There are six distinct aspects of economic thought in Botswana that an investor or entrepreneur trading in the country must be aware of, all cited in specific factors of an economy in flight – Botswana’s Financial sector, Meat Sector, Technology, Energy, Development, and Business Enabling Environment.
Financial Sector: The Enterprising Risktakers of Africa
Disruption, innovation, and growth of any economy begins with risk, and there is tangible evidence that the people of Botswana are a disruptive people.
This review is anchored on the Banking Supervision Annual Report 2017, and supporting reports; useful for the review so that there is consistency in the performance allowing the reader to simulate the performance of 2018 and 2019, or possible the next decade.
This review does a comparative analysis of 2007 and 2017, to show the risk-taking growth of the Botswana people as more financial resources are availed to them.
Through this report, each year, the central bank shows that the principal objective of the Bank of Botswana (Bank) is to promote and maintain monetary stability, an efficient payments mechanism, liquidity, solvency and proper functioning of a soundly based monetary, credit and financial system in Botswana; and it is this that becomes the foundation to which the economy grows.
The economy is grown by the many businesses and individuals, large businesses and small, executives and casual workers, and the like; all creating a cohesive economic engine that is called Botswana.
Meat Sector: Opening Up the Beef and Meat by Products Industry
According to FAO, the world has 1.468 billion head of cattle, and Botswana has 2.5 million of that herd, and it is estimated to account for less than 2% of Botswana's GDP.
On the other hand, Botswana is a cattle country dating back to pre-colonialism, and its post-independence has not disturbed its model of communal cattle ranching that is has commercialized over the decades to ensure sustainable development. In 2015, the Botswana Institute for Development Policy Analysis conducted a research to investigate Botswana’s beef export competitiveness using indices of Revealed Comparative Advantage (RCA) and data for the period 1961-2011.
Results indicated that Botswana has been the most competitive SADC beef exporter, and that it has compared well with the leading world beef exporters, however, the country has recorded declining competitiveness since the mid-1970s. It is argued that, state trading export operations and non-reciprocal trade preferences with the EU have enhanced competitiveness through facilitating export market access. However, the single channel exportation arrangement, through a loss-making state trader, is a potential threat to beef export competitiveness.
Further, recurrent outbreaks of cattle diseases and drought, and the rise in domestic demand for beef (coupled with stagnant domestic supply) have adversely impacted beef export competitiveness. In June 2019, “Botswana has launched a process involving privatization of its loss-making beef exporting firm Botswana Meat Commission (BMC). This follows a report by auditing firm, KPMG Botswana which recommended that BMC should be privatized as a way of liberalising Botswana beef export market”, reported The Southern Times. The privatization of the BMC creates an open field for more entrants into the export market, as cattle herders will have options; that being a major growth factor to the communal and small-scale farmer who own 80% of the export beef sent to the commission. The Weekend Post, reported that the “BMC has been protected from export competition, with several privately owned and local council abattoirs, as well as a large number of local butcheries that undertake slaughter having been restricted to supply only the domestic market.”
The beef industry in Botswana plays an important role as a source of foreign exchange, rural livelihoods and employment, and there is potential for exports, as Botswana, despite the losses being made by the sole exporter – BMC, the country is a regional leader. Beef accounts for 65% of Botswana's Agricultural exports, which were valued at US$118 million in 2017 and 43% was going to the United Kingdom and 42% was going to Norway, and the remaining 15% to the rest of the world.
Development: Economic Development and the Project Facilitation Fund
The unmistakeable iTowers is a symbol of modernisation and economic development in Botswana. A host to businesses, hotels and government offices, the iTowers speak of the country's ability to rise in all aspects of socioeconomic development with grace.
In order for such economic development to be achieved there must needs be the empowerment of the smallest business owner in capital, fair play on the world stage of enterprise, and also a boost from start-up.
To boost small enterprises before and during start-up there is need for a catalyst, an economic enabler; such is what the Ministry of Investment, Trade and Industry (MITI) has provided in the LEA/CEDA Project Facilitation Fund.
Imagine, if you will, as a start-up, when you produce good quality products, sell to a limited market, yet know that you can supply to more, but the actual transforming from your SMME status to large scale requires planning and strategy development whose skills you do not possess.
And, imagine that at some point you then get the chance or courage to learn about business development, create a business plan, draft business proposals for investment, then you apply, only to be told "your business is not bankable".
Most businesses that have not received investment in Botswana, small, medium, or large scale, has been due to the fact that they were somewhat deemed "unbankable", and these have been increasing and the pile is now significant that it affects growth of the national economy. The conversation of global economic contribution by Botswana cannot be spoke before that of the equal participation of the smallest of enterprises in Botswana.
There are tens of thousands of SMMEs in Botswana, and Africa, that suffer stunted growth of their businesses because there is no facility that acts as a catalyst for such a transition. Not so for Batswana anymore, as the Project Facilitation Fund is now here.
Technology: The Big Five of Social Media in Botswana
Social Media has shaped many economies, as it is the frontier of technology at present, and the Botswana economy is no exception, whether or not it has little over a million internet users.
Whilst Botswana’s population is 2.3 million and internet users are just over one million, this actually means just a little under 50% of the population is using the internet, and that in itself is reason to celebrate as a country, making the digital economy easier to forge than most nations in the world.
Your Batswana business or brand can no longer afford to ignore Facebook, Instagram, Twitter, LinkedIn, the most popular social media networks used in the country according to a Global Digital Report published in January 2019. Even so, neither can service providers and specialist businesses in Botswana ignore Pinterest, that is used as much as Facebook in the country. Pinterest is covered in another article.
Note that WhatsApp, Messenger, Skype, and WeChat are social media messaging applications, not included in this article as it is focusing on networks, with a drive to provide insight for business and brands.
Many businesses in Botswana and the continent at large, are not well informed of the benefits of Social Media, as they are of the scandals publicized thereof, bringing a fear and hesitation for business use.
Be that as it may, there are one million Batswana using Social Media, making that at least 42% of the population of the country, and of these 920,000 are using social media on mobile phones, that being 39% of the population.
Energy: The Lion King of Energy in Africa
Botswana is posed to be one of the biggest exporters of energy in South Africa, supplying not only its local households, but of fifteen other countries; Shumba Energy is at the frontier of this agenda in Botswana.
As a rising lion in the Savannah, Shumba Energy is shaping to be the Lion King of Energy in Africa, as it holds a diverse portfolio not only in exploration, but in project development, as they believe and act on “powering the future”.
Shumba Energy is a business and vision to celebrate.
Mashale Phumaphi, Managing Director of Shumba Energy, speaking recently to Mining MX said, “there is a huge market in Botswana and regionally and the economics cannot be ignored”, and Shumba can no longer be ignored as an energy giant in Botswana, and Southern Africa.
Shumba Energy is a Botswana based, locally owned coal and energy development company listed on the Botswana Stock Exchange (BSE) and the Stock Exchange of Mauritius (SEM). The company offers the advantage of being based in a country with the best credit rating in sub-Saharan Africa with a stable fiscal and political setting.
Established in 2011, the company is reaching its development objectives and now controls a significant portion of advanced energy projects in Botswana, including over 4.5 billion tonnes of coal for thermal energy and exports. As a major industry player, Shumba Energy is reaching its development objectives and the company is on a short-term mission to advance into production to create cash-flow and return to their shareholders.
The current power deficits of Botswana and its neighbours stand at Botswana 600MW, Namibia 600MW, Zambia 1,500MW, Zimbabwe 950MW, and South Africa 21,000MW, all indicating a bright future for Shumba Energy, that is poised to reduce the deficit in the near future.
Environment: Doing Business in Botswana 2020
Botswana is open for business, and its ranking on the African and Global market space is getting better by the day; 2020 will be a great year for the country, as the world furthers Doing Business in Botswana.
The economic year 2020 is around the corner, and whosoever has a plan before others have one in their industry, has a greater chance of profitability and growth therein. Even if some may not have, there are many investors across the world, that have great and profitable plans for Botswana. Their first port of call for advice on doing business in Botswana is the Doing Business in 2020 Report.
Botswana is the fastest growing economy in the world for the last four decades, and it ranks as the 8th best place to do business in Africa, and 87th in the world, with a 66.2 score on the Ease of Doing Business Index. What is their formula, you may ask?
In a Global Megatrends for 2020 review, Bloomberg noted that globally Urbanization, Consumerism, Digitalization are on the rise, and focus of developed economies, Africa being a ripe destination of investment in these regards. Botswana stands to benefit and tap into new capital injections in these areas of interest.
Speaking at the JCK Las Vegas, in May 2019, His Excellency Dr. Mokgweetsi Masisi, the President of Botswana, said "The very fact that Debswana is the largest private sector entity in the country and that has been so successful is testament to the fact that this government is deeply committed to yielding a private sector led economy". Diamond was the inception of a knowledge economy that is using international standards of partnerships that are profitable yet beneficial to the Batswana people.
Botswana is moving from being a mineral resource-based economy, into a knowledge-based economy. In order to achieve such, the country must open itself to the world through public and private partnerships that have clear localised beneficiation schemes that not only include economic, but social developmental benefits. The forging of such an economy can only be made possible if the outside world has enough information on the playing field in Botswana; the Doing Business Report of 2020, provides such.
The Doing Business Index measures economic performance of nations in respect to Starting a business; Dealing with construction permits; Getting electricity; Registering property; Getting credit; Protecting minority investors; Paying taxes; Trading across borders; Enforcing contracts; Resolving insolvency; and Employing workers.
The 17th edition of the World Bank’s report “Doing Business in 2020” was released this October 2019. In it, like a few other African countries, Botswana has made a key improvement, and still leaving more areas needing attention. We highlight the country’s performance, and shape a perspective of this report and its impact on local economics for the SMME, listed, and conglomerate business operating in Botswana.
The landscape for doing business in Africa is improving, as more economies open up to globalisation in this fourth industrial age, dubbed Industry 4.0, hence using this globalised yardstick to measure economic engagement and performance goes a long way in developing the economy of Botswana.
Source: CIU
