54 AFRICAN COUNTRIES

Principle Economic Sectors of Botswana

Through fiscal discipline and sound management, Botswana has transformed itself from one of the poorest countries in the world to a middle-income country with a per capita GDP of $13,300 in 2008.Botswana was ranked as the best credit risk nation in Africa. Mining industry, especially diamonds have helped in the expansion and accounts for more than one-third of GDP and for 70-80% of export earnings. Tourism, financial services, subsistence farming, and cattle raising are the other key sectors of the economy.

Agriculture

Agriculture sector in Botswana is still providing the largest amount of livelihood for more than 80% of the total population in the country. The major reason behind this is that most of the Botswana population lives in the rural parts of the country and hence is dependent on the crop production and on livestock farming. The Agriculture sector is still considered as the main pillar of its society and culture. In spite of that Agriculture is only able to supply food to just 50% of the population. The total GDP accounted by Agriculture in Botswana is equal to 2.1% of the total GDP. Agriculture in Botswana is dominated by cattle rearing and subsistence farming. It is, however, plagued by various factors like poor soil condition and erratic rainfall. This is one of the chief reasons behind the inability of agriculture in Botswana to meet the adequate amount of food supply.Agriculture meets only a small portion of food needs and contributes just 2.6% to GDP-primarily through beef exports. Cattle-raising in particular dominated Botswana's social and economic life before independence. The national herd is between 2 and 3 million head.

Tourism

Tourism sector in Botswana is now gaining momentum and accounts for almost 12% of GDP. One of the world's most unique ecosystems - the Okavango Delta, is located in Botswana. The country offers excellent bird watching and gaming view both in the Delta and in the Chobe Game Reserve which is home to one of the largest herds of free-ranging elephants in the world. Good gaming view is also available in Botswana’s Central Kalahari Game Reserve. In addition, tourism in Botswana has a substantial potential for further growth.

Financial Sector

Botswana’s financial sector is growing at a increasing rate .The country's national stock market, the Botswana Stock Exchange, based in Gaborone, is given the responsibility to operate and regulate the equities and fixed interest securities market. Established in the year 1989, the BSE continues to be pivotal to Botswana’s financial system. The capital market is also the avenue on which governments, quasi- government and the private sector can raise debt and equity capital. Though the BSE has just about 40 companies listed still it plays host to the most pre-eminent companies doing business in Botswana. These companies represent a spectrum of industries and commerce from Banking and financial services to Wholesaling and Retailing, Tourism and Information Technology.Till date BSE is considered one of Africa’s best performing stock exchanges with an average 24% aggregate return in the past decade. This has allowed the BSE to be the third largest stock exchange in Southern Africa, terms of market capitalization,Given Botswana's lack of exchange controls, stable currency and exceptionally performing stock market, the financial sector has attracted a host of global investors seeking better returns.

The currency of Botswana, the pula is fully convertible and is valued against a basket of currencies heavily weighted toward the South African rand. Profits and direct investment can be repatriated without restriction from Botswana’s Government. It has also eliminated all exchange controls. Despite the devaluation of May 2005, the pula remains one of the strongest currencies in Africa.Southern African Development Community (SADC) a union of 14 nations is headquartered in Gaborone. A successor to the Southern African Development Coordination Conference (SADCC), which focused its efforts on freeing regional economic development from dependence on apartheid in South Africa, SADC embraced the newly democratic South Africa as a member in 1994 and has a broad mandate to encourage growth, development, and economic integration in Southern Africa. SADC's Trade Protocol, which was launched on September 1st, 2000, calls for the elimination of all tariff and non-tariff barriers to trade by 2012 among the 11 signatory countries. If successful, it will give Botswana companies free access to the far larger regional market. The Regional Center for Southern Africa (RCSA), which implements the U.S. Agency for International Development's (USAID) Initiative for Southern Africa (ISA), is headquartered in Gaborone as well.

Mining

Botswana has the world's largest gem diamond mine and is considered a leading producer of diamonds by value. The diamond sector accounts for 39.8% of GDP, 45% of government revenues, and 75% of export earnings. The production of Nickel, cobalt and soda ash played significant roles in the economy. The mining and quarrying sector engages 6% of the total workforce.The northeast contains copper, nickel, and precious metals, the northwest has copper and silver, and the south holds base and precious metals. The valuable minerals produced also included agate, clay, coal, cobalt, gold, salt, sand, silver, soda ash, and construction stone. Major mines were situated in regions with few job opportunities. Diamonds were the most notable area of exploration.The government maintains an equity position in most of the major mining companies, but the industry was operated, for the most part, on a privately owned free-market basis.The Diamond production of Botswana is dominated by Debswana, which is a joint venture company owned by De Beers Investments (50%) and the Government of Botswana (50%). Debswana has 3 operational mines, Lethlhakane, Orapa and Jwaneng. Improvements in the treatment and recovery have had greatly increased the production and capacity at Orapa and Jwaneng with production in 2003 estimated at 30.4 Mct compared to 28.4 Mct the former being equivalent to 25% by weight and 30% by value of global diamond output.

Private Sector Development and Foreign Investment

Botswana is further trying to diversify its economy away from minerals and mining, which account for a third of GDP (down from nearly half of GDP in the early 1990s).The FDI - FII and management are welcomed in Botswana. Botswana abolished its foreign exchange controls in 1999 and has a low corporate tax rate (15%), no prohibitions on foreign ownership of companies, and a moderate inflation rate (6.6% in 2001). Proven records of good economic governance, Botswana was ranked as Africa's least corrupt country by Transparency International in 1999 and 2000, ahead of many European and Asian countries. The World Economic Forum rates Botswana as the third most economically competitive nation in Africa. In 2001 Botswana was assigned "A" grade credit ratings by Moody's Investors Service as well as Standard & Poor's. This ranks Botswana as by far the best credit risk in Africa, and puts it on par or above many countries in central Europe, East Asia, and Latin America.U.S. investment in Botswana remains at relatively low levels, but continues to grow. Major U.S. corporations, such as Coca-Cola and H.J. Heinz, are present through direct investments, while others, such as Kentucky Fried Chicken, are via franchise. Recent sovereign credit ratings by Moody's and Standard & Poor's clearly indicate that, despite continued challenges such as small market size, landlocked location, and cumbersome bureaucratic processes, Botswana remains one of the best investment opportunities in the developing world. Botswana has a 30-member American Business Council that accepts membership from American-affiliated companies.The currency of Botswana, the pula is fully convertible and is valued against a basket of currencies heavily weighted toward the South African rand. Profits and direct investment can be repatriated without restriction from Botswana. The Botswana Government has eliminated all exchange controls.

For Further Reference :

African Economic Outlook

BBC News

World Bank