Our comprehensive assessment of Botswana’s operating environment and the outlook for its leading sectors are formed by bringing together a wealth of data on global markets that affect Botswana, as well as the latest industry developments that could impact Botswana's industries. This unique integrated approach has given us an impeccable track-record for predicting important shifts in the markets, ensuring you’re aware of the latest market opportunities and risks in Botswana before your competitors.

Country Risk

Botswana Country Risk

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  • Real GDP growth will be 5.2% in 2014. Growth will be driven by private consumption and investment, though it will be somewhat constrained by ongoing disruptions in the power sector.

  • Botswana's budget balance will remain in surplus in 2014/15 and over the next several years. This surplus will narrow, however, as recurrent spending - particularly on wages - is ramped up.

  • The Bank of Botswana will maintain its accommodative monetary policy through the remainder of 2014. We forecast that the Bank Rate will be kept at 7.50% as inflationary pressures will remain benign.

  • Botswana will record a current account surplus of 5.0% of GDP in 2014 and 3.2% in 2015, driven by an ongoing recovery in diamond exports. We expect this surplus to narrow over the coming years as capital goods imports pick up and the...

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Botswana Operational Risk Coverage (9)

Botswana Operational Risk

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Botswana presents some of the lowest operational risks by regional standards, even though its underdeveloped transport network, poor contract enforceability, and unreliable utility costs detract from its overall appeal. However, few security risks, a transparent market-oriented economy, and generous tax breaks and thresholds reduce the overall operational risks of investing in the Botswana. Taking these factors into account, Botswana was awarded an overall score of 50.3 out of 100 for its Operational Risk, ranking fifth out of 44 sub-Saharan African countries, amidst regional leaders such as Mauritius, South Africa, and the Seychelles.

Botswana is an attractive trading destination due to its geographical location in between the Indian and Atlantic Oceans, and next to the regional giant South Africa, which positions the country as a transit hub for the region. Moreover, political stability and low levels of corruption increase the security of...

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Botswana Crime & Security

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BMI View: Botswana is a generally safe place for foreign b usiness travellers, expatriates and tourists, however lately foreigners are experiencing elevated risks of crime to property and to the person. Overall the security situation is much more positive than in other states in the region due to political stability and an established democracy , with a low threat level from terrorism or war . The police are approachable and relatively free from corruption; all this makes Botswana a safer investment d estination. This contributes to the country's regional outperformance in the BMI Crime and Security Index, in third place out of 44 SSA...

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Botswana Labour Market

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Major investment into education since the country's independence in 1966 has transformed Botswana's population from a largely illiterate one into one of the most developed in the region. However persistent social issues such as HIV/AIDS and poverty permeate society, reducing both life expectancy and the average length of time workers are in the labour force. Overall Botswana is a regional outperformer in the Labour Risk pillar of the BMI Operational Risk Index, with a score of 43, placing the country sixth in Sub Saharan Africa (SSA), behind South Africa.

Botswana boasts a sizeable labour force, with a large percentage of the population available to work. Although low life expectancy, of just 47.6 years due to the widespread prevalence of HIV/AIDS, impedes long-term labour force participation and therefore the development of specialist trade wisdom, birth rates are above replacement level, thereby keeping the...

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Botswana Logistics

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BMI View: Botswana is strategically placed within the Southern African Development Community (SADC), facilitating regional trade flows through its efficient and well-connected road and railways. However, the country's status as a landlocked country, its unreliable utilities provision, and its length y bureaucratic procedures detract from its attractiveness as a logistics hub, increasing transport and operational costs for businesses. Taking these factors into account, Botswana received a score of 38.8 out of 100, ranking it 14 thout of 44 sub-Saharan African countries in the BMI Logistics Risk Index.

Botswana's dependence on diamond exports in particular underlines the importance of efficient trade connectivity for the country's economy. As...

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Botswana Trade & Investment

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Botswana is a mature democracy with an established rule of law and the lowest rate of corruption in Africa. Investors benefit from a relatively open economy with attractive tax regulations and incentives for foreign investment. However, Botswana also faces the same drawbacks as many of its regional peers, such as a limited access to credit, poor contract enforceability and cumbersome bureaucratic procedures that increase market entry costs. Overall, Botswana scores 55.7 in the Trade and Investment Risks Index, placing fourth in the region after the Seychelles and 65th in the world.

Botswana is a relatively open country for economic activity due to its market-oriented economy and stable political situation. The government offers generous financial incentives for foreign investors in the shape of tax breaks, low tax rates (corporate tax is 22%), and opportunities for public-private partnerships. In addition, prudent financial planning has...

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Botswana Industry Coverage (11)

Agribusiness

Botswana Agribusiness

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BMI View:   We expect food security in South West Africa to improve over the short term , as we expect higher corn production from Zambia in 2014/15 . Over the medium term, we see downside risks to corn production in the region owing to new reforms introduced in Zambia that aim to reduce farm subsidies. Although this will help to improve the country's current account balance, it may lead to deteriorating food security across the region as farmers respond to lower prices. Even with reduced production incentives, we expect Zambia to easily remain the region's largest corn producer and exporter, while other countries in the region will struggle to maintain production surpluses. We see potential in the Angolan sugar sector due to recent...

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Autos

Botswana Autos

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BMI View: In light of revisions to Botswana's 2013 GDP figure, up to 5.9% from 4.4%, in combination with monetary easing, e asing price pressures and new Q 3 2013 sales data released from the Central Statistics Office, BMI is forecasting new and used passenger car sales of 36 , 872 in 2014.

Passenger vehicles will continue to be the worst performing segment as consumers face price pressure from persistent inflation, fuel subsidies and rises in passenger vehicle prices. Commercial vehicles (CVs) are expected to outperform as mining and construction sectors burgeon as the economy diversifies away from a reliance on diamond exports. Furthermore, we note positive developments in the coal sector as results from coal bed methane (CBM) exploration reveal an...

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Commercial Banking

Botswana Commercial Banking

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Commercial  Banking Sector Indicators 
Date Total assets Client loans Bond portfolio Other Liabilities and capital Capital Client deposits

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Food & Drink

Botswana Food & Drink

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Botswana's underperforming power sector is impacting negatively on the country's economic growth prospects, which is reflected in our readjusted real GDP growth rate to 5.2% (down from 6.2%) in 2014. Despite this, we remain optimistic about the Botswanan economy overall and this modest optimism feeds through into the food and drink sector, as the consumer is expected to benefit from easing inflationary pressures and declining interest rates. Although high unemployment rates are likely to remain a drain on growth in private spending, we predict that the 4% increase in public sector pay approved in April will support more significant growth in private spending than we had previously forecast for 2014.

We forecast that improvements in Botswana's growth prospects in 2014 will also be supported by stabilising demand for diamonds, the country's key export, and low base effects. The latest data reveal that over the first six months of 2013 the...

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Infrastructure

Botswana Infrastructure

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BMI View: The cons truction sector in Botswana is forecast to grow 9.6% in Botswana this year. Foreign investment continues to flow into the country attracted by a stable business environment. A strong project pipeline of projects is primarily driven by investment in power, water and mining-related projects.

Growth will rebound in 2014 with BMI forecasting year-on-year (y-o-y) growth of 9.6%.We believe growth will remain robust over our 10-year forecast period (2013-2022), averaging about 11.3% per year between 2014 and 2023, based on a substantial pipeline of projects.

The biggest source of value creation is likely to remain electricity and water investments. The country is working hard to reduce its reliance on South Africa for...

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Insurance

Botswana Insurance

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BMI View: Growth in the Botswana insurance market will come principally from the life sector. From USD336mn in 2013, gross life premiums will pass USD500mn by 2018, averaging expansion of 9% annually. The non-life sector is much smaller, at USD154mn in 2013, and will grow more slowly than life premiums. Strongest growth within non-life will come from property insurance, with dollar-terms growth rates in excess of 10% from 2014 to 2016.

Life insurance in Botswana is dominated by Botswana Life, boasting over 75% of all premiums each year from 2009 to 2012, equating to over USD250mn in gross premiums in 2012. We expect this market share to remain elevated in the next five years, with the insurer capturing much of the USD180mn growth in premiums by 2018. The life claims ratio, elevated at 96% in 2009, has returned to around 40% where we expect it to remain.

...

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Mining

Botswana Mining

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Botswana hosts one of the best regulated and strongest performing mining sectors in Africa, with diamonds the main commodity. Botswana's mining industry also deals in oth er metals and minerals including copper, nickel and coal. Additionally, uranium mining is likely to take off over the next decade. 

We maintain a positive outlook for Botswana's mining sector over our forecast period to 2018. Diamonds will remain the mainstay of Botswana's mining production. We forecast modest growth for the diamond sector, boosted by new projects planned by Debswana, Gem Diamonds and Lucara Diamond Corp. Nevertheless, the major driver of growth will be acceleration in the country's coal production.

Botswana's mining sector is on course for steady growth over the next few years as we forecast...

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Pharmaceuticals & Healthcare

Botswana Pharmaceuticals & Healthcare

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BMI View:   We remain reasonably optimistic regarding the growth potential of the pharmaceutical and healthcare markets in Botswana, due to the government's efforts at improving healthcare and developing pharmaceutical production within the country. Risks to our outlook include the continued presence of counterfeit pharmaceuticals and the forecast depreciation of the Botswana p ula.

Headline Expenditure Projections

  • Pharmaceuticals: BWP1.62bn (USD193mn) in 2013 to BWP1.74bn (USD193mn) in 2014; +7.0% in local currency terms and -0.1% in US dollar terms. Forecast revised slightly downwards from Q314. 

  • Healthcare: BWP6.34bn (USD755mn) in 2013 to BWP6.73bn (USD749mn) in 2014; +6.2% in local...

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Power

Botswana Power

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BMI View:   The outlook for Botswana ' s power sector is broadly positive. Between 2014 and 2023, overall power generation will increase by an annual average of 20.9%, to reach 5.3 terawatt hours (TWh), boosted by the inception of the thermal Mmashoro power station and the long-delayed Morupule B power station, which will come into service in 2014 and 2016 respectively. Meanwhile, consumption will rise steadily, underpinned by development of industry and household consumption, which is benefitting from a rapid expansion of the electricity grid. However, risks remain. A lack of regulatory reform and the continued domination of the state-owned Botswana Power Corporation   means that the market remains inefficient and overly dependent on a single source of energy, namely coal and the...

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Telecommunications

Botswana Telecommunications

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BMI View : BMI's Q 3 14 Southern Africa report analyses the latest industry, regulatory and macroeconomic developments in the telecoms markets in Angola, Botswana, Mozambique, Mauritius, Namibia, Zambia and Zimbabwe. It also contains analysis of the latest market data relating to the end of March 2014 a nd an update of our five-year forecasts to 2018 for the mobile, fixed-line and internet sectors.

Key Data

  • ...

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Tourism

Botswana Tourism

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BMI View: Botswana presents developers with a substantial potential tourism market, with an enormous range of eco tourism attractions and a positive domestic investment environment. The BMI Botswana Tourism Report looks at a range of key market indicators, including the expected number of inbound and outbound travellers, the hotel sector and overall industry value, with healthy growth expected across the board.

Botswana's outbound tourism market is small, with just 614,000 departures in 2013. However, when you consider that the country's total population is a little over 2mn, this represents an average tourist departures per 1000 of the population figure of 0.31. Thanks to healthy domestic economic growth, including more positive rates of private financial consumptions, we expect to see the number of outbound departures reach over 778,000 by the...

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