"Within one month our revenues had jumped over 50%."

Doing Business in Botswana

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A mid-sized country of just over two million people, Botswana is one of the most sparsely populated countries in the world. Botswana was one of the poorest countries in Africa when it gained independence from Britain in 1966, with a GDP per capita of about US$70. Botswana has since transformed itself, becoming one of the fastest-growing economies in the world to a GDP per capita of about $14,000 in PPP terms, according to the CIA World Factbook. The country also has a strong tradition as a representative democracy.Botswana has transformed itself from one of the poorest countries in the world to a middle-income country. By one estimate, it has the fourth highest gross national income at purchasing power parity in Africa, giving it a standard of living around that of Mexico and Turkey, as reported by Nations Online. The government has maintained a sound fiscal policy, despite consecutive budget deficits in 2002 and 2003, and a negligible level of foreign debt. It earned the highest sovereign credit rating in Africa. Several international mining corporations have established regional headquarters in Botswana, and prospected for diamonds, gold, uranium, copper, and even oil, many coming back with positive results. An array of financial institutions populates the country’s financial system, with pension funds and commercial banks being the two most important segments by asset size. Banks remain profitable, well-capitalized, and liquid, as a result of growing national resources and high interest rates, according to the Africa Finance Forum.

The constitution prohibits the nationalization of private property and provides for an independent judiciary, and the government respects this in practice. The legal system is sufficient to conduct secure commercial dealings, although a serious and growing backlog of cases prevents timely trials. The protection of intellectual property rights has improved significantly. Botswana is ranked second only to South Africa among sub-Saharan Africa countries in the 2009 International Property Rights Index. While generally open to foreign participation in its economy, Botswana reserves a number of sectors for citizen participation. Increased foreign investment plays a significant role in the privatization of state-owned enterprises. Investment regulations are transparent, and bureaucratic procedures are streamlined and open, although somewhat slow. Investment returns such as profits and dividends, debt service, capital gains, returns on intellectual property, royalties, franchise’s fees, and service fees can be repatriated without limits. It is rated as the least corrupt country in Africa, according to international corruption watchdog, Transparency International.

Overall, Botswana is a very good market for businesses to do trade in. It was ranked as the 54th easiest country to do business in for 2012, by the World Bank in their annual survey. In the same survey it was ranked 46th for protecting investors, 65th for enforcing contracts, and 150th for trading across borders. The World Economic Forum rates Botswana as one of the two most economically competitive nations in Africa. While it may have ranked low for trading across borders, Botswana is still a great country to do business in.

 

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Author:Globial International Business Team

The Globial International Business Team researches, analyzes, and reports on all things related to global trade and business.

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