Encouraging International Investment in Botswana
Key Indicators of FDI in Botswana
UNCTAD’s World Investment Report 2023 sheds a bright light on Botswana’s investment landscape, showing a rebound in FDI to USD 216 million in 2022—a remarkable turnaround from the previous year’s decrease. The FDI stock sits at an impressive USD 5.21 billion, forming a substantial part of our GDP (27.2%). We’ve seen a surge of investments within the services sector, which complements our traditionally strong mining sector. Inflows predominantly hail from SACU, EFTA, Canada, and Zimbabwe.
In line with our vision for economic diversification, we’re eager to support and incubate investment across agriculture, diamonds, education, health, and transport sectors. The Botswana Investment and Trade Centre (BITC) is our response to investors’ needs, offering a supportive hub for your business ventures. Fiscal perks await, with competitive tax rates and no foreign exchange controls to fret about. Our National Investment Strategy (2023-2030) spotlights an ambition to elevate investment both in scale and impact, with initiatives such as a strategic diamond hub that’s drawing in supplementary trades like cutting and polishing.
Botswana prides itself on its reputation for minimal corruption—indeed, the lowest in Africa. Fiscal openness, sound economic management, and democratic stability are keystones of our market appeal. While external affirmations of our vibrancy come from international ratings, we recognize challenges like high operational costs, skilled labor shortages, and our landlocked geography. Still, our diamond reserves should not misconstrue our appetite for investment—leading economists affirm the necessity of diversified investments in our thriving economy. On the innovation and economic freedom spectrums, Botswana ranks comfortably at 85th out of 132 and 36th out of 184 nations respectively.
Greenfield Investments remains a cornerstone of our FDI strategy, inviting businesses to build new facilities and branch out into our robust marketplace.
Investment Considerations in Botswana
The Upsides:
- Botswana stands as a paragon of stability and transparency on the African continent.
- Economic integration gives investors an edge with duty-free access to the SADC region’s expansive market, enveloping over 292 million prospects.
- Our network of double taxation agreements, stretching from the rolled hills of South Africa to the vast expanse of Russia, ensures a fiscal advantage.
- Currency transfer worries are a thing of the past with no foreign exchange controls, ensuring seamless profits and capital repatriation.
- An educated, English-speaking workforce brings a competitive edge to your Botswana operations.
The Hurdles:
- Infrastructural gaps, such as energy and water supply deficiencies, internet lag, and logistical hurdles, present areas ripe for improvement and opportunity.
- Certain sectors are currently under state patronage, signalling selective investment openings.
- Assured equal footing in the business realm is a work in progress.
- Certain fiscal incentives such as the Credit Guarantee Scheme remain earmarked for citizen contractors.
Government Initiatives Encouraging FDI:
- A preferential tax cut to 15% for manufacturing entities (both local and foreign), contingent upon approval.
- A substantial tax holiday spanning 5-10 years awaits companies blessed with a Development Approval Order.
- Registering as an International Financial Services Centre yields a reduced 15% tax rate, along with a breather from withholding and capital gains taxes.
- Innovation Hub affiliates enjoy slashed tax rates, fostering creative and technological advancement.
- Foreign entities owning a quarter or more in equity get a break from taxes on dividends sourced internationally.
Your investment in Botswana isn’t just a business decision—it’s a partnership in progress, growth, and shared prosperity. Let’s cultivate the extraordinary together.
