The U.S. Department of State’s Investment Climate Statements provide information on the business climates of more than 170 economies and are prepared by economic officers stationed in embassies and posts around the world. They analyze a variety of economies that are or could be markets for U.S. businesses. The Investment Climate Statements are also references for working with partner governments to create enabling business environments that are not only economically sound, but address issues of labor, human rights, responsible business conduct, and steps taken to combat corruption. The reports cover topics including Openness to Investment, Legal and Regulatory Systems, Protection of Real and Intellectual Property Rights, Financial Sector, State-Owned Enterprises, Responsible Business Conduct, and Corruption.
Executive Summary
Botswana has the best credit rating in mainland Sub-Saharan Africa. Botswana is a stable, democratic country with an independent judiciary system. It maintains a sound macroeconomic environment, fiscal discipline, a well-capitalized banking system, and a crawling peg exchange rate system. On September 16, 2022, Standard & Poor’s (S&P) maintained Botswana’s sovereign credit rating for long and short-term foreign and domestic currency bonds at “BBB+/A-2” with a stable outlook and projected that the demand for Botswana diamonds will remain strong despite weakening global activity. In November 2021, Moody’s revised its credit rating for Botswana from A2 to A3 with a stable outlook. These agencies’ ratings are highly influenced by Botswana’s continued dependence on diamonds, which contribute to nearly 90 percent of foreign exchange earnings and are susceptible to external shocks in global consumer spending.
Botswana’s population of 2.59 million (World Bank, 2021) is small relative to the country’s large land area of 581,730 km2, approximately the size of the U.S. state of Texas. Botswana is nestled among South Africa, Namibia, Zimbabwe, and Zambia. Its central location in southern Africa positions it to serve as a gateway to the region, particularly for industries that align with Botswana’s mining, highway, and water infrastructure investments. The World Bank classifies Botswana as an upper middle-income country based on its per capita income of $6,805.20 in 2021. Botswana’s national Vision 2036 outlines Botswana’s plans to grow from upper middle-income to high-income status by 2036.
Botswana’s economic recovery trajectory has been strong following the peak of the COVID-19 pandemic. In 2021, Botswana’s 11.8 percent GDP growth rate was the highest in Sub-Saharan Africa. GDP growth estimates for Botswana were 6.7 percent at the end of 2022, based on the recorded 6.5 percent year-on-year growth in the first three quarters of 2022. The strength of Botswana’s economic recovery is also evidenced by the continued downward trend of inflation, which fell from its highest recorded inflation (14.6 percent in August 2022) since 2008 to 9.3 percent in January 2023. The Bank of Botswana’s medium-term objective range is three to six percent inflation. Botswana’s central bank forecasts inflation will return to this target range by the third quarter of 2023. Unemployment rates fell slightly from 26 percent in 2021 to 25.4 percent in the fourth quarter of 2022.
Development in Botswana is driven mainly by revenue from diamond mining, which has enabled Botswana to develop infrastructure and fund social investments for the broader population. Additionally, in 2023, the Government of Botswana (GoB) introduced a wealth creation program that consolidates existing economic empowerment loans and grant programs for citizens to facilitate job creation projects that build livelihoods and reduce poverty.
COVID-19 is now a manageable disease in Botswana, but Botswana’s continued economic recovery is still threatened by global challenges posed by Russia’s war on Ukraine and its effect on food, fuel, and fertilizer prices. Compounding some concerns about cost of living and food security, Botswana – as a self-sufficiency measure – banned the importation of certain fruits and vegetables in January 2022. Domestic agricultural production has generally not filled all supply gaps, causing episodic shortages of staple vegetables. Botswana’s Special Economic Zones Authority (SEZA) partnered with the Ministry of Agriculture to develop the value chain for sunflower oil to reduce imports of cooking oil; SEZA will also seek to identify similar opportunities in other sectors.
Botswana has minimal labor strife. Industrial courts exist for labor related matters. Botswana is a member state of the International Centre for Settlement of Investment Disputes (ICSID) Convention and of the 1958 New York Convention. Corruption in Botswana is relatively lower than in other African countries; nevertheless, foreign and domestic companies – and Government of Botswana officials – report increasing perceptions of corruption related to public procurement processes. Minister of Finance Peggy Serame cited this increasing perception of corruption in Botswana in the Budget Speech in February 2023. Botswana has however improved slightly in the Transparency International’s Corruption Perceptions Index from a 2021 score of 5.5 and a ranking of 45 out of 180 countries to a 2022 score of 6.0 and a ranking of 35 out of 180.
The Botswana Investment and Trade Centre (BITC) is Botswana’s trade promotion agency to attract investment and assist foreign investors with doing business in Botswana. Botswana offers low tax rates and has no foreign exchange controls. The BITC’s topline economic goals are to promote export-led growth, ensure efficient government spending and financing, build human capital, and ensure the provision of appropriate infrastructure. GoB entities, including BITC, use these criteria to determine the level of support to give foreign investors.
The GoB and Washington-based Corporate Council on Africa co-hosted the U.S.-Africa Business Summit in July 2023. The GoB has committed to streamlining business-related procedures and removing bureaucratic impediments based on World Bank recommendations in a business reform roadmap. Under this framework, Botswana introduced electronic tax and customs processes in 2016 and 2017. The Companies and Intellectual Property Authority (CIPA) built and successfully integrated the Online Business Registration System (OBRS) with Botswana Unified Revenue Services (BURS) and the Immigration Office. OBRS is designed to reduce the business registration process by more than 10 days. In March 2022, Parliament passed the Intellectual Property Policy to leverage Botswana’s intellectual property potential for inclusive and sustainable economic growth and development.
The GoB released a new National Investment Strategy (NIS) for 2023-2030. This builds upon the previous 2009-2016 NIS. The strategy outlines ways the government can partner, leverage, and incentivize the private sector to accelerate private sector investment in the economy and enhance productivity and competitiveness in a sustainable way.
To access the ICS, visit the U.S. Department of State Investment Climate Statements website.