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Fast Facts on Doing Business in Botswana

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By: Shira Petrack

Estimated reading time: 4 minutes 

Now more than ever, companies need accurate and up to date market information that can guide them in adapting their strategy to a post-Covid world. While a lot of material can be found online, busy executives do not always have the time to sift through lengthy reports to find the data points relevant to their business. To make it easier for you to get the intelligence you need to enter or expand in the African market, we have put together this short list of highlights from the 2020 Investment Climate Statement on Botswana.*

Information for Investors:

  • The Government of Botswana promotes foreign investment in specific sectors, including:
      1. Diamonds
      2. Water and sanitation 
      3. Electricity 
      4. Transportation 
      5. Telecommunication infrastructure 
  • Other sectors (not specifically promoted by GoB) with high investment potentials are:
      1. Mining 
      2. Mineral processing 
      3. Cattle 
      4. Tourism 
      5. Financial services 
  • Botwana’s Special Economic Zones Authority (SEZA) is currently working on developing eight special economic zones throughout the country to streamline investment in sector-targeted geographic areas.
  • The Botswana Investment and Trade Center (BITC) 
    1. Was designed to serve as a one-stop shop for investors or entrepreneurs looking to set up a business or a business partnership in Botswana.
    2. Supports investment projects that will diversify the economy away from dependence on diamond mining and create jobs for, and transfer skills to, Botswana citizens.
    3. Foreigners who wish to operate a business in the country are required to register and obtain the relevant licenses and permits as prescribed by the Trade Act of 2008

Information for Traders: 

  • Botswana, along with Lesotho, Namibia, South Africa, and eSwatini, is a member of the Southern Africa Customs Union (SACU) which is the world’s oldest customs union. These five states maintain a duty free trading area with a common external tariff.
  • As part of its mission to promote trade with the country, the BITC also runs the Botswana Trade Portal, which centralizes all the official information that importers or exporters need to know when setting up their trading business in the country.
  • With the exception of certain foodstuff, import permits are not required for goods entering Botswana from other SACU members.
  • SACU has a free trade agreement with Iceland, Liechtenstein, Norway, and Switzerland through its agreement with the European Free Trade Association.
  • SACU countries have signed reciprocal preferential trade agreements (PTA) with MERCOSUR countries (Argentina, Brazil, Paraguay, and Uruguay) that are in the process of being ratified.
  • Botswana is a member of the Southern African Development Community (SADC) and follows its protocol on trade.
     
  • Botswana has signed an interim Economic Partnership Agreement (EPA) with the EU, which provides duty and quota free access on Botswanan goods to the EU markets.
     
  • Botswana and Zimbabwe have a trade agreement that provides duty-free access for goods within certain parameters.
  • Botswana has signed the African Continental Free Trade Agreement (AFCTA), but it has yet to ratify the AfCFTA.

The Legal System: 

  • The legal system is based on Roman-Dutch law and influenced by English common law. The legal corpus is made up of legislation, judicial decisions, and local customary law.
  • The judiciary is largely regarded as fair and impartial.
  • Botswana has a specialized anti-corruption court that handles all corruption cases.
  • Some litigants have complained about the turnaround time for civil and commercial cases. To expedite the process and ensure relevant judicial expertise, the Government of Botswana is planning to build a corps of specialized commercial judges within the civil court system that will handle commercial cases.   

Property Rights:

  • Botswana’s constitution prohibits the nationalization of property, and the government has never pursued a policy of forced nationalization in the country’s history. The only exceptions are 
      1. Expropriation in exchange for market value within the parameters of the Acquisition of Property Act;
      2. Revocation of an independent power producer’s license and confiscation of the operations in exchange for compensation for public interest purposes within the parameters of the Electricity Supply Act.
  • Of the three categories of land in Botswana – freehold, state land, and tribal land – only freehold land (approximately 5% of the land in the country) can be sold to foreigners.
  • State land (about 25% of the land in Botswana) can be leased for 50 years for industrial and 99 years for residential use.
  • All minerals in Botswana, including those found in private lands, are treated as the property of the state.

Tax Rates:

  • Botswana has a 22% corporate tax rate. The Ministry of Investment, Trade, and Industry (MITI) can grant manufacturing companies a reduced rate of 15%. The withholding tax rate on distributed dividends is 7.5%.  
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*The United States State Department’s Investment Climate Statements publishes yearly analyses of foreign markets that cover almost all countries in Sub-Saharan Africa. These reports can help companies make informed business decisions regarding their foreign investment and partnership. 

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