Botswana
Botswana has undertaken significant effort in the field of public governance, and is upheld as a model and benchmark for many developing countries in this regard. To date Botswana has quite successfully avoided the “natural resource curse” at stake in its diamond revenue exploitation. Nonetheless corruption has become more of a concern since the early 1990s, with the emergence of several corruption scandals in the country. This chapter evaluates Botswana’s progress since then, in terms of developing a comprehensive anti-corruption framework guided by the Directorate on Corruption and Economic Crime (DCEC). Reforms along other dimensions of public governance, such as regulation of civil service performance within the Directorate of Public Service Management (DPSM), public consultation, and co-ordination of the country’s regulatory framework for reducing administrative barriers to investment, are also described here. The regulatory frameworks for procurement and privatization, as overseen by PPADB and PEEPA, are also briefly reviewed in terms of their transparency and clarity – and further expanded upon in .
Botswana is currently one of the strongest performers on the African continent in terms of GDP per capita and social indicators. The number of people living under the poverty line dropped from 30.6% in 2003 to 20.7% only seven years later. Over the past two decades, Botswana has also steadily improved its investment environment and striven to increase opportunities for foreign and domestic investors. The regulatory framework for investment has been strengthened through a series of laws, and the government has consistently taken care not to introduce undue restrictiveness on foreign investors.
Botswana’s robust growth and the sustained improvement of social indicators over the past decades have been commended on many occasions, and our country has even been celebrated as an “African Economic Miracle”. GDP per-capita has increased more than ten-fold since independence in 1966, when Botswana was among the poorest countries on the continent. However today it has become apparent that this is not enough. Our track record in terms of economic diversification has not been as exemplary; nor have we been as successful as several of our Southern African neighbours in attracting foreign investment beyond the extractive sector.
This chapter highlights Botswana’s economic trajectory since independence, and the liberalisation process engaged in recent decades. It demonstrates that Botswana has made vast progress in terms of improving its business climate, and is recognizing the need for a modernisation of public sector roles and responsibilities vis-à-vis the private sector. The chapter then takes stock of Botswana’s latest investment policy reforms and of the economy’s recovery after the impacts of the global financial crisis – including through recent national growth and development strategies, such as the Economic Diversification Strategy (EDD) for 2011-16. Lastly, persisting development and investment climate challenges are emphasised. This overview helps to uncover options for Botswana to channel new investment flows which can foster the growth of novel industries. It also proposes means for increasing investment linkages in the local economy, among large and small enterprises both domestic and foreign – including through investing resources in human resource development. Challenges and opportunities for channelling private sector participation towards the infrastructure sector are also addressed. Altogether, these policy recommendations strive for strengthening the legal and regulatory framework for investment in Botswana, in order to more coherently attract the FDI and local investment needed to realize the country’s growth and diversification objectives.
OECD's comprehensive review of investment policy in Botswana. After an overview of the country, the review examines investment policy, investment promotion and facilitation as well as infrastructure in Botswana.
Over the past decade Botswana has taken important steps in building a more efficient framework for setting up businesses. This chapter examines various measures adopted by the government to reduce administrative burdens on investors, and notably the functions of the Botswana Investment and Trade Centre (BITC) as Botswana’s central investment promotion agency. It also explores how an array of national economic development strategies (on competition, trade, investment, private sector development and exportation) have been organised within a framework headed by the Economic Diversification Drive (EDD) since 2011. While this common structure places emphasis on poverty reduction, investment linkages, human resource development, and the needs of smaller enterprises, the role of private investment (and particularly FDI) is not strongly emphasised. The country may therefore benefit from developing a dedicated national investment strategy. This chapter also investigates the framework for awarding and assessing tax incentives for investment, and ends by investigating different dimensions of Botswana’s human resource development strategy with these investment facilitation goals in mind.
This chapter charts how much progress Botswana has made in improving its investment climate, especially since the mid-1990s. Business establishment could be further facilitated through simplification of procedures of land allocation and property registration. Foreign ownership is also restricted in several economic sectors, limiting the overall openness of the investment regime; the fact that these restrictions are not listed within a common “negative list” may moreover reduce transparency for investors. Nonetheless investors in Botswana today benefit from protection from expropriation, sound contract enforcement, and guarantees for intellectual property rights, among others. Botswana’s legal framework for investment is therefore quite comprehensive and provides investor protection provisions which meet international standards. While Botswana’s Doing Business rankings have declined since 2009, this chapter suggests that this performance is not necessarily a reflection of poor quality of the legal regime. Rather, improvement may be particularly necessary as concerns the transparency and clarity of the legal framework vis-à-vis investors.
Infrastructure, as both a feature of the enabling environment for investment and as an investment opportunity, presents valuable opportunities for stimulating foreign and domestic investment on a large scale – provided that adequate frameworks for regulation and private participation are in place. This chapter first highlights the strategic importance of infrastructure development for Botswana (including through cross-border projects and regional co-operation), given the country’s geographic constraints and small domestic market size. It then provides an overview of the state of existing infrastructure networks in Botswana – in power, transport, ICT, and water – and of the degree of private participation in these markets. Current legal and institutional frameworks for encouraging greater private participation in infrastructure are then investigated, including recent momentum in the area of PPPs and privatisation. Finally the issue of pricing and regulation in infrastructure markets, which can strongly impact not only on end-user affordability but also the attractiveness of infrastructure projects for private investors, is analysed.
This supplementary peer review report analyses the practical implementation of the standard of transparency and exchange of information on request in Botswana, as part of the second round of reviews conducted by the Global Forum on Transparency and Exchange of Information for Tax Purposes since 2016.
This report contains the 2019 Peer Review Report on the Exchange of Information on Request of Botswana.
This report contains the 2014 “Phase 2: Implementation of the Standards in Practice” Global Forum review of Botswana.
The Global Forum on Transparency and Exchange of Information for Tax Purposes is the multilateral framework within which work in the area of tax transparency and exchange of information is carried out by over 130 jurisdictions which participate in the work of the Global Forum on an equal footing.
The Global Forum is charged with in-depth monitoring and peer review of the implementation of the standards of transparency and exchange of information for tax purposes. These standards are primarily reflected in the 2002 OECD Model Agreement on Exchange of Information on Tax Matters and its commentary, and in Article 26 of the OECD Model Tax Convention on Income and on Capital and its commentary as updated in 2004, which has been incorporated in the UN Model Tax Convention.
The standards provide for international exchange on request of foreseeably relevant information for the administration or enforcement of the domestic tax laws of a requesting party. “Fishing expeditions” are not authorised, but all foreseeably relevant information must be provided, including bank information and information held by fiduciaries, regardless of the existence of a domestic tax interest or the application of a dual criminality standard.
All members of the Global Forum, as well as jurisdictions identified by the Global Forum as relevant to its work, are being reviewed. This process is undertaken in two phases. Phase 1 reviews assess the quality of a jurisdiction’s legal and regulatory framework for the exchange of information, while Phase 2 reviews look at the practical implementation of that framework. Some Global Forum members are undergoing combined – Phase 1 plus Phase 2 – reviews. The ultimate goal is to help jurisdictions to effectively implement the international standards of transparency and exchange of information for tax purposes.
The Global Forum on Transparency and Exchange of Information for Tax Purposes is the multilateral framework within which work in the area of tax transparency and exchange of information is carried out by over 90 jurisdictions which participate in the work of the Global Forum on an equal footing.
The Global Forum is charged with in-depth monitoring and peer review of the implementation of the standards of transparency and exchange of information for tax purposes. These standards are primarily reflected in the 2002 OECD Model Agreement on Exchange of Information on Tax Matters and its commentary, and in Article 26 of the OECD Model Tax Convention on Income and on Capital and its commentary as updated in 2004, which has been incorporated in the UN Model Tax Convention.
The standards provide for international exchange on request of foreseeably relevant information for the administration or enforcement of the domestic tax laws of a requesting party. “Fishing expeditions” are not authorised, but all foreseeably relevant information must be provided, including bank information and information held by fiduciaries, regardless of the existence of a domestic tax interest or the application of a dual criminality standard.
All members of the Global Forum, as well as jurisdictions identified by the Global Forum as relevant to its work, are being reviewed. This process is undertaken in two phases. Phase 1 reviews assess the quality of a jurisdiction’s legal and regulatory framework for the exchange of information, while Phase 2 reviews look at the practical implementation of that framework. Some Global Forum members are undergoing combined – Phase 1 plus Phase 2 – reviews. The ultimate goal is to help jurisdictions to effectively implement the international standards of transparency and exchange of information for tax purposes.
All review reports are published once approved by the Global Forum and they thus represent agreed Global Forum reports.
The OECD Investment Policy Review of Botswana is one of five reviews carried out in member states of the Southern African Development Community (SADC) on the basis of the OECD Policy Framework for Investment (PFI). Undertaken by the NEPAD-OECD Africa Investment Initiative in the context of the “Unlocking Investment Potential in Southern Africa” programme with the support of Finland, it reflects the growing co-operation between the OECD and its African partners.
Some countries have successfully regulated their mining sectors without resorting to highly distortive policies such as export restrictions. One such country is Botswana. This paper examines some of the policies in place in Botswana that have contributed to the governance and management of its substantial minerals sector. Lessons are drawn for minerals-rich countries keen to manage their raw materials sectors for increased economy-wide growth.
Starting in the late 1990s Botswana has made concerted efforts to attract FDI into export-oriented manufacturing and services, so as to reduce reliance on diamond exports and to diversify its supply-side capacities. Given that indications are that Botswana’s diamond mines will be depleted within the next 20 years, diversification is becoming indispensable to safeguard growth, development and fiscal sustainability. Today the reform efforts of the authorities are consolidated under the Economic Diversification Drive (EDD), which emphasises the critical role to be played by the private sector in stimulating balanced and sustainable growth.
Botswana: Stock of Total External Debt (percentage of GDP) and Debt Service (percentage of exports of goods and services) appears in African Economic Outlook 2009.
Botswana: Real GDP Growth and Per Capita GDP (USD/PPP at current prices) appears in African Economic Outlook 2009.