. The first phase of the initiative centres Namibia, International Finance
investments in Botswana,” Mpho Masupe, CEO of on the procurement of 300-500 MW of solar capacity in
Standard Chartered Botswana, told OBG. Namibia and Botswana, catalysing additional supply of Corporation, International
low-cost renewable energy to neighbouring countries. Bank for Reconstruction
The country’s first Integrated Resource Plan, approved in and Development, African
August 2020, aims to introduce at least 50 MW and 100 Progress is also being made on channelling green Development Bank
MW of wind and solar photovoltaic capacity, respectively, investment into agriculture. In March 2021 the Green
in the period from 2024 to 2027. The Botswana Climate Fund approved a $96.7m project to support
Stock Exchange (BSE) is working on a framework to ecosystem adaptation and migration in Botswana’s Overarching goal: Construct
enable listed companies to issue green bonds, helping communal rangelands. The project aims to restore solar power generation
companies secure funding for sustainable projects. Local vegetation in shared grazing areas that are particularly facilities in the region with up
firm Shumba Energy – historically a coal power generator vulnerable to climate change. The restoration and to 5 GW of capacity
– already received equity commitments to build a 100- management of grazing vegetation will increase the
MW solar facility after receiving a licence in July 2021. amount of moisture held by the soil to make cattle
raising more resilient to drought, while at the same time Phase 1: Develop 300-500
In April 2021 the governments of Botswana and Namibia, enhancing soil carbon and reducing greenhouse gas MW of solar power capacity in
the International Finance Corporation, the International emissions. A climate-smart agriculture (CSA) programme Botswana and Namibia
Bank for Reconstruction and Development, and the is being implemented as well, with a focus on boosting
African Development Bank finalised a partnership to the resilience of production systems in the context of
support the development of Southern Africa’s largest climate change in order to support local incomes.

Part 4: ESG Trends
Environmental Sustainability
Vision 2036 requires that Botswana observes and having submitted pledges of nationally of the environmental and social issues at the
the local ecosystem’s carrying capacity and apply determined contributions (NDCs), Botswana is farm level, and suggests asking partner farms to
responsible changes to promote the maximum expected to enact policies to support climate- complete the Sustainable Agriculture Initiative’s
sustainable yield of renewable resources. As sensitive sectors. The Climate Change Policy and Farmer Self-Assessment, which enables food and
in the past, proceeds from natural resource Institutional Framework, which was passed by the drink businesses to assess, improve and validate
exploitation will be reinvested into human capital Parliament in 2021, and the National Adaptation on-farm sustainability in their supply chains.
training, new assets and financial programmes Plan act as the foundation to achieve related The BITC also references the 14000 family of
that support future generations. goals. In 2021 Botswana signed a commitment environmental standards from the International
to reduce the use of coal in its national energy Standards Organisation (ISO) to help suppliers
The vision also mandates that mining be mix but stopped short of agreeing to end the manage their sustainable responsibilities.
undertaken in a more environmentally friendly issuance of new mining licences.
manner. In line with this, in September 2021 Within the country’s special economic zones
Johan Ferreira, CEO of Khoemacau Copper Mining, Meanwhile, the Botswana Investment and (SEZs), integrated planning is helping to alleviate
said the company was considering a 40- to 45- Trade Centre (BITC) is addressing concerns environmental issues. For example, businesses
MW solar plant to power its operations, and and incorporating sustainability criteria into its within the Lobatse SEZ will benefit from the
was developing strategic sustainability models investment calls and informational materials. recent commissioning of the 100-km Masama-
in conjunction with the eight communities that The centre offers guidance on how suppliers can Mmamashia water pipeline, as well as the Lobatse
surround its copper and silver mine, which is meet increasingly strict international ESG rules, Water Supply Master Plan. These aim to address
located in the Kalahari Copper Belt. such as by signing a code of conduct vowing to an ongoing water shortage in the area as well
respect local environmental and labour laws and as facilitate the production of more sustainable
As a signatory of the UN Framework Convention avoid corruption. It recommends that exporters wares, such as bone china plates and bowls that
on Climate Change and the Paris Agreement, and importers of agricultural goods be aware are made from crushed cattle bones.

Part 4: ESG Trends
Social Impact
Under the NDP 11, Botswana aims to sustainably engage smart cities that balance agricultural and manufacturing
in the Fourth Industrial Revolution by focusing on four facilities with the living environments of workers and their
areas: climate change mitigation and adaptation; a healthy families. Over time, as more international investors locate
environment for a healthy population; integrated planning in Botswana’s SEZs, job creation and skills exchange are Equitable access Efficient land
for sustainable human settlements; and sustainable expected to raise the living standards of the surrounding to public services management
management of natural and cultural resources. communities. In tandem, the government is pursuing
programmes related to clean air, chemical and waste
Integrated planning for sustainable human settlements management, and clean water and sanitation.
involves ensuring cities grow in a manageable way and
offer adequate economic and social infrastructure for a Additionally, the BITC advises suppliers to deepen their
high quality of life. This entails equitable access to public
services, efficient land management, flexible changes to
understanding of trading partners’ corporate social
responsibility guidelines, such as the UK’s Ethical Trading
Sustainable
land use and fair land-allocation procedures. Importantly, Initiative and the global Business Social Compliance human
systematic planning adds great economic value for Initiative. These focus on improving social conditions in
production industries, including in terms of the utilisation their members’ supply chains and require suppliers to act
settlements
of agricultural land. Two initiatives in this space are the in compliance with their principles.
Flexible Fair land-
Land Administration Procedures, Capacity and Systems,
and the National Spatial Plan (NSP). ISO 26000, for its part, guides how businesses and changes to allocation
organisations can operate in a socially responsible land use procedures
Botswana’s nine SEZs are guided by the NSP and attempt manner, acting ethically and transparently in a way that
to bring together the aforementioned concepts in contributes to the health and welfare of society.

Part 4: ESG Trends
Governance Focus
Botswana performs well on transparency credibility and responsiveness. It also suggests the potential impact of governance issues
and anti-corruption benchmarks, ranking 25 questions that ESG reports should be able among listed companies.
45th out of 180 countries on Transparency to answer and provides a reference list of best
International’s 2021 Corruption Perceptions global sustainability practices. Botswana is working to improve corporate
Index. The country is also making progress governance practices in the country as it
on addressing financial governance issues. That said, ESG reporting remains voluntary embarks on the next phase of its national
For example, in October 2021 Botswana was in Botswana and the central bank recognises development planning. In line with this, the
removed from the Financial Action Task Force’s that although the country’s listed entities are Special Economic Zones Authority Act provides
anti-money-laundering so-called grey list after in reasonable financial health, risks associated for zonal boards that blend public and private
the country fast-tracked more than 20 pieces with governance, accountability and compliance representation to increase awareness among
of legislation to address regulatory gaps and failures are elevated in parastatal corporations investors of the bodies’ responsibilities.
combat money-laundering and tax evasion. that do not produce audited annual financial
statements. “Generally, ESG issues remain There are some early signs of progress
The government and financial institutions are prominent and require close monitoring. when it comes to providing investors with
intent on improving the ESG profile of major Climate-related issues, in particular, have the the appropriate tools to monitor ESG risks
local companies. In 2018 the BSE fulfilled its potential to impose losses on the financial more accurately in Botswana. For example,
commitment to publish guidance for listed system, with far-reaching consequences for in September 2021 RMB, a division of South
companies on reporting ESG information to financial stability,” the Bank of Botswana noted Africa-based FirstRand Bank, launched an
investors. The document is structured around in a report published in 2020. ESG measurement platform designed to drive
five guiding principles for ESG reporting: the deployment of sustainable finance via
responsibility and oversight; clarity of purpose; Indeed, the 2019 collapse of the Botswana- client interfaces that enable more informed
relevance and materiality; accessibility; and based Choppies supermarket chain highlighted investment decisions around ESG principles.

6 Key Takeaways
1 Botswana is a stable, upper-middle-income

democracy with a track record of channelling
income from mineral resources into public
infrastructure. The country ranks highly
on international indices of anti-corruption,
transparency, rule of law, freedom of the press
and political rights, and the population is
2
The framework for economic diversification
away from diamond mining spans multiple
national planning documents underpinned by
Vision 2036, which aims to transform Botswana
into a high-income, export-orientated economy.
Botswana’s membership in regional and
continental trade agreements should facilitate
3
The BITC and SEZA are two government
institutions that are spearheading economic
transformation in the country. The BITC provides
a one-stop shop for international investors to
facilitate business and tax registration, as well as
work and residence permits. SEZA, for its part, is
tasked with spurring local value creation, import
known for being well educated. trade growth in the years ahead. substitution and export growth.
4 Priority sectors include agriculture,

logistics, financial services, education, ICT
and manufacturing, with many possibilities
for PPPs. Opportunities also abound to
supply automotive parts and services to
manufacturers in neighbouring South Africa,
and the government intends to foster a
5
The government is addressing risks posed by
water scarcity and power shortages through
the rollout of new pipelines and renewable
energy infrastructure. Botswana has high solar
power potential and has liberalised its energy
market to stimulate investment. Meanwhile,
ESG principles are being integrated into the
6
Botswana offers potential investors many
advantages, including the fact that English is
widely spoken and the country has one of Africa’s
highest rates of female participation in the labour
force, at 65%. Businesses can rely on a young,
motivated and cost-competitive workforce that
is highly connected and tech savvy, with a mobile
domestic electric vehicle industry. operation of public and private entities. penetration rate above 160%.

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Botswana

oxfordbusinessgroup.com July 2022

5 Facts and Figures 14 Automotive 27 Overview of SEZs 37 Current Investments

6 Business Environment 15 Logistics 28 Interview: Lonely Mogara, 38 Environmental Sustainability

2 OBG Botswana Focus Report July 2022

5 Facts and Figures 14 Automotive 27 Overview of SEZs 37 Current Investments

6 Business Environment 15 Logistics 28 Interview: Lonely Mogara, 38 Environmental Sustainability

3 OBG Botswana Focus Report July 2022

4 OBG Botswana Focus Report July 2022

Facts and Figures

7 OBG Botswana Focus Report July 2022

Recent Performance and Diversification

9 OBG Botswana Focus Report July 2022

Supply Chain and Transport Infrastructure

11 OBG Botswana Focus Report July 2022

5 Facts and Figures 14 Automotive 27 Overview of SEZs 37 Current Investments

6 Business Environment 15 Logistics 28 Interview: Lonely Mogara, 38 Environmental Sustainability

12 OBG Botswana Focus Report July 2022

13 OBG Botswana Focus Report Graph source: MADFS July 2022

14 OBG Botswana Focus Report July 2022

16 OBG Botswana Focus Report July 2022

17 OBG Botswana Focus Report Infographic source: MESD July 2022

18 OBG Botswana Focus Report July 2022

ICT and Innovation

19 OBG Botswana Focus Report Map source: BoFiNet July 2022

20 OBG Botswana Focus Report Graph source: MFED July 2022

21 OBG Botswana Focus Report Graph source: MFED July 2022

NATIONAL STRATEGIES FOR MANUFACTURING & IMPLEMENTING BODIES

22 OBG Botswana Focus Report Infographic source: CEDA July 2022

23 OBG Botswana Focus Report July 2022

5 Facts and Figures 14 Automotive 27 Overview of SEZs 37 Current Investments

6 Business Environment 15 Logistics 28 Interview: Lonely Mogara, 38 Environmental Sustainability

25 OBG Botswana Focus Report July 2022

26 OBG Botswana Focus Report July 2022

27 OBG Botswana Focus Report July 2022

28 OBG Botswana Focus Report July 2022

Technology and Efficiency

30 OBG Botswana Focus Report July 2022

Investment in Targeted Sectors

31 OBG Botswana Focus Report July 2022

Job Creation and Skills Development

32 OBG Botswana Focus Report July 2022

33 OBG Botswana Focus Report Graph source: SACU July 2022

Integration and Export Opportunities

34 OBG Botswana Focus Report July 2022

5 Facts and Figures 14 Automotive 27 Overview of SEZs 37 Current Investments

6 Business Environment 15 Logistics 28 Interview: Lonely Mogara, 38 Environmental Sustainability

35 OBG Botswana Focus Report July 2022

36 OBG Botswana Focus Report July 2022

37 OBG Botswana Focus Report July 2022

38 OBG Botswana Focus Report July 2022

39 OBG Botswana Focus Report July 2022

40 OBG Botswana Focus Report July 2022

1 Botswana is a stable, upper-middle-income

4 Priority sectors include agriculture,

41 OBG Botswana Focus Report July 2022

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