Botswana

Botswana Investment Opportunities

Botswana has a rare beauty unmatched by many other countries, with 38% of
its total land area devoted to national parks, reserves and wildlife management
areas. This has allowed Botswana to become a rarity in an overpopulated and
overdeveloped world.

Botswana has transformed itself since independency into an oasis developing
“The fourth highest gross income at purchasing power parity in
Africa” thus providing a comparable living standard to that of Mexico and
Turkey. Thanks to a combination of diamond wealth and far-sighted government
policies, the country has established an unassailable track record for
effective macroeconomic management backed by strong political institutions,
with a remarkably low incidence of corruption.

Botswana economical development investment authority (BEDIA)

BEDIA acts as the first point of contact for potential investors in
Botswana, ensuring they clear all formalities, priding itself in the
professional service that it offers to investors and the profile it has as
‘the friend of the investor’.

Services

BEDIA is dedicated to providing support and services to both potential
investors and existing industrialists by:

•Identifying investment opportunities in the country.

•Providing investment advice.

•Identifying joint venture partners.

•Organising visits and meetings between economic operators in the
country and potential investors.

•Assisting in obtaining factories.

•Assisting in obtaining pre-investment clearances (work and residence
permits, licences etc).

•Providing both economic and trade statistics.

Investment in Botswana

Mining Sector:

Minerals, especially diamonds, have been the mainstay of Botswana’s
economy since independence in 1966, helping propel the country’s high
rate of economic growth.

The existing diamond mines recover stones from kimberlite pipes or primary
deposits. Debswana Diamond Company – a 50/50 partnership between the government
and De Beers – undertakes production at four major mines, whose total output
has expanded rapidly in recent years, reaching close to 30 million carats in
2003. Botswana has thus moved rapidly into the first league of world diamond
producers and geologists see good potential for the discovery of additional
deposits. Botswana has large untapped reserves of semi-bituminous coal but the
sole mining operations the Morupule Colliery in eastern Botswana, over which
Debswana assumed control from AngloAmerican in 2003, which has a capacity to
produce some one million tonnes per year. The government is pursuing strategies
to increase coal usage throughout the economy, including the establishment of a
coal washing and coal briquette plant, the promotion of affordable coal burning
stoves for household use, and improved distribution facilities. The planned
expansion of Morupule power station to increase local electricity generating
capacity would increase demand for coal and possibly make development of an
additional colliery viable.

 

Energy Sector:

There is a range of investment opportunities for the supply of energy
equipment in Botswana, especially affordable or technologically innovative
equipment. These include coal burning stoves and other coal related products,
solar panels and solar water heating systems, photovoltaic (PV) systems, and
biomass generating equipment.

Solar is the most abundant renewable resource and is already tapped to some
degree for small-scale and some light industrial and commercial applications.
Additionally, a wind-mapping programme is underway to define potential
applications for wind-driven water pumping and electricity generation. An
exciting new energy source being evaluated is the natural gas potential of
coal-bearing sedimentary rocks of the Kalahari Karoo Basins.

A coal-bed methane (CBM) study of the Central Kalahari Karoo sub-basin in
central Botswana has concluded that the rocks contain a significant volume of
gas-inplace resources. If it is proved commercially viable to extract the gas,
the development of a natural gas energy supply system would significantly
diversify Botswana primary energy supplies and provide an alternative to
coal.

A feasibility study to determine the site and size of a coal beneficiation
and briquette manufacturing plant is due to be completed during 2004. Depending
on the outcome of the study, the government would invite private sector
investment to participate in the construction of the plant, probably to be
located at Morupule, the site of the existing colliery. The government also
intends to establish or facilitate the establishment of additional coal
distribution points from which coal from the beneficiation plant would be
distributed.

Tourism Sector:

The whole of northern and central Botswana is a unique and very precious
resource, but an area primarily for specialists and explorers. For the
privilege of access and permission to stay, visitors are prepared to pay higher
than normal park entrance fees that your average holiday goer. These special
holiday/exploration arrangements help to keep the main visitor locations in
pristine condition – that allows the wildlife to flourish and visitors to
continue being drawn for as long as the park maintains its reputation for being
unspoiled.

Over the last ten years, tourism investment itself has grown, increasing
from BWP12m (US$ 2.4m) to BWP55m (US$ 11m). The trade, hotel and restaurant
sector grew by about ten per cent per annum in recent years, indicating the
huge potential of tourism.

All foreign investors are encouraged to operate joint ventures with
citizens. Foreign investors wishing to invest in Botswana are required to
transfer technology to Botswana as well as to transfer skills to the citizens
by promoting participation in supervisory positions and senior management
levels. Foreign investors wishing to invest in the services sector are expected
to bring into Botswana a minimum investment of US$200,000 for tourism
enterprises wholly owned by non-citizens. In the case of a joint venture they
should bring a minimum investment of US$100,000. In both cases the number of
foreign shareholders or directors is limited to two.

Incentives

Financial Sector Service Incentives:

•A corporate tax rate of 15 per cent until 2020.

•Exemption from withholding taxes in Botswana.

•Credits for withholding taxes in other jurisdictions.

•Access to double taxation treaties.

•Tax exemptions for collective investment undertakings (for unit trusts
and collective investment structures).

 

Manufacturing Industry Incentives:

•All machinery and equipment imported for purposes of manufacturing is
duty free.

•Manufacturing companies are eligible for the exemption of sales tax on
imported raw materials provided the produce is for export outside the customs
area.

•A duty drawback facility is available to manufacturing companies that
export outside the customs area.

•Companies securing development approval order can get a tax holiday
and special treatment of capital expenditure.