Botswana

In-depth country-focused analysis on Botswana's economic, political and operational risk environment, complemented by detailed sector insight

Botswana

Botswana is one of Africa's most stable countries, attracting the business of many of our clients. It has one of the longest running multi-party democratic systems on the continent. The country also possesses one of the world's highest economic growth rates since its independence in 1966. Botswana boasts the lowest corruption levels in Africa and supplies good quality statistics. Our coverage – using our unique Total Analysis model – ensures that our clients make risk-assessed decisions in Botswana. We keep them informed of the latest market moves and political developments supported by our interactive data and forecasting. They also benefit from in-depth analysis of 11 of Botswana's most important industries as part of our 'top-down' and 'bottom-up' perspective. Our research teams make it easy for you, as our client, to get the results you strive for in Botswana.

Country Risk

Botswana Country Risk

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Core Views:

  • Economic growth in Botswana will remain relatively healthy over the coming years, averaging around 4.6% annually. Even so, growth will continue to be dominated by the mining sector, as economic diversification efforts continue to bear little fruit .

  • Lower fuel and food prices and continued slack within the economy will allow the Bank of Botswana to keep monetary policy accommodative through the remainder of 2015.

  • In the continued absence of meaningful economic diversification, the mining sector s set to remain a key engine of growth. While nickel, copper and particularly coal will become more prominent in the country's export base, as well as driving investment, diamonds will retain their primacy.

  • We expect a return to the political status quo in Botswana in 2015...

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Botswana Operational Risk Coverage (9)

Botswana Operational Risk

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BMI View: Botswana is a generally safe place for foreign business travellers, expatriates, and tourists, but non-violent crime rates are rising, increasing foreigner vulnerability. Overall, however, the security situation is much safer than in other states in the region due to political stability and an established democracy. The police are approachable and relatively free from corruption, contributing to making Botswana an attractive investment destination. The country therefore performs well in the BMI Crime and Security Risk Index, placing third out of 48 Sub-Saharan A...

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Botswana Crime & Security

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BMI View: Botswana is a generally safe place for foreign business travellers, expatriates and tourists, however lately foreigners are experiencing elevated risks of crime to property and to the person. Overall the security situation is much more positive than in other states in the region due to political stability and an established democracy, with a low threat level from terrorism or war. The police are approachable and relatively free from corruption; all this makes Botswana a safer investment destination. This contributes to the country's regional outperformance in the BMI Crime and Security Index, in third place out of 44 SSA countries, with a...

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Botswana Labour Market

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Major investment into education since the country's independence in 1966 has transformed Botswana's population from a largely illiterate one into one of the most developed in the region. However persistent social issues such as HIV/AIDS and poverty permeate society, reducing both life expectancy and the average length of time workers are in the labour force. Overall Botswana is a regional outperformer in the Labour Risk pillar of the BMI Operational Risk Index, with a score of 43, placing the country sixth in Sub Saharan Africa (SSA), behind South Africa.

Botswana boasts a sizeable labour force, with a large percentage of the population available to work. Although low life expectancy, of just 47.6 years due to the widespread prevalence of HIV/AIDS, impedes long-term labour force participation and therefore the development of specialist trade wisdom, birth rates are above replacement level, thereby keeping the...

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Botswana Logistics

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BMI View: Botswana's dependence on diamond exports in particular underlines the importance of efficient trade connectivity for the country's economy. As a result, the government has invested in a number of initiatives to enhance Botswana's connectivity to regional and international markets, notably in facilities in Namibia's Port of Walvis Bay as well as the expansion and modernisation of the country's rail and road system. Although Botswana's lack of port facilities constitutes a major disadvantage for lowering trade costs and times, these initiatives will facilitate improvements in transport options for foreign businesses.

Businesses operating in Botswana benefit from low electricity and fuel prices by regional standards, enabling businesses to reduce their operating costs and increase their competitiveness vis-a-vis firms in neighbouring...

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Botswana Trade & Investment

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Botswana is a mature democracy with an established rule of law and the lowest rate of corruption in Africa. Investors benefit from a relatively open economy with attractive tax regulations and incentives for foreign investment. However, Botswana also faces the same drawbacks as many of its regional peers, such as a limited access to credit, poor contract enforceability and cumbersome bureaucratic procedures that increase market entry costs. Overall, Botswana scores 55.7 in the Trade and Investment Risks Index, placing fourth in the region after the Seychelles and 65th in the world.

Botswana is a relatively open country for economic activity due to its market-oriented economy and stable political situation. The government offers generous financial incentives for foreign investors in the shape of tax breaks, low tax rates (corporate tax is 22%), and opportunities for public-private partnerships. In addition, prudent financial planning has...

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Botswana Industry Coverage (11)

Agribusiness

Botswana Agribusiness

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BMI View: We expect food security in South West Africa to improve over the short term, as we expect higher corn production from Zambia in 2014/15. Only in parts of Angola do we see food security being at risk, owing to the increase in fuel costs in 2014, which is expected to result in upward pressure on food prices and could negatively impact on food access, particularly in deficit producing areas. Over...

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Autos

Botswana Autos

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The latest data released by the Central Statistics Office in Q314 show that total vehicle sales, comprising both new and used vehicles, growing by 1.23% year-on-year in Q314 to 7,985 units. The slower rate of growth highlights the impact of the government's import ban of aged vehicles, by reducing the supply of affordable vehicles in an economy where incomes per capita remain low. This coupled with slower economic growth in 2014 leads us to estimate an 8.7% decline in total auto sales in 2014.

After the sharp decline in 2014, we anticipate a mild recovery in 2015 and forecast sales to grow 5.1% for the full year. Over the 2015-2019 period, we forecast growth in vehicle sales to average 10.4% to hit 57,459 units by 2019.

In line with BMI's view, Toyota Motor continues to be firm favourite in Botswana. In Q3 2014 it accounted for 5,355...

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Commercial Banking

Botswana Commercial Banking

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Commercial Banking Sector Indicators
Date Total assets Client loans Bond portfolio Other Liabilities and capital Capital Client deposits

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Food & Drink

Botswana Food & Drink

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BMI View: Botswana, like many of its Sub-Saharan African neighbours, has a promising food and drink sector held back by high risks. The relative appeal of the country is undermined by a poor demographic profile with a smaller population, especially the all-important youth population, than many of its peers. Premiumisation is therefore likely to be a key target for industry players in Botswana. The country also benefits from a good business environment, a relatively well-developed food retail sector and an even distribution of incomes. Economic headwinds will temper per capita consumption growth.

Consumer Outlook

Botswana's economic growth prospects will remain sub-optimal during 2015 despite improved production and exports of diamonds. The country's underperforming power sector and weak...

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Infrastructure

Botswana Infrastructure

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BMI View: The infrastructure and construction sector of Botswana is heading into a period of sustained growth on the back of continued investment in the mining sector and the development of associated transport and power infrastructure. For 2015, we expect the sector to grow in real terms by 5.7%, with average annual real growth over our 10-year forecast period at 6.5%.

The biggest source of value creation is likely to remain electricity and transport. The country is working hard to reduce its reliance on South Africa for electricity supply and cater to growing domestic demand from its mining sector. There are a number of projects being developed and due to come online over the medium term. These include the long-delayed Morupule B coal-fired plant, which has...

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Insurance

Botswana Insurance

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BMI View: We have a positive outlook for Botswana's life and non-life insurance segments in local currency terms. While currency weakness may negatively affect USD-term figures of some of the individual non-life lines, we see positive developments transfer growth to written non-life premiums. Important developments include the country's rising per capita income, coupled with low interest rates and inflation. Similarly, growth in life insurance is driven largely by growing per capita income, as well as the country's ageing population.

Botswana's life insurance segment will hold the lion's share of the overall insurance sector, accounting for roughly 70% of total premiums written in 2015. In terms of growth potential, we expect life insurance to consistently outpace non-life insurance in the next five years, as we see its market share...

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Mining

Botswana Mining

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BMI View: Botswana will remain a leading destination for global mining investment over the next few years as the country's strong regulation and attractive business environment draws investors to its diamond, coal and other mineral reserves. However, we note that a lack of diversity remains the country's Achilles heel, with Botswana vulnerable to growing competition from other diamond-producing countries in the region.

We maintain a constructive outlook for Botswana's mining sector over our forecast period to 2019. Diamonds will remain the mainstay of Botswana's mining sector, boosted by new projects planned by Debswana, Gem Diamonds and Lucara Diamond Corp and with significant exploration activity also taking place across the country. In addition...

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Pharmaceuticals & Healthcare

Botswana Pharmaceuticals & Healthcare

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BMI View: Multinational drugmaker presence in Botswana will be limited to imports via leading distributors Medswana and Delta. Domestic manufacturing output will increase over the long-term and will be mainly focussed on generic anti-retrovirals given the significant demand.

Headline Expenditure Projections

  • Pharmaceuticals: BWP1.82bn (USD203mn) in 2014 to BWP1.99bn (USD202mn) in 2015; +9.4% in local currency terms and -0.4%% in US dollar terms. Forecast in line with Q215 in local currency terms; downgraded in US dollar terms.

  • Healthcare: BWP7.48bn (USD833mn) in 2014 to BWP8.16bn (USD828mn) in 2015; +9.1% in local currency terms and -0.7% in US dollar terms. Forecast...

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Power

Botswana Power

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BMI View: The outlook for Botswana's power sector is somewhat tepid. Between 2015-2024, overall power generation will grow incrementally from 0.7TWh in 2015 to 0.9TWh in 2024. Consumption will rise steadily, underpinned by the development of industry and household consumption, which is benefiting from a rapid expansion of the electricity grid. However, risks remain. A lack of regulatory reform and the continued domination of the state-owned Botswana Power Corporation means the market remains inefficient and...

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Telecommunications

Botswana Telecommunications

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BMI View : BMI's Q315 Southern Africa report analyses the latest industry, regulatory and macroeconomic developments in the telecoms markets in Angola, Botswana, Mozambique, Mauritius and Namibia. It also contains our estimate of the market data relating to the end of 2014 and an update of our five-year forecasts to 2019 for the mobile, fixed-line and internet sectors. From the five states...

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Tourism

Botswana Tourism

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BMI View: Botswana holds great potential as a tourism destination. As well as an abundance of areas of natural beauty and wildlife watching opportunities, the country has a stable political environment and offers a range of accommodation options. Our forecast shows that the sector will not experience particularly strong growth however, as severely inadequate transport facilities and a lack of investment in the hotel market continue to hinder the possibilities.

Botswana has the natural resources to compete with many of the other, better established tourist destinations in Southern Africa. Areas of natural beauty such as the Okavango Delta offer enormous possibilities for wildlife and adventure holidays. The majority of visitors to Botswana are those looking for very specialist wildlife packages or young backpackers travelling Southern Africa. This...

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