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Botswana: Country and Foreign Investment

Economy and Currency

Botswana is a stable democracy with an excellent track record since independence in 1966. Botswana has been one of the world's fastest growing economies since 1965 with average 9.2% growth as against South Korea with 7.3% and China with 6.7%. However, growth dipped below 5% in 2007/8 and the economy shrank by an estimated 5.2% in 2009. 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 USD16,100 in 2011.

Botswana is a member of the Southern African Customs Union (SACU), an economic grouping free of tariffs that also includes South Africa, Namibia, Lesotho and Swaziland. It is also a member of the Southern African Development Community (SADC), and serves as the headquarters of the regional organization that has a market of 200 million people.

Botswana has consistently invested a high proportion of its budget on education and skills training. The country has a thriving domestic financial sector, which includes banks, insurance companies and a growing stock market. Botswana has acceded to international conventions and is strictly observing internationally accepted guidelines on combating money laundering and financial crime. Transparency International, in its Corruption Perceptions Index of 2012, rated Botswana to be the least corrupt country in Africa, and 30th least corrupt in the world on this score.

GDP at purchasing power parity was estimated at USD29.85 billion in 2011. Diamond mining has fueled much of Botswana's expansion and currently accounts for more than one-third of GDP and for four-fifths of export earnings. Tourism, subsistence farming, and cattle raising are other key sectors. Unemployment is a problem and there remains considerable poverty; high rates of HIV infection are also a challenge to the government.

Botswana's currency is the pula (BWP). One US dollar was worth 7.88 pula in January 2013. In February, 2004 the Pula was devalued by 7.5% but then appreciated by 12.8% against the US dollar by the end of 2004. A new exchange rate regime introduced in late May 2005 reversed the cumulative real appreciation of the Pula since the year 2000. The new regime, called the crawling band, also entailed widening of the margins between the Bank of Botswana foreign exchange buy and sell rates.

The Pula is divided into 100 Thebe (t). The word 'Pula' means rain and 'thebe' means shield. The shield appears on the national coat of arms. There are no foreign exchange controls in Botswana. Two major investment services rank Botswana as the best credit risk in Africa. Standard and Poors and Moody’s in 2003 gave Botswana an investment grade sovereign credit rating higher than any other sub Saharan African country, and this 'A' rating was maintained in 2011.

In June, 2004, a World Economic Forum Africa Competitiveness report rated Botswana as Africa’s most competitive nation. Botswana’s top position in the Index results from the fact that the country achieved the highest scores with regard to the state of its public institutions and the condition of its macroeconomic environment. In its 2011 report, the World Economic Forum ranked Botwana on the same competitiveness level as the North African average, meaning it is performing better than most sub-Saharan countries.

In June 2007, a joint report by the US-based Heritage Foundation and Wall Street Journal rated Botswana among the top three African economies. In a report which surveyed over 40 countries, Botswana, alongside Mauritius and South Africa, was rated as one of the continent’s freest economies.

The 2008 'Doing Business' report by the World Banks and IFC placed Botswana in the top ten of countries which achieved the most regulatory reforms helping business between June 2007 and June 2008.

According to the 2012 Corruption Perceptions Index, Botswana ranks 1st in Africa and 30th in the world in terms of transparency.



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