Botswana – Successes, Opportunities, and Traditions

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The past several decades of international news and events have wrought exciting and sometimes dangerous and tragic episodes in finance, diplomacy, military unrest and both high and low levels of travel and vacationing. Among the nations in the headlines have been Britain, the United Arab Emirates, Nigeria, Syria, and Afghanistan. It has been perhaps all too easy to overlook the African Republic of Botswana, which is located in the Southern part of that continent, yet not officially part of South Africa.

For the most part, the average American may not have Botswana on their radar of notable foreign locations, but there are two distinct groups who are quite familiar with the country’s charm and beauty. Those who enjoy wildlife expeditions – both top shelf and more rudimentary – have been entranced with Botswana’s comparatively untouched and pristine tours and safaris. Although the nation is a landscape of combined desert and forested settings, it is also home to Cape Buffalos, the black-maned lion, zebras that migrate through the area regularly, hippopotamus communities and a wide range of birds and other creatures.

Travel and tours is a major occupation in Botswana, and at present, it is the most successful endeavor of the commercial concessions that are not affiliated with the diamond mine business. Travel companies are usually sponsored in part by the government of Botswana (GOB), and they offer an extensive scope of information, services, and assistance to travelers and those who desire information before making their reservations.

The second group of Americans (and Europeans and others) who became somewhat familiar with Botswana’s culture and traditions are readers and television viewers who enjoy the mystery/crime genre.  The Number 1 Ladies’ Detective Agency series by Alexander McCall Smith (2003 – 2008, Pantheon Books) became its own success and was later adapted for the screen in a series produced for PBS.

The books and the televised episodes brought a colorful and sometimes humorous glimpse into the lives of women, townspeople, and customs in Botswana. For Americans, the very important civility in all interactions and the adherence to social and economic traditions was perhaps a welcome relief to the informality that customizes much of American culture. Another salient point made within the publications and the TV episodes was that of the rising trend for women in Botswana to undertake business start-ups. This arena has gained a great deal of governmental and private business support since the books were first published, and it may be that the success of the books and the main character - Mma Ramotswe – have served as inspiration for women in Botswana.

A Summary History

From its early and informal organization of tribal groups to its independence in 1965, Botswana’s growth has been characterized by both internal and external disputes and claims regarding land ownership, language, political control and economic relations with surrounding Sub-Saharan nations and natural resources that were both being exported and still in the process of discovery. Somewhat similar to India and other countries that were colonies, territories or ‘protectorates’ of Britain: the goals of the British did not always accede to the wishes of surrounding nations or the leaders of Botswana. 

For multiple decades in the twentieth century, Botswana (then known as Bechuanaland) was politically and commercially suppressed in order to facilitate the British and South African liaison, which controlled most of the leadership and import/export trade in the area. Among the reasons for active resistance to merging with South Africa was the prevailing political and social practice of apartheid. This convention would have not only reduced the status and power of tribal leaders and members, but it would have in effect ceded control of developing resources to White officials and nations – a concession that was unbearable to Botswana. The internal push for independence and separation from both Britain and South Africa was hindered by lack of economic feasibility, but after several years of dependence on British funding for the new independent nation, “The planning and execution of economic development took off in 1967-71 after the discovery of diamonds at Orapa” (Parsons, 12) . This event not only provided Botswana with needed revenue for its infrastructure but also enabled the Republic to wield power in negotiating trade, right of way through other lands (sometimes with the help of the U.S. or other countries) and a sociopolitical presence that distinguished the nation from South Africa’s intolerance. 

The discovery of diamond mines enabled Botswana to develop a partnership with the South African company DeBeers. The resulting corporation – Debswana – initially provided Botswana with a 15% share of revenue, but “government upped its stake in Debswana to 50 percent, ensuring that a significant portion of government revenue would stem from diamonds” (King, par. 31). While this increased Botswana’s financial resources and standing, the dependence on diamond revenue also highlighted the need to increase fiscal development from other sources.

Development of the mining business brought about an almost immediate need to also develop transportation conduits within Botswana and in cooperation with South Africa and other surrounding states, as well as trade partners. According to the 2016 publication “Botswana Transport and Infrastructure” , roads in Botswana are managed and maintained by local authorities and the Central Government, and at the time of publication, consisting of materials ranging from earth, sand, and gravel to interlocking bricks and bitumen (Statistics Botswana 1). This document lists both the number of kilometers and the assigned authority for each section of the nation’s roadwork. 

Botswana maintains meticulous procedures and records for all on-road vehicles – both personal, public in nature and for private business. The publication reports that registration increased in the last quarter of 2015 (Statistics Botswana 7), which is the end-year for this report. In addition, the publication discusses the vehicle stock owned by the Government, and that the Botswana Police keep detailed records (displayed within) for reported vehicle accidents. 

The data management enables readers to obtain locations, times and types of collisions and other accidents, as well as injuries and deaths resulting (Statistics Botswana 10 - 27). Air travel for commercial and business, scheduled and unscheduled, is documented for the five Botswana airports, which are in Gaberone, Gantsi, Kasane, Maun, and Selebi Phikwe. Maun, Gaberone, and Kasane are the descending leaders in air transport (30), due to both the proximity to main cities and the increasing air travel from other countries both for business and for leisure/recreational activities.

Rail transport is also critical to Botswana, as this was the first formal transportation mode for products and goods being imported and exported. The discovery of the diamond mines necessitated more extensive and well-constructed rail systems, and these are still in use, both for commercial purposes and for passenger travel.

This report notes that rail transit declined during the recession, which affected Botswana through much of 2010, and that “The rail also faces stiff competition from roads, as such it sometimes loses its customers to road transport” (Statistics Botswana 35). As noted above, and as is similar in most countries, the availability of personal vehicles and the affordability of licenses and fuel can affect the overall use of rail for passenger travel, especially when drivers are on specific time schedules for work, school or other endeavors that do not fit well with train schedules.

Botswana Today

Gaberone is both the capital city of Botswana and the city of the highest population density in the nation. For all of Botswana’s size, which is 582,730 square meters (almost 2,245,000 square miles). ” With an estimated population of 2.37 million, Botswana has a population density of just 3 people per square kilometer” (World Population Review, par.3), which is within the lowest 15 nations and territories for density. Over the past several decades, Botswana has experienced more shifts from rural to urban settings, and this trend continues. Lack of utilities in the far reaches of the country very likely also affects this move toward the cities. In addition to the growing desire for electric power for in-home needs, the growing popularity of the Internet – and the need for connection or Wi-Fi may well be a motivating factor.

A majority of the population is comprised of those who are indigenous to Botswana, some who retain the tribal practice of hunting and gathering. There are additional immigrants from other African countries, many seeking better opportunities for themselves and their families. The three major faith organizations in the nation are Roman Catholic, Buddhist, and Muslim. 

National Commerce and Financial Status

According to Moody’s 2018 analytics, “More than five decades of uninterrupted civilian leadership, progressive social policies, and significant capital investment have created one of the most stable economies in Africa” (Moody’s Analytics 2). This publication also references the stability of Botswana’s political arena, which has been led by the Botswana Democratic Party since the nation’s independence in 1966. Moody also notes that Botswana achieved a “per capita GDP of approximately $18,100 in 2017” (Moody’s Analytics 3) and that it ranks as “one of the least corrupt and best places to do business in sub-Saharan Africa” (Moody’s Analytics 3). 

While U.S. dollars are accepted at most major businesses in Botswana, the national currency is the Pula, which value is 0.094235 USD (ExhangeRate.com, para.1). There are both nationally and foreign-owned banks in Botswana, with the Central institution being the First Bank of Botswana. The International Trade Administration reports that “All commercial banks are either majority or wholly foreign-owned” (ExhangeRate.com, par.1). This arrangement both reinforces Botswana’s control of national financial matters and limits the nation’s culpability for legal and other problems that can occur from banking partnerships, which tend to occur not only in the practice of lending but in mortgage sales and management.

Traditionally, the enterprise has been fostered in Botswana by finance and investment corporations, but their historical requirement for high credit ratings and collateral have excluded small and medium-sized businesses and start-ups. As of the current year, “The financial institutions are now improving the range of services they provide, including a new emphasis on small and medium-sized enterprises” (Moody’s Analytics, par. 3). General liquidity of area banks allows Botswana to be generous in loans to foreign entities, but there are limits on extended credit arrangements due to the relatively diminutive capital bases of the commercial finance institutions.

Business and Enterprise

According to the International Trade Administration’s (ITA) Botswana Country Commercial Guide, “Customs revenue from the Southern African Customs Union (SACU) and diamond revenue each contribute about one-third of total GOB revenue” (ITA, par.7); which means that two thirds of the country’s income is from sources that may change over time. This document shows that “Finance and business services represented about 13.9% of GDP (and) The GOB [Government of Botswana] estimates travel and tourism accounted for about 19.6% of GDP” (ITA, par. 11). This reinforces the general belief that Botswana needs to create and develop revenue sources that are not contingent upon the diamond or mineral mines.

The Bertelsmann Stiftung 2019 BTI (Transformation Index) is overall very positive about Botswana’s economic and overall growth and sustenance. It does mention the need for the nation to aggressively seek the development of resources other than mining, which is Botswana’s single highest revenue source. There is a discussion of Botswana’s efforts toward reversing climate change/environmental preservation, as well as its commitment to reducing poverty throughout the nation. 

This report notes that, aside from potential dissent by young people without work, “Botswana is likely to maintain its trajectory of democratic transformation and economic growth” (Bertelsmann Stiftung, par. 82), while also referencing the importance of Botswana’s need to provide incentives and opportunities for increased civilian participation in state events and procedures. On the deficit side, the publication references Botswana’s shortfalls for the 2015/16 year and projected deficits for the next two fiscal years. This report is one of many that notes the importance of Botswana’s prevention and treatment efforts for AIDS, as the country has among the highest international ratio of the disease among its population. To date, concerted action in this area by the government and medical systems appear to show some success.

In general, Botswana offers a broad spectrum of investment and business opportunities for interested parties. Through the Botswana Investment and Trade Center (BITC), the low tax rate (15% for manufacturing and International Finance Service Center customers), the stable economy and political structure, and the desire to increase the job force with residents and citizens all present appealing opportunities for business in this country. This Center promotes business and investment through direct supports, such as assistance with licensing, facilitation of permits and allocation of space, as well as other listed services

The marketing Handbook describes the BITC as “an integrated Investment and Trade Promotion Authority with an encompassing mandate of investment promotion and attraction; export promotion and development including management of the Nation Brand” (BITC Handbook, 15). The material and data within is backed by specific ratings and rankings at regional and international level in a publication that is extremely appealing and in comparison to countries with far less available land or desire to welcome newcomers.

A similar publication, also by the BITC, provides much of the same rating and service data but also focuses more on the merits of the business in Botswana. Among the touted benefits are “The workforce is well educated — 82% are literate and most speak English”, “There are no labor tensions” and “We have no foreign exchange controls or restrictions on business ownership” (BITC, Why Botswana, 5) ; to list just a few of the attractions of business in the country. Both publications list extensive contact information, and the latter booklet notes that there are subsidiary BITC offices in South Africa, India, and the United Kingdom. 

As noted previously, it has been difficult for small to medium size businesses to get funding for start-up and expansion. Part of the reason for this is that Botswana’s government has invested a great deal of support in some of the major industries and institutions, and there is an overall national goal to develop the nation’s resources beyond the diamond mines and banking. In 1970, the government incorporated an agency that had formerly been governmental into the Botswana Development Corporation (BDC). The functions of BDC include “to drive the industrialization of the country by providing financial assistance to investors with commercially viable projects” and “to develop and equip businesses with trade credit insurance policies that protect them from the dangers of non-payment by credit customers, but also to offer companies a selection of business growth tools” (Pansira and Yalala 58). The array of supports includes insurance, debt collection and construction bonds; which will strengthen the viability of new and growing companies. 

International Relations and Memberships

Botswana is a member of the World Trade Organization (WTO), the Southern Africa Customs Union (SACU) the Southern African Development Community (SADC) and a host of other regional and international groups. These entities provide support to member nations in addressing the matters of tariffs, licensing and requirements for varied agricultural and non-agricultural products.

Through these organizations, Botswana has numerous Economic Partnership Agreements (EPAs) with other individual countries and with Europe. Botswana and the United States have a multi-layered relationship that includes financial incentives and legal support and protections. As of December 2018, and according to the records maintained by Institute of International Commercial Law/Pace University, Botswana is not a United Nations Convention on Contracts for the International Sale of Goods (CISG) state. When there have been disputes regarding sales or contracts, CISG provides arbitration to arrive at settlements.

The United Kingdom is another entity that is not an official CISG state, and numerous other nations have developed partial compliance arrangements with CISG standards and/or with exclusionary clauses or declarations. According to the ILCL/Pace University, “Certain countries have adopted the CISG subject to authorized declarations and others have accompanied their acceptances with interpretive comments which are a procedure not authorized by the CISG” (CISG, par. 6). Article 98 of the CISG clarifies that “No reservations are permitted unless expressly authorized in this Convention” (CISG, par.8). It is not known at this time whether Botswana will become a CISG state, or if it will maintain its independence and rely on its own governmental regulations and the provisions of the SACU and the SADC. These affiliations, combined with the partnerships with the U.S. and the U.K may sustain Botswana’s import and export concessions.

Utilities in Botswana

Botswana is one of the countries whose infrastructure deficits are supported by Power Africa, which is an entity of USAID – a system of partnerships between the United States and various countries and regions whose business (import and export) activities are limited by internal resources. According to its most recent fact sheet, 

Botswana currently generates the bulk of its power from coal and sits on large coal reserves of around 200 billion tons. Botswana also has coal bed methane reserves of 0.15 – 3.2 trillion cubic feet (tcf) at the Lesedi field. The country also has significant solar potential, with 3,200 hours of sunshine per year, and irradiance of 6640 Wh/m2/day. Only a portion (450 MW) of installed capacity is available to produce power, and additional demand is met through electricity imports, primarily from South Africa (Power Africa, par.1).

This publication also states that complications in Botswana include “The lack of an Integrated Resource Plan (IRP) and Uncertainties around independence limited powers of Botswana Energy Regulatory Authority (BERA)” (Power Africa, par.3). The sheet indicates more than 200,000 homes do not currently have electric power, and this is due to both lack of experience and resources within the country and the spread of the population over a relatively vast land. While report within the past decade to show that the country is becoming more urbanized, there are still significant numbers of people living in rural and other distant locations, where utilities cannot currently be connected.

A report referenced previously by Statistics Botswana states that: The number of Botswana Power Corporation (BPC) customers has been growing from year to year. From 2009 to 2014 BPC customers increased by 74.4 percent.  In 2014, BPC customers increased by 8.7 percent from 315,669 customers in 2013 to 343,050 customers in 2014. In 2014, the bulk of BPC customers were residential, making 92.3 percent of total customers. The rest which is 7.7 percent of 37 were non-residential customers. Non- residential customers are further classified into commercial and industrial, where commercial customers were 75.7 percent of non-commercial customers and the rest were industrial (38). 

Among the decisions to be made within Botswana is the prioritization of utilities to the private sector, which will require extensive and expensive construction, transport and management; or to the business sector, which for the most part is congregated in Gaborone and the other larger cities. 

Legal Protections for Business and Commerce

The GOB maintains a department and page that address intellectual property, trademarks, copyrights, patents and separates these by categories of Industrial Property: Trademarks, Patents and Industrial Design; and Copyright (Government of Botswana, par. 2). The sections of this page provide specific examples of the various types of works, the organizations that provide information and support, and the overall provisions of the Copyright and Neighboring Rights Act and its amendments (Government of Botswana, par. 5-7). The last section of this page lists the specific types of literary and artistic works that are considered to be Intellectual Property (Government of Botswana, par. 7). From the many online listings of college and university courses and legal firms within Botswana, it appears that the fields of Intellectual Property Law and Contract Law are rising career goals for students and attorneys in the country.

Internet Connectivity and Use

Botswana has been utilizing online services for its banking and other commercial endeavors for some years now. In terms of business and personal implementation of Internet access, “Doing Business in Botswana” reports the following as of March 2017:

Internet usage is on the rise and, according to the Botswana Communication Regulatory Authority 2017 annual report, is now used by some 64.2% (8,997 fixed broadband subscriptions and 1,404,065 mobile broadband penetration) of the population. The Government has sought to lower the cost of internet usage by offering substantial discounts to internet providers to lease government-owned fiber-optic cables.  Mobile broadband service using cellular technology is available, and coverage is generally good, but it is slow.  DSL service through fixed lines and a relatively good national fiber backbone is somewhat reliable but it is expensive relative to U.S. internet costs.  Although the connection to the Seacom (Africa East Coast) has been completed and Botswana has access to the ACE (Africa West Coast) undersea cable, internet speeds continue to be slow.  The GOB partially privatized the state-owned Botswana Telecommunications Corporation (par. 2). Legislation has been drafted to expand the use of the Internet. 

As of 2018, and according to Freedom House, Botswana does not currently impose restrictions on Internet use even though a considerable amount of time is wasted on the internet, but there are concerns about future civil rights due to governmental suppression and punishment of recent media coverage and the fact that the Directorate of Intelligence and Security Services (DISS) “has developed technology to monitor the private communications of Botswanans” (Botswana, par. 23). This review also states that although freedom of expression and Democratic principles are generally upheld and respected, Botswana does not have a Freedom of Information Act, which limits civilians from obtaining documents and data; and also that television broadcasting is largely conducted by state-run media.

Analysis of the Feasibility of Expansion to Botswana

Opportunities

Botswana’s generally positive and stable political structure and economy may well make it one of the best nations for which relocation, expansion or start-up businesses are established. The extensive provisions and resources offered by the nation – including low taxes, a feasible tariff structure, available space, and a competent and English-speaking workforce – indicate that Botswana desires and will support commercial/business concessions in multiple areas.

As noted in this paper, the fields of transportation, construction, Internet services, utility services and more are in the stages of increasing activity. The logistics of Botswana’s landscape indicate that new companies and businesses in such areas would be needed for long term services, as the country is engaged in expansion and updating of its infrastructure and amenities. The positive relations with the U.S., the U. K. and developing partnerships with Japan and other global powers speak for the positive regard in which Botswana is held by external states.

Separately from the more commercial initiatives, part of Botswana’s internal plan is to increase agricultural viability through the expansion of its water distribution system and education to those who are and who would like to be farmers. It is very likely that more of the population will move to urban locations, and the rural settings will become urbanized with the presence of utilities, Internet, potable water and other items. The vitalization of rural areas will require the availability of a wide range of stores and business services, including but not limited to groceries, package/mail delivery, clothing and shoes, farm and other equipment and the professional services of medicine, insurance, dentistry, and schools. Botswana’s consideration of solar energy as an alternate to coal-produced electric may well open the door to a number of business opportunities, similar to those that now exist in Canada, parts of the U.S. and India.

There are laws, regulations, and departments already in place in the nation to protect the property and rights of business owners and individuals - provisions which are not always established in other countries, and which can be very problematic when and if there are disagreements or disputes. Companies from the U.S. may be limited in obtaining assistance for legal matters in foreign countries unless the U.S. has a formal relationship or agreement with such nations, and such agreements are specific in the areas of business commerce and related functions.

In summary, there are a wealth of opportunities for businesses to consider in multiple fields and disciplines in Botswana, and there will be support and assistance in set-up, maintenance and in some cases, with funding, by the central or local governments.

Concerns

For those who are used to U.S. standards for Internet connectivity, rapid digital transmission of data, television broadcasting (and ability to use programs such as Netflix, Roku, etc.) life and business will be significantly different in Botswana. Internet speeds are far below U.S. averages, and because television media is predominantly that of GOB, there will likely be a great disparity between what can easily be accessed, viewed and listened to in Botswana. In terms of residence and business office locations, the major cities are currently the main areas where one can depend on the provision of utilities, water and other concessions that are considered typical in the U.S. by many people. 

A larger issue which is not presently a problem, but which has been indicated by current Botswana systems and external entities’ views is that of the prevailing presence and control manifested by the GOB. This is evident in the government’s involvement with almost all services and utilities that are in the nation, and there have been some signs that the newest President and Botswana’s history of controlled succession cause some critics to believe that the government plans to implement more controls on freedoms for civilians and business immigrant entities. One notable feature of Botswana’s governmental and business dealings is the use of and respect for written agreements and contracts. It is advised that any business owner utilize such a tool for all specifics in communicating and negotiating with Botswana for a potential business.

Works Cited

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