Botswana Country Commercial Guide
Learn about the market conditions, opportunities, regulations, and business conditions in botswana, prepared by at U.S. Embassies worldwide by Commerce Department, State Department and other U.S. agencies’ professionals
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Market Overview
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Botswana is sometimes referred to as a “land-linked” country due to its central positioning next to South Africa, Namibia, Zimbabwe, and Zambia.  Despite its small population of approximately 2.52 million (World Bank, 2024), Botswana has access to regional markets through its membership in the Southern African Customs Union (SACU), which comprises over 68 million people; and the Southern African Development Community (SADC), which expands its market reach to 406 million people.  Additionally, the African Continental Free Trade Agreement (AfCFTA), which came into force in May 2019, provides Botswana access to nearly 1.3 billion people across Africa.  These trade agreements facilitate regional integration, harmonize policies, and promote development in trade, infrastructure, agriculture, and conservation.

Botswana’s economy is heavily reliant on diamonds, which account for over 80 percent of export revenues and one-third of government income.  Customs revenue from SACU and diamond exports collectively contribute two-thirds of government revenue, leaving Botswana vulnerable to external market fluctuations.  The diamond sector is currently experiencing a historic crisis, with declining global demand and prices leading to liquidity challenges, deficits, and borrowing requirements.  The economy contracted by 2 percent from January 2024 to September 2024, compared to 4 percent growth in 2023, and is expected to record zero growth in 2025 (IMF).  Foreign exchange reserves have fallen significantly, from $5.53 billion (80 billion pula) in FY 2014/2015 to $3.2 billion (46.35 billion pula) at the end of 2024.  Inflation remains low, averaging 2.8 percent in 2024 and further decreasing to 2.3 percent in April 2025.

Botswana maintains a strong credit profile, with debt capped at 40 percent of GDP.  However, SADC has established a public debt-to-GDP target of 60% as part of its macroeconomic convergence targets to promote stability and sustainable development among its member states.  Standard & Poor and Moody’s Investor Services recently downgraded Botswana’s outlook to negative due to weak diamond demand and fiscal pressures.  Despite this, Botswana remains firmly investment-grade, with long-term ratings of BBB+/A-2 (S&P) and A3 (Moody’s).

Key Sectors and Opportunities

Energy: Botswana is diversifying its energy mix to include solar, wind, coal, and coalbed methane assets, with the goal of becoming a net exporter of electricity.  The unbundling of the Botswana Power Corporation (BPC), initiated in July 2025, will separate generation from transmission and distribution, opening the sector to private investment.  The country also launched the Rooftop Solar Program in 2020, supported by the U.S. Government, enabling domestic consumers to generate and sell electricity back to the grid.

Mining: Botswana remains a global leader in diamond mining, with additional opportunities in copper, nickel, coal, and untapped reserves of uranium, lead, and zinc.  Entities like the Diamond Hub, Minerals Development Company Botswana (MDCB), and Okavango Diamond Company (ODC) support the sector’s growth.

Tourism: The government is expanding tourism offerings beyond high-end safaris to include cultural tourism and mid-range options. Botswana’s strategic location and infrastructure, such as the Kazungula Bridge (which connects Zambia and Botswana over the Zambezi), enhance its potential as a regional tourism hub.

Manufacturing and Export: Botswana’s membership in SACU and SADC makes it an ideal base for export-oriented businesses.  Opportunities exist in textiles, automotive parts, food processing, and logistics.

Digital Economy: Investment opportunities include e-government services, software development, e-waste management, e-mobility, and innovative financial operations.  Botswana’s first satellite, BOTSAT-1, launched in March 2025, positions the country as a growing player in space technology, supporting environmental monitoring, agriculture, and mining.  An ongoing effort to provide internet to the entire country is reportedly 95% complete, helping to slowly grow the digital space outside of Gaborone.

Investment Incentives

Botswana offers several incentives to attract foreign direct investment:

  • Tax Incentives: A 15 percent corporate tax rate applies to manufacturing, International Finance Service Centre (IFSC) companies, and businesses accredited by the Botswana Digital and Innovation Hub (BDIH).
     
  • Free Repatriation of Profits: Investors can freely repatriate profits and dividends, with no foreign exchange controls or restrictions on foreign ownership.
     
  • Duty-Free Imports: Specialist machinery and equipment used for manufacturing are exempt from import duties.
     
  • Special Economic Zones (SEZs): SEZs target specific sectors, offering tax breaks, streamlined customs procedures, and superior infrastructure.  Key SEZs include Gaborone (multi-use, diamond processing, financial services), Selibe-Phikwe (mineral processing, horticulture), Lobatse (beef, leather, biogas), and Francistown (mining, logistics).
     
  • SPEDU Incentives: The Selebi Phikwe Economic Diversification Unit (SPEDU) which covers the Selibe-Phikwe region benefits from reduced corporate tax rates (5 percent for the first five years, 10 percent thereafter), zero customs duty on imported raw materials, and extended land leases of up to 50 years.
     

Challenges

Botswana faces several challenges, including:

  • Economic Dependence: Heavy reliance on diamonds and SACU revenues leaves the economy vulnerable to external shocks.
  • Regulatory Barriers: Excessive red tape, licensing constraints, and restrictions on foreign participation in certain sectors hinder business operations.
  • Digital Economy Gaps: High data costs, limited digital literacy, and inadequate support for start-ups slow ICT sector growth.
  • Workforce Limitations: A shortage of skilled labor and difficulties obtaining work permits for foreign workers impact private sector development.
  • Income Inequality: Botswana has one of the highest Gini index scores globally (53.3 in 2024), with unemployment at 27.6 percent and youth unemployment at 38.4 percent.
     

Political Stability

Botswana remains one of Africa’s most stable democracies. The Umbrella for Democratic Change (UDC) won the 2024 elections, marking the first political transition between rival parties in 58 years.  Botswana and the United States maintain strong bilateral relations, with opportunities for collaboration in mining, healthcare, ICT, tourism, energy, and defense.
Botswana’s location, robust governance framework, relatively good infrastructure, and investment incentives make it an attractive destination for foreign investors.  While challenges persist, the government’s focus on diversification, infrastructure development, and regional integration offers significant opportunities across energy, mining, tourism, manufacturing, and digital sectors.

Political Environment

Visit the State Department’s website for background on Botswana’s political and economic environment https://www.state.gov/countries-areas/botswana/

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