Botswana is one of Africa's most stable countries, attracting the business of many of our clients. It has one of the longest running multi-party democratic systems on the continent. The country also possesses one of the world's highest economic growth rates since its independence in 1966. Botswana boasts the lowest corruption levels in Africa and supplies good quality statistics. Our coverage – using our unique Total Analysis model – ensures that our clients make risk-assessed decisions in Botswana. We keep them informed of the latest market moves and political developments supported by our interactive data and forecasting. They also benefit from in-depth analysis of 11 of Botswana's most important industries as part of our 'top-down' and 'bottom-up' perspective. Our research teams make it easy for you, as our client, to get the results you strive for in Botswana.

Country Risk

Botswana Country Risk

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Core Views:

  • Real GDP growth will be 4.5% in 2015, a downwards revision from our previous forecast of 5.2%. Falling diamond exports, diminishing base effects and ongoing power issues will constrain real GDP growth.

  • Botswana will post a diminishing budget surplus amid rising spending and slowing revenue growth. We forecast a surplus equivalent to 0.8% of GDP in fiscal year 2014/15, falling to 0.3% of GDP in 2016/17.

  • Monetary policy in Botswana will remain accommodative in 2015. Inflation is contained and will continue to be so in the coming months thanks to the pula's appreciation against the rand and slowing domestic economic growth.

  • We predict that Botswana's current account surplus will narrow from an estimated 7.0% in 2014 to 5.4% in 2015. Having declined in 2014 we forecast that both goods imports and...

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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 sixth 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 business 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 destination. 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 lengthy 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 38.6 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...

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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. 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 investments coming on-stream and...

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Autos

Botswana Autos

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The latest data released by the Central Statistics Office in Q114 show that total vehicle sales, comprising both new and used vehicles, declined 14.3% year-on-year in Q114 to 7,985 units. The decrease highlights the impact of the government's import ban of aged vehicles, by reducing the supply of affordable vehicles in an economy where incomes per capita remain low. This coupled with slower economic growth in 2014 leads us to estimate a 8.7% decline in total auto sales in 2014.

After the sharp decline in 2014, we anticipate a mild recovery in 2015 and forecast sales to grow 4.2% for the full year. Over the 2015-2019 period, we forecast growth in vehicle sales to average 10.3% to hit 57,133 units by 2019.

Owing to growth in key industrial sectors including mining and construction, commercial vehicles (CVs) will continue to outperform the car segment, representing an increasing percentage of total vehicle sales. Over the...

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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 continues to have a negative impact on the country's economic growth prospects and falling diamond exports have worsened the county's growth prospects. In light of this, we have readjusted real GDP growth for 2014 downwards to 4.7% (from 5.2%) and forecast the same rate of growth for 2015. We expect sedate growth in private consumption, which despite a recent hike in public sector wages we forecast will reach just 3.6% in 2014. In 2015 we expect private consumption growth to strengthen to a forecast 4.5%. High unemployment rates, however, are likely to remain an issue with the consequent drain on growth in private spending, which will impact the food and drink sector.

Botswana is heavily reliant on diamonds for its economic wellbeing. Exports of the precious stone account for over 70% of export revenue and around 30% of GDP, and so any fall in international prices or domestic production can seriously...

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Infrastructure

Botswana Infrastructure

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BMI View:   Botswana's construction sector has a positive growth forecast thanks to sustained interest in its mining sector, however, forecasts are downgraded, based on 3.1% average real growth for H1 2014 resulting in estimates of 4.1% year-on-year (y-o-y) for 2014 as a whole. Foreign investment continues to flow into the country driven by a stable business environment and strong project pipeline in power, water and mining-related projects.

The sector is set to strengthen in 2015 with BMI forecasting year-on-year (y-o-y) growth of 5.8%.We believe growth will remain robust over our 10-year forecast period (2014-2023), averaging about 8.9% per year between 2014 and 2023, based on a substantial pipeline of projects.

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Insurance

Botswana Insurance

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BMI View: The life sector, already far larger than the non-life sector, will drive growth over the next five years. An increasing challenge to the dominant market leader will boost product diversification and help deliver average annual growth of around 8% to around USD500mn by 2019. The non-life sector will struggle in comparison, with growth closer to 4% largely delivered by property insurance, already the largest line in the non-life sector.

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. Approximately one in every two Pula spent on insurance in Botswana is received by Botswana Life. We expect this market share to remain elevated in the next five years, with the insurer capturing much of the USD160mn growth in premiums between 2015 and 2019....

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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 other 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:   Our outlook for the pharmaceutical and healthcare markets of Botswana is reasonably positive due to the government's increasing commitment to improve the country's healthcare sector. The country's import reliance for pharmaceuticals, coupled with the forecast depreciation of the Botswana pula will be seen as a negative for the local industry as imports will become increasingly expensive.

Headline Expenditure Projections

  • Pharmaceuticals: BWP1.66bn (USD198mn) in 2013 to BWP1.85bn (USD207mn) in 2014; +11.3% in local currency terms and +4.6% in US dollar terms. Forecast revised slightly upwards from Q414. 

  • ...

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Power

Botswana Power

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BMI View: The outlook for Botswana's power sector is broadly positive. Between 2015 and 2023, overall power generation will more than double, to 5.3 terawatt hours (TWh), boosted by the inception of the thermal Mmashoro power station and the long-delayed Morupule B station. Meanwhile, consumption will rise steadily, underpinned by the 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, while the absence of a strong regulatory framework for the development of renewable energy will severely hinder...

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Telecommunications

Botswana Telecommunications

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BMI View : BMI's Q115 Southern Africa report analyses the latest industry, regulatory and macroeconomic developments in the telecoms markets in Angola, Botswana, Mozambique, Mauritius and Namibia. It also contains analysis of the latest market data relating to the end of September 2014 and 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: The Botswana tourism report examines a range of indicators in this emerging tourism market in the heart of Sub-Saharan Africa. Botswana's fledgling tourism market is in the early stages of development, with only limited progress made in the hotel sector, hampered by a limited transport network. With arrivals set to increase steadily over the forecast period, we expect to see more international developers take note of the potential offered by this untouched eco-tourism destination.

Inbound travel to Botswana has been increasing steadily. The country has worked hard to raise its global profile, and its recent inclusion on the UNESCO World Heritage List for the Okavango Delta (the 1000th World Heritage Site) will no doubt help to further raise awareness of Botswana's myriad attractions. Arrivals are expected to reach just under 3.7mn in 2015, an increase of over 5% on the 2014 arrivals...

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