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Botswana: Country and Foreign Investment

Economy and Currency

This page was last updated on 23 Apr 2019.

Botswana is a stable democracy with a generally excellent track record since independence in 1966. Botswana has been one of the world's fastest growing economies since 1965, though growth has lessened of late. Through fiscal discipline and the sound management of its generous mineral resources, Botswana has transformed itself from one of the poorest countries in the world to a middle-income country with a PPP per capita GDP of USD15,800 in 2017.

Botswana is a member of the Southern African Customs Union (SACU), an economic tariff-free grouping that also includes South Africa, Namibia, Lesotho and Swaziland. Botswana 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. In Transparency International’s 2018 Corruption Perceptions Index, Botswana was rated the 34th least corrupt country in the world and the least corrupt in Africa.

Diamond mining has fuelled 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 10.65 pula in April 2019. 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 pula (Setswana: ‘rain’) is divided into 100 thebe (Setswana: ‘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. Since 2017, Standard and Poor’s credit rating for Botswana has been A- and stable; this gives the country an investment grade sovereign credit rating higher than any other sub Saharan African country.

In recent years, international competitiveness reports have ranked Botswana as Africa’s most competitive country. However, it has slipped a little in the rankings of late, and in 2018 the Global Competitiveness Index ranked Botswana 90th in the world. The country’s ranking amnong African countries is still a respectble 4th.

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.

The economy, one of the most robust on the continent, is dominated by diamond mining.

 

 

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