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.
Botswana Country Risk
Botswana's economy will continue to be affected by the global commodity slump as demand for and prices of diamonds remain subdued. We have revised down our near term real GDP forecast for Botswana, the world's second biggest diamond producer after Russia. Economic growth will reach 3.7% in 2016, compared to our previous forecast of 4.1%; thereafter it will see a slight uptick to 4.1% in 2017.
We believe the Bank of Botswana will hike interest rates by 50 basis points by the end of 2016 on the back of an expected rise in inflation. This is due to forecasted increases in import costs stemming from Botswana's main trading partners, Namibia and South Africa.
In the continued absence of meaningful economic diversification, the mining sector is set to remain a key engine of growth. While nickel, copper and...
Botswana Operational Risk Coverage (9)
Botswana Operational Risk
Botswana Operational Risk
BMI View: Botswana is an attractive trading destination due to its geographical location in between the Indian and Atlantic Oceans, and next to the regional giant South Africa, which positions the country as a transit hub for Sub-Saharan Africa. Moreover, political stability and low levels of corruption increase the security of investments. Overall, the major operational risks in Botswana emerge from the transport sector; it is a land-locked country, which places an unavoidable extra cost on supply-chains. This also places an additional strain on Botswana's road and rail network. Taking these factors into account, Botswana receives an overall score of 47.0 out of 100 in our Operational Risk Index, ranking sixth out of 48 Sub-Saharan African countries, amid regional leaders such as Mauritius, South Africa, and the Seychelles.
Botswana Crime & Security
Botswana Crime & Security
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...
Botswana Labour Market
Botswana Labour Market
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...
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...
Botswana Trade & Investment
Botswana Trade & Investment
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...
Botswana Industry Coverage (12)
BMI View: We believe the rising incomes and population of South West Africa will see the region enjoy long-term growth in production in the corn sector. While there will be bumps along the way, we are ultimately predicting the region to see output growth outpace consumption growth over our forecast period to 2019. Meanwhile, in the sugar sector we see production in the key markets of Angola and Zambia beginning to slow over the forecast period as cheap imports from Brazil and China compete with local production.
Key BMI Forecasts
Angolan corn production from 2014/15 to 2018/19: 6% to 1.97mn tonnes. Although less than the bumper 2014 crop, we expect above-...
BMI View: We believe rising incomes and growing populations in Angola, Botswana and Namibia will see these countries enjoy long-term production growth in the corn sector. While there will be bumps along the way, we are ultimately predicting these countries to see output growth outpace consumption growth over our forecast period to 2020. Meanwhile, in the sugar sector we see Angolan production accelerating over the forecast...
BMI View: We forecast a slower rate of growth of 4.3% in the passenger vehicle market in 2016 due to the impact of the import ban placed on older vehicles. The commercial vehicle market looks set to outperform off the back of infrastructure developments with a forecast growth rate of 8.3% in 2016.
|Botswana Vehicle Sales By Segment|
|BMI/Central Statistics Office|
Commercial vehicles (CV) to outperform passenger vehicles in 2016 with CV's and passenger vehicles forecast to grow by 8.3% and 4.3...
Botswana Commercial Banking
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Food & Drink
Botswana Food & Drink
BMI View: Botswana's food and drink industry will experience positive yet modest growth in 2016 as the country's economic conditions gradually improve from the 2015 downturn. Rising household spending will support the growth in the industry, with alcohol sales seeing a significant uptick led by higher formal beer consumption. The MGR sector will grow over 2016 on the back of local retailer's domestic expansion as well as South African retailers looking to expand outside their local market.
|Food and Drink Spending|
BMI View: Botswana's construction industry, especially the infrastructure sector, 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. However, we highlight challenges to sector development resulting from electricity and water shortages.
Latest Updates And Structural Trends
A joint venture between Japanese firm Marubeni Corporation and South Korea's Posco Energy secured a USD800mn contract to expand the coal-fired Morupule B power plant in Botswana. The plant's capacity will be expanded by an extra 300MW from its existing capacity of 600MW. The plant's output will be sold to Botswana Power Corporation under a 30-year power purchase deal at BWP812.56 (...
BMI View: We retain a broadly positive outlook for Botswana's small insurance sector. A number of well-capitalised firms are present in the market, several of which benefit from the backing of leading regional and multinational insurers. These providers are distributing attractive products through multiple channels. Price competition remains a challenge in much of the non-life segment. Both major segments are exposed to slowing in the economy (or worse).
BMI View: Botswana's mining industry has considerable potential, with sizeable mineral deposits complemented by a stable political climate and supportive regulatory environment. The mining industry is largely dominated by domestic players, or, in the case of Debswana, local partners of foreign agents. However overseas interest is growing, particularly in the coal mining sector, the scale of which is just starting to be realised. Price weakness will constrain the expansion of the mining sector in the short term, with diamond production set to contract in 2016, but we see significant room for growth beyond 2020.
Pharmaceuticals & Healthcare
Botswana Pharmaceuticals & Healthcare
BMI View: The growth of Botswana's pharmaceutical and healthcare markets will remain limited over the coming years as multinational drugmakers are unlikely to establish a direct manufacturing presence within the country. The government's ongoing commitment to alleviating the overwhelming HIV/AIDS burden in the country will, however, continue to provide opportunities for generic drugmakers in the public healthcare sector. As the burden of non-communicable diseases increases in the country, we expect this to provide a more attractive profile for foreign drugmakers over the long-term.
Headline Expenditure Projections
BMI View: Botswana will remain a net electricity importer throughout our forecast period until 2024 due to an underperforming power sector and constant delays to the construction of power plants. Increased interest by IPPs will be the result of government seeking to address current power issues.
BMI View : BMI 's 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 estimates based on the latest market data and updated five-year forecasts to 2020 for the mobile, fixed-line and broadband sectors. From the five states, Mauritius and Mozambique stand out as dynamic and higher performing markets in terms of penetration and 3G/4G developments along with growth rates.
Latest Updates & Industry Developments
Important downward revisions were made to Angola's...
BMI View: Strong expansion of tourism arrivals to Botswana from European source markets will help to offset slower growth in inbound travel from Botswana's regional neighbours, including South Africa and Zimbabwe where economic growth has declined in recent months. Botswana offers substantial growth potential as a tourism destination, benefiting from a broad range of eco tourism attractions and strong travel connections to regional travel hubs in South Africa, however domestic transport and accommodation infrastructure remains underdeveloped which will dampen growth prospects over the short to medium term.