Botswana is streamlining regulations, cutting red tape
Expanding beyond diamonds into infrastructure, energy, and tourism
P11.54 billion budget, new PPP law to attract private investors
Strong credit rating, 25.75% debt-to-GDP, competitive tax rates
Botswana is making bold strides to position itself as a premier investment destination, offering opportunities that extend far beyond its world-renowned diamond industry.
The new government said it is removing bureaucratic hurdles, simplifying investment procedures, and establishing clear frameworks that welcome investors with the capital, expertise, and vision to drive sustainable development.
See key takeaways from the Budget Speech presented by Finance Minister Ndaba Gaolathe, that might shape investment decisions going forward.
· Attracting Mega Investments:
Focus on large-scale, transformational projects.
Goal: Reduce reliance on diamonds and create broader economic value.
· Investment Promotion Overhaul:
Moving away from a fragmented system.
Cutting red tape to make investing easier.
Creating a more strategic and effective framework.
· Ideal Investor Profile:
Must have substantial financial resources.
Prefer long-term investments over quick profits.
Bring expertise, intellectual property, and strategic vision.
· Strategic Alignment:
Partners should align with Botswana’s long-term development goals.
Investment approach to ensure economic growth and fiscal sustainability.
Clear Investment Framework:
Government establishing specific requirements for ideal investors.
Implementing a compliance framework to guide investor selection.
Ensuring investments meet Botswana’s strategic and economic priorities.
Rail Corridor Mega-Project:
Developing a self-funding rail corridor linking Namibia and Botswana’s western copper-belt via Ghantsi.
Existing rail infrastructure is outdated, underutilised, and needs upgrading.
Evaluating the best rail operational model for Botswana’s needs.
Legislative changes required to redefine Botswana Railways’ role.
Power Sector Modernisation:
Shifting towards a solar-dominated energy industry.
Unbundling power generation, transmission, and related services to boost efficiency and competition.
Scaling electricity production to 8,000 MW within four years.
Targeting a 30% reduction in electricity costs to ease financial pressure on businesses and households.
Positioning Botswana as a regional electricity exporter, enhancing economic resilience and influence.
Ensuring a stable, cost-effective power supply to attract investment and make Botswana a prime business hub.
Upcoming Renewable Energy Projects (Currently Under Procurement):
200 MW Concentrated Solar Power in Maun.
100 MW Solar PV in Jwaneng.
100 MW Solar PV and 100 MW Wind Power in Letlhakane.
Expected benefits:
Job creation and business opportunities for locals.
Lower long-term energy costs, making power more accessible and affordable.
Reimagining National Investment Structures:
Reviewing the role of CEDA (Citizen Entrepreneurial Development Agency) and Botswana Development Corporation (BDC).
Exploring the creation of a National Fund of Funds to modernise investment models.
Strategically allocating resources to priority sectors aligned with national development goals.
Expanding funding access to disruptors, innovators, and the creative industry.
Public-Private Partnerships (PPP) & Infrastructure Investment:
P11.54 billion development budget allocated for infrastructure projects.
Advancing a legal framework to improve PPP project management.
The PPP Bill expected to be finalised and presented to Parliament in 2025/2026.
Once enacted, the bill will:
Strengthen private sector partnerships.
Attract domestic and international investors to optimise PPP benefits.
Reduce fiscal strain on the Government budget.
Enhance the growth-investment nexus, accelerating national development.
Aviation & Tourism Expansion:
Pursuing strategic partnerships with regional and international airlines.
Aiming to establish more direct routes linking Botswana to key global tourism markets.
The Civil Aviation Authority of Botswana, in collaboration with major tourism and trade organisations, is working to attract long-haul airlines.
Success so far:
Two new international routes introduced through Ethiopian Airlines and Fly Namibia.
Tax Reform & Legislative Changes (Planned for 2025/2026):
Three new Bills to be presented in Parliament.
Introduction of a new Tax Administration Act to:
Harmonise tax rules for Value Added Tax (VAT) and Income Tax.
Reduce compliance time for taxpayers.
Eliminate duplication in filing and tax payments.
Tax Rate Adjustments:
1.5% proposed increase in corporate tax and the top personal income tax bracket.
Botswana’s tax rates will remain among the lowest in the region despite this adjustment
Current tax-to-GDP ratio is 13%, below the African average (16%) and SACU average (20%).
Optimising Financing for Development:
Implementing a “cascade” financing framework:
Commercially viable projects will rely on private financing.
Blended financing for projects with commercial potential, supported by government.
PPP models will be used to improve the bankability of large projects.
Botswana has previously earned an investment-grade credit rating, which signals that it is a low-risk investment destination. This makes it attractive for investors who are looking for stability and strong fiscal management.
Botswana’s Current Credit Ratings:
Standard & Poor's (S&P): As of March 2024, Botswana holds a 'BBB+' long-term and 'A-2' short-termsovereign credit rating, with a stable outlook.
Moody’s: In October 2023, Moody’s rated Botswana 'A3', also with a stable outlook.
Both of these ratings reflected Botswana’s strong fiscal position, low debt, and political stability, which were key factors in maintaining its reputation as a safe investment option.
What Could Affect the Outlook?
Diamond Market Weakness: If the diamond market weakens more than expected and other industries don't grow enough to make up for declines in mining, Botswana's economic outlook could turn negative.
Government Finances: If the government’s financial situation worsens, it could lead to a credit rating downgrade, making Botswana a riskier investment.
Investors will be aware that the country’s economic future is closely tied to the performance of its diamond sector.
Botswana’s government announced that it has finalised a new agreement with De Beers, a move that many economists believe will help restore confidence in the country’s diamond sector.
Minister’s Optimism
Minister of Minerals, Bogolo Kenewendo, is hopeful that this new agreement will bring stability and help to rebuild trust in the diamond industry, which is critical for Botswana’s financial health.
Potential Economic Impact
Renewed Mining Licenses: Some economists argue that the renewal of mining licenses under this deal could result in increased capital spending, leading to higher mining output. This would be a positive development for Botswana’s economy.
Differing Opinions
Bank of Botswana’s View: However, Dr. Kealeboga Masalila, the Deputy Governor of the Bank of Botswana, believes that diamond revenues will depend primarily on how well the diamond sector performs itself, rather than the new agreement with De Beers. He suggests that sector performance is the key determinant, not the deal itself.
For investors, the outlook of the diamonds, the main foreign currency earner will be of interest. De Beers is said to have stockpiled diamonds worth US$2 billion, the largest since the 2008 global financial crisis. Economist Dr. Keith Jefferis explains that even if the diamond market improves, it will take time for the demand to pick up in mining. This is because De Beers and other players in the diamond industry need to first sell off the large stockpiles they have accumulated.
Foreign currency reserves have declined as a result of poor performance of diamonds. Foreign currency reserves are important for the stability of the Botswana currency. Botswana is encouraging businesses to export and earn foreign currency while improving infrastructure gap to become a prime investment destination.
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