Botswana: Landlocked And Logistically Unattractive
One word sums up the logistics outlook for Botswana: landlocked. The country is the only one of the seven Sub-Saharan states that we are analysing that does not boast a maritime border and as such scores lower than its peers, with the country's imports and exports the most expensive to transport due to their distance to the sea. We argue that Botswana, however, will play a role in the development of autos logistics in Africa, as although it is reliant on other states for its international trade connections, its reliance is on two of the most developed countries logistically in the area: South Africa and Namibia. Botswana's role for automotives will be one of demand and also transit. A manufacturing and export role looks unlikely due to the cost aspect involved in shipping to Botswana.
Landlocked position decreases Botswana's attractiveness logistically;
The country benefits from being reliant on the relatively well-developed logistics networks of South Africa and Namibia;
Botswana's well-developed transport network aids the country by offering quick links to its neighbours;
Botswana is part of a larger Southern Africa transit network;
Landlocked position increases the cost of goods imports and exports;
Competitive trade bureaucracy eases the import and export burden.
Reliant On Its Neighbours
Botswana's landlocked status leaves it wholly reliant on its neighbours to meets its international shipping needs, with the country's imports and exports handled by either Namibia's port of Walvis Bay or South Africa's port of Durban.
While Botswana's lack of a maritime border is a considerable drag on the country's trade sector, the country is at least reliant on two of Sub-Saharan Africa's most developed states in terms of logistics. According to data from the World Economic Forum's Global Competitiveness Index, Namibia and South Africa's port infrastructure is well developed, with the countries ranked in first and second position respectively when compared with the other Sub-Saharan states that we are analysing (Ghana, Kenya, Nigeria and Tanzania.)
|Reliant On Well Connected And Developed Neighbours|
|LHC: Port Infrastructure Ranks. RHC: UNCTADstat Liner Connectivity Ranking|
Namibia and South Africa and by extension Botswana's maritime operations are further boosted by the relatively high level of liner connectivity at their ports. South Africa is the continent's outperformer, boasting the most liner connections and Namibia also scores highly, just behind the West African states of Nigeria and Ghana.
A landlocked state's reliance on its neighbours always adds a layer of uncertainty to a country's logistics operations. BMI has previously highlighted this point as a problem for landlocked Ethiopia, which has faced issues due to its reliance on Djibouti. Landlocked states are at the mercy of increases in port rates and their cargo often takes second billing to that of the country that the port is in during periods of congestion. Access to ports for landlocked states is also reliant on good political links, as political fallouts usually lead to tit-for-tat responses, with access to ports being a major bargaining chip.
In the case of Botswana, the country boasts good relationships with both Namibia and South Africa, with both countries eager to perform the role as maritime gateways and also to have their transport networks benefit from transit trade. We therefore believe that unlike other landlocked African states Botswana's link to the sea is secure.
Developed Transport Network To Ensure Quick Connections
The lack of a port for Botswana leaves the country more heavily reliant on its other transport modes. Road and rail links aid a landlocked country in getting the quickest possible access to a neighbour's port and Botswana's reliance on strong transport links with its neighbours is in BMI's opinion why the country is a transport outperformer in comparison with the other Sub-Saharan states that we are comparing (no data is available for Angola). According to data from the World Economic Forum's Global Competitiveness Index Botswana's road and rail infrastructure is ranked second below Namibia.
|Transport Network Outperformers|
|LHC: Global Competitiveness Report Road Infrastructure Rankings. RHC: Global Competitiveness Report Rail Infrastructure Rankings|
Botswana also benefits from its reliance on the transport networks of Namibia and South Africa. The country requires both countries' transport networks to get to the sea. Out of the Sub-Saharan states that we are analysing, Namibia's road and rail infrastructure ranks in first place. We are not analysing South Africa's autos logistics role, as we are concentrating on more up-and-coming countries in this area; however, as part of our analysis of Botswana we highlight that if we were to insert data for South Africa into the mix the country's road and rail infrastructure would be ranked second after Namibia. This therefore places Namibia, South Africa and Botswana in the top three positions for road and rail infrastructure.
Investment in Botswana's links to ports continues. The Trans-Kalahari road corridor via Gobabis to Walvis Bay is already in operation and is set to be complemented by the Trans-Kalahari Railway. The link is being developed with the aim of catering for Botswana's vast coal resources, positioning Walvis Bay as the port of choice over South African facilities. The project highlights that inter regional transport projects are at the forefront of development projects and so there exists the potential for the development of other railway links between Botswana and its neighbouring states. BMI also highlights that the development of the coal-specific railway will ensure the commodity's transport needs are met, without impeding on Botswana's national railway network, thereby decreasing the likelihood of cargos such as containers having to fight for space in the country's railway network.
Playing A Transit Role
Botswana's autos logistics needs are geared towards the new and used car markets - there are as yet no manufacturing or assembly of vehicles taking place in the country. Demand is at present largely driven by government consumption - the consumer outlook is poor at present - or by Botswana's growing coal and diamond mining industries. Given that the country is far from any ports, we believe that it will likely remain a destination for completely built vehicles, either new or used, rather than assembly kits.
|Part Of A Bigger Transit Network|
|Map of Southern Africa|
Botswana, however, also boasts another autos logistics role, one of transit. The country is used by Zimbabwean importers of used cars who import vehicles through Namibia's Walvis Bay and drive them through Botswana on their way back to their own landlocked country. However, we note here that due to a recent move by Botswana to ban imported second-hand vehicles that are more than five years old from its roads, in solidarity with an earlier move by Namibia, this trade is in part disrupted. Some Zimbabwean importers have been choosing to load vehicles onto containers for their journey through Botswana, thereby not driving them on Botswana's roads and so not falling foul of the new law, while others have begun opting to import them via South Africa's port of Durban instead.
Botswana's demand for autos imports and its role as a transit point for Zimbabwean imports means that currently the main logistical concern for automotives firms is the ease by which goods can be imported into Botswana.
As a landlocked state Botswana has attempted to make the process of importing as easy as possible, as the country will suffer from longer lead times due to its distance from a port. The country appears to have tried to reduce the bureaucratic hurdles faced by importers with only seven documents required for import. This makes the country highly competitive with its peers ranked in joint first position with Ghana, Kenya and Namibia out of its seven peers.
|Lessening The Bureaucratic Nightmare, But Still Costly|
|LHC: Documents To Import (Number). RHC: Cost to Import (US$ Per Container)|
Botswana is, however, let down by the cost to import, which places it at the bottom of our table of seven Sub-Saharan states. The issue of longer lead times and the distance required to travel to get Botswanan imports from ports into the country, all weigh down on its import sector.
As highlighted the country ranks lowest out of its seven peers, but BMI notes the increase in cost to import into Botswana is considerably more than its peers. According to World Bank data, it costs an average of US$3,445 to import a container into Botswana US$755 per container more than the second to last ranked Angola, where it costs US$2,690 per container.
BMI believes that this will deter any potential plans to develop Botswana's domestic assembly of automobiles, given the increased costs involved with doing so in Botswana in comparison with any of the other countries we are analysing.
Export Role Unlikely To Develop
The belief that Botswana's role in the automotives sector will remain as that of an importer and a transit nation means it is unlikely the country will attract automotives firms seeking to develop assembly plants in Africa. As highlighted, the country's landlocked position and the relatively high cost to import goods will work against Botswana.
The unlikelihood of Botswana developing a role in automotives assembly therefore means that automotives firms will not be seeking to explore export options in Botswana. If they do in future, BMI highlights they would find the same drawbacks that face them in the import sector. Although Botswana's export bureaucracy is competitive, ranked joint first with Tanzania, with just six documents required for export, the country is costly to export from.
|Export Over Import View Holds|
|LHC: Cost To Export (US$ per Container). RHC: Botswana Cost To Import & Export (US$ Per Container)|
It costs US$2,945 per container to export from Botswana, placing it last out of its Sub-Saharan African peers, making it US$690 per container more expensive than to export from second to last ranked Kenya. BMI has previously noted a pattern with other Sub-Saharan African states that it is cheaper to export than it is to import, this also holds true for Botswana, with exporters saving US$500 per container compared with importers.