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:

  • 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

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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 favourably for investors in Southern Africa. Moreover, political stability and low levels of corruption increase the security of investments and lower legal costs. 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 48.5 out of 100 in our Operational...

Botswana Crime & Security

BMI View:

BMI View : Businesses face low overall crime and security risks to their operations in Botswana, especially when compared to its immediate neighbours (Namibia and South Africa) and the Sub-Saharan region as a whole. The lowest-scoring pillar is Vulnerability to Crime, which indicates that businesses will have to incur some basic costs in order to protect their employees and assets from petty and violent crime. In relation to financial and cybercrime, while there are not especially high levels of these activities present in the country, businesses remain at risk from them, due to relatively inexperienced law enforcement agencies as well as poor cybersecurity....

Botswana Labour Market

BMI View:

BMI View : Employers in Botswana will benefit from the substantial availability of labour with basic skills due to the regionally high youth literacy rates, though the dearth of workers with advanced skills will necessitate the import of foreign labour and investment in training. Long-term labour market risks will be mitigated by the Botswana government's considerable investment in education that will help boost the availability of skilled workers. Vocational skills development is also supported by the large proportion of workers with formal employment, thereby lowering training costs for businesses. Meanwhile, Botswana's relatively developed labour regulations and low labour-related taxes will serve to lower direct labour...

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. As a result, Botswana scores 36.3 for Logistics Risk, putting it in 17th position out of 48 Sub-Saharan countries, ahead of Mozambique but behind Kenya.

Businesses operating in Botswana benefit from low...

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...

Botswana Industry Coverage (11)

Agribusiness

Botswana Agribusiness

BMI View:

BMI View: Rising incomes and populations will see South West Africa enjoy long-term growth in corn production. While there will be significant bumps along the way, with the 2015/16 forecast especially poor for Botswana and Namibia, the region will see output growth outpace consumption growth through to the end of our forecast period in 2019/20. Meanwhile, in the sugar sector we see production in the key market of Angola beginning to slow over the forecast period as cheap imports from Brazil and China compete with local production.

Key BMI Forecasts

  • ...

Botswana Agribusiness

BMI View:

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...

Autos

Botswana Autos

BMI View:

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
(2013-19)
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...

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

Food & Drink

Botswana Food & Drink

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BMI View: Botswana's food and drink industry will benefit from a recovery in economic growth, boosting the positive consumer outlook for 2016. Rising household spending will fuel strong growth in food and drink spending through to the end of our forecast period in 2020. Growing food retailing expansion will further support our positive outlook for Botswana's consumer market, encouraged by low operational risks and stable political conditions.

Food and Drink Spending
(2013-2020)
...

Infrastructure

Botswana Infrastructure

BMI View:

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 (...

Insurance

Botswana Insurance

BMI View:

BMI View: Botswana's insurance market is small by regional and global standards, though the life sector has grown rapidly in recent years and emerged as an important conduit for organised savings. Both the life and non life sectors are expected to grow rapidly over the forecast period, bolstered by growing demand for motor and property insurance and by wider economic growth. Low average household income levels will continue to hamper growth, however, and while financial inclusion is rising at least one quarter of the adult population either does not understand the benefits of insurance or cannot afford it.

...
Headline Insurance Forecasts (Botswana 2012-2019)
2012

Mining

Botswana Mining

BMI View:

BMI View: Botswana's mining industry has considerable potential, with sizeable mineral deposits complemented by a stable political climate and supportive regulatory environment.

Botswana Mining Industry Value Forecast (2015-2020)
2015e 2016f 2017f 2018f 2019f ...

Pharmaceuticals & Healthcare

Botswana Pharmaceuticals & Healthcare

BMI View:

BMI View: Multinational drugmaker presence in Botswana will be limited to imports as the small market size and lack of investment incentives deter any large-scale investment plans. Although generic drugs will retain their dominance in terms of market share, as the burden of non-communicable diseases increases this will create more lucrative opportunities for foreign drugmakers. The government will remain committed to reducing the longstanding HIV/AIDS burden in the country. As such, a combination of funding from the public sector and international donors will make significant progression towards achieving the UNAIDS 90-90-90 targets.

Headline Expenditure Projections

  • Pharmaceuticals: BWP1.96bn (USD190mn) in 2015 to BWP2.15bn (USD180mn) in 2016; +9.2% in local currency terms and -5.9% in US dollar terms....

Power

Botswana Power

BMI View:

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.

Headline Power Forecasts (Botswana 2014-2020)
2014e 2015f 2016f 2017f 2018f ...

Tourism

Botswana Tourism

BMI View:

BMI View: Despite offering significant growth potential, the outlook for Botswana's fledgling tourism industry has taken a turn for the worse this quarter. The country is heavily reliant upon nearby and neighbouring states to boost international visitor figures and declining private consumption in South Africa as well as ongoing political instability in Zimbabwe will undermine growth over the coming months and years. Heightened economic uncertainty in Europe will also dampen growth, particularly from markets such as the UK and Germany. The outlook is not entirely negative, however, with Botswana successfully building on marketing campaigns to highlight its attractions as a safari and ecotourism destination among visitors from Asia Pacific markets such as Australia and from the United States. The market will also remain attractive to investors in light of Botswana's well established...

Latest Botswana Articles

  • We have left our corn forecasts unchanged despite recent price volatility. ...

  • An unsettled political and economic environment in the wake of the Brexit v...

  • We maintain our above-consensus forecast for the year, with Brent and WTI f...

Latest Botswana Blogs

Latest Botswana Podcasts

  • Despite another tough year for the global mining sector, BMI expects p...

  • The increasingly important economic relationship between Asia and Sub-...

  • This week, Risk Watchdog discusses beneficiation in the mining sector ...

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