# ![](media/image1.jpeg){width="0.7395833333333334in" height="0.78125in"}  Doing Business In Botswana: A Country Commercial Guide for U.S. Companies

# INTERNATIONAL COPYRIGHT, U.S. & FOREIGN COMMERCIAL SERVICE AND U.S. DEPARTMENT OF STATE, 2004. ALL RIGHTS RESERVED OUTSIDE OF THE UNITED STATES.

-   [Chapter 1: Doing Business In
    Botswana](#chapter-1-doing-business-in-botswana)

-   [Chapter 2: Political and Economic
    Environment](#chapter-2-political-and-economic-environment)

-   [Chapter 3: Selling U.S. Products and Services](#ch3)

-   [Chapter 4: Leading Sectors for U.S. Export and Investment](#ch4)

-   [Chapter 5: Trade Regulations and Standards](#ch5)

-   [Chapter 6: Investment Climate](#ch6)

-   [Chapter 7: Trade and Project Financing](#ch7)

-   [Chapter 8: Business Travel](#ch8)

-   [Chapter 9: Contacts, Market Research and Trade
    Events](#chapter-9-contacts-market-research-and-trade-events)

-   [Chapter 10: Guide to Our Services](#ch10)

#   {#section .unnumbered}

# Chapter 1: Doing Business In Botswana

-   [Market Overview](#market-overview-return-to-top)

-   [Market Challenges](#market-challenges-return-to-top)

-   [Market Opportunities](#market-opportunities-return-to-top)

-   [Market Entry Strategy](#market-entry-strategy-return-to-top)

## Market Overview [**Return to top**](#chapter-1-doing-business-in-botswana)

Botswana is an African success story. The government has laid a solid
macroeconomic foundation since independence, with the highest average
growth rate in the world from 1966 to 1997 (9.2 percent). It is now
attempting to diversify the country\'s economy and promote sustainable
development against the backdrop of an emerging global market and a
severe HIV/AIDS challenge. In 2005, the World Economic Forum ranked
Botswana among Africa\'s two most competitive economies along with South
Africa.

The Botswana economy faltered slightly in 2005 with the real Gross
Domestic Product (GDP) growth rate anticipated to fall from its rate of
5.4 percent in 2003/4 to between 3 and 4 percent in 2004/5. (Note:
Unless otherwise indicated, all statistics are based on the Botswana
fiscal year, which runs from April to March). The 2003/4 real GDP growth
rate of 5.4 percent was also a slowdown from the 2002/3 rate of 6.7
percent. The sustained slowdown is attributable to a variety of causes,
including the worldwide spike in oil prices and a drop in government
expenditure on infrastructure projects as a result of repeated deficits.

As the capstone of a continuing economic program targeted at
diversifying the economy and attracting foreign investment, the
government sought and received sovereign credit ratings from both
Moody's and Standard & Poor's (S&P). Both companies gave Botswana solid
investment-grade ratings, and again in November 2005 S&P rated Botswana
investment grade (A/A-1 local currency and A+/A-1 foreign currency),
placing it on par with Kuwait, Oman and Chile as a destination for
foreign investment, and ranking it above the rest of Africa.

The country\'s positive response to the opportunities and challenges of
globalization, which currently face every developing nation, is
reflected by the strong performance of the stock exchange, the
government\'s attempt to encourage productive and efficient export
industries, and the implementation of educational and training programs
designed to raise the productivity and quality of the labor force.

The Government continues to focus its economic policies on
diversification of the economy away from dependence on the mineral
sector, which still accounts for roughly 70-80 percent of export
earnings and 50 percent of government revenue. The diversification
strategy is also aimed at the reduction of unemployment, which is
officially estimated at 23.8 percent. The Government is actively
encouraging the development of the private sector through an attractive
taxation regime, the elimination of exchange controls and support for
foreign direct investment in non-mining sectors of the economy,
principally manufacturing, tourism and financial services. It is
currently drafting a Foreign Direct Investment Strategy, Competition
Law, and National Export Diversification Strategy. In March of 2005 the
Parliament passed a Privatization Master Plan as further commitment to
the encouragement of private industry, and is debating further
liberalization of its telecommunications industry to include such
services as Voice-over Internet Protocol.

Official external trade statistics for 2004 show direct U.S. exports to
Botswana of \$51.6 million and U.S. imports of \$73 million. According
to the most recent numbers released from the International Trade
Commission, trade between Botswana and the U.S. increased significantly
in the first nine months of 2005 (January-September). U.S. imports
totaled \$124.4 million, 95 percent more than the 2004 calendar-year
figure and nearly 130 percent growth over the same nine-month period in
2004. U.S. exports rose nearly 37 percent over this period, from \$36.1
million to \$49.5 million. The figures do not necessarily reflect the
total consumption of U.S. goods, however, as many U.S. products enter
Botswana as re-exports from South Africa. Similarly, Botswana\'s exports
to the U.S. do not include diamonds, the nation\'s principal export,
which generally enter as re-exports from the United Kingdom.

Export opportunities include mining equipment, hospital/medical
equipment and supplies, pharmaceuticals, telecommunications equipment
and supplies, computer hardware and software, solar energy equipment,
consulting services, fabrics, and grains. Sectors targeted by the
Government for investment include tourism, light manufacturing,
financial services, leather products, printing and publishing, ceramic
and sanitary ware items, glass products and pharmaceuticals. Due to
Botswana\'s limited domestic market, export-led industries are
encouraged, and foreign investors and exporters should look to market
products throughout Southern Africa, for which Botswana presents a
strategic location.

Botswana is a member of the Southern Africa Development Community (SADC)
and the Southern African Customs Union (SACU). SACU is the oldest
customs union in the world and encompasses Botswana, South Africa,
Namibia, Lesotho and Swaziland. SADC began implementing a free trade
protocol on September 1, 2000. The intention is to liberalize trade in
products considered less sensitive by 2008. The protocol will eliminate
tariff and non-tariff barriers to trade between the eleven signatory
states over a ten-year period. If successful, U.S. exporters and
investors will gain easier access to the regional market. SADC aims to
have a Customs Union in place by 2010 and a Common Market in 2015.

Botswana participates in the U.S.-SACU Free Trade Area (FTA)
negotiations, due to be completed by the end of 2006 and arguably the
more promising of the regional trade initiatives. This five-country
Union is one of the most economically dynamic regions in Africa. With
this FTA, the SACU countries are opening up a USD 125 billion market of
fifty million consumers. In return, they are getting guaranteed
long-term duty-free access to a USD 11 trillion U.S. market with more
than 290 million consumers: the largest market in the world. An FTA can
also help the SACU countries attract further foreign direct investment
to the region and will establish dispute resolution mechanisms to deal
fairly with trade disagreements.

Botswana has had a democratically-elected government since its
independence in 1967. Democratic institutions are in place and function
well. Parliamentary elections held in October 2004 were free and fair
and resulted in another victory for the ruling Botswana Democratic
Party. Following the elections, the National Assembly reelected
President Festus Mogae. The current Parliament will serve until new
elections in October 2009. Botswana and the U.S. enjoy excellent
bilateral relations.

U.S. exporters seeking general export information and assistance, or
country-specific commercial information, should consult with their
nearest Export Assistance Center or the U.S. Department of Commerce's
Trade Information Center at (800) USA-TRADE, or go to one of the
following web sites: [www.export.gov](http://www.export.gov/) or
[www.buyusa.com](http://www.buyusa.com/). For additional information on
Botswana, please also visit the website of the Commercial Section of the
U.S. Embassy in Gaborone, Botswana at
[http://botswana.usembassy.gov](http://botswana.usembassy.gov/).

## Market Challenges [**Return to top**](#chapter-1-doing-business-in-botswana) 

-   Relative size of the market -- Population of only 1.7 million

-   Landlocked country

-   Work and resident permits for expatriate employees

-   Judicial backlog

-   Customer service

-   Regulatory system in need of clarification

-   Advancing citizen empowerment efforts may limit new opportunities

## Market Opportunities [**Return to top**](#chapter-1-doing-business-in-botswana)

-   Hub potential for regional export/investment businesses -- Good
    access to the SADC and SACU markets via the Trans-Kalahari Corridor

-   Political and economic stability

-   No foreign exchange controls

-   Investment grade (A) sovereign credit rating

-   Low levels of corruption

-   Favorable corporate tax rates

> **Key Sector Opportunities**:

-   International Financial Services (Investment banking, business
    processing outsourcing, and insurance/reinsurance business)

-   Tourism (Eco-tourism, hotels/restaurants)

-   Energy (Morepule Power Plant expansion and proposed Mmamabula Export
    Power Station -- Solar energy equipment -- Natural gas reserve
    discovery)

-   Mineral Sector (Mining equipment and services, construction,
    consulting, engineering)

-   Telecommunications (Cellular Telephone Industry Deregulated --
    further liberalization under consideration)

-   Healthcare (Services and medical/surgical equipment)

-   Textiles and Apparel (Fabrics and production equipment)

## Market Entry Strategy [**Return to top**](#chapter-1-doing-business-in-botswana)

-   Personal relationships are essential to establishing business
    relationships

-   Visiting is important to establishing mutual respect and
    understanding

-   Partnering with local firms greatly enhances prospects for success,
    particularly for securing government procurement contracts or local
    financing

[Return to table of
contents](#doing-business-in-botswana-a-country-commercial-guide-for-u.s.-companies)

#   {#section-1 .unnumbered}

# Chapter 2: Political and Economic Environment

For background information on the political and economic environment of
the country, please click on the link below to the U.S. Department of
State Background Notes.

<http://www.state.gov/r/pa/ei/bgn/1830.htm>

[Return to table of
contents](#doing-business-in-botswana-a-country-commercial-guide-for-u.s.-companies)

[[]{#ch3 .anchor}Return to table of
contents](#doing-business-in-botswana-a-country-commercial-guide-for-u.s.-companies)

# Chapter 3: Selling U.S. Products and Services 

-   [Using an Agent or
    Distributor](#using-an-agent-or-distributor-return-to-top)

-   [Establishing an Office](#establishing-an-office-return-to-top)

-   [Franchising](#franchising-return-to-top)

-   [Direct Marketing](#direct-marketing-return-to-top)

-   [Joint Ventures/Licensing](#joint-ventureslicensing-return-to-top)

-   [Selling to the
    Government](#selling-to-the-government-return-to-top)

-   [Distribution and Sales
    Channels](#distribution-and-sales-channels-return-to-top)

-   [Selling
    Factors/Techniques](#selling-factorstechniques-return-to-top)

-   [Electronic Commerce](#electronic-commerce-return-to-top)

-   [Trade Promotion and
    Advertising](#trade-promotion-and-advertising-return-to-top)

-   [Pricing](#pricing-return-to-top)

-   [Sales Service/Customer
    Support](#sales-servicecustomer-support-return-to-top)

-   [Protecting Your Intellectual
    Property](#protecting-your-intellectual-property-return-to-top)

-   [Due Diligence](#due-diligence-return-to-top)

-   [Local Professional
    Services](#local-professional-services-return-to-top)

-   [Web Resources](#web-resources-return-to-top)

## Using an Agent or Distributor [**Return to top**](#ch3)

U.S. companies looking for assistance in finding a Botswana
agent/distributor may wish to contact BOCCIM, the Botswana Confederation
of Commerce, Industry and Manpower
([www.boccim.co.bw](http://www.boccim.co.bw/)), an organization to which
many local businesses belong. Its membership directory is not yet
available online, but the complete list can be provided by BOCCIM in
hard copy. BOCCIM has roughly 2,000 member companies and is the single
largest private sector association in Botswana.

## Establishing an Office [**Return to top**](#ch3)

Companies interested in investing in Botswana should contact the
Botswana Export Development and Investment Authority (BEDIA --
[www.bedia.co.bw](http://www.bedia.co.bw/)), the parastatal agency
charged with assisting foreign investors in setting up operations. BEDIA
promotes itself as a one-stop shop for foreign investors considering
establishing offices in Botswana.

Company formation and registration in Botswana is relatively simple.
Legislation governing company formation is contained in the Companies
Act of 1959, Cap 42.01, as amended, and distinguishes between external,
public, and private companies, the latter being predominant. All
companies are registered with the Registrar of Companies, who certifies
that the company is incorporated. The common practice is to engage a
local attorney or a company secretary to arrange for a company
registration, which can typically be completed within two weeks,
although efforts are being made to expedite the process. A list of local
attorneys can be obtained from the U.S. Embassy's Consular Section
(<http://gaborone.usembassy.gov/botswana/consular.html>).

## Franchising [**Return to top**](#ch3)

There are a number of successful U.S. franchises and licensing
agreements in Botswana. They include DHL, Federal Express, Coca-Cola,
Kentucky Fried Chicken, and Avis, along with a few new entrants like
Remax Realtors. The majority of U.S. franchises are concentrated in the
capital city of Gaborone.

## Direct Marketing [**Return to top**](#ch3)

Direct marketing is also feasible, particularly to local companies
seeking to import goods to supply a government tender. The Commercial
Section updates commercial activities on the US Embassy web site,
[http://botswana.usembassy.gov](http://botswana.usembassy.gov/), and
provides business alerts on specific government tenders with prospects
for U.S. firms. The Embassy's website also provides links to useful
economic, social, and political information relevant to potential U.S.
investors in Botswana. The Commercial Section will assist U.S. firms in
obtaining further information and/or tender documentation for bids.

## Joint Ventures/Licensing [**Return to top**](#ch3)

Botswana entrepreneurs and the government\'s investment arm, the
Botswana Development Corporation (BDC --
[www.bdc.bw](http://www.bdc.bw/)), welcome joint venture opportunities,
particularly where the foreign partner will bring production expertise,
product design or marketing ties.

The Industrial Development Act of 1988 requires that all foreign-owned
manufacturing enterprises obtain a license from the Ministry of Trade
and Industry before commencing operations. U.S. companies are advised to
consult with both the Ministry and the Botswana Export Development and
Investment Authority (BEDIA) to ensure that their proposal does not
include one of a small number of commercial enterprises reserved for
citizens of Botswana.

Two bodies, according to the location of the business, issue business
licenses. Businesses that are specific to a certain locality are issued
by Local Licensing Authorities and those without a regional focus are
issued by the National Licensing Authority. The list of businesses
requiring licenses includes:

-   Dry Cleaner

-   Bottle Store

-   Bar

-   Pharmacy

-   Restaurant/Take Away

-   Fresh Produce

-   Hair Dresser

-   Supermarket

-   Liquor Restaurant

-   Motor Dealer

-   General Trading

-   Specialized Dealer

-   Petrol Filling Station

-   Temporary Liquor

-   Importer/Exporter

-   Agent

-   External Representative

-   Drillers

-   Auctioneers

All licenses are valid for twelve (12) months after which they are
renewable.

The following licenses are reserved for Botswana citizens:

-   Butchery and Fresh Produce

-   General Trading

-   Bottle Store

-   Petrol Filling Station

-   Bars (other than those related to hotel establishments)

-   Supermarkets (excluding chain stores and franchise operations)

-   Simple specialty operations such as clothing boutique, footwear etc.

## Selling to the Government [**Return to top**](#ch3)

To comply with the Public Procurement and Asset Disposal Act of 2002,
the Public Procurement and Asset Disposal Board (PPADB -
<http://www.ppadb.co.bw/>) was created in 2003 as an independent
parastatal to take over the functions of its predecessor organization,
the Central Tender Board. The PPADB is responsible for the award of all
government tenders. The tender process is open and tenders are now
listed online at the Government's central website
<http://www.gov.bw/business/tenders.html>. Lobbying of the PPADB or its
members is strictly prohibited. One of the key policy objectives of the
Public Procurement and Asset Disposal Board (PPADB), since its
inception, has been the enhancement of operational efficiency in the
public procurement system. PPADB has established the Advisory Committee,
Independent Complaints Review Committee and the Ministerial and District
Tender Committees in accordance with its Act. The Advisory Committee
advises the Ministry of Finance and Development Planning on any
weaknesses in the operations of the board. The Independent Complaints
Review Committee, established in November 2004, reviews the Board's
decisions subject to challenge by stakeholders (e.g. contractors and
procuring entities) whilst the Ministerial and District Tender
Committees ensure that speedy decisions are made. In effect since
December 2003, PPADB has started publishing its decisions concerning
awarded tenders, prequalification lists and newly registered
contractors, a measure which should go a long way towards enhancing
public confidence in the operations of the board. Unfortunately, there
have been a number of very public controversies regarding the award of
tenders under the supervision of the PPADB during 2005.

Government procurement practices do, however, involve some preference
schemes and reserve certain tenders for 100 percent citizen-owned
companies. There is an ongoing public debate about government
procurement practices, which many view as a giveaway to foreign
companies. The PPADB is explicitly charged with promoting citizen
empowerment through the proactive implementation of reservation and
preference schemes designed and introduced by the Government of Botswana
from time to time to enhance citizen participation in economic
activities resulting in increased employment and capacity building.
However, the Board states that it considers these schemes within the
context of its obligations under international trade treaties such as
the World Trade Organization (WTO), and regional agreements under the
Southern African Development Community (SADC) and the Southern African
Customs Union (SACU).

## Distribution and Sales Channels [**Return to top**](#ch3)

Botswana is a land-locked country but finds itself in the middle of the
SADC region and at the center of the Trans-Kalahari Corridor, which
connects Botswana to the Namibian port of Walvis Bay and through to Dar
Es Salaam in the northeast. The principal commercial trading route
remains via South Africa through its southern port of Durban. However,
Walvis Bay has grown exponentially and is increasingly an attractive
alternative to the delays often experienced shipping out of or into
Durban, due mainly to over-capacity.

Most goods enter Botswana through Gaborone, the capital city. However,
other central points of commerce include Lobatse, Francistown, Maun and
Kasane. Roads are typically good, although nighttime driving is
extremely dangerous and to be avoided due to the high incidence of
traffic accidents, many caused by wildlife on the roads due to
insufficient fencing.

As part of SACU, the vast majority of U.S. products sold in Botswana
enter as re-exports from South Africa. Many U.S. companies maintain
regional distributorships in South Africa, which supply the rest of the
SACU and SADC regions. There is, however, a growing number of U.S.
franchises in Botswana, concentrated principally in the capital,
Gaborone.

## Selling Factors/Techniques [**Return to top**](#ch3)

English is the official language, but Setswana is the traditional
language and remains predominant in social and business interactions.
Depending on the scale or target consumer, marketing materials should be
translated into Setswana.

## Electronic Commerce [**Return to top**](#ch3)

Internet usage is on the rise but nationwide remains extremely low. The
Government of Botswana revealed at the end of November 2004 that a mere
5 percent of the population is utilizing the Internet. There is a
growing number of Internet Service Providers and Internet cafes, but due
to the high cost of fixed-line phone charges associated with dial-up
service, the cost of accessing the Internet remains prohibitive for the
majority of the population. Recently introduce DSL service has provide
more reliable and efficient, but the cost remains relatively high for
the general public.

The telecommunications market was partially liberalized in 1996
following the adoption of the Telecommunications Policy of 1995 and
enactment of the Telecommunications Act (Act No. 15 of 1996), which
abolished Botswana Telecommunications Corporation's (BTC) monopoly in
some segments of the market and established the independent regulator,
the Botswana Telecommunications Authority (BTA). Botswana is considering
further liberalization but has made no final decisions.

Botswana did not participate in the WTO extended telecommunications and
financial services negotiations. The BTA was created to safeguard
competition and inter-connection to the public network, yet the
state-owned BTC still maintains a monopoly as the sole licensed supplier
of fixed-line voice services, including international calls. Market
segments liberalized so far are mobile telephones, data communications,
payphones, sale of telecommunications equipment, and Internet services.
Competition in the cellular phone industry is dominated by two
international firms, Mascom (Portuguese) and Orange (French), who
compete for the bulk of the local market share. Voice-over Internet
Protocol (VoIP) is not allowed (except over private networks); this
prevents licensed Internet providers, as well as suppliers of
international data transmission through very small aperture terminals
(VSATs), from offering voice services in competition with BTC.

The BTA operated with almost complete freedom in deciding the number of
licenses and associated conditions prior to an amendment to the
Telecommunications Act of 1996 in December 2004. This amendment requires
that the Minister of Communications, Science and Technology approve all
new licenses and associated conditions, as well as the budgeting and
strategic planning of the Authority.

BTC must run any new telecommunications services as subsidiaries or
associated entities to allow sufficient accounting separation from its
fixed-line operations (BTC Act and 1996 amendments). BOTSNET, a BTC
subsidiary, for example, is competing in Internet services with other
licensed providers.

## Trade Promotion and Advertising [**Return to top**](#ch3)

Newspapers and radio are the most common advertising media in Botswana.
South African satellite television broadcasts reach the major cities and
can provide a venue for products marketed region-wide. The national
television station, Btv, and the Gaborone television station, GBC, may
also prove useful means for advertising.

Major newspapers are:

(a) The Botswana Guardian, P.O. Box 1641, Gaborone, Tel: (267) 390-8408;
    Fax: (267)

390-8457;

(b) The Botswana Gazette, P.O. Box 1605, Gaborone, Tel: (267) 391-2833,
    Fax: (267) 397-2283; email: <gazette@info.bw>;

(c) The Midweek Sun, P. O. Box 1641, Gaborone, Tel: (267) 390-8408;
    Fax: (267) 390-8457;

(d) The Reporter - Mmegi, Bag BR 50, Broadhurst, Gaborone, Tel: (267)
    397-4784, Fax: (267) 390-5508, email: <mmegi@global.bw>;

(e) The Daily News, Department of Information and Broadcasting P/Bag
    0060, Gaborone,

Tel: (267) 395-2971, Fax: (267) 395-2541; and

(f) The Advertiser, (Printing and Publishing Services), P/Bag 0081,
    Gaborone, Tel: (267)

> 391-4788, Fax: (267) 391-4595, email: <advertiser@info.bw>.

Advertisers interested in wide, local and English language coverage may
wish to contact Radio Botswana at Department of Information and
Broadcasting, P/Bag 0060, Gaborone, Tel: (267) 395-2541; Fax: (267)
395-2541. Private radio stations:

\(a\) Gabz FM 96.2, Bag B0319, Gaborone, Tel: (267) 3956-962 and

\(b\) Yarona FM 106.6. Box 1607, Gaborone, Tel: (267) 391-1066.

The government-owned Botswana television station (Btv) launched its
programming on July 29, 2000 and offers some advertising. Interested
advertisers should contact the Department of Information and
Broadcasting at the above address. The long-standing GBC television
station, Box 921, Gaborone, Tel. (267) 395-7654, Fax (267) 390-1875,
email: gbctv@info.bw, offers advertising for the Gaborone market.

A few reputable marketing, media and advertising agencies are present in
the country. These include:

Horizon Ogilvy and Mather

Private Bag Bo 20, Bontleng, Gaborone

Tel: (267) 392-2655; Fax: (267) 392-2684

Web: www.horizon.ogilvy.co.bw/

Marketing Communications

Private Bag Bo 27, Bontleng, Gaborone

Tel: (267) 391-9366; Fax: (267) 391-9365

Email: <marcom@info.bw>

Media Communications

Private Bag BR 26, Broadhurst, Gaborone

Tel: (267) 390-2586; Fax: (267) 390-7209

Email: <vich@medcom.bw>

Clear Channel Independent Botswana

Gaborone International Commerce Park

Plot 157, Unit 4

PO Box 601991

Gaborone, Botswana

Tel: (267) 392-2340; Fax: (267) 391-9887

Email: <steenkamps@ccibotswana.com>

Web: [www.ccirsa.com](http://www.ccirsa.com/)

## Pricing [**Return to top**](#ch3)

Prices for most U.S. made consumer goods are increasingly competitive
due to the favorable exchange rate between the Botswana Pula and the
U.S. dollar. The current exchange rate (January 2006) is USD 1 = Pula
5.32. The exchange rate used in the calculation of USD equivalents to
figures provided in Botswana Pula within this document is the average
exchange rate for 2005 of USD 1 = Pula 5.076.

## Sales Service/Customer Support [**Return to top**](#ch3)

Service and after-sales support for imported products sold in Botswana
are often deficient. Guaranteeing parts and service may be essential to
marketing unfamiliar products.

## Protecting Your Intellectual Property [**Return to top**](#ch3)

Chapter 33 of the Deeds Registry Act regulates and protects the
recording of secured interests in property. The Attorney General\'s
Chambers is responsible for administering the registration of mortgage
bonds and deeds of transfer for the acquisition and disposition of
property respectively. The legal system in place is non-discriminatory
and applies equally to both domestic and foreign investors.

Botswana has made significant improvements in the last few years in its
protection of intellectual property rights. Its legislation is now
largely in accordance with the Agreement on the Trade Related Aspects of
Intellectual Property Rights (TRIPS), except for geographic indications
and integrated circuits (Chapter III(4)(v)). Capacity building is mainly
needed for enforcement of intellectual property rights. In 1998,
Botswana became a member of both the Bern and Paris Conventions, the
international baseline intellectual property rights agreements. The
Botswana Copyright Law, passed by Parliament in March 2000, replaced a
1965 law that was woefully inadequate. The law offers
internationally-accepted standards of protection for the rights of
creators of literary, artistic, dramatic, cinematographic works;
computer programs; broadcasting organizations; and sound recordings. In
addition, the legislation gives the Government additional tools to use
in its ongoing fight against piracy, including stiffer penalties. The
Government of Botswana believes that once fully implemented, the
mechanisms put in place will provide sufficient remedies to deter future
infringement. The Registrar of Company is in the process of reviewing
the Act to provide for compliance with obligations under the TRIPS
Agreement, the Patent Cooperation Treaty, the Madrid Treaty and the
Madrid Protocol on International Registration of Marks.

In November 2005 the Botswana Parliament introduced the Copyright and
Neighboring Rights Amendment Bill to the 2000 Act as implementing
legislation. Under the proposed law every audio and audio-visual
recording made available to the public by sale, rental, lending or
distribution for commercial purpose in Botswana will have a security
device affixed to it. Any person who contravenes the set requirements
will be liable upon conviction to a fine not exceeding P20,000 (USD
3,940) or a prison term not exceeding two years. Any person who
reproduces the device without the authorization of the Copyright Office
shall be liable to a fine not exceeding P50,000 (USD 9,850) or a prison
term not exceeding five years. Any importation of audio or audio-visual
recording devices for the purpose of sale, rental, lending or
distribution to the public for commercial purposes will apply as
prescribed by the Copyright office. Any person who carries this out
without accreditation will also be liable to a fine not exceeding
P50,000 (USD 9,850). Finally, a non-profit copyright society will be
created to represent copyright owners.

With the assistance of the World Intellectual Property Organization
(WIPO), the Registrar of Companies has recently established the
Copyright Office in Gaborone with branches in other towns. Among its
other responsibilities, the Copyright Office will supervise the
activities of the copyright society and advise the government and its
agencies on all matters pertaining to copyright law, including
Botswana's obligations under international treaties and agreements. It
will also be responsible for organizing awareness campaigns to inform,
educate and sensitize the public on matters of copyright. In addition,
an arbitration panel comprised of three to five members will be
established to preside over any conflicts.

The Industrial Property Act of 1998 governs Botswana's patent and
trademark legislation. Under the law, Botswana provides
internationally-recognized standards of protection for both foreign and
domestic holders of patents, industrial designs, and trademarks, and
fully complies with the TRIPS Agreement.

## Due Diligence [**Return to top**](#ch3)

Due diligence is essential to any commercial enterprise and this holds
true in Botswana. Due diligence can be conducted through engaging a
local attorney as well as through the assistance of the Embassy's
Commercial Section.

## Local Professional Services [**Return to top**](#ch3)

Botswana Telecommunications Corporation:
[www.btc.bw](http://www.btc.bw/)

International Financial Services Center:
[www.ifsc.co.bw](http://www.ifsc.co.bw/)

Botswana Export Development and Investment Authority:
[www.bedia.co.bw](http://www.bedia.co.bw/)

Botswana Confederation of Commerce, Industry and Manpower:
[www.boccim.co.bw](http://www.boccim.co.bw/)

Botswana Development Corporation: [www.bdc.bw](http://www.bdc.bw/)

American Business Council: <rram@it.bw>

## Web Resources [**Return to top**](#ch3)

Government Tenders: <http://www.gov.bw/business/tenders.html>.

Botswana Telecommunications Corporation:
[www.btc.bw](http://www.btc.bw/)

International Financial Services Center:
[www.ifsc.co.bw](http://www.ifsc.co.bw/)

Botswana Export Development and Investment Authority:
[www.bedia.co.bw](http://www.bedia.co.bw/)

Botswana Confederation of Commerce, Industry and Manpower:
[www.boccim.co.bw](http://www.boccim.co.bw/)

Botswana Development Corporation: [www.bdc.bw](http://www.bdc.bw/)

Exporters Association of Botswana: <http://www.exporters.bw/>

[Return to table of
contents](#doing-business-in-botswana-a-country-commercial-guide-for-u.s.-companies)

[[]{#ch4 .anchor}Return to table of
contents](#doing-business-in-botswana-a-country-commercial-guide-for-u.s.-companies)

# Chapter 4: Leading Sectors for U.S. Export and Investment 

-   [Agricultural Sector](#agsectors)

**Commercial Sectors**

-   [Telecommunications -- Leading Sector
    #1](#telecommunications-tes-tel-leading-sector-1)

-   [Financial Services -- Leading Sector
    #2](#financial-services-fns-leading-sector-2)

-   [Tourism -- Leading Sector #3](#tourism-tra-htl-leading-sector-3)

-   [Health Care Industry -- Leading Sector
    #4](#health-care-industry-hcs-med-leading-sector-4)

-   [Energy -- Leading Sector #5](#energy-ogs-ogm-req-leading-sector-5)

-   [Mining -- Leading Sector #6](#mining-min-leading-sector-6)

-   [Textile and Apparel -- Leading Sector
    #7](#textile-and-apparel-txp-txf-txm-leading-sector-7)

## Telecommunications (TES, TEL) -- Leading Sector #1

### Overview [**Return to top**](#ch4)

Botswana has a reasonably well-developed telecommunications system. The
Botswana Telecommunications Corporation (BTC) is a parastatal in which
the Botswana Government holds 100 percent equity. Internet use is very
limited, estimated at a mere 5 percent of the population. It is also
currently slow and expensive, mainly because there is no formal national
Internet exchange point. It incurs substantial local telephone charges.
The telecommunications market was partially liberalized in 1996. This
followed the adoption of the Telecommunications Act, which abolished
BTC's monopoly in some segments of the market and established an
independent regulator, the Botswana Telecommunications Authority (BTA).
Further liberalization, including the introduction of Voice-over
Internet Protocol and possible infrastructure competition, is under
debate. Such liberalization could open up tremendous opportunities for
investors and service providers of information and communications
technologies in Botswana. Botswana's neighbor, South Africa, liberalized
its telecommunications industry on February 1, 2005.

  ------------------------ -------------- ------------ -------------------
                           2003           2004         2005 (estimated)

  Total Market Size        \$113.4        127.80       \$ 145.60 million
                           million                     
  ------------------------ -------------- ------------ -------------------

Data is estimated at an average exchange rate of P1 = \$ 0.212, \$
0.227, 0.197 FOR 2003, 2004, & 2005, respectively.

Source: Bank of Botswana 2004

All service providers, including BTC, must be licensed by BTA, which had
almost complete freedom in deciding the number of licenses and
associated conditions prior to December 2004. BTA has issued licenses
for a range of telecommunications services. Market segments liberalized
so far are mobile telephones, data communications, payphones, sale of
telecommunications equipment and Internet services. The 1996 Act
retracted the monopoly of BTC and introduced indirect competition
through two cellular joint venture consortiums, Mascom Wireless and
Vista Communications (now Orange). No restrictions apply to foreign
partnerships in mobile services. However, an amendment to the BTC Act in
December 2004 places decision-making power for the issuance of licenses
and associated conditions back with the Minister of Communications,
Science and Technology.

The Government has stated its intention to privatize the BTC and favors
a strategic partnership approach. However, the Government has not set a
date for privatization, and it is unclear what impact further
liberalization would have on the valuation of the BTC. Competition in
telecommunications services has reduced tariffs, and additional
opportunities are virtually certain to open up with further
liberalization.

### Best Prospects/Services [**Return to top**](#ch4)

Communications services, including Internet service provision, and
telecommunications equipment and software.

### Opportunities [**Return to top**](#ch4)

In addition to the expected services opportunities that will be
generated through liberalization, the BTC has embarked on an ambitious
program to upgrade the country's telecommunications infrastructure, and
government tenders for the supply of equipment and services are often
issued. See the tenders page of the BTC for additional information:
[www.btc.bw/tenders.asp#](http://www.btc.bw/tenders.asp)

As a partial measure of the potential for telecommunications equipment,
the U.S. exports more electronic products to Botswana than any other
commodity or product, apart from mining equipment. Over the past two
years (2004 & 2005), over USD 27 million in U.S. electronics entered
Botswana in a range of different product areas, including communications
equipment.

### Resources [**Return to top**](#ch4)

Botswana Telecommunications Corporation:
[www.btc.bw](http://www.btc.bw/)

BTC Tenders Page:
[www.btc.bw/tenders.asp#](http://www.btc.bw/tenders.asp)

Botswana Telecommunications Authority: <http://www.bta.org.bw/>

Ministry of Communications, Science and Technology:
[www.gov.bw](http://www.gov.bw/)

Ministry of Trade and Industry: [www.mti.gov.bw](http://www.mti.gov.bw/)

Department of Customs and Excise: <http://www.finance.gov.bw/customs/>

## Financial Services (FNS) -- Leading Sector #2

### Overview [**Return to top**](#ch4)

Botswana's financial services sector is developing rapidly. The
establishment of the Botswana International Financial Services Center
(IFSC) in 1999 was a Government initiative to stimulate the growth of
cross-border financial services and thereby diversify the national
economy away from mineral resource dependence. As incentives to attract
companies to base their operations in Botswana, the government
established a guaranteed 15 percent corporate tax for IFSC companies
until 2020, an exemption from withholding taxes on interest, commercial
royalties, management or consultancy fees and dividends paid by an IFSC
company to a non-resident, tax credit for withholding taxes in other
jurisdictions, a tax exemption for Collective Investment Units (CIU),
and abolished foreign exchange controls. The Bank of Botswana regulates
the IFSC.

  ------------------------ -------------- ------------ -------------------
                           2003           2004         2005 (estimated)

  Total Market Size        \$ 424.27      \$ \$ 519.54 \$ 592.34
                           million        million      
  ------------------------ -------------- ------------ -------------------

Data is estimated at an average exchange rate of P1 = \$ 0.212, \$
0.227, 0.197 FOR 2003, 2004, & 2005, respectively.

Source: Bank of Botswana 2004

IFSC companies are eligible to provide banking and financing operations,
brokerage and securities trading, investment advice, Collective
Investment Schemes, captive insurance and reinsurance business,
registrars and transfer agency services, accounting and financial
administration, including for non-financial corporate institutions, and
back office support or business processing outsourcing, including call
centers. The project has made substantial progress recently, as
exhibited by the newest addition, the Enterprise Banking Group, which
announced its decision to open a holding company in Botswana in January
2005 to provide institutional financing for small and medium sized
enterprises. The majority of existing businesses are in the areas of
international banking, funds administration, corporate treasury
management and captive insurance operations, including two U.S. firms,
the AON and Marsh insurance companies.

### Best Prospects/Services [**Return to top**](#ch4)

Insurance and reinsurance, regional investment banking and structured
financing operations, and business processing outsourcing.

### Opportunities [**Return to top**](#ch4)

New legislation under consideration (International Insurance Bill --
draft 2004) is expected to enhance the regulatory environment for the
establishment of insurance and reinsurance businesses. There is a review
for a number of pieces of legislation, including the Building Societies
Act, which is scheduled for presentation to Parliament during 2005 /
2006. The Botswana Stock Exchange (BSE) Act will also be reviewed during
this period. This will enable the BSE to grow and keep abreast with new
developments in the financial sector, as well as create an enabling
environment for capital market growth and development. The review will
include bringing the BSE legislation up-to-date with new U.S. Securities
and Exchange Commission regulations and legislation, including the
Sarbanes-Oxley bill.

### Resources [**Return to top**](#ch4)

International Financial Services Center: <http://www.botswanaifsc.com/>

Ministry of Finance: [www.gov.bw](http://www.gov.bw/)

Bank of Botswana: [www.bob.bw](http://www.bob.bw/)

Ministry of Trade and Industry: [www.mti.gov.bw](http://www.mti.gov.bw/)

Department of Customs and Excise: <http://www.finance.gov.bw/customs/>

## Tourism (TRA, HTL) -- Leading Sector #3

### Overview [**Return to top**](#ch4)

The tourism sector in Botswana has shown consistent growth over the past
several years, with eco-tourism in the Okavango Delta and Chobe National
Park leading the way. The contribution of Tourism to GDP continues to
rise and stood at nearly 12 percent in 2004, up from 8 percent in 1993.
The industry grew by 2.9 percent in the Botswana fiscal year 2003/2004.
After diamond mining and financial services, Botswana relies heavily on
eco-tourism as an integral part of its economy and is actively
encouraging market entry of new investments and joint ventures. The
Botswana Government continues to play a major role in facilitating the
development of tourism projects in several communities and is placing
special emphasis on the development of tourism in and around Gaborone.
Many new hotels and conference facilities have opened in the past few
years, significantly increasing the country's ability to host
international conferences and events. In order to maintain and improve
the economic performance of the tourism sector, the government continues
to upgrade infrastructure in wildlife-protected areas.

  ------------------------ -------------- ------------ -------------------
                           2003           2004         2005 (estimated)

  Total Market Size        \$ 885.7       \$ 1,019.20  \$ 1,090.55 million
                           million        million      
  ------------------------ -------------- ------------ -------------------

Data is estimated at an average exchange rate of P1 = \$ 0.212, \$
0.227, 0.197 FOR 2003, 2004, & 2005, respectively.

Source: Bank of Botswana 2004

To date, a total of 525 tourist enterprises have been licensed,
comprised of 138 hotels and guesthouses, 201 camps and lodges, 140
mobile safari operations and 45 travel agencies. Efforts are being made
to improve licensing procedures to include other facilities. The
government is looking to diversify Botswana's source markets and to
increase the participation of the private sector through the
establishment of a Botswana Tourism Board, an offshoot of the Department
of Tourism, which will focus on marketing and tourism promotion for the
country.

Over the last ten years, annual tourism investment has grown
tremendously, increasing from P 12 million (USD 2.4 million) to P 55
million (USD 10.8 million). The hotel and restaurant sector has grown at
an average of ten percent per annum in recent years, indicating the huge
potential of tourism. In 2004 the growth rate for hotels and restaurants
stood at 2.9 percent. The tourism sector has a natural comparative
advantage to compete both regionally and internationally. The number of
citizen investors has been experiencing a tremendous increase over the
past five years. All foreign investors are encouraged to operate joint
ventures with citizens.

### Best Prospects/Services [**Return to top**](#ch4)

Eco-Tourism, Hotels & Restaurants

### Opportunities [**Return to top**](#ch4)

Joint ventures are being sought for hotel expansions and start-ups along
the Trans-Kgalagadi Highway joining Botswana and Namibia.

If successful, a proposed trans-frontier conservation area, commonly
referred to as the Limpopo / Shashe Trans-frontier Conservation Area,
would be a unique partnership between the Governments of Botswana, South
Africa, and Zimbabwe, the private sector, and the local communities, and
create new opportunities for eco-tourism.

In addition, the 2010 World Cup, which will be hosted by neighboring
South Africa, could have significant ancillary potential for Botswana's
tourism sector, and government strategies are currently being devised to
take advantage of this potential in collaboration with the private
sector.

### Resources [**Return to top**](#ch4)

Ministry of Environment, Wildlife and Tourism:
<http://www.gov.bw/government/ministry_of_env_wildlife_and_tourism.html>

Hospitality & Tourism Association of Botswana: <http://www.hatab.bw/>

Annual Economic Report 2005

The Tourist (Botswana Tourism Magazine): <TheTourist@botsnet.bw>

Air Botswana: [www.airbotswana.co.bw](http://www.airbotswana.co.bw/)

Ministry of Trade and Industry: [www.mti.gov.bw](http://www.mti.gov.bw/)

Department of Customs and Excise: <http://www.finance.gov.bw/customs/>

## Health Care Industry (HCS, MED) -- Leading Sector #4

### Overview [**Return to top**](#ch4)

Botswana is facing major challenges in stamping out health threats, such
as HIV/AIDS, malaria and tuberculosis. In order to improve service
delivery, the Botswana Government has attached high priority to manpower
development through training of health care personnel. There is also a
firm commitment to improve health care infrastructure and provide and
upgrade medical and surgical equipment. Presently there is no
pharmaceutical production capacity in Botswana.

  ------------------------ -------------- ------------ -------------------
                           2003           2004         2005 (estimated)

  Total Market Size        \$ 295.5       \$ 345.5     \$ 390.44 million
                           million        million      
  ------------------------ -------------- ------------ -------------------

Data is estimated at an average exchange rate of P1 = \$ 0.212, \$
0.227, 0.197 FOR 2003, 2004, & 2005, respectively.

Source: Bank of Botswana 2004 -- The total market size data is
considered part of the Bank of Botswana's Social and Personal Services
financial category. Therefore, the figures are an over estimation of the
size of the market.

The Health sector has been allocated the third largest (12 percent)
share of the national development budget. The Government of Botswana's
Ministry of Health is planning a series of infrastructure improvements
and equipment upgrades, including improvements to several district
medical facilities.

### Best Prospects/Services [**Return to top**](#ch4)

Pharmaceuticals, construction, ARV therapy supply, medical and surgical
equipment.

### Opportunities [**Return to top**](#ch4)

Infrastructure improvements and equipment upgrades for a number of
hospitals and medical facilities are planned as part of the government's
infrastructure development plans. The government also intends to develop
a local pharmaceutical production capacity. Some international companies
have shown interest in expanding regional production capacity by opening
facilities in Botswana. The ARV program is funded with grant support
from the African Comprehensive HIV/AIDS Partnership (ACHAP), a
consortium between U.S. pharmaceutical company Merck and the Bill and
Melinda Gates Foundation.

### Resources [**Return to top**](#ch4)

Ministry of Health:
<http://www.gov.bw/government/ministry_of_health.html>

Ministry of Trade and Industry: [www.mti.gov.bw](http://www.mti.gov.bw/)

Department of Customs and Excise: <http://www.finance.gov.bw/customs/>

## Energy (OGS, OGM, REQ) -- Leading Sector #5 

### Overview [**Return to top**](#ch4)

Faced with a looming energy crisis by the year 2007, the Government of
Botswana has committed to the development of electricity production
through the expansion of its existing coal-fired power station and the
construction of an export power station to meet the region's growing
energy needs. Botswana currently produces a mere 30 percent of its
electricity needs and imports the remainder of its power from the South
African energy giant, Eskom. However, as a result of South Africa's
burgeoning demand, Eskom's resources to provide cheap power to Botswana
are likely to expire at the end of the two countries' current power
purchasing agreement in 2007. Botswana is looking to meet its own
growing demand in a variety of ways. In addition, the Botswana Power
Corporation (BPC) is extending the provision of electricity to rural
villages and has recently issued a number of tenders for transmission
line construction.

The energy sector is facing challenges that require policies and
strategies that can facilitate effective and efficient management of the
sector. In view of this, the National Energy Policy has been drafted in
order to address these challenges as well as give direction for future
developments in the sector. The policy is expected to be in place in the
2005 / 2006 financial year.

  ------------------------ -------------- ------------ -------------------
                           2003           2004         2005 (estimated)

  Total Market Size        \$ 196.40      \$ 241       \$ 289.2 million
                           million        million      
  ------------------------ -------------- ------------ -------------------

Data is estimated at an average exchange rate of P1 = \$ 0.212, \$
0.227, 0.197 FOR 2003, 2004, & 2005, respectively.

Source: Bank of Botswana 2004-- Statistics represent both Energy and
Water sector economic activity.

Botswana has abundant renewable energy resources, mainly in the form of
solar energy, which is under-utilized. The Government is hoping private
industry and households will help increase the contribution of solar
energy to the national energy balance. The Government has developed the
National Rural Photo-Voltaic Electrification Program
(<http://www.gov.bw/government/mewa/pv_dissemination_project/index.html>)
to assist communities with loans repayable over four years to purchase
and install quality photo-voltaic (PV) systems for household use. The
program is scheduled to run from 2003 until 2012. The demand for solar
energy equipment including PV components is expected to continue to
rise.

### Best Products/Services [**Return to top**](#ch4)

Energy equipment, solar heating systems, engineering services.

### Opportunities [**Return to top**](#ch4)

The Kalahari Gas Corporation, a private joint venture U.S.-Botswana
energy company, has recently discovered substantial natural gas reserves
in northeast Botswana. Through the assistance of a USTDA-funded
feasibility study and initial start-up financing provided by OPIC, the
Kalahari Gas Corp has begun drilling coal-bed methane wells and hopes to
exploit the resource for Botswana's growing energy needs. Once fully
developed over the next couple of years, the natural gas deposits could
generate substantial downstream opportunities for new natural gas
intensive equipment and services.

In addition, the Botswana Government's planned construction of an export
power station in Mmamabula, which is currently at the feasibility study
phase, could present opportunities for U.S. construction and engineering
firms as well as for clean-coal power generation equipment.

Finally, the Government has stated its interest in inviting private
sector investment to participate in the construction of a briquette
manufacturing plant in Morepule, where its existing power plant is
located.

### Resources [**Return to top**](#ch4)

Ministry of Minerals, Energy and Water Affairs:
<http://www.gov.bw/government/ministry_of_minerals_energy_and_water_affairs.html>

Botswana Export Development & Investment Authority:
[www.bedia.co.bw](http://www.bedia.co.bw/)

Botswana Power Corporation (BPC): [www.bpc.bw](http://www.bpc.bw/)

-   BPC Tenders: <http://www.bpc.bw/tenders.htm>

Ministry of Trade and Industry: [www.mti.gov.bw](http://www.mti.gov.bw/)

Department of Customs and Excise: <http://www.finance.gov.bw/customs/>

## Mining (MIN) -- Leading Sector #6

### Overview [**Return to top**](#ch4)

The mining industry has dominated the economy of Botswana since its
independence in 1966. The sector accounts for roughly 70-80 percent of
national foreign exchange earnings, 50 percent of government revenue,
and contributes the single largest proportion of GDP at 34.8 percent.
Botswana's mining industry consists mainly of diamonds. The diamond
market continues to strengthen with average diamond prices increasing by
14 percent. Other minerals include copper-nickel matte, coal, soda ash,
salt and small amounts of gold. The copper and nickel prices continue to
improve significantly, the average increased by forty percent, while
copper prices went up by sixty percent between 2003 and 2004. The
Government's main objective for the mineral sector is to continue to
maximize the economic benefits for the nation while enabling private
investors to earn competitive returns. Government policy encourages
prospecting and new mine development.

  ----------------------- ------------- --------------- ------------------
                          2003          2004            2005 (estimated)

  Total Market Size       \$ 2,678.7    \$ 3,072.11     \$ 3,256.44
                          million       million         million

  Total Local Diamond     30.4 million  31 million      32.8 million
  Production              carats        carats          carats
  ----------------------- ------------- --------------- ------------------

Data is estimated at an average exchange rate of P1 = \$ 0.212, \$
0.227, 0.197 FOR 2003, 2004, & 2005, respectively.

Source: Bank of Botswana 2004, Debswana, Economic Review 2005

Debswana, which is a 50-50 joint venture between the Government of
Botswana and the De Beers Corporation, is the nation's diamond mining
company. A new Debswana mine (Damatshaa) commenced operation in 2003 and
follows expansion of other mines at Jwaneng and Orapa where output has
doubled in the recent years. As demands to increase diamond mining's
contribution to employment have risen, the Government has pressured
Debswana to actively promote downstream processing of minerals, such as
diamond cutting and polishing, and a couple of new cutting and polishing
companies have recently opened in Botswana. The renewal of the
Government / De Beers Mining Lease of December 2004, covers the
harmonization of mining leases in all Debswana diamond mines and the
establishment of a Botswana joint venture company, which will be the
sorting and marketing arm of Debswana's diamonds. The government is also
looking at opportunities for further processing its salt and soda ash
resources.

Mining equipment of U.S. origin is not new in this field, with
Caterpillar capturing a sizable portion (over 50 percent) of the market.
Equipment is supplied by distributors and recorded as imports from the
country of supply and not as imports from the country of origin, hence
the understated value of imports from the U.S. All heavy equipment and
machinery are imported, as there is no local production or assembly.

### Best Products/Services [**Return to top**](#ch4)

Mining equipment, services, prospecting and consulting.

### Opportunities [**Return to top**](#ch4)

The Mines and Minerals Act revised in 1999 aims to increase the sector's
competitiveness by improving security of tenure for investors by
removing ministerial discretion, lowering royalty rates and facilitating
exploration and production of other minerals. A good example of the
opportunities this Act creates is the Kalahari Gas Corporation's
discovery of natural gas reserves and the provisions for private
exploitation of the resource.

### Resources [**Return to top**](#ch4)

Ministry of Minerals, Energy and Water Affairs:
<http://www.gov.bw/government/ministry_of_minerals_energy_and_water_affairs.html>

Debswana: <http://www.debswana.com/homePage/dbHomePage.asp>

Ministry of Trade and Industry: [www.mti.gov.bw](http://www.mti.gov.bw/)

Department of Customs and Excise: <http://www.finance.gov.bw/customs/>

## Textile and Apparel (TXP, TXF, TXM) -- Leading Sector #7

### Overview [**Return to top**](#ch4)

Past development of the textiles and clothing sector was focused on
supplying the domestic and regional markets, but Botswana's entitlement
to duty-free access to the U.S. market under the African Growth and
Opportunity Act (AGOA) has provided new opportunities for expanding
value adding activities. A number of companies have rapidly expanded
their operations to export textile and apparel products directly to the
U.S.

  ------------------------ -------------- ------------- -------------------
                           2003           2004          2005 (estimated)

  Total Local Production                                

  Total Exports to the     \$ 7.1 million \$ 20.3       \$ 23.0 million
  U.S.                                    million       

  Total AGOA Exports to    \$ 6.3 million \$            \$ 22.8 million
  the U.S.                                20.1million   

  Imports from the U.S.    \$ 0.010       \$ 0.132      \$ 0.246 million
                           million        million       
  ------------------------ -------------- ------------- -------------------

Data is estimated at an average exchange rate of P1 = \$ 0.212, \$
0.227, 0.197 FOR 2003, 2004, & 2005, respectively.

Source: USITC

While there is little U.S. manufactured textile and apparel product
export potential for U.S. firms, the sector remains viable for the sale
of equipment and fabrics necessary for production as well as a potential
investment opportunity for U.S. companies interested in establishing
production facilities overseas.

### Best Products/Services [**Return to top**](#ch4)

Fabrics, manufacturing equipment, textiles and apparel.

### Opportunities [**Return to top**](#ch4)

As a result of AGOA, there are now greater opportunities for Botswana in
the textile, clothing and apparel sectors. Over six companies have been
issued with visas to enable them to export to the U.S. As the sector
grows, new equipment and fabrics will be needed to supply expanding
production facilities. Under AGOA, Botswana is categorized as a
least-developed country and is thereby eligible to source its fabrics
from third countries, predominately in Asia. However, third-country
fabric sourcing eligibility expires in September 2007, and local
producers will be forced to source their fabrics either locally, where
there is no production, or from the U.S. Early entry by a U.S. firm as a
supplier of fabrics for textile and apparel manufacturing could have
strong growth potential.

### Resources [**Return to top**](#ch4)

Southern Africa Global Competitiveness Hub:
[www.satradehub.org](http://www.satradehub.org/)

AGOA: [www.agoa.gov](http://www.agoa.gov/)

Ministry of Trade and Industry: [www.mti.gov.bw](http://www.mti.gov.bw/)

Department of Customs and Excise: <http://www.finance.gov.bw/customs/>

## Agricultural Sector (AGS, AGM) [**Return to top**](#ch4)

### Overview [**Return to top**](#ch4)

Agriculture is one of Botswana's prime economic activities, despite the
fact that the industry's relative share of GDP has dropped from roughly
40 percent at independence in 1966 to only 2.3 percent for 2003/4. Yet,
it remains the principal livelihood of the majority of Batswana. The
sector is also important as it presents linkages with upstream and
downstream industries. It supplies raw materials for agro-based
industries such as meat processing, tanning, milling, oil, soap,
brewing, furniture manufacturing and suppliers of agricultural inputs.

Botswana is a net importer of food and agricultural products.
Unfortunately, solid data on agricultural production and
commodity-specific trade are scarce. However, rough figures on the
country's self-sufficiency in various agricultural sectors provide a
glimpse of the opportunities that may exist for U.S. agricultural
products, particularly given favorable exchange rates. These figures
show that Botswana is about 20 percent self sufficient in grains, 15
percent in vegetables, 25 percent in fruits and only 3 percent in dairy
products. It produces almost all of its poultry requirements and is a
net exporter of beef, exporting some 90 percent of production, mainly of
chilled and frozen beef to the European Union and South Africa. Botswana
imports 90 percent of its dairy requirements, including fluid milk and
milk powder.

  ------------------------ -------------- ------------ -------------------
                           2003           2004         2005 (estimated)

  Total Market Size        \$ 184.5       \$ 211.4     \$ 236.77 million
                           million        million      

  Total Exports            \$ 0.023       \$ 0.01      \$ 0.015 million
                           million        million      

  Imports from the U.S.    \$ 0.008       \$ 0.069     \$ 0.01 million
                           million        million      
  ------------------------ -------------- ------------ -------------------

Data is estimated at an average exchange rate of P1 = \$ 0.212, \$
0.227, 0.197 FOR 2003, 2004, & 2005, respectively.

Source: Bank of Botswana, USITC

Direct U.S. agricultural exports to Botswana, as the table above shows,
have been negligible. However, most U.S. agricultural products that
reach the store shelves of Botswana's cities enter the country as
re-exports from South Africa, by virtue of the Southern African Customs
Union's common tariff. Many South African importers and U.S.
distributors resell American goods across the border into Botswana.

Botswana's large-scale livestock sub-sector provides the bulk of the
nation's agricultural output, and the beef industry is well established.
Livestock and cattle raising and grazing is by far the primary
agricultural product and export. The livestock production exceeds
domestic needs, and the country has been a substantial exporter of
range-fed beef to the European Union for many years. Unfortunately, the
modernization and investment in an efficient livestock production and
slaughter industry (and the corresponding development of a market for
U.S. feed stocks, ingredients and technology) is stifled by the
Government of Botswana's ownership and monopoly of meat processing
plants, exports, and livestock prices.

Botswana is distinguished by the fact that it is primarily desert and
medium high arid plains similar to many parts of the rural Southwestern
United States (Arizona, New Mexico). Domestic food crop production
provides less than 5 percent of domestic consumption. Domestic
production of staple cereals has met 10 percent of national
requirements, with the balance met through imports. This leaves Botswana
as a net importer of food grains, representing a strong potential growth
area for U.S. grain exporters. The crop sub-sector is dominated by the
growth of cereals, principally sorghum. A range of initiatives is being
implemented by the Government of Botswana to increase the productivity
and expand the range of crops. The main priority is expanding both
rain-fed and irrigated farming.

Horticulture has been identified by the Government of Botswana as having
significant potential for diversifying agricultural production, as local
output currently accounts for only one-fifth of domestic demand for
fruits and vegetables, along with oil seeds and dairy products (most of
which of which are imported). The government aims to facilitate
sustainable agricultural diversification by widening the range of
products, promoting value-added agricultural resources and improving
marketing arrangements.

Livestock, especially cattle, are the mainstay of both commercial and
subsistence agriculture. Cattle holdings / farms increased by 17.8
percent from 66,113 in 2001 to 77,871 in 2002, and the cattle population
increased significantly by 19.3 percent, from 2.5 million to 2.9 million
head. However, recognizing the negative impact of depressed prices in
the sector and their impact on over capacity at national meat processing
plants, the monopoly Botswana Meat Commission (BMC) announced a 40
percent increase in its cattle purchase prices in January 2006. This
could provide a needed jumpstart to the industry. The BMC hopes it will
lead to a rejuvenated livestock sector leading to new investments and an
increase in supply of cattle to the BMC. Separately, the ostrich
industry continues to grow and produces close to five thousand birds
annually for slaughter.

National fish production has averaged one hundred and fifty five (tons)
per annum over the past six years. About 80 percent of the country's
fish output comes from the Okavango aquatic system. Botswana's annual
national fish import bill is currently around P 19 million (USD 3.74
million), which reflects a total quantity of 2,800 tons of fish sourced
from outside the country. Efforts to augment fish production through
aquaculture, such as the construction of fish hatcheries to supply fish
seed to over-fished reservoirs are being explored and may provide a
niche market for incoming investors.

The Ministry of Agriculture has prepared a National Master Plan for
Agricultural Development (NAMPAD), which will be used to guide
investments and increase productivity. In 2005 the Ministry of
Agriculture launched a project on "Commercialization of Hides and Skins
by Improving Collection and Quality in Small-holder Farmer Systems in
Botswana". The objective is to improve and increase the marketability
and quality of hides and skins from small producers.

USDA's Foreign Agricultural Service in Pretoria prepares more than 50
reports each year on the agricultural situation by commodity sector in
South Africa. Some reports highlight opportunities for U.S. farm
exports. For U.S. exporters of agricultural products, it may be useful
to please start with the Exporter Guide for South Africa (GAIN# SF4030)
at <http://www.fas.usda.gov/gainfiles/200408/146107213.pdf>.

For other sector reports please look at "Attaché reports" off the main
FAS website: [www.fas.usda.gov](http://www.fas.usda.gov/)

If you are an exporter of U.S. agricultural products, please feel free
to contact AgPretoria for further information at the following address:

Foreign Agricultural Service

U.S. Embassy Pretoria, South Africa

Tel: +27-12-431 4235

Fax: +27-12-342 2264

Email: <agpretoria@fas.usda.gov>

### Best Products/Services [**Return to top**](#ch4)

Grains, dairy farming, pet foods, health foods, food service, ostrich
farming and processing, leather, fish farming and veldt products.

### Opportunities [**Return to top**](#ch4)

There is considerable potential for the development of entrepreneurial
fish farming. Presently it is not conducted on a commercial scale and is
confined mainly to the Chobe River and Okavango Delta.

Over the next five years, the government hopes to attract private sector
investment in tanneries countrywide for the export of processed hides
and skins, establish a poultry hatchery, breeder stock and poultry
abattoirs, and pig feed production and breeder stock.

### Resources [**Return to top**](#ch4)

Ministry of Agriculture,
<http://www.gov.bw/government/ministry_of_agriculture.html>

U.S. Foreign Agricultural Service:
[www.fas.usda.gov](http://www.fas.usda.gov/)

Ministry of Trade and Industry: [www.mti.gov.bw](http://www.mti.gov.bw/)

Department of Customs and Excise: <http://www.finance.gov.bw/customs/>

[Return to table of
contents](#doing-business-in-botswana-a-country-commercial-guide-for-u.s.-companies)

[[]{#ch5 .anchor}Return to table of
contents](#doing-business-in-botswana-a-country-commercial-guide-for-u.s.-companies)

# Chapter 5: Trade Regulations and Standards

-   [Import Tariffs](#import-tariffs-return-to-top)

-   [Trade Barriers](#trade-barriers-return-to-top)

-   [Import Requirements and
    Documentation](#import-requirements-and-documentation-return-to-top)

-   [U.S. Export Controls](#u.s.-export-controls-return-to-top)

-   [Temporary Entry](#temporary-entry-return-to-top)

-   [Labeling and Marking Requirements](#twentyone)

-   [Prohibited and Restricted
    Imports](#prohibited-and-restricted-imports-return-to-top)

-   [Customs Regulations and Contact
    Information](#customs-contact-information-return-to-top)

-   [Standards](#standards-return-to-top)

-   [Trade Agreements](#trade-agreements-return-to-top)

-   [Web Resources](#web-resources-return-to-top-1)

## Import Tariffs [**Return to top**](#ch5)

In general, goods imported into Botswana from outside the Southern
African Customs Union - SACU (Botswana, Lesotho, Namibia, South Africa
and Swaziland) attract customs duties at rates outlined in the Customs
Tariff Book. Customs duties are paid against a prescribed declaration
form formally known as a bill of entry, form BW500. A tariff book as
well as a goods codebook is available for sale at all regional Customs
and Excise offices for BWP 300.00 and BWP 17.00, respectively. It is not
currently available via the Internet.

(Department of Customs and Excise: <http://www.finance.gov.bw/customs/>)

## Trade Barriers [**Return to top**](#ch5)

There are very few tariff or non-tariff barriers to trade with Botswana,
apart from restrictions on licensing for some business operations, which
are reserved for Batswana companies. (Please refer to the section on
Joint Ventures/Licensing in Chapter 3 for a list of the business
licenses reserved for Botswana citizens.)

However, there exists the potential for some investment barriers,
principally in the services sector, as the country pursues its
privatization and liberalization efforts while simultaneously pursuing a
program for citizen empowerment. The Government is continuing to
reorganize and restructure some Ministries and Departments, with the aim
of improving efficiency and effectiveness of service delivery, and it is
moving towards privatizing a number of parastatal businesses. Part of
the reform development has required the Government to establish
autonomous authorities or boards, working largely on commercial
principles. One of these is the Public Enterprise Evaluation and
Privatization Agency (PEEPA). In 2000, PEEPA was established to oversee
the implementation of the Privatization Policy. PEEPA will ultimately
decide the extent of foreign participation in the privatization process
and determine the mechanics that will be used to promote citizen
participation. The Government intends to use privatization as a tool to
increase foreign direct and portfolio investment in the country.

The Ministry of Finance and Development Planning, to which PEEPA
reports, has promised that foreign participation in privatized companies
will be welcomed as, in addition to capital, foreign investors will
bring with them advanced technology, managerial expertise and useful
market connections. The Ministry has stated, however, that local
investors may be given preference in some instances; \"restrictions may
need to be imposed on foreign participation in certain companies for
strategic or other reasons that will be considered on a case-by-case
basis.\"

The telecommunications market was partially liberalized in 1996
following the adoption of the Telecommunications Policy of 1995 and
enactment of the Telecommunications Act (Act No. 15 of 1996), which
abolished Botswana Telecommunication Corporation's (BTC) monopoly in
some segments of the market and established the independent regulator,
the Botswana Telecommunications Authority (BTA). Botswana is considering
further liberalization but has made no final decisions.

Botswana did not participate in the WTO extended telecommunications and
financial services negotiations. The BTA was created to safeguard
competition and inter-connection to the public network. Yet, the
state-owned BTC still maintains a monopoly as the sole licensed supplier
of fixed-line voice services, including international calls. Market
segments liberalized so far are mobile telephones, data communications,
payphones, sale of telecommunications equipment, and Internet services.
Two international firms, Mascom (Portuguese) and Orange (French),
compete for the bulk of the local cellular phone market share.
Voice-over Internet Protocol (VoIP) is not allowed (except over private
networks); this prevents licensed Internet providers, as well as
suppliers of international data transmission through very small aperture
terminals (VSATs), from offering voice services in competition with BTC.

The BTA operated with almost complete freedom in deciding the number of
licenses and associated conditions prior to an amendment to the
Telecommunications Act of 1996 in December 2004. This amendment requires
that the Minister of Communications, Science and Technology approve all
new licenses and associated conditions, as well as the budgeting and
strategic planning of the Authority.

## Import Requirements and Documentation [**Return to top**](#ch5)

Import permits are required for goods entering Botswana directly from
outside the Southern African Customs Union, with the exception of
Malawi, and are obtainable from the Department of Trade and Consumer
Affairs in the Ministry of Trade and Industry. The import permits are
not transferable. Permits are usually granted upon request, and
Botswana\'s abolition of foreign exchange controls in February 1999
means there is no difficulty in obtaining sufficient foreign currency to
cover transactions.

In 1999, the government underscored its intention to replace the
existing sales tax regime with a value-added tax (VAT) by April 2001.
The introduction of VAT took place with effect from July 01, 2002. This
10 percent tax, which replaces the sales tax, covers a wide variety of
goods and services, with just a few exceptions. The VAT is expected to
broaden the tax base and will lead to more stable revenue for the
country. While a few goods and services are exempt from VAT, the onus is
on the supplier to establish that the supply falls within the exemption
list. VAT will be applicable to any organization or company that makes
an annual return of over P250, 000 (USD 49,250). In preparation for the
new tax system, a VAT guide was produced and distributed to the general
public, and the registration of taxpayers started April 2002. The
Value-Added-Tax Act makes no provision for allowing input tax credit for
second-hand clothing.

General documentation required for external trade includes the
following: (a) Form CCA I for imports and exports within SACU; (b) Form
CE 500 (Bill of Entry) for imports from outside of SACU; (c) Form CE 24
(Bill of Entry) for exports of local products; and (d) Form CE 23 (Bill
of Entry) for exports of imported products.

## U.S. Export Controls [**Return to top**](#ch5)

Relatively few exports require an export license. Licenses are required
in certain situations involving national security, foreign policy,
short-supply, nuclear non-proliferation, missile technology, chemical
and biological weapons, regional stability, crime control, or terrorist
concerns. License requirements are dependent upon an item\'s technical
characteristics, the destination, the end-use, and the end-user, and
other activities of the end-user. For information related to U.S. Export
controls, please visit the U.S. Department of Commerce's website at
<http://www.export.gov/exportcontrols.html>.

## Temporary Entry [**Return to top**](#ch5)

Equipment that is imported on a temporary basis for a given project is
admissible under the General Rebate of duty concession. Here, it is
important to note that the equipment and parts thereof should be
imported under cover of a bond the amount of which is equivalent to
customs duties and/or VAT applicable. The bond is valid for a limited
period only, as follows: equipment attracting VAT is covered by a three
(3) months bond while equipment attracting customs duties is covered by
a six (6) months bond. That is to say, after the elapse of the bond
period, applicable customs duties and/or VAT becomes due and payable
and, the bond will then be called to suit as customs duties and/or VAT.
A bond form can be collected from the headquarters of the Department of
Customs and Excise (Excise Unit) and lodged with any recognized
commercial bank or insurance company in Botswana.

## Labeling and Marking Requirements [**Return to top**](#ch5)

There are specific requirements for providing information regarding
preparation of goods. The labeling and marketing article addresses
aspects relating to presentation and advertising. It prohibits the use
of information that would mislead purchasers. This is applicable to
prepackaged goods that are to be delivered as such to the ultimate
consumer. It also affects foods supplied to restaurants, hospitals, etc.
The Botswana Bureau of Standards conducts periodic inspections to verify
compliance with this compulsory standard specification.

## Prohibited and Restricted Imports [**Return to top**](#ch5)

Prohibited imports include habit-forming drugs and objectionable
literature (pornographic magazines and videotapes). Importation of
certain agricultural products and plants requires approval from the
Ministry of Agriculture prior to obtaining the import permit from the
Department of Trade and Consumer Affairs. Imports of fresh pork and beef
are banned; import permits are granted only on processed pork products,
while poultry imports are permitted only when there is a domestic market
deficit. Imports of some vegetables, meat, and dairy products are
seasonally banned.

## Customs Contact Information [**Return to top**](#ch5)

The Botswana Department of Customs and Excise website:
<http://www.finance.gov.bw/customs/>

Acting Director of Customs and Excise Botswana, Mr. W. Maunge. Tel: +267
3922129; Fax: +267 3163955. [wmaunge@gov.bw](mailto:pvalashia@gov.bw)

## Standards [**Return to top**](#ch5)

-   [Overview](#overview-return-to-top-8)

-   [Standards Organizations](#standards-organizations-return-to-top)

-   [Conformity Assessment](#conformity-assessment-return-to-top)

-   [Product Certification](#product-certification-return-to-top)

-   [Accreditation](#accreditation-return-to-top)

-   [Publication of Technical
    Regulations](#publication-of-technical-regulations-return-to-top)

-   [Labeling and Marking](#labeling-and-marking-return-to-top)

###  Overview [**Return to top**](#standards-return-to-top)

> Created in 1995, the Botswana Bureau of Standards (BOBS --
> [www.bobs.co.bw](http://www.bobs.bw/)) is a parastatal organization
> that develops and implements national Botswana standards. Separate
> government ministries, parastatals, and private companies can develop
> standards specifically for their own institutions, but only BOBS is
> recognized by the International Organization for Standardization (ISO)
> and has the authority to create national standards. The procedures
> employed in the development of standards are tailored to comply with
> the WTO's code of good practice for the development of standards.

Botswana's standards regime consists of compulsory and voluntary
standards. Compulsory standards are those that all public and private
entities are compelled by law to implement. Compulsory standards affect
human health, safety, environment or export, and BOBS monitors them to
ensure compliance. Presently BOBS enforces compulsory standards on seven
products: petroleum gas, poultry feed, pre-packaged goods for consumers,
cereals/sorghum grains for consumption, cattle feeds, garments, and
drinking water. Standards are voluntary, not binding or backed by law,
so manufacturers do not have to conform to them. Altogether, there are
238 registered standards in Botswana. Any foreign entity or company that
is accredited in its home country is allowed to certify products in
Botswana. Thus, there are many conformity assessment bodies in country.

###  Standards Organizations [**Return to top**](#standards-return-to-top)

BOBS is the sole organization that develops national standards, and it
does have an annual plan of standards. The only other organization in
Botswana that develops an annual plan is the National Food Control
Board. BOBS annually sends its plan to the ISO.

###  Conformity Assessment [**Return to top**](#standards-return-to-top)

Botswana has no national testing organization or conformity assessment
body. Prior to the creation of BOBS, respective ministries, according to
sector, did testing since very few private industries or manufacturers
existed in country with the capacity to test. Each different ministry
had testing laboratories catering to the needs of that particular
ministry. The parastatals have always had their own testing facilities.

> When BOBS came into being in 1995, the GOB created the National
> Testing System (NTS), which is made up of all government, private, and
> parastatal laboratories. Through a Memorandum of Agreement with BOBS,
> these laboratories do testing for the GOB whenever it is needed.
> Whenever BOBS receives a request for testing or calibration, the
> request is passed on to a relevant laboratory. However, according to
> the Director of Standards at BOBS, the NTS testing facilities are
> outdated and inefficient and need to be upgraded to meet international
> standards. The Quality Assurance Department at BOBS has identified
> eleven such testing centers and laboratories that could potentially be
> upgraded, but it is still in the process of monitoring the centers and
> deciding which (if any) would be most feasible for further
> development. In the future, BOBS hopes to replace the NTS with a
> National Conformity Assessment system.

###  Product Certification [**Return to top**](#standards-return-to-top)

Any public or private body whose product satisfies all the requirements
of a Botswana product standard can apply to BOBS for the product to be
certified. Samples of the product are then tested to verify its
conformance to the requirements of the product standard, and if the
results are acceptable, the product can then obtain the BOBS
certification mark.

There are benefits to product certification. The GOB reserves 30% of its
annual budget to be spent on BOBS certified products. Furthermore, the
construction industry is one of the major users of standards in Botswana
and the GOB has agreed to only use locally made products for all of its
construction projects if the products are BOBS certified. All compulsory
standards must be certified. Botswana has no mutual recognition
agreements (MRA's) with U.S. organizations.

###  Accreditation [**Return to top**](#standards-return-to-top)

The GOB requires accreditation for each sector but has no national
accreditation body. Lab reports are sent to the accreditation boards in
South Africa, Mauritius, or the United Kingdom. The SADC countries are
in the process of creating one regional accreditation organization
called the Southern African Development Committee for Accreditation
Services (SADCAS). The idea of SADCAS has already been internationally
accepted and SADC expects to have the organization functioning soon.

###  Publication of Technical Regulations [**Return to top**](#standards-return-to-top)

The Government Gazette publishes both proposed and final regulations.
There are two ways that U.S. entities can comment on proposed
regulations. The 1995 Standards Act stipulates that for two months prior
to standardizing a product, BOBS must publish in the Gazette a
preliminary notice of the proposed standard and circulate it among
countries that participate in trade of the particular product or are
affected by the standard. Any interested entity is able to comment or
send an objection to BOBS during the two months of circulation.
Furthermore, before requiring a government ministry to place a
compulsory standard on a product, BOBS notifies the Batswana public of
its intent. At that point, before a recommendation becomes a technical
regulation, interested parties are able to comment and intervene. In the
future, BOBS is considering sending each of its draft compulsory
standards to all WTO members.

###  Labeling and Marking [**Return to top**](#standards-return-to-top)

> There are specific requirements for providing information regarding
> preparation of goods. The labeling and marketing article addresses
> aspects relating to presentation and advertising. It prohibits the use
> of information that would mislead purchasers. This is applicable to
> prepackaged goods that are to be delivered as such to the ultimate
> consumer. It also affects foods supplied to restaurants, hospitals,
> etc. The BOBS conducts periodic inspections to verify compliance with
> this compulsory standard specification.

## Trade Agreements [**Return to top**](#ch5)

Recognizing the problems that its small domestic market ultimately poses
for investors, Botswana is actively pursuing free trade agreements with
its neighbors as well as other developed and developing countries.

[Southern African Customs Union]{.underline}

Botswana is a member of the Southern African Customs Union (SACU). SACU
is one of the oldest regional integration groupings in the world, dating
as far back as 1910. The member states are Botswana, South Africa,
Lesotho, Namibia, and Swaziland. SACU comprises a duty free trading area
with a common external tariff. With the exception of certain foodstuffs,
import permits are not required for goods entering Botswana from other
SACU members. Botswana\'s membership in SACU allows investors to take
advantage of selling duty free in the far larger South African market.
As a result of the signing of the new SACU Agreement in October 2002,
the new SACU Secretariat, based in Namibia, initiated its operations in
mid-2004. The establishment of the Secretariat will play a crucial role
in implementing the new SACU Agreement as well as improving economic
performance of the union's member states. The member states of SACU have
also agreed to negotiate all future free trade agreements as a bloc.

[U.S.-SACU Free Trade Area]{.underline}

The United States of America and SACU launched comprehensive Free Trade
Area negotiations in June 2003. The negotiations, which are still
underway, are scheduled to conclude in the next couple of years. A
U.S.-SACU FTA will offer increased markets for exports from the SACU
countries, and in so doing enhance growth and employment opportunities.
With this FTA, the SACU countries are opening up a USD 125 billion
market of fifty million consumers. In return, they are getting
guaranteed long-term duty-free access to a USD 11 trillion U.S. market
with more than 290 million consumers: the largest market in the world.

##### Southern African Development Community Free Trade Protocol

Botswana is a member of the Southern African Development Community
(SADC), which launched its Free Trade Area negotiations in September
2000. Once fully implemented in 2008, the free trade area will include
200 million people stretching from the Democratic Republic of Congo to
South Africa. At present, the 13 participating states, including
Botswana, have begun phasing-in an eight-year program for the
elimination of tariffs on all categories of goods originating in their
territories. The member states have also pledged to eliminate, during
the implementation, all existing non-tariff barriers to trade, which
exist in the region. As the SADC free trade area comes into being, it
will greatly assist Botswana\'s investment climate by offering foreign
and domestic investors access to a far larger single market. A Trade
Protocol Implementation Unit has been set up in Gaborone, where the SADC
Secretariat is located, to assist member states to understand and
implement the protocol and help them to cushion short-term dislocations
they might experience as a result of trade liberalization.

##### World Trade Organization

Following its accession to the General Agreement on Tariffs and Trade
(GATT), Botswana became a member of the World Trade Organization (WTO),
which was launched as the official successor to GATT in January 1995.
The WTO is currently responsible for the implementation of the Doha
Round of trade liberalization negotiations.

##### Cotonou Agreement

In June 2000, European Community Member States signed a twenty-year
partnership agreement with the 77 African, Caribbean and Pacific (ACP)
Group states. Together, the ACP signatories represent a total of more
than 650 million people. The Cotonou Agreement replaces the Lomé
Convention, which provided the structure for trade and cooperation
between them and the Community since 1975. Botswana was an associate
member of the Lomé Convention and ratified the Cotonou Agreement in
March 2002. In addition, Botswana hosted the 2004 ACP convention.
Botswana is currently participating in negotiations on an Economic
Partnership Agreement (EPA) with the European Union as part of the
7-country SADC EPA negotiating configuration, which includes Botswana,
Lesotho, Namibia, Swaziland, Mozambique, Angola and Tanzania.

[China and India]{.underline}

Botswana, as part of SACU, launched free trade negotiations in 2005 with
both China and India.

[Mercosur]{.underline}

SACU signed a Preferential Trade Agreement (PTA) on the 16th of December
2004 with the South American customs union, known as Mercosur,
comprising Argentina, Brazil, Paraguay and Uruguay. The agreement
creates the legal framework for improved trade relations between SACU
and Mercosur as well as serving as a first step toward the creation of a
free trade area between the two regions.

##### African Growth and Opportunity Act

Botswana is a beneficiary of the U.S. African Growth and Opportunity
Act, which expands the Generalized System of Preferences and remains in
effect until 2015 with the passage of the 2004 AGOA Acceleration Act.
Under AGOA, over 6,500 product categories of goods are granted duty and
quota free access to the U.S. market. More information about AGOA is
available on the Internet at [www.agoa.gov](http://www.agoa.gov/) and
from the Southern Africa Global Competitiveness Hub, located in
Gaborone, on its website at
[www.satradehub.org](http://www.satradehub.org/).

## Web Resources [**Return to top**](#ch5)

Ministry of Trade and Industry: [www.mti.gov.bw](http://www.mti.gov.bw/)

AGOA: [www.agoa.gov](http://www.agoa.gov/)

Southern Africa Global Competitiveness Hub:
[www.satradehub.org](http://www.satradehub.org/)

Botswana International Financial Services Center:
<http://www.botswanaifsc.com/>

Botswana Bureau of Standards: <http://botsid.com/bobs/>

Southern African Development Community:
[http://www.sadc.int](http://www.sadc.int/)

World Trade Organization: [www.wto.org](http://www.wto.org/)

The Botswana Department of Customs and Excise website:
<http://www.finance.gov.bw/customs/>

U.S. Export controls: <http://www.export.gov/exportcontrols.html>

[Return to table of
contents](#doing-business-in-botswana-a-country-commercial-guide-for-u.s.-companies)

[[]{#ch6 .anchor}Return to table of
contents](#doing-business-in-botswana-a-country-commercial-guide-for-u.s.-companies)

# Chapter 6: Investment Climate

-   [Openness to Foreign
    Investment](#openness-to-foreign-investment-return-to-top)

-   [Conversion and Transfer
    Policies](#conversion-and-transfer-policies-return-to-top)

-   [Expropriation and
    Compensation](#expropriation-and-compensation-return-to-top)

-   [Dispute Settlement](#dispute-settlement-return-to-top)

-   [Performance Requirements and
    Incentives](#performance-requirements-and-incentives-return-to-top)

-   [Right to Private Ownership and Establishment](#thirtynine)

-   [Protection of Property
    Rights](#protection-of-property-rights-return-to-top)

-   [Transparency of Regulatory
    System](#transparency-of-regulatory-system-return-to-top)

-   [Efficient Capital Markets and Portfolio
    Investment](#efficient-capital-markets-and-portfolio-investment-return-to-top)

-   [Political Violence](#political-violence-return-to-top)

-   [Corruption](#corruption-return-to-top)

-   [Bilateral Investment
    Agreements](#bilateral-investment-agreements-return-to-top)

-   [OPIC and Other Investment Insurance
    Programs](#opic-and-other-investment-insurance-programs-return-to-top)

-   [Labor](#labor-return-to-top)

-   [Foreign-Trade Zones/Free
    Ports](#foreign-trade-zonesfree-ports-return-to-top)

-   [Foreign Direct Investment
    Statistics](#foreign-direct-investment-statistics-return-to-top)

-   [Web Resources](#web-resources-return-to-top-2)

## Openness to Foreign Investment [**Return to top**](#ch6)

The Government of Botswana is committed to creating an attractive
climate for foreign investment. Credit ratings received from Moody's and
Standard's & Poor's for Botswana were the highest given to an African
country, ranking it with the oil and gas economies of the Gulf, the
State of Kuwait, the Kingdom of Bahrain, as well as successfully
developing economies like the Republic of Chile. Botswana has a strong
and well-managed minerals economy, coupled with a long record of
political and macroeconomic stability. Over the past 30 years,
Botswana's per capita income rose to roughly USD 4,800 from one of the
poorest countries in the world. This makes Botswana a middle-income
developing country.

The Government and the private sector in Botswana increasingly
acknowledge the need for significant foreign investment, which will
require a strategy for the privatization of state-owned enterprises.
While this policy is not without its political and ideological
opponents, the Government is committed to maintaining Botswana\'s
position as one of the developing world's most competitive economies and
to attracting serious foreign investors to enhance efficiencies,
productivity and secure transfers of skills and technology. Efforts are
now focusing on developing the country's service sector through the
International Financial Service Center (IFSC) and Botswana's unique
tourism potential.

Botswana continues to develop a regulatory framework favorable to
investors. The Government, the second in southern Africa to do so,
abolished all foreign exchange controls in February 1999. It has
undertaken largely successful efforts to combat crime, including
corruption, and to improve the delivery of the judicial system. The
Government has instituted low corporate tax rates, the increasingly
speedy processing of applications for business ventures, a stable
macroeconomic environment, and a commitment to transparency. The
Ministry of Trade and Industry recently announced that it has taken
measures to simplify and expedite the issuance of work and residence
licenses, although evidence of the arbitrary implementation and
occasional politicization of the process appears to be on the rise. The
Registrar of Companies has progressed in implementing its commitment to
reduce the turnaround time to register a company from twelve weeks to
ten working days. In addition, the Government provided assistance to
investors through investment incentive schemes, including grants and tax
relief.

A growing recognition of the importance of private investment,
particularly foreign direct investment, in the creation of sustainable
employment, economic diversification and poverty reduction led to the
formation of the Botswana Export Development and Investment Authority
(BEDIA) in 1998. BEDIA is an autonomous organization established to
promote investment in Botswana with a special emphasis on
export-oriented manufacturing industries. The Authority is designed to
serve as the primary government contact point for both domestic and
foreign investors. Since its inception, BEDIA has assisted fourteen
companies, which are now operational. The total level of investment from
these companies is estimated at USD 12 million, which according to BEDIA
has led to the creation of some 3,600 new jobs. Through its One Stop
Service Center, BEDIA has been providing services for investor needs and
aftercare to both new and existing foreign and citizen-owned enterprises
since 2001. The Center focuses on enabling investors in both the
manufacturing and service sectors to secure all clearances and approvals
as quickly as possible under one roof. BEDIA promotes the sectors
through incoming and outgoing missions as well as through direct mailing
campaigns in the targeted markets, including South Africa, Italy, the
United Kingdom, Belgium, India and Mauritius. These efforts market
Botswana as a viable investment location. Under new leadership as of May
2002, BEDIA is increasingly reaching out towards the United States as a
source for foreign investment and is eager to work with established
businesses seeking to expand their operations into Botswana. The CEO has
also revealed that she intends to undertake a restructuring of the
authority to enhance its efficiency and responsiveness to inquiries.

The foreign investment climate in Botswana calls for foreign investors
to be law-abiding, identify with Botswana\'s national principles and
objectives, assist in the diversification of the economy, and share
Botswana\'s commitment to maintenance of a democratic, open and
non-racial society. Botswana has little tolerance for corruption. A
Foreign Direct Investment Strategy scheduled to be completed by the
Government in early and 2006, will outline these ideals and express the
commitment of the Government to attracting investors.

All foreign investors wishing to invest in Botswana are required to
register a company in Botswana in accordance with the Companies Act and
comply with other applicable legislation, transfer of technology to
Botswana, transfer skills to Batswana by promoting their involvement and
participation in positions of supervisory, middle and senior management
levels in the company in an effort to localize the companies within an
agreed period. There are no ownership transference requirements. These
initiatives are aimed at securing citizen involvement in the development
of Botswana's private sector.

The Government of Botswana is aware that for Botswana to be competitive
in both the regional and global markets, there is a need to continue to
create a conducive environment for private sector investment and growth,
by both domestic businesses and foreign direct investors. The Government
has approved a Competition Policy and with assistance from the United
Nations Development Program (UNDP) is working on drafting a Competition
Law in 2006. In addition, the new Companies Act will create an updated,
simplified and clarified framework for incorporating companies.

While generally open to foreign participation in its economy, Botswana
does reserve some sectors solely for citizen participation and has a
number of citizen-empowerment programs that are closed to foreign
investors. Most were imposed by Parliament out of a fear that other
non-citizen African and South Asian residents were opening businesses in
areas traditionally controlled by Batswana. The restrictions are not
retroactive, and businesses in existence prior to the law\'s passage
remain in the hands of their non-citizen owners. In addition, many
foreign investors have continued to invest in certain areas, such as gas
stations, through franchising to Botswana citizens.

The Ministry of Trade and Industry, which has responsibility for
licensing businesses, issues licenses to foreigners to operate
businesses related to these areas whenever there has been any ambiguity
as to whether the licensing prohibition applied. At present, the law
prohibits foreign participation in school furniture manufacturing, and
the welding and bricklaying trades. The law limits the following trades
or businesses to those ventures wholly controlled by Batswana:

A\) hawkers and vendors

B\) butchery and fresh produce

C\) general trading

D\) petrol filling station

E\) bottle stores (liquor stores)

F\) bars other than those related to hotel establishments

G\) chibuku (traditional beer) bar

H\) village type restaurant take-away including restaurant liquor
license

I\) supermarkets, but excluding chain stores and franchise operations,

J\) simple specialty operations such as clothing boutique, footwear,
etc.

K\) Government building projects

\- registration as building contractor

\- building projects up to P 150,000 (USD 29,550)

\- maintenance and minor building works of government properties

L\) Road contracts and railway maintenance

\- fencing, reserve and draining, culvert construction, transport and
plant hire, clearing and scrubbing bush, road marking, carting gravel,
bridge painting, stock piling of material

M\) Industrial activities

\- school furniture, uniforms, ordinary cement and baked bricks,
ordinary bread baking, sorghum milling, burglar bars

N\) Others

\- transportation of mail, purchase furniture by local authorities and
government, procurement of uniforms, overalls and dust coats by
government, local authorities and parastatals.

The Government has also imposed a temporary prohibition on the licensing
of any specialty trading companies pending a review, which was expected
to be completed by June 2005 and is now long overdue, of potential abuse
of the specialty trading licenses for the operation of general
dealerships, which are reserved for Batswana citizen companies.

The Ministry of Trade and Industry has taken an expansive interpretation
of \"chain stores\" to mean any store with more than one outlet and has
allowed the exemption to apply not only to supermarkets, but also to
simple specialty operations and general trading stores. Hence, large
general merchandise markets, restaurants and the dominant grocery
network, all owned by foreigners, operate without restriction. Foreign
investors are allowed to participate in all other sectors. Business
licenses are issued following a routine review of proposed commercial
activities, which is carried out in a transparent and non-discriminatory
manner.

Foreign investors are given equal access to general investment incentive
schemes for medium and large projects in most economic sectors. Foreign
investors do not, however, have access to Botswana Government assistance
loans and grants designed for citizen-owned contracting firms or for
small enterprises, defined as those involving investments of less than
Pula 75,000 (USD 14,775 ). Investment of foreign capital in job-creating
industrial projects, particularly those that have an import substitution
component or have export potential, is strongly encouraged.

The Government is continuing to reorganize and restructure some
Ministries and Departments, with the aim of improving efficiency and
effectiveness of service delivery, and is moving towards privatizing a
number of parastatal businesses. Part of the reform development has
required the Government to establish autonomous authorities or boards,
working largely on commercial principles. One of these is the Public
Enterprise Evaluation and Privatization Agency (PEEPA). In 2000, PEEPA
was established to oversee the implementation of the Privatization
Policy. PEEPA will ultimately decide the extent of foreign participation
in the privatization process and determine the mechanics that will be
used to promote citizen participation. The Government intends to use
privatization as a tool to increase foreign direct and portfolio
investment in the country, while on the other hand addressing the
concerns that privatization will cost jobs and only reward wealthy
foreign interests. The Ministry of Finance, to which PEEPA reports,
welcomes foreign participation in privatized companies.

Indeed, the Botswana Government is attempting to walk a narrow tightrope
on the issue. It desires, on the one hand, to use privatization as a
tool to increase foreign direct and portfolio investment in the country,
while on the other addressing concerns that privatization will cost jobs
and only reward wealthy foreign interests. The Ministry of Finance and
Development Planning promised that foreign participation in privatized
companies will be welcomed as, in addition to capital, foreign investors
will bring with them advanced technology, managerial expertise and
useful market connections. The Ministry has also stated that local
investors may be given preference in some instances; \"restrictions may
need to be imposed on foreign participation in certain companies for
strategic or other reason that will be considered on a case-by-case
basis.\"

With the passage of the Privatization Master Plan in March 2005,
privatization of public enterprises is expected to accelerate,
especially since most of the public enterprises were profitable in
2002/2003. The Privatization Master Plan provides a concrete basis for
implementation of different privatization-related activities in a
systematic manner. As part of the preparations for implementation of the
Privatization Master Plan, PEEPA is carrying out extensive diagnostic
reviews covering the performance of public enterprises. The Agency has
issued a request for proposals to conduct a feasibility study for the
merger and privatization of the National Development Bank and the
Botswana Savings Bank. The privatization of Air Botswana, the national
airline, which was Botswana's first test, is still not completed. The
Government is exploring options following the withdrawal of the two
strategic partners who had earlier shown interest in the airline's
privatization.

However, the ability of PEEPA to push through the privatization of
state-owned enterprises is hampered by its legislative restrictions.
There is no privatization implementing legislation, meaning the decision
for privatizing particular parastatals still rests with the Ministries
in question; a situation that has led to some inertia in moving the
privatization process forward.

## Conversion and Transfer Policies [**Return to top**](#ch6)

Botswana was the second country in the Southern African Development
Community (SADC) to abolish exchange controls. The complete elimination
of controls on current and capital accounts enhances Botswana's
competitive position as a regional investment destination. In addition,
the abolition of exchange controls has allowed the further development
of Botswana\'s financial markets through the creation of new portfolio
investment options. This new change in policy has necessitated the
development of government capacity to monitor data on capital flows so
as to provide early warning signals of potentially destabilizing
activity. Commercial banks are required to have investors complete basic
forms indicating name, address, identity, purpose and details of the
beneficiary prior to processing investors\' transfer requests or loan
applications. The Ministry of Finance monitors data collected on the
forms for statistical information on capital flows, but the form does
not require Botswana Government approval prior to the processing of a
transaction and does not in any way delay capital transfers. Other
government agencies also monitor large international capital inflows so
that appropriate policies can be implemented to reduce any destabilizing
effects on the economy.

There are no restrictions on converting or transferring funds associated
with an investment into a freely convertible currency and at a legal
clearing rate. Investors are allowed to remit funds through a legal
parallel market. Non-residents can trade in and issue Botswana
Pula-denominated bonds with maturity periods of over one year, provided
such instruments are listed on the Botswana Stock Exchange. This is a
move to encourage portfolio investments, the development of domestic
capital markets, and the diversification of investment instruments.
Foreigners can hold shares in Botswana companies. Residents are
permitted to invest overseas and borrow offshore. Travelers are not
restricted as to the amount of currency they may carry on their person
or in their baggage, but they are required to declare to customs at the
port of departure any cash amount in excess of Pula 10,000 (USD 1,970).
All quantitative limits on foreign currency access for current account
transactions have been removed. Dual listings are permitted on the
Botswana Stock Exchange. Botswana\'s new \"Letlole Saving Certificate\"
(the equivalent of a U.S. Treasury bond) can be purchased only by
Botswana citizens.

The government permits the establishment of foreign currency-denominated
accounts in Botswana. At present, commercial banks offer accounts
denominated in U.S. Dollars, British Pounds, Euros and South African
Rands. Businesses and other bodies incorporated or registered under the
laws of Botswana may open such accounts without prior approval from the
Bank of Botswana. The government also permits the issuance of foreign
currency denominated loans.

Upon disinvestment by a non-resident, the person is allowed immediate
repatriation of all proceeds. Investment returns such as profits and
dividends, debt service, capital gains, returns on intellectual
property, royalties, franchise fees and service fees can all be
repatriated without limits. There is no difficulty in obtaining foreign
exchange. Shortages of foreign exchange that would lead banks to block
transactions is highly unlikely. With international reserves of
approximately USD 5.7 billion, Botswana will not experience foreign
exchange difficulties in the foreseeable future, covering roughly 2
years of import liabilities. The Botswana Pula is, for all intents and
purposes, freely convertible.

## Expropriation and Compensation [**Return to top**](#ch6)

The Constitution of Botswana prohibits the nationalization of private
property. The Government of Botswana has never pursued a policy of
forced nationalization, and there is no reason to believe that it would
consider expropriatory actions.

## Dispute Settlement [**Return to top**](#ch6)

The Botswana constitution provides for a judiciary, which is independent
of both the executive and legislative authorities. Civil law is based on
Roman-Dutch law while criminal law is built on familiar tenets of the
English legal system. The legal system is sufficient to conduct secure
commercial dealings. Foreign and domestic parties have equal access to
and standing under the judicial system. Botswana courts will, in
general, accept and enforce decisions of a foreign court found to have
jurisdiction in a given case. However, due to a caseload backlog, some
U.S. companies facing legal challenges have expressed impatience with
the resolution of disputes.

Botswana has written and consistently applied commercial and bankruptcy
laws. Secured and unsecured creditors enjoy the same rights under
bankruptcy proceedings as they would in the United States. Botswana is a
member of the International Center for the Settlement of Investment
Disputes (ICSID) and the Multilateral Investment Guarantee Agency
(MIGA), and as such accepts binding international arbitration of
investment disputes.

## Performance Requirements and Incentives [**Return to top**](#ch6)

Performance requirements are not imposed as a condition for
establishing, maintaining or expanding an investment in Botswana, or for
access to tax and investment incentives. A unique incentive corporate
tax at only 15 percent for manufacturing enterprises is also available.
Foreign investors are encouraged but not compelled to establish joint
ventures with citizens or citizen-owned companies. The choice of
citizens or citizen owned companies is in the absolute discretion of the
foreign investor.

Foreign investors wishing to invest in Botswana are required to register
the company in accordance with the companies Act and comply with other
applicable legislation. Investors are encouraged, but not required, to
purchase from local sources. Foreign exchange is available to all
investors, domestic or foreign, regardless of export volumes. The
Government does not require investors to locate in specific geographical
areas, use a specific percentage of local content, allow local equity in
projects, manufacture substitutes for imports, meet export requirements
or targets, or use local sources of financing.

It is the official policy of the Government to encourage foreign firms
to hire qualified Botswana nationals rather than expatriates, and the
granting of work permits to expatriates can in some instances be made
contingent upon establishment of demonstrable \"localization\" efforts.
The Government has in the past recognized that the shortage of technical
and managerial job skills among the general population necessitates the
import of expatriate labor and has generally granted work permits for
positions which cannot be filled by an appropriately trained Botswana
citizen or for which the company requires job-specific training. After
the start-up period, however, the Government has often required evidence
that a citizen is being trained to assume some of the expatriate
positions, particularly at the middle-management level, through the
filing of an annual localization plan.

The process of reviewing the Industrial Development Act has started. The
review is intended to provide for a decentralized and simplified
industrial licensing system that will speed up the issuance of licenses,
as well as bring services closer to the public. It is also intended to
align the Industrial Development Act with the Trade Act of 2003 and
provide consistency in the issuance of business licenses. Efforts are
continuing to deal with the long-standing backlog of residence permit
applications for investors. The use of a single application for both
work and residence permits, which was started in April 2002, should
further reduce processing time of applications for both resident and
work permits.

The government of Botswana offers foreign investors equal access to
incentives designed to promote export-oriented industries. Current
incentives include:

\- A duty drawback facility when purchasing raw materials to be used for
the production of merchandise destined for export.

\- Exemption from sales tax when importing machinery and equipment
required in the production of export merchandise.

In addition, the government-owned Botswana Export Credit Insurance and
Guarantee Ltd. (BECI) allows investors to purchase coverage against the
insolvency and inability of buyers to pay for purchases and political
risks, such as losses caused by import restrictions, war, and, more
commonly, the prevention of foreign exchange transfer for payment by the
buyer\'s country.

A Venture Capital Fund has been established under the Citizen
Entrepreneurial Development Agency (CEDA), to provide equity capital to
citizens as well as ventures between citizens and foreign investors. So
far an estimated total value of P120 million (USD 23.6 million) had been
allocated by the fund. The plan is to invest the full committed capital
of P 200 million (USD 39.4 million) over a five-year period. Transfer of
technology is required of foreign investors and investors are encouraged
but not required to purchase from local sources. The Government does not
require investors to locate in specific geographical areas, utilize a
particular percentage of local content, allow local equity in projects,
manufacture substitutes for imports, meet export requirements or
targets, or use local sources of financing.

The planning of the Credit Development Scheme (CGS) is one of the new
developments under CEDA. The regulations under CGS are:

-   An upper loan limit of P 2 million (USD 400,000 in the earlier
    scheme, to support development of small and medium enterprises)

-   A guarantee cover to participating banks of 75 percent, up from 60
    percent, of the net loss

-   Participating banks provide the funds and appraise projects

-   A reduced maximum interest rate of prime plus 2 percentage points

-   Collateral or security required by banks is subject to negotiation
    between lender and borrower

Technical assistance is to be made in the form of training and mentoring
to develop entrepreneurship among citizens. CEDA's rejection rate
remains very high. The main reasons for the rejection includes the lack
of a sufficient market to render a proposed project viable and
inappropriate requests to refinance existing loans from other financiers
for businesses in over-traded markets.

The Government\'s local procurement policy (LPP) sets aside a portion of
Government supplies procurement needs to be filled by manufacturing
firms based in Botswana. The LPP is an incentive offered by Government
of Botswana for the promotion of the manufacturing and service sectors,
administered by the Industrial Support Services Division. The LPP seeks
to develop and stimulate local entrepreneurship capacity and
international competitiveness where 30 percent of Central Government
purchases are reserved exclusively for local manufacturing companies. To
qualify for the program, manufacturing companies must achieve a minimum
Local Content of 25 percent and meet any two of the following
conditions:

-   Employ between 10 and 200 people

-   Have an annual turnover ranging between P 200,000 (USD 39,400) and P
    500,000 (USD 98,500)

-   Local firms can still tender for the remaining 70 percent with
    international companies

Applications to register a firm for LPP must include a certified copy of
the company's previous fiscal year's financial statement, certificate of
Incorporation and Industrial license and should be filed with the
Department of Industrial Affairs. Both foreign and domestic owned firms
operating in Botswana are equally eligible.

The Minister of Finance and Development Planning has the authority to
issue Development Approval Orders for specific projects, providing tax
relief and/or education and training grants of different types and
rates. The Minister must be satisfied that the proposed project will be
beneficial to the Botswana economy and/or contribute to the economic
advancement of Botswana citizens. Any firm may apply for a Development
Approval Order to the Permanent Secretary for Finance and Development
Planning. Applications will be evaluated against the following criteria:

a\) Job creation for Botswana citizens;

b\) The company\'s training plans for Botswana citizens;

> c\) The company\'s plans to localize non-citizen positions;

d\) Botswana citizen participation in company management;

> e\) Amount of equity held by Botswana citizens in the company;

f\) The location of the proposed investment;

> g\) The project\'s effect on stimulation other economic activities;
> and
>
> h\) The project\'s effect on reducing local consumer prices.

Domestic and foreign-owned firms may both apply for Development Approval
Orders.

## Right to Private Ownership and Establishment [**Return to top**](#ch6)

Botswana has no restrictions on investment ownership, the sources of
financing for investments, the marketing of products, the sources of
technology used by companies, or the methods of training used by
companies. Foreign and domestic private entities may freely establish,
acquire, and dispose of interests in business enterprises. As previously
discussed, there is a brief list of enterprises reserved for ownership
by citizens and a minimum value for foreign investment in a number of
industries, but these restrictions are not a meaningful impediment to
serious foreign investment. Competitive equality is the standard applied
to private enterprises in competition with public enterprises with
respect to access to markets, credit, and other business operations.
Indeed all-remaining parastatals have been commercialized, meaning they
are expected to operate as commercial entities receiving no government
subsidies or special treatment, with the exception of certain public
utility corporations, which still enjoy legally protected monopoly
status. Most of these parastatals, even those without legally protected
monopoly status, are de facto monopolies.

## Protection of Property Rights [**Return to top**](#ch6)

The Constitution of Botswana prohibits the nationalization of private
property. The Government of Botswana has never pursued a policy of
forced nationalization, and there is no reason to believe that it would
consider expropriatory actions.

## Transparency of Regulatory System [**Return to top**](#ch6)

The Botswana government adheres to transparent policies and maintains
effective laws to foster competition and establishes clear rules of the
game. Bureaucratic procedures are streamlined and open, although
somewhat slow, and not excessively overbearing compared to other African
countries.

To comply with the Public Procurement and Asset Disposal Act of 2002,
the Public Procurement and Asset Disposal Board (PPADB) was created in
2003 as an independent parastatal to take over the functions of its
predecessor organization, the Central Tender Board. The PPADB is
responsible for the award of all government tenders. The tender process
is open, and lobbying of the PPADB or its members is strictly
prohibited. One of the key policy objectives of the Public Procurement
and Asset Disposal Board (PPADB), since its inception, has been the
enhancement of operational efficiency in the public procurement system.
PPADB has established the Advisory Committee, Independent Complaints
Review Committee and the Ministerial and District Tender Committees in
accordance with its Act. The Advisory Committee advises the Ministry of
Finance and Development Planning on any weaknesses in the operations of
the board. The Independent Complaints Review Committee, established in
November 2004, reviews the Board's decisions subject to challenge by
stakeholders (e.g. contractors and procuring entities) whilst the
Ministerial and District Tender Committees ensure that speedy decisions
are made. In effect since December 2003, PPADB has started publishing
its decisions concerning awarded tenders, prequalification lists and
newly registered contractors, a measure which should go a long way
towards enhancing public confidence in the operations of the board.

Government procurement practices do, however, involve some preference
schemes and reserve certain tenders for 100 percent citizen-owned
companies. There is an ongoing public debate about government
procurement practices, which many view as a give-away to foreign
companies. The PPADB is explicitly charged with promoting citizen
empowerment through the proactive implementation of reservation and
preference schemes designed and introduced by the Government of Botswana
from time to time to enhance citizen participation in economic
activities resulting in increased employment and capacity building.
However, the Board states that it considers these schemes within the
context of its obligations under international trade treaties such as
the World Trade Organization (WTO), and regional agreements under the
Southern African Development Community (SADC) and the Southern African
Customs Union (SACU).

The Government updated its labor legislation to comply with ILO
standards in 2004. Implementation is expected in the course of 2005. The
existence of an industrial court further enhances and strengthens
impartiality in labor disputes. The Employment Act of 1992 provides
basic guidelines for employment in Botswana. This labor legislation
controls minimum wages, length of the workweek, annual and maternity
leave, hiring and termination.

The Regulation of Minimum Wages Order sets minimum wage rates. Work
permits regulate the employment of non-citizens in Botswana.
Non-resident consultant and supervising engineers or directors of
companies registered in Botswana, however, are exempt from obtaining
work permits. Every private company is required to have at least one
director resident in the country. Health and safety laws, embodied in
the Factories Act of 1973, are designed to provide basic protection for
workers from unsafe working conditions. Minimum working conditions
required on work premises include cleanliness of the premises, adequate
ventilation and sanitation, sufficient lighting and the provision of
safety precautions. Health inspectors and the Botswana Bureau of
Standards carry out periodic checks at both new and operating factories.

## Efficient Capital Markets and Portfolio Investment [**Return to top**](#ch6)

The liberalization of the Botswana economy created the necessary
environment for growth in the financial sector. The country continues to
maintain sound and coordinated fiscal and monetary policies, which are
reflected, in the careful control that has been exercised over credit
expansion, the Pula exchange rate, interest rates and foreign and
domestic borrowing. The financial system and banking industry have
undergone major changes in recent years. A revised Banking Act has given
banks more flexibility in conducting their operations and brought
banking legislation in line with changes in the global industry\'s norms
for regulation, supervision and payments. The Botswana Government is
encouraging the establishment of new and diverse financial institutions
to support increased foreign and domestic investment and to fill the
existing gaps where finance is not currently commercially available.

Botswana launched its International Financial Services Center (IFSC) in
1999. The Botswana IFSC's initiative is to develop a recognized
financial services regional hub in an effort to diversify the economy
and to manage the country's real comparative advantages. Since its
inception, seven companies had applied for and been issued with either
banking licenses or exemption certificates as at December 2003. In
addition, over twenty companies have been approved under IFSC, including
banking operations, fund administrators and group treasury structures.
Botswana has an attractive tax incentives package to encourage financial
service providers to use the IFSC as a base for managing regional
initiatives. Under the Income Tax Amendment Act 1999, Botswana IFSC
special tax regime cover, guaranteed maximum tax rate of 15 percent
until 2020, exemption from withholding tax in Botswana, access to
Botswana's double taxation treaty network, and no capital gains tax.
Botswana IFSC plans to play an important role in regional expansion
initiatives by providing a platform to facilitate cross-border financial
services in an appropriate and conducive manner. For example, the
Botswana Government is currently deliberating on re-insurance
legislation that would permit international insurance companies to widen
the scope of their operations within the IFSC to cover regional as well
as domestic businesses.

The country's policies facilitate the free flow of financial resources.
Credit is available on market terms, and foreign investors have access
to credit on the local market, although the high prime rate of 14.50
percent as of January 2006 is considered prohibitive to debt finance.
Botswana banks may lend to non-resident controlled companies and other
non-resident owned business entities in Botswana without specific
approval from the Bank of Botswana. In fact, foreign investors generally
enjoy much better access to credit than local firms due to the
often-limited capital base of the local entrepreneur, conservative
lending policies by commercial banks, and the variety of strengths
(personnel, technological, and logistical) that the bigger foreign
investors possess. Commercial lenders generally apply a debt to equity
ratio of 4:1. Authorized dealers and credit institutions licensed by the
Bank of Botswana are allowed to make foreign currency-denominated loans,
financial leases and other forms of financial support to their customers
in Botswana whether or not they have onshore accounts.

The central bank - the Bank of Botswana - has an impressive track record
for managing both the commercial banking sector and the country\'s
monetary policies. The number of commercial banks increased to five
following the founding of Bank of Baroda Botswana Limited in March 2001
\-- the other four banks are: Barclays Bank of Botswana Ltd., First
National Bank of Botswana Ltd., Standard Chartered Bank of Botswana Ltd,
and Stanbic Bank Botswana Ltd. All have correspondent relationships with
U.S. banks. In addition, the African Banking Corporation operates a
financial services institution, specializing in structured trade
finance, treasury operations and investment banking.

In 2004, the total assets of commercial banks grew year-on-year by 14.5
percent, to P14.84 billion (USD 2.92 billion). This is compared to a
slightly higher rate of growth of 15.9 percent in 2003.

The Government created two financial parastatals to complement domestic
banks in terms of the commercial and long-term lending. The first of
these is the Botswana Development Corporation, "The Service--Plus
Investment Corporation for Botswana." To date, the BDC's reforms have
been largely successful. BDC is now actively seeking to develop quality
investment proposals rather than waiting for project submissions. In the
past, BDC provided loans and equity capital to almost any project
defined as "development" component. This resulted in huge monetary
losses, which the Government had to cover. Now the organization's
emphasis is on developing commercially viable investment and lending
portfolios. BDC continues to identify manufacturing projects, monitors
and supervises the Corporation's portfolio of companies engaged in a
wide variety of manufacturing activities.

The National Development Bank (NDB), the second parastatal, offers
competitive long-term loans and equity capital to finance commercial
business development. As a Development Financial Institution, NDB is
viable and self-sufficient. The bank continues to contribute very
significantly to the growth of the local economy. NDB's business is
directed solely towards the business community in whatever capacity be
they small, medium or large-scale enterprises and/ or projects. In 1998,
NDB was the first bank in Africa to be certified under the ISO 9001
International standards. The Bank continued to sustain its profitability
during the 2004/05 financial year, but its profits dropped nearly 8
percent against its 2003/04 performance and it was the third consecutive
year the NDB has seen a drop in net income. NDB achieved a net profit of
P37.9 million (USD 7.5 million) for the year ending March 2005. The net
loan book of the Bank grew by 6 percent in 2004, as compared to the 23
percent growth experienced in 2003. Both foreign and domestic investors
are equally eligible for NDB loans and equity participation in
investments. Screening mechanisms have not discriminated against
foreign-owned firms, with 31 percent of the Bank's total loan value
owned by non-citizens.

The Botswana Stock Exchange (BSE) has been one of the best performing
stock markets in the world over the past decade, and 2004 proved to be
another solid year for the Exchange. The domestic company index grew
strongly during the first two quarters of the year and then leveled off
in the third and the fourth quarters, showing total capital growth for
the year at 15.6 percent and 27 percent factoring in dividend returns.
The foreign companies index rose by 11.9 percent in 2004. As a
demonstration of the Exchange's growth, the total number of companies
listed on the exchange has increased from only 5 at its inception in
1989 to 44 as of 2004. In June 2004, seven medium and long term
Quasi-government bonds valued at P1 billion were listed on the Exchange,
increasing the total value in the Botswana bond market four-fold to P1.8
billion. In addition, there are now 18 corporate bonds listed on the
Exchange, 16 of which were listed in 2004.

There are no known practices by private firms to restrict foreign
investment participation or control in domestic enterprises. There are
no known laws or regulations specifically authorizing private firms to
adopt articles of incorporation or association, which limit or prohibit
foreign investment, participation or control.

## Political Violence [**Return to top**](#ch6)

There is no political violence in Botswana.

## Corruption [**Return to top**](#ch6)

Over the years the Government of Botswana has become seriously concerned
about the increasingly detrimental effects of the growing crime rates
which were seen to be limiting the country's development and affecting
its social structures, depriving it of considerable revenue and damaging
the country's reputation. Legislation to combat corruption and economic
crime was put in place, and the Directorate on Corruption and Economic
Crime (DCEC) was established in 1994. Passage of the Proceeds of Serious
Crime Act in 2000 expanded the DCEC\'s mandate to include money
laundering. Since its inception, DCEC has earned itself respect locally
and among those engaged in anti-corruption work elsewhere in the world.
In 2005, Transparency International ranked Botswana as the least corrupt
country in Africa. The Directorate has embarked on an education campaign
to raise public awareness about the cost of corruption and is also
working with Government departments to reform their accountability
procedures.

A few cases of substantial misappropriation of money and land have been
exposed in recent years by the press. Bribery is strictly illegal in
Botswana. The government bureaucracy is paid on time and is provided a
living wage. Investors with experience in other developing nations
describe the lack of obstruction or interference by government as among
the country\'s most important assets. While there remains a high
tolerance for conflict of interest in government/private sector
interaction, foreign investor complaints generally focus on the reputed
inefficiency and/or unresponsiveness of mid- to low-level bureaucrats in
government. Because of the high tolerance in government for conflicts of
interest, nepotism concerns are largely overlooked given the small size
of the population and the chronic shortage of skilled labor in various
sectors. The Government introduced the Performance Management System
(PMS) in 2004 in an effort to improve service and accountability.

## Bilateral Investment Agreements [**Return to top**](#ch6)

Botswana and the United States entered into an investment guarantee
treaty soon after the country\'s independence. Botswana has bilateral
trade agreements governing the duty-free entry of goods with Malawi and
Zimbabwe in southern Africa, in addition to membership, along with South
Africa, Namibia, Swaziland and Lesotho, in the Southern African Customs
Union (SACU). Botswana is a member of the Southern African Development
Community (SADC). Botswana has announced it is planning to pursue free
trade negotiations with China and India in 2005, in addition to its
ongoing FTA negotiations with the U.S., as part of SACU. Botswana
ratified the Cotonou Agreement in March 2002 and played host to the ACP
convention in 2004. It is currently negotiating an Economic Partnership
Agreement (EPA) with the EU as part of SADC. In addition, Botswana
participates in the Generalized System of Preferences, and is an AGOA
beneficiary country. None of these agreements are specifically
\"investment\" agreements.

## OPIC and Other Investment Insurance Programs [**Return to top**](#ch6)

OPIC insurance is available to U.S. investors in Botswana. In July 2004,
OPIC signed a USD 8.5 million investment guarantee with the Kalahari Gas
Corporation, owned in part by Covalent Energy Corporation of Arlington,
VA, to finance equipment purchases and the drilling of coal bed methane
(CBM) wells located approximately 500 meters underground in eastern
Botswana. Botswana is a member of the Multilateral Investment Guarantee
Agency (MIGA). MIGA offers investors protection against inconvertibility
or transfer of currency, expropriation, breach of contract and war and
civil disturbance.

## Labor [**Return to top**](#ch6)

With high levels of unemployment (estimated at 23.8 percent in 2004) and
underemployment, Botswana suffers no shortage of potential workers. The
skills base is still limited, however, and employers may have to engage
in significant training efforts depending on the industry. Retention of
workers and absenteeism can pose problems and is growing as HIV/AIDS
affects the workforce on a broader basis. In addition, managers often
cite productivity of the workforce as a point of frustration. The lack
of trained local citizen professionals is generally resolved by the use
of expatriates, although government officials maintain that local
equivalent labor is available.

Organized labor represents only a small portion of the formal sector
workforce in Botswana of 288,000 workers, concentrated in the mining,
and, to a lesser extent, banking sectors. Botswana law provides for the
right of association, but most foreign investors will not encounter a
unionized workforce in the near term. Only on very rare occasions have
the established unions resorted to work stoppages.

Botswana law protects worker rights in a number of commonly defined
areas, and, in the formal employment sector, standards for length of
workweek (48 hour maximum), minimum wage, and prohibition of child labor
are almost universally upheld. Government continues to build capacity
and ensure implementation of fair practices, and good human and
industrial relations. To achieve this, there will be a review of the
Regulations for Industrial Class Employees and the Public Service
Regulations to align them with new Employment Act, Trade Disputes Act,
Trade Union and Employers Organization Act, and International Labor
Organizations Conventions of which Botswana is a signatory.

## Foreign-Trade Zones/Free Ports [**Return to top**](#ch6)

Botswana currently has no domestic free trade zones or free ports.

## Foreign Direct Investment Statistics [**Return to top**](#ch6)

Foreign direct investment statistics trends show that FDI forms a major
portion of capital flows into Botswana followed by portfolio
investments, which have shown a considerable increase since the
establishment of the Botswana Stock Exchange in the 1990\'s.

The following tables show the Levels of Foreign Investment in Botswana
by Industry and Country as of 31 December 2003.

LEVEL OF FOREIGN INVESTMENT IN BOTSWANA BY INDUSTRY

(Equity/Non-equity - P million as of 31 December 2003)

Industry Foreign Direct Investment Other Investment

\-\-\-\-\-\-\-\-\-\--
\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\--
\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\--

Mining 5,223 1,711

Manufacturing 295 3

Finance 873 192

Retail & Wholesale 826 189

Water Electricity and Energy 27 200

Business Services 94 77

Transport & Communication 154 34

Construction 10 833

Hospitality 154 \-\-\--

Public Administration \-\-- 2,193

Other 1 1

#### Total 7,643 5,338 

LEVEL OF FOREIGN INVESTMENT IN BOTSWANA BY COUNTRY

(Equity/Non-equity - P million as of 31 December 2003)

Source Foreign Direct Investment Other Investment

\-\-\-\-\-\-\-\-\--
\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\--
\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\--

North America & Central 38 88

U.S.A. 18 88

Europe 4,205 1,166

United Kingdom 537 831

Netherlands 34 \-\--

Luxembourg 3,609 \-\-\--

Other Europe 94 62

Africa 3,135 1,799

South Africa 3,054 1,723

Middle East 87 57

Other 3 1,686

#### Total 7,643 5,338 

Exchange Rate USD/Pula 1:5.076

Source: Bank of Botswana 2004 Annual Report

Since 2001, the largest part of foreign direct investment has been
focused in the mining industry, representing 68 percent of total FDI in
2003. The financial sector is the second largest recipient of FDI. The
bulk of FDI was from Europe, which overtook South Africa as the major
source in 2001. Though it is still large, South Africa's share of total
FDI fell to 40 percent from 60.1 percent in 2001.

Major U.S./Foreign Investors

\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\--

AON Botswana is 95 percent U.S. owned by the AON Corporation, which has
its headquarters in Chicago, and it is 5 percent owned by AON Botswana
staff. AON has annual revenues of over USD 7 million and its primary
clients are the Government of Botswana and Debswana (Government-De Beers
joint venture).

Phillip Morris owns a percentage of SAB Miller Co., which owns 40
percent of Kgalagadi Breweries (PTY) LTD. In 2004, South African
Breweries (SAB) bought out the Miller Brewing Company, which owned the
percentage of Kgalagadi. Annual revenue for Kgalagadi Breweries was
roughly USD 170 million in 2003.

Marsh Insurance is 95 percent owned by Marsh New York of the Marsh and
McLennan Companies and is 5 percent locally owned. Marsh has 27
employees and annual revenues were roughly USD 1 million last year.

H.J. Heinz, Inc. owns 80 percent of Kgalagadi Soap Industries,
representing assets of well over USD 5 million.

Covalent Energy of Virginia owns 25 percent of the Kalahari Gas
Corporation, which received OPIC funding for a natural gas drilling
project in mid-2004.

Harness Manufacturing Botswana (HMB) has a special contractual agreement
with the U.S. owned Delphi Corporation as an integrated supplier for
Delphi. HMB produces only Delphi products and operates under the
technical management of Delphi Europe. Annual revenues for HMB in 2003
were roughly USD 24 million.

Additional U.S. Distributors/Agents/Franchises operating in Botswana
include: Kentucky Fried Chicken, ReMax Realtors, Colgate Palmolive,
Grant Thorton Acumen, Deloitte and Touche, Pricewaterhouse Coopers,
KPMG, Ernst & Young, DHL, Federal Express, Avis, 3M, Barloworld, and
Canon. The auditing firms (e.g. Pricewaterhouse Coopers, etc) are wholly
owned by the local partners and receive management control and guidance
from the U.S.

Among non-U.S. investors, by far the largest is the Anglo-American
Corporation (De Beers), which has a 50 percent stake, along with the
Government of Botswana, in the country\'s diamond mining company
Debswana.

## Web Resources [**Return to top**](#ch6)

Overseas Private Investment Corporation:
[www.opic.gov](http://www.opic.gov/)

U.S. Export-Import Bank: [www.exim.gov](http://www.exim.gov/)

U.S. Department of Commerce: [www.doc.gov](http://www.doc.gov/) &
[www.export.gov](http://www.export.gov/) &
[www.buyusa.com](http://www.buyusa.com/)

U.S. Department of State: [www.state.gov](http://www.state.gov/)

U.S. Trade and Development Agency: [www.tda.gov](http://www.tda.gov/)

U.S. Small Business Administration: [www.sba.gov](http://www.sba.gov/)

U.S. Department of Agricultural: [www.usda.gov](http://www.usda.gov/)

Botswana Central Statistics Office:
[http://www.cso.gov.bw](http://www.cso.gov.bw/)

Botswana Public Procurement and Asset Disposal Board:
<http://www.ppadb.co.bw/>

Botswana Export Development and Investment Authority:
[www.bedia.co.bw](http://www.bedia.co.bw/)

Botswana Development Corporation: [www.bdc.bw](http://www.bdc.bw/)

Botswana Telecommunications Corporation:
[www.btc.bw](http://www.btc.bw/)

Botswana Telecommunications Authority: <http://www.bta.org.bw/>

Directorate on Corruption and Economic Crime:
<http://www.gov.bw/government/directorate_on_corruption_and_economic_crime.html>

Botswana Stock Exchange: [http://www.bse.co.bw](http://www.bse.co.bw/)

Bank of Botswana: [www.bob.bw](http://www.bob.bw/)

Citizen Entrepreneurial Development Agency:
[www.ceda.co.bw](http://www.ceda.co.bw/)

Ministry of Agriculture:
<http://www.gov.bw/government/ministry_of_agriculture.html>

Ministry of Trade and Industry: <http://www.mti.gov.bw/>

Ministry of Finance and Development Planning:
<http://www.finance.gov.bw/>

Southern African Development Community:
[http://www.sadc.int](http://www.sadc.int/)

[Return to table of
contents](#doing-business-in-botswana-a-country-commercial-guide-for-u.s.-companies)

[[]{#ch7 .anchor}Return to table of
contents](#doing-business-in-botswana-a-country-commercial-guide-for-u.s.-companies)

# Chapter 7: Trade and Project Financing

-   [How Do I Get Paid (Methods of
    Payment)](#how-do-i-get-paid-methods-of-payment-return-to-top)

-   [How Does the Banking System
    Operate](#how-does-the-banking-system-operate-return-to-top)

-   [Foreign-Exchange
    Controls](#foreign-exchange-controls-return-to-top)

-   [U.S. Banks and Local Correspondent
    Banks](#u.s.-banks-and-local-correspondent-banks-return-to-top)

-   [Project Financing](#fiftyseven)

-   [Web Resources](#web-resources-return-to-top-3)

## How Do I Get Paid (Methods of Payment) [**Return to top**](#ch7)

The most common method of payment for imports from the U.S. is through
Letters of Credit, bank drafts or bank transfers. There are currently no
domestic credit rating agencies in Botswana.

## How Does the Banking System Operate [**Return to top**](#ch7)

Botswana's banking sector consists of a central bank (Bank of Botswana),
five commercial banks (Barclays Bank Botswana, Standard Chartered Bank
Botswana, First National Bank Botswana, Bank of Baroda Botswana Ltd and
Stanbic Bank Botswana), and a growing number of investment and corporate
finance institutions, including Investec Group, Andisa Bank and the
African Banking Corporation of Botswana, which specializes in structured
trade finance, treasury operations and investment banking. All are
geared towards financing for existing and new businesses. However, a
lack of adequate local corporate financing, partially as a result of
over-concentration on asset-based as opposed to cash flow lending
practices, has presented some problems for local and international
businesses. The financial institutions are now improving the range of
services they provide, including a new emphasis on small and
medium-sized enterprises. The newly-emerging group of international
financial institutions that are entering Botswana under the umbrella of
the International Financial Services Center should augment these
efforts. An additional six development-targeted financial institutions
offer specialized services to specific economic sectors. There are
currently no U.S. financial lending institutions or Multilateral
Development Banks in the country. Nonetheless, all five major commercial
banks operating in Botswana have correspondent relationships with U.S.
banks.

The Bank of Botswana was established in 1975 and is responsible for
monetary policies, central banking services, supervision of financial
institutions, issuing of bank notes, implementing exchange rate
policies, administering exchange controls and foreign exchange reserves
management. The bank\'s financial statements are in compliance with
international standards. Both Pricewaterhouse Coopers and KPMG serve as
the bank's auditors.

Short-term finance, including pre-and-post-shipment credit, is readily
available through the commercial banking system at market rates of
interest. Export credit insurance is available through the Botswana
Export Credit Insurance (BECI) agency.

The provisions for U.S. and other foreign firms borrowing in Botswana
are liberal while local banks remain highly liquid. The country\'s
commercial banks, however, have difficulty making long-term credit
available due to the short maturity nature of their deposits and small
capital bases. At present, commercial banks finance only about one-third
of the annual investment in Botswana.

Botswana has kept its external borrowing to a minimum. Moreover, the
country\'s favorable balance of payments situation has meant that, with
one or two exceptions, it has not been forced to borrow externally on
commercial terms. However, given the country's recent fiscal deficits
and its subsequent scaling back on development financing, it is possible
Botswana will begin to access international credit markets to finance
development and infrastructure projects, particularly given its
consistently high sovereign credit ratings (Rated A+ by Standard & Poors
and Moody's).

## Foreign-Exchange Controls [**Return to top**](#ch7)

There are no exchange controls in Botswana. The complete elimination of
controls on current and capital accounts allows the free flow of money
and capital.

## U.S. Banks and Local Correspondent Banks [**Return to top**](#ch7)

The following banks have correspondent relationships with U.S. banks:

Barclays Bank of Botswana Ltd.

Web Address: <http://www.barclays.com/africa/botswana/>

First National Bank of Botswana Ltd.

Web Address: <https://www.fnbbotswana.co.bw/>

Standard Chartered Bank Botswana Ltd.

Web Address: <http://www.standardchartered.com/bw/>

Stanbic Bank Botswana Ltd.

Web Address: <http://www.stanbic.co.bw/>

Bank of Baroda

Web Address: <http://www.bankofbaroda.com/overseasbranch.asp>

## Project Financing [**Return to top**](#ch7)

The Botswana Development Corporation (BDC) and National Development Bank
(NDB) provide local project financing. In addition, the Citizen
Entrepreneurial Development Agency (CEDA) operates a Venture Capital
Fund to provide equity capital to citizens as well as ventures between
citizens and foreign companies.

The Overseas Private Investment Corporation's (OPIC) finance and
insurance programs are available for Botswana, and the body is currently
pursuing a number of investment options in the country. For example,
OPIC signed a deal worth USD 8.5 million to develop a coal-bed methane
natural gas project in mid-2004 and signed a \$6 million direct loan for
school development in 2005. The gas project's feasibility study was
funded by the U.S. Trade and Development Agency (USTDA) and built the
basis for the extension of OPIC financing. U.S. Export-Import Bank
resources are also available for both trade financing and project
financing in Botswana.

## Web Resources [**Return to top**](#ch7)

Export-Import Bank of the United States:
[http://www.exim.gov](http://www.exim.gov/)

Country Limitation Schedule:
<http://www.exim.gov/tools/country/country_limits.html>

OPIC: [http://www.opic.gov](http://www.opic.gov/)

Trade and Development Agency: <http://www.tda.gov/>

SBA\'s Office of International Trade: <http://www.sba.gov/oit/>

USDA Commodity Credit Corporation:
<http://www.fsa.usda.gov/ccc/default.htm>

U.S. Agency for International Development:
[http://www.usaid.gov](http://www.usaid.gov/)

(Insert a link to the applicable Multilateral Development Bank here and
any other pertinent web resources.)

[Return to table of
contents](#doing-business-in-botswana-a-country-commercial-guide-for-u.s.-companies)

[[]{#ch8 .anchor}Return to table of
contents](#doing-business-in-botswana-a-country-commercial-guide-for-u.s.-companies)

# Chapter 8: Business Travel

-   [Business Customs](#business-customs-return-to-top)

-   [Travel Advisory](#travel-advisory-return-to-top)

-   [Visa Requirements](#visa-requirements-return-to-top)

-   [Telecommunications](#telecommunications-return-to-top)

-   [Transportation](#transportation-return-to-top)

-   [Language](#language-return-to-top)

-   [Health](#health-return-to-top)

-   [Local Time, Business Hours and
    Holidays](#local-time-business-hours-and-holidays-return-to-top)

-   [Temporary Entry of Materials and Personal
    Belongings](#web-resources-return-to-top-4)

-   [Web Resources](#web-resources-return-to-top-4)

## Business Customs [**Return to top**](#ch8)

Although friendly and well disposed toward Americans, Botswana business
and government counterparts tend to be more reserved and formal than in
the U.S. business world. The use of first names generally takes longer,
and it is a good idea to wait until your Motswana contact initiates the
practice. Reconfirm business meetings twenty-four hours in advance
directly with the person you are to meet, if possible. Even carefully
arranged meetings may sometimes start late. Business meetings may be
interrupted by telephone conversations. Although odd for an American
businessperson, these occurrences are not indications of a lack of
respect or interest in your business proposal.

## Travel Advisory [**Return to top**](#ch8)

U.S. Department of State Travel Advisory website:
<http://travel.state.gov/travel/cis_pa_tw/cis/cis_1071.html>

## Visa Requirements [**Return to top**](#ch8)

A valid U.S. passport is required for entry into Botswana. No visa is
required of U.S. citizens for stays of up to 90 days.

U.S. Companies that require travel of foreign businesspersons to the
United States should allow sufficient time for visa issuance if
required. Visa applicants should go to the following links.

State Department Visa Website: <http://travel.state.gov/visa/index.html>

United States Visas.gov: <http://www.unitedstatesvisas.gov/>

U.S. Embassy Gaborone Consular Section:
<http://gaborone.usembassy.gov/botswana/consular.html>

## Telecommunications [**Return to top**](#ch8)

Botswana has a relatively modern telecommunications infrastructure, with
over 20 licensed Internet service providers, two licensed mobile
cellular phone operators, and a number of licensed private networks and
data service providers in the country. However, the Botswana
Telecommunications Corporation maintains a de facto monopoly on most
voice services, and maintains the country's fixed-line services
exclusively. Voice-over Internet Protocol is prohibited, and the high
cost and inconsistent reliability of Internet service, including at the
principal hotels in town, has fueled an infrastructure development
initiative and discussions on further liberalization of the
telecommunications industry. DSL service was introduced by Botswana
Telecommunications Corporation in late 2005.

Promotional videotapes should be in the PAL-I format. Computer-based
slide projectors are not readily available. Power runs on 220V.

## Transportation [**Return to top**](#ch8)

Although major roads are generally in good condition, the combination of
long, tedious stretches of two-lane highways, high speed limits, and the
occasional presence of large animals on the roads make fatal accidents a
frequent occurrence. Driving at night on rural highways is dangerous and
should be avoided. Taxis are generally available in towns. Gaborone has
several 24-hour door-to-door chauffeur services. Major hotels provide
periodic shuttle bus service to the downtown area, but arranging
transfers between business appointments is often difficult. Renting a
car is recommended if you have a busy appointment schedule in Gaborone.
The rental agencies will provide a driver for an additional charge, an
option some may wish to consider as traffic moves on the left in
Botswana.

## Language [**Return to top**](#ch8)

English is the official language of government and business in Botswana.
Setswana is the predominant indigenous language and the first language
of most Batswana.

## Health [**Return to top**](#ch8)

Inoculations are not required for visitors to Botswana. Malaria
prophylaxis is necessary only for those traveling north of Francistown,
especially in the northern game parks and reserves. Tap water in the
major towns is safe to drink. Medical facilities in Gaborone and
Francistown are adequate. In the rest of the country, they are limited.
Health providers often expect immediate cash payment for health
services. U.S. medical insurance is not always valid outside the
country.

## Local Time, Business Hours, and Holidays [**Return to top**](#ch8)

For 2006, businesses will be closed in Botswana on January 1 (New Year's
Day), January 2 (Public Holiday), January 3 (Public Holiday), April 14
-- 17 (Easter) May 1 (Labor day), May 25 (Ascension Day), July 1 (Sir
Seretse Khama Day), July 3 (Public Holiday), July 17 (President's Day)
July 18 Public Holiday), September 30 (Botswana Day), October 1 -- 2
(Public Holidays and December 25-26 (Christmas & Boxing Day). Local
government/business hours are from 7:30-12:45 and 1:45-4:30, and local
time is 7 hours ahead of Eastern Standard Time from November-April, and
6 hours ahead from May-October.

## Web Resources [**Return to top**](#ch8)

Government of Botswana Homepage: [www.gov.bw](http://www.gov.bw/)

U.S. Embassy, Gaborone, Consular Section:
<http://gaborone.usembassy.gov/botswana/consular.html>

U.S. Department of State Travel Advisory for Botswana:
<http://travel.state.gov/travel/cis_pa_tw/cis/cis_1071.html>

Hospitality and Tourism Association of Botswana:
[www.hatab.co.bw](http://www.hatab.co.bw/)

Botswana Export Development and Investment Authority:
[www.bedia.co.bw](http://www.bedia.co.bw/)

Botswana Confederation of Commerce, Industry, and Manpower (BOCCIM):
<http://www.boccim.co.bw/>

[Return to table of
contents](#doing-business-in-botswana-a-country-commercial-guide-for-u.s.-companies)

[Return to table of
contents](#doing-business-in-botswana-a-country-commercial-guide-for-u.s.-companies)

# Chapter 9: Contacts, Market Research, and Trade Events

-   [Contacts](#contacts-return-to-top)

-   [Market Research](#market-research-return-to-top)

-   [Trade Events](#trade-events-return-to-top)

## Contacts [**Return to top**](#chapter-9-contacts-market-research-and-trade-events)

U.S. Embassy Commercial Section Contact

Organization: Embassy of the United States of America

Contact Name and Title: Jim Hogan, Economic / Commercial Officer

> Keletso Tlale, Commercial Specialist

Address: P.O. Box 90, Gaborone, Botswana

Phone: (267) 395-3982

Fax: (267) 395-6947 or (267) 318-0232

E-Mail address: <commercialgabs@state.gov>

Web Address: <http://gaborone.usembassy.gov/botswana/comm.html>

###### USAID Financed Trade Assistance/Capacity Building Center

Organization: Southern Africa Global Competitiveness Hub

Web Address: [www.satradehub.org](http://www.satradehub.org/)

###### Local Chambers of Commerce/Business Associations

Organization: American Business Council (ABC) In Botswana

Email: <rram@it.bw>

Organization: Botswana Confederation of Commerce

> Industry and Manpower (BOCCIM)

Web Address: <http://www.boccim.co.bw/>

Organization: Exporters Association of Botswana

Web Address: [www.exporters.bw](http://www.exporters.bw/)

Organization: Hospitality and Tourism Association of Botswana

Web Address: [www.hatab.bw/](http://www.hatab.bw/)

###### Government Agencies/Departments/Parastatals

Government Homepage: [www.gov.bw](http://www.gov.bw/)

Organization: Ministry of Agriculture

Web Address: <http://www.gov.bw/government/ministry_of_agriculture.html>

Organization: Ministry of Trade and Industry

Web Address: <http://www.mti.gov.bw/>

Organization: Department of Customs and Excise

Web Address: <http://www.finance.gov.bw/customs/>

Organization: Ministry of Finance and Development Planning

Web Address: <http://www.finance.gov.bw/>

Organization: Bank of Botswana

Web Address: [www.bob.bw](http://www.bob.bw/)

Organization: Botswana Exporter Development and Investment Authority
(BEDIA)

Web Address: [www.bedia.co.bw](http://www.bedia.co.bw/)

Organization: Botswana Development Corporation

Web Address: [www.bdc.bw](http://www.bdc.bw/)

Organization: National Development Bank

Web Address: <http://www.ndb.bw/>

Organization: Public Procurement and Asset Disposal Board (PPADB)

Web Address: <http://www.ppadb.co.bw/ppadb/index.html>

Organization: Enterprise Botswana

Web Address: <http://www.enterprisebotswana.org/EBmenu.htm>

Organization: Botswana Telecommunications Corporation

Web Address: <http://www.btc.bw/>

Organization: International Financial Services Center

Web Address: [www.ifsc.co.bw](http://www.ifsc.co.bw/)

Organization: Central Statistics Office

Web Address: [http://www.cso.gov.bw](http://www.cso.gov.bw/)

###### Think Tanks/Policy Organizations

Organizations: Botswana Institute for Development Policy Analysis

Web Address: <http://www.bidpa.bw/>

## Market Research [**Return to top**](#chapter-9-contacts-market-research-and-trade-events)

To view market research reports produced by the U.S. Commercial Service
please go to the following website:
[http://www.export.gov/marketresearch.html](http://www.export.gov/marketresearch.html )
and click on Country and Industry Market Reports.

Please note that these reports are only available to U.S. citizens and
U.S. companies. Registration to the site is required, but free of
charge.

Some Industry Market Reports are also available directly from the U.S.
Embassy's Commercial Section website at:
<http://gaborone.usembassy.gov/botswana/comm.html>

## Trade Events [**Return to top**](#chapter-9-contacts-market-research-and-trade-events)

The following is a list of annual or semi-annual trade events held in
Botswana:

-   Botswana Confederation of Commerce, Industry and Manpower (BOCCIM)
    Francistown Northern Trade Fair (Annual -- May/June)

-   BOCCIM National Business Conference (Bi-annual -- August)

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-   Botswana International Trade Fair (Annual -- September)

Please click on the link below for information on global upcoming trade
events.

<http://www.export.gov/tradeevents.html>

[Return to table of
contents](#doing-business-in-botswana-a-country-commercial-guide-for-u.s.-companies)

[[]{#ch10 .anchor}Return to table of
contents](#doing-business-in-botswana-a-country-commercial-guide-for-u.s.-companies)

# Chapter 10: Guide to Our Services

The U.S. Commercial Service offers customized solutions to help your
business enter and succeed in markets worldwide. Our global network of
trade specialists will work one-on-one with you through every step of
the exporting process, helping you to:

-   Target the best markets with our world-class research

-   Promote your products and services to qualified buyers

-   Meet the best distributors and agents for your products and services

-   Overcome potential challenges or trade barriers

For more information on the services provided to U.S. businesses in
Botswana, please click on the link to the Embassy's Commercial Section
below or contact the Department of State Commercial Officer directly at
(+267) 395-3982, Ext 5323.

<http://gaborone.usembassy.gov/botswana/comm.html>

[Return to table of
contents](#doing-business-in-botswana-a-country-commercial-guide-for-u.s.-companies)

# 

U.S. exporters seeking general export information/assistance or
country-specific commercial information should consult with their
nearest **Export Assistance Center** or the **U.S. Department of
Commerce\'s Trade Information Center** at **(800) USA-TRADE**, or go to
the following website: [http://www.export.gov]()\
\
To the best of our knowledge, the information contained in this report
is accurate as of the date published. However, **The Department of
Commerce** does not take responsibility for actions readers may take
based on the information contained herein. Readers should always conduct
their own due diligence before entering into business ventures or other
commercial arrangements. **The Department of Commerce** can assist
companies in these endeavors.