Botswana is centrally located in southern Africa, sharing borders with Zambia and Zimbabwe in the North, South Africa in the South and Namibia in the North West. Botswana is 581,730 sq km in area, roughly the size of France, with a population of 2.1 million.
Botswana has a reputation for being among the most stable and successful economies in Africa, maintaining one of the world's highest economic growth rates since its gained independence from Britain in 1966.
Five decades of uninterrupted civilian leadership, progressive social policies, and significant capital investment have created one of the most stable economies in Africa.
Mineral extraction, principally diamond mining, dominates economic activity, though tourism is a growing sector due to the country's conservation practices and extensive nature preserves.
And while new technology is now being promoted throughout Botswana, it’s the old technology of mining, specifically of diamonds, that is the real life-blood of the country.
Diamond mining has fuelled much of the country’s expansion and currently accounts for more than one-third of GDP, 70-80 per cent of export earnings, and about half of the government's revenues.
Although diamonds dominate economic activity, other important sectors include beef production and tourism – the latter is developing strongly, thanks to the country's conservation policies and extensive nature reserves. Financial services and subsistence farming are other sectors enjoying growth in Botswana.
Through fiscal discipline and sound management, Botswana has transformed itself from one of the poorest countries in the world to a middle-income country with a per capita GDP of $16,600 in 2014.
Strengths of the market
- No foreign exchange controls.
- Corporate tax is only 15 per cent for manufacturing companies.
- Duty free and quota free access to EU market
- Duty free access to South Africa, Namibia, Lesotho and Swaziland
- Preferential access to markets of 14 Southern African countries
- Low personal income tax, the highest bracket being only 25 per cent
- Industrial relations are good and trade unions are not militant
Challenges of the Botswana market
In contrast to Botswana’s impressive economic growth, good governance and prudent macroeconomic and fiscal management, the country faces high levels of poverty and inequality as well as low human development indicators. While poverty rates declined from 50% at independence to just over 19% today, significant pockets of poverty remain, especially in rural areas.
Education expenditure is among the highest in the world, at around 9% of GDP and includes the provision of nearly universal and free primary education. However, the sector has not created the skilled workforce Botswana needs to diversify its economy. Unemployment has remained persistent at nearly 17.8%, and as a consequence, income inequality in Botswana is among one of the highest in the world.
Continued uncertainty in global markets and the slow pace of economic recovery in advanced countries continues to affect Botswana's economic outlook. According to the World Bank, the outlook for 2015-2017 is modest with expected growth rates of 3.2%, 3.8% and 3.9% respectively.
This is mainly due to falling demand for diamonds particularly in light of the slowdown in China, severe water and electricity constraints, as well as reduced credit growth due to higher household debt.
How to tackle the predicted decline in previously buoyant diamond revenues remains a key challenge for Botswana. Diamonds may not be fully exhausted in the country for another generation but output is past its peak. Continued economic diversification to offset this will be crucial to the country’s future economic well-being.
Given the agricultural sector’s decreasing share in GDP, there is a need to diversify agricultural production and promote the potential for investment in agro-industrial and supply chain development.
Opportunities exist in:
- Beef production
- Dairy farming
- Cereal production
The education sector receives the largest share of total government expenditure and investment in education continues to be a priority in Botswana. The government has emphasised the development of human resources by investing in education and training to raise productivity. Botswana has both private and public institutions of international standard that meet the increasing demands of its growing economy.
Opportunities exist in
- Student accommodation
- ICT connectivity
- Equipment providers
- Maintenance service providers
- Student financial services
The ICT industry is growing fast in Botswana, particularly in mobile services. The government is also developing the Botswana Innovation Hub to connect ICT enterprise and R&D institutes in Botswana's public and private sectors.
Opportunities exist in
- Infrastructure development:
- Digital government services
- ICT equipment/supply
- Software development
- IT support
The government has been commended for its policies and regulations governing the tourism industry. Botswana is well known for having some of the best wilderness and wildlife areas on the African continent – 38 percent of its total land area is devoted to national parks, reserves and wildlife management areas. Other attractions include the Okavango Delta region, which during the rainy season is a maze of waterways, islands, and lakes.
Opportunities exist in
- Infrastructure development
- Hotel construction
- Hospitality training
The mining industry has dominated the national economy of Botswana since the early 1990s, with diamonds being the leading component. And while opportunities still exist in the sector, there is potential in the mining of other mineral resources, including copper, gold, nickel and soda ash.
- Prospecting and surveys
- Diamond trading, cutting and polishing.
- Information technology/support
- Accounting and human resources