According to the World Bank’s 2024 Business Ready Report, Botswana ranks in the third quintile, reflecting a mix of strengths and weaknesses in its business environment.  The government is the largest consumer of goods and services, with the large number of state-owned enterprises (SOEs) dominating key industries and crowding out private sector growth.  Efforts to diversify the economy have been largely unsuccessful, despite numerous reforms and initiatives aimed at promoting private sector development.  Privatization plans for several SOEs have stalled, and the country faces a shortage of skilled managers and technical experts due to its small population and limited workforce capacity.
Botswana’s business environment is hindered by regulatory constraints in certain sectors, excessive red tape for licenses and permits, limited access to finance, poor-performing and expensive internet, low worker productivity, and poor customer service.  

The digital economy faces additional challenges, including high data costs that limit internet access, particularly in rural areas; gaps in digital literacy and technical skills among young people; and an underdeveloped innovation ecosystem with limited venture capital and inadequate support for start-ups.  Consumers frequently report issues such as slow internet speeds, faulty telephone lines, and billing problems, highlighting the need for improved network quality and regulatory oversight.  Private sector entities also face difficulties obtaining work permits for skilled foreign labor.

Value addition in the minerals industry is constrained by high manufacturing costs, limited project financing, and restrictions on mineral output volumes (e.g., copper and diamonds).  Botswana law restricts 35 service sectors to citizen-owned businesses, with exceptions historically granted to large foreign-owned chain stores.  Since 2016, localization agreements have been required for foreign companies seeking approval.  The government is currently implementing a Citizens Economic Empowerment (CEE) law, which will mandate foreign companies to outsource at least 50 percent of their services and projects to citizen-owned businesses.

The Public Procurement Act, introduced in April 2022, includes new methods and processes designed to be more conducive to international companies, including U.S. firms.  However, procurement preferences for citizen-owned companies remain prevalent, and some private companies have adopted similar local preferences.  Business decisions in Botswana are often slow, taking months or even years, with low risk tolerance among decision-makers.