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 be hit by the global diamond price and demand slump, slashing real GDP growth in half in 2015. We have revised down our near term real GDP forecast for Botswana, the world's second biggest diamond producer after Russia. Economic growth will slow to 2.5% in 2015 and 3.7% 2016, compared to our previous forecast of 4.1% for both years.

  • The Bank of Botswana will keep rates unchanged in Q216 We expect inflation to remain low due to factors such as subdued oil prices, low demand pull pressure due to low real GDP growth and a depreciating rand.

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

Botswana Operational Risk Coverage (9)

Botswana Operational Risk

BMI View:

BMI View : Businesses face low overall crime and security risk affecting 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 crimes present in the country, due to relatively inexperienced law enforcement agencies as well as the low levels of cybersecurity present in Botswana, Businesses still remain at a moderate risk of being victims of such crimes. Furthermore, Botswana is not a potential target for any international terrorist groups and is not involved in any international disputes. Botswana scores 54.8 out of 100 for the Crime and Security Risk pillar of...

Botswana Crime & Security

BMI View:

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

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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...

Botswana Logistics

BMI View:

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

BMI View:

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: 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-...

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: We forecast modest growth for Botswana's food industry as the price of staple foods will increase due to increasing prices of grains imports. The drinks and MGR sectors will experience positive growth as local companies increase investment over our 2016 forecast period. Sefalana will expand its operations in the beverage sector, and the MGR sector will also experience growth with increasing investment from local and international retailers.

Food And Drink Spending...

Infrastructure

Botswana Infrastructure

BMI View:

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 development of associated transport and power infrastructure. However, we highlight challenges to sector development resulting from electricity and water shortages.

We expect the power and transport sectors to continue to ouperform as the country works hard to reduce its reliance on South African electricity and caters 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 had its implementation date pushed back several times. International companies are also expanding their business and investing in mining projects.

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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.

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Headline Insurance Forecasts (Botswana 2012-2019)
2012

Mining

Botswana Mining

BMI View:

BMI View: The expansion of Botswana's mining industry will be tempered by weakness in global diamond prices over the next few quarters, with the country's largest producer, Debswana, revealing plans to scale back production at two of its mines over the next three years. A sluggish diamond sector will be mitigated to an extent by rapid expansion in thermal coal mining as the government aims to become a net power exporter within the next few years. Growth in thermal coal output will pave the way for the gradual, but long-awaited, diversification of the country's mining sector.

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

Pharmaceuticals & Healthcare

Botswana Pharmaceuticals & Healthcare

BMI View:

BMI View: Botswana's pharmaceutical market will continue to present an unattractive investment destination for multinational drugmakers. The country will remain extremely reliant on importing its pharmaceutical needs over our forecast period, as plans to expand local manufacturing capabilities continue to be postponed. Although the government's provision of free antiretroviral treatment will provide opportunities for generic drugmakers in the public healthcare sector, the country's small market size will continue to limit commercial opportunities.

Headline Expenditure Projections

  • Pharmaceuticals: BWP1.97bn (USD199mn) in 2015 to BWP2.16bn (USD210mn) in 2016; +9.7% in local currency terms and +5.5% in US dollar terms. Forecast unchanged from Q...

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 ...

Telecommunications

Botswana Telecommunications

BMI View:

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...

Tourism

Botswana Tourism

BMI View:

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.

Key Forecasts...

Latest Botswana Articles

  • We have revised down our CME milk price forecast for 2016 and now see price...

  • We believe that there is currently disconnect between oil prices and fundam...

  • Village-level solar-powered microgrids will support electrification efforts...

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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