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Originally published:
Feb-21-2006
Government
Botswana is a multiparty constitutional democracy. Since independence in 1966, all elections have been held on schedule and have been freely and fairly contested.
There are three branches of government: executive, made up of the president, who is the chief of state and the head of government, and the president’s cabinet; legislative, including a popularly elected National Assembly and advisory House of Chiefs; judicial, the High Court, Court of Appeal, local and customary courts, and industrial labor court.
Population
The estimated population in July 2005 was 1,640,115. Growth is static at 0% (2005 est.). Most of Botswana’s population is Batswana. Ethnic groups include: Tswana 79%; Kalanga 11%; Kgalagadi, Herero, Bayeyi, Hambukush, Basarwa ("San"), Khoi and whites 10%. The official language is English, but only 2.1% of the population speak it. 78.2% speak Setswana. Kalanga and Sekgalagadi are local languages. Adult literacy is 81%.
Botswana has one of the world's highest known rates of HIV/AIDS infection – estimated at 37.3% of the population in 2003. However, the country also has one of Africa's most progressive and comprehensive programs for dealing with the disease.
Legal System
Botswana’s legal system is based on Roman-Dutch law and local customary law. The country has not accepted compulsory ICJ jurisdiction. Botswana's High Court has general civil and criminal jurisdiction. Judges are appointed by the president and may be removed only for cause and after a hearing. The constitution has a code of fundamental human rights enforced by the courts, and Botswana has a good human rights record.
Economy
Currency: Pula (BWP)
- Pula per US dollar: 5.57041 (2/20/06)
- Pula per Euro: 6.64817 (2/20/06)
Economic Indicators
| |
2001 |
2002 |
2003 |
2004 |
2005(e) |
2006(f) |
| Economic Growth (%) |
2.1 |
7.8 |
5.7 |
4.1 |
3.7 |
3.6 |
| Real GDP Growth Rate (%) |
4.7 |
6.0 |
7.2 |
5.7 |
4.0 |
|
| GDP Per Capita ($ at PPP) |
7,800 |
9,500 |
9,000 |
9,200 |
|
|
| Inflation (%) |
6.6 |
8.1 |
9.6 |
6.6 |
8.4 |
7.0 |
| Current Account Balance (% GDP) |
11.5 |
2.2 |
6.5 |
9.8 |
9.1 |
6.7 |
| Exports (USD millions) |
2,326 |
2,353 |
2,976 |
3,502 |
3,845 |
3,995 |
| Imports (USD millions) |
1,612 |
1,735 |
2,018 |
2,870 |
3,045 |
3,293 |
| Trade Balance (USD millions) |
74.0 |
618.0 |
958.0 |
633.0 |
799.0 |
702.0 |
| Foreign Debt (USD millions) |
22.8 |
23.0 |
16.7 |
17.0 |
16.7 |
16.4 |
| Debt Service (% exports) |
4.2 |
3.7 |
2.9 |
2.8 |
2.4 |
2.3 |
| Foreign Exchange Reserves (import months) |
36.3 |
25.2 |
21.6 |
19.3 |
18.6 |
17.8 |
(e) estimate (f) forecast
Leading Markets (2003/4): European Union, South Africa, Zimbabwe
Leading Exports: diamonds, nickel, copper, meat products, textiles, hides, skins, soda ash
Leading Suppliers (2003/4): South Africa, European Union, United States
Leading Imports: machinery, transport equipment, manufactured goods, food, chemicals, fuels
Top Industries: mining (35% of GDP) – diamonds, cooper, nickel, coal; tourism, textiles, construction, beef processing, chemical products, food and beverage. Diamonds are by far the most important source of income for Botswana.
General Economic Situation
Botswana’s economic progress, since attaining independence from Britain in 1966, has been one of the greatest success stories of the African continent. At independence, the per capita income was just US $80, making Botswana one of the 20 poorest countries in the world. Today, the country is considered the richest non-oil producing country in Africa, with one of the world’s highest economic growth rates.
Despite its successes, however, it still has to contend with serious poverty (30% of the population) and high unemployment (23%). As well, the country’s good performance is derived mainly from the revenues produced from diamond extraction. Botswana’s diamonds represent 25% of the world production, 50% of the country’s fiscal revenues, and 80% of export earnings. In the coming years, the country will have to meet several challenges including the effects on economic growth of diamond production stabilization, the substantial increase in health and social spending as a result of the spread of the AIDS pandemic.
Business Climate
Foreign investment and management are welcomed in Botswana. There are no foreign exchange controls, the corporate tax rate is low (15%), and there are no prohibitions on foreign ownership of companies.
In 2005, the country was ranked as Africa’s least corrupt country by Transparency International, ahead of many European and Asian countries. The World Economic Forum rates Botswana one of the two most economically competitive nations in Africa.
The Constitution of Botswana prohibits nationalization of private property. The legal system is sufficient to conduct secure commercial dealings, and foreign and domestic parties have equal standing. The country has written and consistently applied commercial and bankruptcy laws. Secured and unsecured creditors enjoy the same rights under bankruptcy proceedings as they would in the United States.
Credit and Collections
- Collection Experience: Fair-Good
- Exchange Delays: 3 months
- Preferred Credit Terms: Unconfirmed letter of credit
- Minimum Credit Terms: Unconfirmed letter of credit
Risk Assessment
Coface Country Risk Rating: A2 - Default probability is still weak even in the case when one country's political and economic environment or the payment record of companies are not as good as A1-rated countries.
Ducroire Delcredere Political Risk Rating: 1 (very low risk)
Ducroire Delcredere Commercial Risk Rating: A (very low risk)
Standard & Poor’s: A for long-term debt and Prime-1 for short term debt.
Both Standard & Poor’s and Moody’s Investors Service have awarded Botswana their highest sovereign ratings in Africa. The ratings reflect Botswana’s long record of political and social stability, rapid economic growth and prudent economic management. As an investment destination, Botswana is one of the best-rated countries in the developing world.
Sources for further information on doing business in Botswana
British Chamber of Commerce Export Zone Country Profile of Botswana - Comprehensive overview of Botswana that includes demographic, political, social and financial overviews along with details of trade missions and essential business contacts.
Business in Botswana – Government of Botswana web site providing detailed information on business and investment, incentives, taxation and customs, labor and manpower.
Mbendi – Africa’s leading business, travel and tourism web site. Provides e-mail news and alert services to help investors/exporters find opportunities, business and finance partners and reference information.
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This information is provided by ABC-Amega Inc. Providing international receivable management and debt collection services for exporters to more than 200 countries including Bangladesh. For further information, contact info@abc-amega.com.
This report represents a compilation of information from a wide variety of reputable sources.
Economic Indicators: Variety of sources including the CIA World Factbook, COFACE Country Ratings, Economist Country Briefings, Federation of International Trade Associations (FITA) Country Profiles.
Risk Assessment information: Provided with permission by Coface Country Rating. Also Belgian credit insurance company Ducroire Delcredere
Information on credit terms and the probability of prompt payment are provided, with permission, from Overseas Press and Consultants (OP&C) as published in IOMA's Report on "Managing Credit, Receivables & Collections," December 2007.
Historical Exchange Rates: OANDA.com The Currency Site.
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