Botswana

The Republic of Botswana (Lefatshe la Botswana) is a landlocked nation in Southern Africa. Formerly the British protectorate of Bechuanaland, Botswana adopted its new name after becoming independent on September 30, 1966. It is bordered by South Africa to the south, Namibia to the west, Zambia to the north, and Zimbabwe to the northeast. The economy, closely tied to South Africa's, is predominated by cattle raising and mining, especially diamonds. The country is named after its largest ethnic group, the Tswana.

Economy

Since independence, Botswana has had the fastest growth in per capita income in the world. Economic growth averaged over 9% per year from 1966 to 1999. The government has maintained a sound fiscal policy, despite consecutive budget deficits in 2002 and 2003, and a negligible level of foreign debt. It earned the highest sovereign credit rating in Africa and has stockpiled foreign exchange reserves (over $5.1 billion in 2003/2004) amounting to almost two and one half years of current imports. Botswana's impressive economic record has been built on the foundation of wisely using revenue generated from diamond mining to fuel economic development through prudent fiscal policies and a cautious foreign policy. Debswana, the only diamond mining company operating in Botswana, is 50 % owned by the government and generates about half of all government revenues.

Related Topics:
Per capita income - Economic growth - Government - Fiscal policy - Budget deficits - Foreign debt - Credit rating - Africa - Diamond - Mining - Foreign policy - Debswana - Diamond mining

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However, economic development spending was cut by 10 % in 2002-2003 as a result of recurring budget deficits and rising expenditure on healthcare services. Botswana has been hit very hard by the AIDS epidemic. Approximately one in three Botswanans have HIV, giving Botswana the second highest HIV infection rate in the world after Swaziland http://www.avert.org/aidsbotswana.htm. The government recognizes that HIV/AIDS will affect the economy and is providing leadership and programs to combat the epidemic, including free anti-retroviral treatment and a nation-wide Prevention of Mother-to-Child Transmission program.

Related Topics:
Healthcare - AIDS - Swaziland - HIV - Epidemic - Anti-retroviral treatment

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Some of Botswana's budget deficits can be traced to relatively high military expenditures (of roughly 4% of GDP in 2004, according to the CIA World Factbook), which some critics contend is unnecessary given the low likelihood of international conflict (though the Botswana government also makes use of these troops for multilateral operations and assistance efforts).

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Private sector development and foreign investment

Botswana seeks to further diversify its economy away from minerals, which account for a third of GDP, down from nearly half of GDP in the early 1990's. Foreign investment and management are welcomed in Botswana. Botswana abolished foreign exchange controls in 1999, has a low corporate tax rate (15%), no prohibitions on foreign ownership of companies, and a moderate inflation rate (7.6% November 2004). The Government of Botswana is currently considering additional policies to enhance competitiveness, including a new Foreign Direct Investment Strategy, Competition Policy, Privatization Master Plan, and National Export Development Strategy.

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With its proven record of good economic governance, Botswana was ranked as Africa's least corrupt country by Transparency International in 2004, ahead of many European and Asian countries. The World Economic Forum rates Botswana as one of the two most economically competitive nations in Africa. In 2004 Botswana was once again assigned "A" grade credit ratings by Moody's Investors Service and 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.

Related Topics:
Transparency International - Moody's Investors Service

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U.S. investment in Botswana remains at relatively low levels, but continues to grow. Major U.S. corporations, such as H.J. Heinz and AON Corporation, are present through direct investments, while others, such as Kentucky Fried Chicken and Remax, are present via franchise. The 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 90-member American Business Council that accepts membership from American-affiliated companies.

Related Topics:
H.J. Heinz - AON Corporation - Kentucky Fried Chicken - Remax

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Because of history and geography, Botswana has long had deep ties to the economy of South Africa. The Southern Africa Customs Union (SACU), comprised of Botswana, Namibia, Lesotho, Swaziland, and South Africa, dates from 1910, and is the world’s oldest customs union. Under this arrangement, South Africa has collected levies from customs, sales, and excise duties for all five members, sharing out proceeds based on each country's portion of imports. The exact formula for sharing revenues and the decision-making authority over duties — held exclusively by the Government of South Africa — became increasingly controversial, and the members renegotiated the arrangement in 2001. The new structure has now been formally ratified and a SACU Secretariat has been established in Windhoek, Namibia. Following South Africa's accession to the World Trade Organization (WTO), Botswana also is a member, many of the SACU duties are declining, making American products more competitive in Botswana. Currently the SACU countries and the US are negotiating a free trade agreement. Botswana is currently also negotiating a free trade agreement with Mercosur and an Economic Partnership Agreement with the European Union as part of SADC.

Related Topics:
South Africa - Southern Africa Customs Union - Namibia - Lesotho - Swaziland - Levies - Windhoek - World Trade Organization - Mercosur - European Union

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Botswana's currency — 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 eliminated all exchange controls in 1999. The Central Bank devalued the Pula by 7.5% in February 2004 in a bid to maintain export competitiveness against the real appreciation of the Pula. There was a further 12% devalution in May 2005 and the policy of a "crawling peg" was adopted.

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Gaborone is host to the headquarters of the 14 nation Southern African Development Community (SADC), a successor to the Southern Africa Development Coordination Conference (SADCC-launched in 1980), which focused its efforts on freeing regional economic development from dependence on apartheid 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 1, 2000, calls for the elimination of all tariff and non-tariff barriers to trade by 2008 among the 11 signatory countries. If successful, it will give Botswana companies free access to the far larger regional market. SADC's failure to distance itself from the Mugabe government in Zimbabwe has diminished the number of opportunities for cooperation between the US and SADC.

Related Topics:
Gaborone - Southern African Development Community - Southern Africa Development Coordination Conference - Mugabe - Zimbabwe

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Transport and communications

A sparsely populated, semi-arid country about the size of Texas, Botswana has nonetheless managed to incorporate much of its interior into the national economy. An "inner circle" highway connecting all major towns and district capitals is completely paved, and the all-weather Trans-Kalahari Highway connects the country (and, through it, South Africa's commercially dominant Gauteng Province) to Walvis Bay in Namibia. A fiber-optic telecommunications network has been completed in Botswana connecting all major population centers. In November, 2003 representatives of Botswana, Namibia and South Africa signed an MOU to simplify documentation to move cargoes to and from the Port of Walvis Bay in Namibia.

Related Topics:
Texas - Trans-Kalahari Highway - Gauteng Province - Walvis Bay - Fiber-optic

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In addition to the government-owned newspaper and national radio network, there is an active, independent press (seven weekly newspapers). Two privately owned radio stations began operations in 1999. In 2000, the government-owned Botswana Television (BTV) was launched, which is Botswana's first national television station. GBC is a commercially owned television station that broadcast programs to the Gaborone area only. Foreign publications are sold without restriction in Botswana, and there are 18 commercial Internet service providers. Two cellular phone providers cover most of the country.

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