HomeReportsBureau of Economic and Business Affairs2022 Investment Climate Statements…Botswana

# 					2022 Investment Climate Statements: Botswana			

 In this section										/

													Executive Summary 											

                -  Executive Summary  
                -  1. Openness To, and Restrictions Upon, Foreign Investment                     -  Policies Towards Foreign Direct Investment  
                  -  Limits on Foreign Control and Right to Private Ownership and Establishment  
                  -  Other Investment Policy Reviews  
                  -  Business Facilitation  
                  -  Outward Investment  
                -  2. Bilateral Investment and Taxation Treaties     
                -  3. Legal Regime                     -  Transparency of the Regulatory System  
                  -  International Regulatory Considerations  
                  -  Legal System and Judicial Independence  
                  -  Laws and Regulations on Foreign Direct Investment  
                  -  Competition and Antitrust Laws  
                  -  Expropriation and Compensation  
                  -  Dispute Settlement                       -  ICSID Convention and New York Convention  
                    -  Investor-State Dispute Settlement   
                    -  International Commercial Arbitration and Foreign Courts  
                  -  Bankruptcy Regulations  
                -  4. Industrial Policies                     -  Investment Incentives  
                  -  Foreign Trade Zones/Free Ports/Trade Facilitation  
                  -  Performance and Data Localization Requirements   
                -  5. Protection of Property Rights                     -  Real Property  
                  -  Intellectual Property Rights                       -  Resources for Rights Holders   
                -  6. Financial Sector                     -  Capital Markets and Portfolio Investment  
                  -  Money and Banking System  
                  -  Foreign Exchange and Remittances                       -  Foreign Exchange  
                    -  Remittance Policies  
                  -  Sovereign Wealth Funds  
                -  7. State-Owned Enterprises                     -  Privatization Program  
                -  8. Responsible Business Conduct                     -  Additional Resources 
                  -  Climate Issues  
                -  9. Corruption                     -  Resources to Report Corruption  
                -  10. Political and Security Environment    
                -  11. Labor Policies and Practices    
                -  12. U.S. International Development Finance Corporation (DFC), and Other Investment Insurance or Development Finance Programs    
                -  13. Foreign Direct Investment Statistics    
                -  14. Contact for More Information    

## Executive Summary 

Botswana is a small country with a population of about 2.35 million (World Bank, 2020) and nestled between South Africa, Namibia, Zimbabwe and Zambia.  Its central location in southern Africa enables it to serve as a gateway to the region.  Botswana has historically enjoyed high economic growth rates and its export-driven economy is highly correlated with global economic trends.  Development has been driven mainly by revenue from diamond mining, which has enabled Botswana to develop infrastructure and provide social welfare programs for vulnerable members of the population, and these programs will be maintained despite financial challenges in the current financial year, which runs from April 2022 to March 2023.  The economic impact of the COVID-19 pandemic was significant as evidenced by an economic growth of negative 8.5 percent in 2020; economic growth was estimated to reach 9.7 percent in 2021.  Unemployment also rose from 22.2 percent in the fourth quarter of 2019 (prior to the pandemic) to 26 percent in the fourth quarter of 2021.  The fiscal impact of the pandemic has also been significant, resulting in large budget deficits of $1.4 billion in 2020 and $0.87 billion in 2021 compared to the $0.68 billion surplus that the government had forecasted for 2021 in its National Development Plan (NDP).  In the first quarter of 2021, diamond revenues recovered, but international tourism revenues did not.  In recent years, inflation has remained at the bottom end of the central bank’s three to six percent acceptable range; however, since the COVID-19 pandemic, inflation rose to a 13-year high of 10.6 percent in January 2022 and stayed at that level in February 2022.  The World Bank classifies Botswana as an upper middle-income country based on its per capita income of $6,405 in 2020, although it declined from $7,203 in 2019.

Botswana is a stable, democratic country with an independent judiciary system.  It maintains a sound macroeconomic environment, fiscal discipline, a well-capitalized banking system, and a crawling peg exchange rate system.  In March 2021, Standard & Poor’s (S&P) maintained Botswana’s sovereign credit rating for long and short-term foreign and domestic currency bonds at “BBB+/A-2” with a negative outlook, which reflects the risks COVID-19 will continue to pose on Botswana’s economic and fiscal performance over the next 12 months.  In November 2021, Moody’s revised its credit rating for Botswana from A2 to A3 with a stable outlook.  These agencies’ ratings are highly influenced by Botswana’s continued dependence on diamonds, which contribute to at least a quarter of Botswana’s GDP and are susceptible to external shocks which places the country at a much higher risk.  The diamond industry has however been experiencing a recovery, setting Botswana on a positive trajectory.

Botswana has minimal labor strife.  The country has been cited in the 2020 Global Competitiveness Report as one of 30 countries out of 141 in which hiring of foreign labor has become significantly harder than it was in 2008.  Botswana is a member state to both the International Centre for Settlement of Investment Disputes (ICSID) Convention and the 1958 New York Convention.  Corruption in Botswana remains less pervasive than in other parts of Africa; nevertheless, foreign and national companies have noted increasing tender-related corruption.  The Government of Botswana (GoB) created the Botswana Investment and Trade Centre (BITC) to assist foreign investors.  Botswana offers low tax rates and has no foreign exchange controls.  The BITC’s topline economic goals are to promote export-led growth, ensure efficient government spending and financing, build human capital, and to ensure the provision of appropriate infrastructure.  GoB entities, including BITC, use these criteria to determine the level of support to give foreign investors.  The GoB has committed to streamline business-related procedures, and remove bureaucratic impediments based on World Bank recommendations in a business reform roadmap.  Under this framework, the GoB introduced electronic tax and customs processes in 2016 and 2017.  The Companies and Intellectual Property Authority (CIPA) built and successfully integrated the Online Business Registration System (OBRS) with Botswana Unified Revenue Services (BURS) and the Immigration Office.  OBRS is designed to reduce the business registration process by more than 10 days.  On March 2022, Parliament passed the Intellectual Property Policy to leverage Botswana’s IP potential for inclusive and sustainable economic growth and development.  The Public Procurement and Asset Disposal Board (PPADB) will from April 1, 2022, be transitioned to Public Procurement and Regulatory Authority (PPRA) and no longer adjudicate on government tenders.  The GoB also established the Special Economic Zones Authority (SEZA) to streamline sector-targeted investment in Botswana’s different geographic areas.  The Ministry of Investment, Trade & Industry (MITI) is developing a Trading Service Strategy to facilitate economic diversification and is also working on the African Continental Free Trade Area (AfCFTA) Implementation Strategy.

Due to COVID-19-related economic shortfalls, Botswana drew down heavily on its foreign exchange reserves and government savings.  Sectors such as mining, tourism, trade, hotels and restaurants, construction, and manufacturing suffered significantly; however, rough diamond sales recovered somewhat in the second half of 2020.  In April 2021, the government put in place several interventions to raise revenues including a Value Added Tax (VAT) increase from 12 percent to 14 percent, an increase on Withholding Tax on dividend income from 7.5 percent to 10 percent and increases in several fees and levies charged for government services (source: 2021, Budget Speech).  The government moved swiftly to implement relevant statutory instruments to curb the likelihood of companies exploiting COVID-19 to collude to set exorbitant prices.  The 2020 statutory instrument 61 regulated the prices of essential supplies and basic food commodities for the duration of the 18-month COVID-19 related state of emergency.  Interventions like the Economic Recovery and Transformation Plan (ERTP) and the Reset Agenda augmented the short-term economic relief package that included wage subsidies, tax amnesties, waivers of certain levies due to government, loan guarantee schemes to support firms’ access to bank credit, and provision of food relief.  The president’s Reset Agenda seeks to adjust some priorities in light of new and unexpected challenges and to find smarter ways to implement projects in a timely manner and within stipulated budgets.  The ERTP aims to reinforce support already given to affected businesses and also to take advantage of opportunities that have emerged because of the pandemic such as digital services and e-commerce.

Botswana is committed to reducing greenhouse emissions to 15 percent by 2030 through renewable energy projects already underway and listed in the Integrated Resource Plan (IRP).  Botswana also adopted a Climate Change Policy in 2021 which seeks to promote access to carbon markets, climate finance, and clean technologies.

							1. Openness To, and Restrictions Upon, Foreign Investment 					

### Policies Towards Foreign Direct Investment 

The GoB publicly emphasizes the importance of attracting Foreign Direct Investment (FDI) and drafted an investment facilitation law recommended by the 2014 Organization for Economic Co-operation and Development (OECD) Investment Review.  While the draft was completed in 2016 with technical assistance from UNCTAD, it was never enacted.  The draft is still under review and will be presented to Parliament for approval.  The GoB has launched initiatives to promote economic activity and foreign investment in specific areas, such as establishing a diamond hub which brought more value-added businesses (i.e., cutting and polishing) into the country.  Additional investment opportunities in Botswana include large water projects, electricity, transportation, telecommunication infrastructure projects, horticultural production, and agro processing. Economists have also noted Botswana’s considerable potential in the mining, mineral processing, beef, tourism, solar energy, and financial services sectors.  BITC assists foreign investors with projects intended to diversify export revenue, create employment, and transfer skills to the citizens of Botswana.  The High-Level Consultative Council (HLCC), chaired by the President, and an Exporter Roundtable organized by BITC and Botswana’s Exporters and Manufacturers Association (BEMA), are mechanisms employed by the GoB to focus on a healthy business environment for FDI.

### Limits on Foreign Control and Right to Private Ownership and Establishment 

Botswana’s 2003 Trade Act reserves licenses for citizens in 19 sectors, including general trading establishments, gas stations, liquor stores, supermarkets (excluding chain stores), bars (other than those associated with hotels), certain types of restaurants, boutiques, auctioneers, car washes, domestic cleaning services, curio shops, fresh produce vendors, funeral homes, hairdressers, various types of rental/hire services, laundromats, specific types of government construction projects under a certain dollar amount, certain activities related to road and railway construction and maintenance, and certain types of manufacturing activities including the production of furniture for schools, welding, and bricklaying.  The law allows foreigners to participate in these sectors as minority joint venture partners in medium-sized businesses.  Foreigners can hold the majority share if they obtain written approval from the trade minister.  Foreign companies have access to about 46 trading licenses in different categories.  It takes approximately five working days to obtain a license.

The Ministry of Investment, Trade, and Industry (MITI) administers the citizen participation initiative and takes an expansive interpretation of the term chain stores, so that it encompasses any store with more than one outlet.  This broad interpretation has resulted in the need to apply exemptions to certain supermarkets, simple specialty operations, and general trading stores.  These exceptions were generally granted prior to 2015 and many large general merchandise markets, restaurants, and grocery networks are owned by foreigners as a result.  Since 2015, the GoB has denied some exception requests, but reports they have approved some based on localization agreements directly negotiated between the ministry and the applying company.  These agreements reportedly include commitments to purchase supplies locally and capacity building for local workers and industry.  BITC conducts due diligence on companies that are looking to invest in the country and the Directorate of Intelligence Services (DIS) handles background checks for national security.

### Other Investment Policy Reviews 

Botswana has been a World Trade Organization (WTO) member since 1995.  In 2016, the WTO conducted a trade policy review of the Southern African Customs Union to which Botswana belongs (https://www.wto.org/english/tratop_e/tpr_e/tp322_e.htm).

Botswana underwent an ICT Policy Review and e-Commerce strategy review with UNCTAD and the report was released in October 2021 (https://unctad.org/system/files/official-document/dtlstict2021d4_en.pdf).  Botswana sees this as a critical move to diversify the economy and position the country to be a bigger player in the global economy.

### Business Facilitation 

To operate a business in Botswana, one needs to register a company with the GoB’s CIPA through the OBRS at: https://www.cipa.co.bw/types-of-entities

CIPA asserts that the company registration process can be completed in a day and is integrated with BURS which allows for a fast-tracked tax registration in 30 days.  Additional work is required to open bank accounts and obtain necessary licenses and permits.

BITC (www.bitc.co.bw), the GoB’s integrated investment and trade promotion authority, was designed to serve as a one-stop shop to assist investors in setting up a business and finding a location for operation.  BITC’s ability to streamline procedures varies based on GoB entity and bureaucratic requirements.  BITC assesses investment projects on their ability to diversify the economy away from its continued dependence on diamond mining, contribute towards export-led growth, and job creation for and skills transfer to Batswana citizens.  BITC also hosts the Botswana Trade Portal (https://www.botswanatradeportal.org.bw) that is designed to ease trade across borders.  It is a single point of contact for all information relating to import and export to and from Botswana and represents relevant ministries and parastatals.

Botswana has several incentives and preferences for both citizen-owned and locally based companies.  Foreign-owned companies can benefit from local procurement preferences which are usually required for government tenders.  MITI instituted a program in 2015 to give locally based small companies a 15 percent preferential price margin in GoB procurement, with mid-sized companies receiving a 10 percent margin, and large companies a five percent margin.  Under this policy, MITI defines small companies as having less than five million pula in annual revenue reflected in their financial statements, medium companies with five to 20 million pula in revenue, and large companies with revenues exceeding 20 million pula.  The directive applies to 27 categories of goods and services ranging from textiles, chemicals, and food, as well as a broad range of consultancy services.  The government can also offer up to 50 million pula in funding through the Citizen Entrepreneurial Development Agency (CEDA) to joint ventures between foreign and citizen owned companies.

For Companies Act registration purposes, enterprises are classified as:  Micro Enterprises – fewer than six employees including the owner and an annual revenue below 60 thousand pula; Small Enterprises – fewer than 25 employees and an annual revenue between 60 thousand and 1.5 million pula; Medium Enterprises – fewer than 100 employees and annual revenue between 1.5 and 5 million pula; Large Enterprises – over 100 employees and an annual revenue of at least 5 million pula.  This classification system permits foreigners to participate as minority shareholders in medium-sized enterprises in the 35 business sectors reserved for citizens.

### Outward Investment 

The GoB neither promotes nor restricts outward investment.

							2. Bilateral Investment and Taxation Treaties  					

The United States and the Southern Africa Customs Union (SACU), which includes Botswana, signed a Trade, Investment, and Development Cooperative Agreement (TIDCA) in 2008.  The TIDCA establishes a forum for consultative discussions, cooperative work, and possible agreements on a wide range of trade issues, with a special focus on customs and trade facilitation, technical barriers to trade, sanitary and phytosanitary (SPS) measures, and trade and investment promotion.

SACU has free trade agreements with Iceland, Liechtenstein, Norway, Switzerland, and the European Free Trade Association.  SACU countries and MERCOSUR – Argentina, Brazil, Paraguay, and Uruguay – signed reciprocal preferential trade agreements (PTA) in December 2008 and April 2009, respectively.  The PTA establishes fixed preference margins as a first step towards the creation of a free trade area between SACU and MERCOSUR.  Botswana has ratified the agreement and is awaiting remaining Member States to complete ratification for the agreement to be implemented.

For more information on SACU’s tariff regime see the WTO document:  http://www.wto.org/english/tratop_e/tpr_e/s222-00_e.doc.

Botswana is also a member of the Southern African Development Community (SADC) and is currently implementing the SADC Protocol on Trade.  For more information about SADC, visit:  www.sadc.int.

In June 2016, Botswana signed an Economic Partnership Agreement (EPA) with the European Union as part of the SADC EPA Group.  The EPA guarantees access to the EU market without any duties or quotas for Botswana and gives asymmetric access to the SADC EPA Group.

The EPA between the United Kingdom, the Southern African Customs Union and Mozambique (SACUM-UK EPA) was signed in 2019, providing immediate duty-free, quota-free access to goods exported from the SACU member states and Mozambique, except for South Africa.  In return, these countries commit to gradual tariff liberalization for imported goods from the UK.

Botswana has a trade agreement with Zimbabwe, which provides duty-free access for goods with at least 25 percent local content.

In 2018, Botswana signed the Tripartite Free Trade Area (TFTA) agreement consisting of 26 countries of the three Regional Economic communities of the Common Market for Eastern and Southern Africa (COMESA), East African Commission (EAC), and SADC.

The African Continental Free Trade Agreement (AfCFTA), of which Botswana is a signatory, commenced trading officially on January 1, 2021.  AfCFTA was founded in 2018 to promote intra-African trade and to pave the way for a future continental customs union.

Botswana has Bilateral Investment Treaties (BIT) with Germany and Switzerland which came into force in 2007 and 2000, respectively.

Botswana is also a member of OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS).  In October 2021, Botswana and other member countries signed the new tax deal that will ensure that Multinational Enterprises will be subject to a minimum 15 percent tax rate from 2023.

							3. Legal Regime 					

### Transparency of the Regulatory System 

Bureaucratic procedures necessary to start and maintain a business tend to be transparent, though slow, and regulatory procedures can be cumbersome to navigate.  In 2018, Botswana launched a Regulatory Impact Assessment Strategy to improve the regulatory environment, ensure legislation is necessary and cost effective, reduce administrative burdens imposed by the regulatory environment to businesses, and to improve transparency, consultation, and government accountability.  Most complaints by foreign investors are about the inefficiency and/or unresponsiveness of mid- and low-level government bureaucrats.  The GoB has introduced a Performance Management System to improve the service and accountability of its employees.  Additionally, President Masisi presented a Reset Agenda in May 2021 and one of its priorities is to align government’s machinery to the presidential agenda.  This will ensure transformation and improved service delivery in the public service by bringing significant reforms in all public institutions.  Unfair business practices or conduct can be reported to the Competition Authority, which seeks to level the playing field for all business operators and foster a conducive environment for business.  The GoB does not require companies’ environmental, social, and governance (ESG) disclosure to facilitate transparency and/or help investors and consumers to distinguish between high- and low-quality investments.  However, Environmental Impact Assessments (EIA) are a requirement and taken very seriously when undertaking infrastructural developments projects.  Bills in Botswana, including investment laws, go through a public consultation process and are available for public comment.  Bills are also debated in Parliament sessions that are open to the public.

The Companies Act of 2004 requires all companies registered in Botswana to prepare annual financial statements on the basis of generally accepted accounting principles.  It further requires every public company, including non-exempt private companies, to prepare their Financial Statement in accordance with the International Financial Reporting Standards.

The GoB’s procuring entity, Public Procurement and Asset Disposal Board (PPADB) has since April 1, 2022, transitioned to a regulatory authority, Public Procurement and Regulatory Authority (PPRA), under a new procurement act.  The new act dictates for all government procurements to be adjudicated and awarded from the relevant procuring ministries/government entities. PPRA will play an oversight role, ensuring that all procurement processes are followed according to the new act.  Further, PPRA will provide necessary and relevant training and capacity building to align the local procurement processes with international best practices.  Prospective government contractors are still required to register with the PPRA.  An independent body from the PPRA known as the Public Procurement Tribunal will be established to adjudicate on any disputes.  The PPRA will use a national eProcurement system which will serve as an electronic end-to-end One Stop information and transaction portal for any public procurement.  Since 2014, PPADB has partnered with the United States Trade and Development Agency’s (USTDA) Global Procurement Initiative in a shared commitment to utilize best-value determination procurement practices and to professionalize procurement.  Through training, USTDA also assisted PPADB’s transition to PPRA.

Online services are available at https://ipms.ppadb.co.bw/login

The PPRA Act shall from time-to-time call for preferential procurement of citizen-owned contractors for works, service, and supplies.  To be eligible for a specific reservation or preference the contractor is required to attach to the bidding package proof of eligibility from the issuing authority.  Parliament enacted an Economic Inclusion Act to provide for the establishment of the office of the Coordinator of the Economic Empowerment office that will promote the effective participation of targeted citizens in the growth and development of the economy and facilitate enforcement of the economic empowerment initiatives.  Targeted citizen according to this act means a citizen whose access to economic resources has been constrained by various factors as may be prescribed by the minister from time to time.

Health and safety laws, embodied in the Factories Act of 1973, 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.

### International Regulatory Considerations 

Botswana is a member of SACU and SADC.  Neither has authority over member state national regulatory systems.  Botswana is a member of the World Trade Organization (WTO) and notifies all draft technical regulations to the WTO’s Technical Barriers to Trade (TBT) Committee.

### Legal System and Judicial Independence 

The Constitution provides for an independent judiciary system.  Botswana’s legal system is based on Roman-Dutch law as influenced by English common law.  This type of system exists with legislation, judicial decisions, and local customary law.  The courts enforce commercial contracts, and the judicial system is widely regarded as being fair.  Both foreign and domestic investors have equal access to the judicial system.  Botswana does not have a dedicated commercial court.  The Industrial Court, set up by the Trade Dispute Act of 2004, primarily addresses labor matters.

The GoB is planning to create a corps of commercially specialized judges within the civil court system.  Under the new system, commercial cases will be overseen by these commercial judges to expedite handling and ensure relevant expertise.  Botswana already has a specialized anti-corruption court that handles all corruption cases.

Some U.S. litigants have reported that the time to obtain and enforce a judgment in a commercial dispute is unreasonably long.  The turnaround time for civil cases is approximately two years.  To improve adjudications efficiency, the GoB has established a land tribunal, and industrial, small claims, and corruption courts.  In the past several years, some dockets have improved, but progress has been uneven.

Local laws are accessible through the Botswana Attorney General’s Office website (www.elaws.gov.bw).  It can take up to 24 months for a law, once passed, to appear on the website.

### Laws and Regulations on Foreign Direct Investment 

Under Botswana’s Company Act, foreigners who wish to operate a business are required to register, as well as obtain, the relevant licenses and permits as prescribed by the Trade Act of 2008.

Licenses are required for a wide spectrum of businesses, including banking, non-bank financial services, transportation, medical services, mining, energy provision, and alcohol sales.  Although amendments to the Trade Act have eliminated the catchall miscellaneous business license category, investors have reported on local authorities insisting a business apply for a license even when it does not fall within the established categories.  In addition, some businesses have observed the enforcement of licenses, as well as the time taken for inspections to comply with licensing requirements, varies widely across local government authorities.

### Competition and Antitrust Laws 

Botswana has anti-trust legislation and policies to ensure appropriate and fair competition in business.  Under the Competition Act, the Competition Authority (CA) monitors mergers and acquisitions.  In 2019, the CA expanded its mandate by taking over the operations of the Consumer Protection Act from MITI and rebranded itself as the Competition and Consumer Authority (CCA).  The CCA’s mandate is to prevent and rectify anti-competitive practices and protect the interests of consumers through the control of unfair business practices.  During the year 2020/2021, the CCA engaged in the Financial Inclusion Program with other stakeholders.  While the aim of the program is to reach out to populations that are excluded from financial services, the CCA’s participation ensures that consumers’ interests are taken into consideration, especially the interests of people in remote areas or with limited education.

On the competition side, the authority ramped up its public outreach using digital platforms and increased its engagement on public platforms, resulting in an increase in the number of complaints lodged online.  The authority handled 41 mergers in 2020/21 financial year, a 26 percent decrease from 56 mergers handled in 2019/20.  The decrease could be attributable to the 18-month COVID-19 related State of Emergency that started in March 2020, under which the authority temporarily suspended receipt of new mergers.  The CCA investigated a total of 25 competition related cases with 15 of them being carried over from the previous financial year, while 10 were new cases and successfully closed off four cases; the remaining 21 cases are under investigation and have been carried over to the 2021/22 financial year.  The CCA is empowered to reject mergers deemed not in the public interest.  CCA interprets this power to mean that it can prohibit mergers that concentrate most shares in the hands of foreign investors.  For consumer complaints, a total of 1,158 cases were lodged in the year under review with most complaints related to motor vehicles, motor parts and services (mostly involving grey imports) at 23.7 percent, followed by cellphones and accessories at 18.7 percent, electronic category at 16.2 percent, furniture complaints at 11.2 percent, and e-commerce transactions at 0.45 percent.  A total of 1,267 of these complaints or 90.3 percent were resolved while 136 of these were still pending at the end of the financial year.  During the 2020/21 financial year, the CCA also carried out a research study on cement as a policy advisory instrument to the Ministry of Investment, Trade and Industry (MITI) and will use the policy paper to shape the development of a cement sector in Botswana.

### Expropriation and Compensation 

Section 8 of Botswana’s Constitution prohibits the nationalization of private property.  The Constitution is currently under review and a committee has been set up to do consultations and gather public opinion across the country.  The GoB has never pursued a forced nationalization policy and is highly unlikely to adopt one.  The Acquisition of Property Act provides a process for any expropriation, including parameters to determine market value and receive compensation.  The 2007 Amendment to the Electricity Supply Act allows the GoB to revoke an Independent Power Producer’s license and confiscate the operations, with compensation, for public interest purposes.

### Dispute Settlement 

#### ICSID Convention and New York Convention 

The GoB has ratified the convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958 New York Convention).  GoB is also a member state of the International Centre for Settlement of Investment Disputes (ICSID convention), and the Multilateral Investment Guarantee Agency (MIGA).  Botswana is a signatory to many international treaties and participates in more than 40 international organizations.

#### Investor-State Dispute Settlement  

There are no known investment disputes involving U.S. persons as of April 1, 2022. Botswana accepts international arbitration to settle investment disputes.  Judgments by GoB-recognized foreign courts are enforceable in the local courts where the appropriate bilateral agreements between the countries exist.

#### International Commercial Arbitration and Foreign Courts 

There are no known complaints about transparency or discrimination by local courts in Botswana.

### Bankruptcy Regulations 

Botswana’s commercial and bankruptcy laws are comprehensive.  Secured and unsecured creditors enjoy similar rights under bankruptcy proceedings as those they would enjoy in the United States.

							4. Industrial Policies 					

### Investment Incentives 

Botswana has several mechanisms in place to attract FDI.  BITC assists local and foreign investors.  BITC is responsible for promoting FDI, investor aftercare, and promoting locally manufactured goods in export markets.  Through its one-stop service center, BITC assists investors with company registration, land acquisition, factory shells, utility connections, and work and residence permit for essential staff.  Investors’ requests for support from BITC and other agencies are evaluated based on the proposed project’s potential to diversify Botswana’s economy, grow priority sectors, and provide employment and training to Botswana citizens.  The GoB also makes grants available to investors who partner with citizens and will extend credit to investors presenting proposals that have undergone appropriate due diligence and that have completed a feasibility study.  Foreign investors are encouraged to transfer technology to Botswana and skills to Botswana citizens with a view to preparing them for promotion into management positions.

Botswana’s tax rates are relatively low at 22 percent on corporate taxable income of resident companies and 10 percent withholding tax on all dividends distributed.  However, non-resident companies’ tax is charged at 30 percent.  MITI can grant manufacturing companies the reduced level of 15 percent taxable income.  Companies can pay the reduced rate of 15 percent of profit with accreditation from the Innovation Hub or the International Financial Services Centre on approved operations.

The Minister of Finance and Economic Development has the authority to issue development approval orders that are used for specific projects, which include providing tax holidays, education, and training grants.  The Minister must be satisfied the proposed project will benefit Botswana’s economy.  Any firm, local or foreign, may apply for a Development Approval Order through the Permanent Secretary at the finance ministry.  Applications are evaluated against the following criteria: job creation for Botswana citizens; the company’s training plans for Botswana citizens; the company’s plans to localize non-citizen positions; Botswana citizen participation in company management; amount of equity held by Botswana citizens in the company; the location of the proposed investment; the project’s effect on the stimulation of other economic activities; and the project’s effect on reducing local consumer prices.  MITI also offers rebates on imported materials for manufacturers that produce products for export.

In 2017, Parliament approved and implemented a special incentive package for Selebi-Phikwe geared to promote economic growth and diversification.  Some of the incentives include reduced corporate tax of five percent for the first five years and 10 percent thereafter (versus the 22 percent national tax rate), zero customs duty on imported raw materials, rebates for customs duty and value-added tax for any exports outside the SACU, and a minimum of 50 years on land leases (instead of the standard lease of 25 years).

The GoB is actively encouraging green energy investment through independent power producer (IPP) developed renewable energy projects that have been outlined in the Integrated Resource Plan, and these include solar power plants, wind energy power projects, and biogas.  In 2020 the GoB, with the assistance of USAID’s Southern Africa Energy Program (SAEP), launched the Rooftop Solar program.  The program allows domestic consumers to install their own solar systems to generate electricity and permits consumers to sell their excess electricity to the Botswana Power Corporation (BPC).  The Botswana Energy Regulatory Authority (BERA) regulates investment in the energy sector and is responsible for setting feed-in tariffs for IPPs.  The GoB includes the Mega Solar Program (a multi-donor partnership coordinated by the USG through Power Africa) in its renewable energy plans and will be using it to fast-track existing renewable energy (solar and wind) projects.

### Foreign Trade Zones/Free Ports/Trade Facilitation 

The Special Economic Zones Authority (SEZA) was established with the mandate to develop and operate special economic zones around the country.  It earmarked five geographic areas with a total of eight zones and is actively recruiting investors, private developers, and manufacturers.  In 2015, Parliament approved a Special Economic Zones (SEZ) law to streamline investment in sector-targeted geographic areas including two Gaborone area SEZs (multi-use, diamond processing, and financial services); two Selebi-Phikwe SEZs (mineral processing and horticulture); and additional SEZs in Lobatse (beef, leather, biogas); Palapye (energy); Pandamatenga (agriculture); and Francistown (mining and logistics).  The Gaborone financial services zone is fully operational, servicing of land has begun in the Gaborone multi-use/diamond zone, construction of silos and factory shells is underway in the Pandamatenga zone, while the rest are still to be developed.  The Special Economic Zones Act is available for sale in hard copy at the GoB bookshop.

The Selebi-Phikwe Economic Diversification Unit (SPEDU), another economic diversification agency, though regional and only focused in the greater Selebi-Phikwe region (eastern part of the country), was set up to transform its region into a vibrant economic zone.  The region has its own special incentive packet that was approved by parliament in 2017.  Some of the incentives include a five percent corporate tax for the first five years and 10 percent thereafter, zero customs duty on imported raw materials, minimum 50-year land leases, dedicated One-Stop Services for the region, etc.  BURS has also introduced an electronic Customs Management System to replace the Automated System for Customs Data and launched the National Single Window, an electronic trade platform that makes trading more secure and efficient.

### Performance and Data Localization Requirements  

Performance requirements are not imposed as a condition for establishing, maintaining, or expanding an investment in Botswana.  Foreign investors are encouraged, but not compelled, to establish joint ventures with citizens or citizen-owned companies. Several incentives have been set for local companies, encouraging foreign companies in a way to register companies locally.  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.  The GoB does not require investors to locate in specific geographical areas, use a specific percentage of local content, permit local equity in projects, manufacture substitutes for imports, meet export requirements or targets, or use national sources of financing for private-sector investments.  However, GoB entities, including BITC, use the criteria of diversifying the economy, creating employment, and transferring skills to Botswana citizens in determining whether to assist foreign investors. As a matter of policy, the GoB encourages foreign firms to hire qualified Botswana nationals rather than expatriates.  The granting of work permits for foreign workers may be made contingent upon establishment of demonstrable localization efforts.  The government may additionally require evidence that a local is being trained to assume duties currently being fulfilled by a foreign worker, specially focused at the middle-management level.  The GoB offers incentives to companies that train local employees, including the deduction of 200 percent of training expenses when an accredited institution conducts the training.

Business leaders cite difficulty securing work permits combined with local skills deficits and constrained labor productivity among the foremost business constraints in Botswana. However, since President Masisi assumed power in April 2018, GoB reports indicate permits for foreign workers have increased with approval rates exceeding 90 percent.  Select grants are available to foreign investors who partner with Botswana citizens.  The Citizen Entrepreneurial Development Agency has established a venture capital fund to provide equity to citizens and ventures between citizens and foreign investors.  Most GoB loans and grants are designed specifically for citizen-owned contracting firms or for small enterprises and are therefore not available to foreign investors.  However, the National Development Bank (NDB) finances both citizens and non-citizens, joint ventures, partnerships, and locally registered foreign owned companies, and covers different sectors of the economy (agriculture, property, education, retail, commerce, etc.).

The GoB, the largest procuring entity in the country, has directed central government, local authorities, and state-owned enterprises to purchase all products and services from locally based manufacturers and service providers if the goods and services are locally available, competitively priced, and meet tender specifications in terms of quality standards as certified or recognized by the Botswana Bureau of Standards.  Local preferences arise from numerous sources.  In 2015, MITI instituted a preferential procurement program for local companies based on company size – small companies receive a 15 percent preferential price margin on GoB procurement, mid-sized companies receive a 10 percent margin, and large companies a five percent margin.  The directive applies to 27 categories of goods and services ranging from textiles to chemicals, and food, in addition to a broad range of consultancy services.  In 2014, the GoB and the Chamber of Mines created a committee to oversee the purchase of mining supplies with a 10 percent preference towards those produced locally.  The 2012 Citizen Economic Empowerment Policy also emphasized the preference for local companies. In 2020, the GoB announced a new policy that all government contracts less than $900,000 were reserved for citizen-owned businesses.  The GoB has recently enacted the Economic Inclusion Act to make provision for the establishment of an Economic Empowerment Office, whose mandate is to empower targeted citizens by facilitating their participation in the development and growth of the economy and facilitating the enforcement of various sets of economic empowerment initiatives such as the ones mentioned above.

For a foreign firm to qualify with the Department of Industrial Affairs as a local manufacturer or service provider to sell goods or services to the GoB, the firm must be registered with the Registrar of Companies and possess a relevant license or waiver letter.  These procedures can be completed online, however, companies may choose to engage the services of a Company Secretary to perform these and other required documentation services.  Tenders are generally designed based on the products available in the local market and with locally based companies in mind.  In addition, many tenders require local registration as a prerequisite for bids and the GoB frequently breaks up large-scale projects into a series of tenders.  These requirements make it difficult to compete for tenders from outside Botswana.

							5. Protection of Property Rights 					

### Real Property 

Property rights are enforced in Botswana.  There are three main categories of land in Botswana: freehold, state land, and tribal land.  Tribal and state land cannot be sold to foreigners.  There are no restrictions on the sale of freehold land, but only an approximate five percent of land in Botswana is freehold.  All minerals in Botswana, even those on private lands, are viewed as property of the State.  In the capital city of Gaborone, the number of freehold plots is limited.  In 2019, the GoB increased the rate of Transfer Duty on the sale and transfer of property to non-citizens (both individuals and companies) from five percent to 30 percent.

State land represents about 25 percent of land in Botswana.  On application to the Department of Lands, both foreign-owned and local enterprises registered in Botswana may lease state land for industrial or residential use.  Commercial use leases are for 50 years, and residential leases are for 99 years.  Waiting periods tend to be long for leasehold applications, but subleases from current leaseholders are available.  In 2014, the GoB changed its implementing regulation to allow companies with fewer than five employees to operate in residential areas if their operations do not pose a health or safety risk to residents.

Tribal land represents 70 percent of land in Botswana.  To obtain a lease for tribal land, the investor must approach the relevant local Land Board.  Processes are unlikely to be streamlined or consistent across Land Boards.

Since independence, the trend in Botswana has been to increase the area of tribal land at the expense of both state and freehold land.  Landlord-tenant law in Botswana tends to be moderately pro-landlord.

In addition to helping investors who meet its criteria obtain appropriate land leaseholds, BITC has also built factory units for lease to industrialists with the option to purchase at market value.

### Intellectual Property Rights 

Botswana’s legal intellectual property rights (IPR) structure is adequate, although some improvements are needed.  The key challenge facing the GoB is effective implementation. CIPA was established in 2014 and is comprised of three offices: the Companies and Business Office, the Industrial Property Office, and the Copyright Office.  Intellectual property is registered through CIPA.  CIPA’s priorities are to strengthen and implement Botswana’s IPR regime and to improve interagency cooperation.  IPR infringement occurs in Botswana primarily through the sale of counterfeit items in low-end sales outlets.  According to CIPA, targeted raids by local law enforcement have reduced the availability of counterfeit goods across the country.  Several spot checks that were conducted in Gaborone revealed that most of the shops that used to sell counterfeit products were no longer selling them.  Of the raids that were done, 456 were works with no holograms, 34 pirated works and 1,454 were products infringing on trademarks such as Nike, Fila, Soviet, Adidas, Puma, Converse, etc.  Most of these were found with street hawkers.   The U.S. government continues to work with the GoB to modernize and improve enforcement of IPR.

IPR is protected under the Industrial Property Act of 2010, which provides protections on patents, trademarks, utility designs, handicrafts, traditional knowledge, and geographic indicators.  The 2000 Copyright and Neighboring Rights Act also protects art and literary works, and the 1975 Registration of Business Names Act oversees corporate name and registration procedures.  On March 31, 2022, the Parliament passed the Intellectual Property Policy which was developed with the assistance of the World Intellectual Property Authority (WIPO).  Its primary aim is to leverage Botswana’s IP potential for inclusive and sustainable economic growth and development.  Other IPR-related laws include the Competition Act, the Value Added Tax Act, the Botswana Penal Code, the Customs and Excise Duty Act, the Monuments and Relics Act, the Broadcasting Act, and the Societies Act.

Botswana is not included in the United States Trade Representative (USTR) Special 301 Report or the Notorious Markets List.

Botswana is a signatory to the Beijing Treaty on Audiovisual Performances, the Hague Agreement Concerning the International Deposit of Industrial Designs, the Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks, the Convention establishing the World Intellectual Property Organization (WIPO), the WIPO Copyright Treaty, the WIPO Performances and Phonograms Treaty, the Patent Cooperation Treaty, the Berne Convention for the Protection of Literary and Artistic Works, and the Paris Convention for the Protection of Industrial Property.

For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/.

#### Resources for Rights Holders  

Goitseone MontshoEconomic/Commercial SpecialistMontshoG@state.gov+267 373-2431

Local lawyers’ list:  https://bw.usembassy.gov/u-s-citizen-services/local-resources-of-u-s-citizens/attorneys/

							6. Financial Sector 					

### Capital Markets and Portfolio Investment 

The government encourages foreign portfolio investment, although there are limits on foreign ownership in certain sectors.  It also embraces the establishment of new and diverse financial institutions to support increased foreign and domestic investment and to fill existing gaps where finance is not commercially available.  There are nine commercial banks, one merchant bank, one offshore bank, three statutory deposit-taking institutions, and one credit union operating in Botswana.  All have corresponding relationships with U.S. banks.  Additional financial institutions include various pension funds, insurance companies, microfinance institutions, stock brokerage companies, asset management companies, statutory finance institutions, collective investment undertakings, and statutory funds.  Historically, commercial banks have accounted for 93.7 percent of total deposits and 93.5 percent of total loans in Botswana.  Access to banking services measured by the number of depositors on adult population improved from 72 percent in 2019 to 76.6 percent in 2020.  Additionally, banks introduced new products and services that included enhancement of transactional accounts, introduction of cross border payment services, collaborative arrangements with money-transfer service providers to widen the financial inclusion efforts for the unbanked population.

### Money and Banking System 

The central bank, the Bank of Botswana, acts as banker and financial advisor to the GoB and is responsible for the management of the country’s foreign exchange reserves, the administration of monetary and exchange rate policies, and the regulation and supervision of financial institutions in the country.  Monetary policy in Botswana is widely regarded as prudent, and the GoB has historically managed to maintain a sensible exchange rate and a stable inflation rate, generally within the target of three to six percent.  But the COVID-19 pandemic pushed inflation to new heights, reaching 10.6 percent in January and February 2022, the highest level on record in over a decade.

Banks may lend to non-resident-controlled companies without seeking approval from the Bank of Botswana.  Foreign investors usually enjoy better access to credit than local firms do.  In July 2014, USAID’s Development Credit Authority (now DFC – U.S. International Development Finance Corporation), in collaboration with ABSA (formerly Barclays Bank of Botswana), implemented a seven-year program to allow small and medium-sized enterprises (SME) to access up to US$ 15 million in loans in an effort to diversify the economy.  So far, the program that was initially scheduled to come to an end in June 2021 is at 83 percent utilization and has been extended to July 2024. To date ABSA has disbursed US$ 12.5 million and has up to June 2023 to disburse the remaining US$ 2.5 million.

At the end of 2020, there were 24 companies on the Domestic Board and eight companies on the Foreign Equities Board of the Botswana Stock Exchange (BSE).  In addition, there were 46 listed bonds and three exchange traded funds listed on the Exchange.  The Domestic Company Index (DCI) declined by 8.2 percent in 2020, while it declined by 4.6 percent in 2019, reflecting how the pandemic affected the economy.  According to the BSE 2020 Annual Report, all sectors in the domestic equity board experienced a decline which contributed a negative 8.4 percent points to the DCI’s depreciation of 8.2 percent except for one sector, Retail & Wholesale.  The total market capitalization for listed companies at year-end 2020 was US$ 33.5 billion, with domestic companies’ capitalization standing at US$ 3 billion while foreign companies’ capitalization stood at US$ 30.5 billion.  The Mining and Minerals sector continued to dominate the foreign equity board as it contributed 94.7 percent of the foreign companies’ market capitalization in 2020 and contributed 0.97 percentage points to the Foreign Company Index (FCI) depreciation of 1 percent.  The BSE is still highly illiquid compared to larger African markets and is dominated by mining companies which adds to index volatility.  Laws prohibiting insider trading and securities fraud are clearly stipulated under Section 35 – 37 of the Securities Act, 2014 and charges for contravening these laws are listed under Section 54 of the same Act.

The government has legitimized offshore capital investments and allows foreign investors, individuals and corporate bodies, and companies incorporated in Botswana, to open foreign currency accounts in specified currencies.  The designated currencies are U.S. Dollar, British Pound sterling, Euro, and the South African Rand.  There are no known practices by private firms to restrict foreign investment participation or control in domestic enterprises.  Private firms are not permitted to adopt articles of incorporation or association which limit or prohibit foreign investment, participation, or control.

In general, Botswana exercises careful control over credit expansion, the pula exchange rate, interest rates, and foreign and domestic borrowing.  Banking legislation is largely in line with industry norms for regulation, supervision, and payments.  However, Botswana failed to meet the compliance requirements of the Financial Action Task Force (FATF), resulting in a grey listing in October 2018.  Botswana worked to implement the necessary regulatory legislations to address the identified technical compliance deficiencies and was subsequently removed from the FATF grey list in October 2021, and then in February 2022, removed from the EU blacklist of high risk third countries with regard to AML/CFT.  The government continues to work on its regulatory environment to avoid falling back into the grey list.   The Non-Bank Financial Institutions Regulatory Authority (NBFIRA) was established in 2008 and provides regulatory oversight for the non-banking sector.  It extends know-your-customer practices to non-banking financial institutions to help deter money laundering and terrorist financing. NBFIRA is also responsible for regulating the International Financial Services Centre, a hub charged with promoting the financial services industry in Botswana.

### Foreign Exchange and Remittances 

#### Foreign Exchange 

There are no foreign exchange controls in Botswana or restrictions on capital outflows through financial institutions.  Commercial banks are required to ensure customers complete basic forms indicating name, address, purpose, and other details prior to process funds transfer requests or loan applications.  The finance ministry monitors data collected on the forms for statistical information on capital flows, but the form does not require government approval prior to processing a transaction and does not delay capital transfers.

To encourage portfolio investment, develop domestic capital markets, and diversify investment instruments, non-residents can trade in and issue Botswana pula-denominated bonds with maturity periods of more than one year, provided such instruments are listed on the Botswana Stock Exchange (BSE).  Only Botswana citizens can purchase Botswana’s Letlole National Savings Certificate (equivalent to a U.S. Treasury bond).  Foreigners can hold shares in BSE-listed Botswana companies.

Travelers are not restricted to the amount of currency they may carry, but they are required to declare to customs at the port of departure any cash amount exceeding P10,000 ($865 at current exchange rate).  There are no quantitative limits on foreign currency access for current account transactions.

Bank accounts denominated in foreign currency are allowed in Botswana and in 2020 they contributed 17 percent of total commercial bank deposits (an increase of two percent from 2019).  Commercial banks offer accounts denominated in U.S. Dollars, British Pounds, Euros and South African Rand.  Businesses and other bodies incorporated or registered domestically may open accounts without prior approval from the Bank of Botswana.  The GoB also permits the issuance of foreign currency denominated loans.  Foreign currency denominated loans decreased by 16.8 percent from US$ 337 million in 2019 to US$ 276 million in 2020, while foreign currency denominated deposits for the same period increased by 23.1 from US$ 95.9 million to US$ 118.4 million).

Upon disinvestment by a non-resident, the non-resident is allowed immediate repatriation of all proceeds including profits, rents, and fees.

The Botswana Pula has a crawling peg exchange rate and is tied to a basket of currencies of major trading partner countries.  In 2018 the weights of the pula basket currencies were maintained at 45 percent for the South African Rand and 55 percent for the Special Drawing Rights (consisting of the U.S. Dollar, the Euro, British Pound, Japanese Yen, and Chinese Renminbi) respectively.  Government maintained these exchange rate parameters for 2021.  However, the downward rate of crawl of the pula exchange was adjusted from 1.51 percent to 2.87 percent per annum in May 2020.  Movements of the South African Rand against the U.S. Dollar heavily influence the Pula.  There is no difficulty in obtaining foreign exchange.  Shortages of foreign exchange that would lead banks to block transactions are highly unlikely.

#### Remittance Policies 

There are no restrictions or limitations placed on foreign investors in converting, transferring, or repatriating funds associated with an investment.

### Sovereign Wealth Funds 

The Bank of Botswana maintains a long-term sovereign wealth fund, known as the Pula Fund, in addition to a regular foreign reserve account providing basic import cover.  The Pula Fund was established under the Bank of Botswana Act and forms part of the country’s foreign exchange reserves, which are primarily funded by diamond revenues.  The Pula Fund is wholly invested in foreign currency-denominated assets and is managed by the Bank of Botswana Board with input from recognized international financial management and investment firms.  All realized market and currency gains, or losses are reported in the Bank of Botswana’s income statement.  The Fund has been affected severely by the COVID-19 pandemic, with the GoB making withdrawals to address significant COVID-19-related revenue shortfalls.  As a result, the Pula Fund, which provides long fiscal cushion against economic shocks, is significantly depleted from 20 percent of GDP in 2011 to seven percent of GDP as of mid-2020 – from $1.69 billion to $510 million – a decline of more than 70 percent.  Botswana is a founding member of the International Forum of Sovereign Wealth Fund and was one of the architects of the Santiago Principles in 2008.  More information is available at: https://www.bankofbotswana.bw/sites/default/files/BOTSWANA-PULA-FUND-SANTIAGO-PRINCIPLES.pdf

							7. State-Owned Enterprises 					

State-owned enterprises (SOEs), known as “parastatals,” are majority or 100 percent owned by the GoB.  There is a published list of SOEs at the GoB portal (www.gov.bw), with profiles of financial and development SOEs.  Some SOEs are state-sanctioned monopolies, including the Botswana Meat Commission, the Water Utilities Corporation, Botswana Railways, and the Botswana Power Corporation.

The same business registration and licensing laws govern private and government-owned enterprises.  No law or regulation prohibits or restricts private enterprises from competing with SOEs.  Botswana law requires SOEs to publish annual reports, and private sector accountants or the Auditor General audits SOEs depending on how they are constituted.  GoB ministries together with their respective SOEs are compelled on an annual basis to appear before the Parliamentary Public Accounts Committee to provide reports and answer questions regarding their performance.  Some SOEs are not performing well and have been embroiled in scandals involving alleged fraud and mismanagement. Botswana is not party to the Government Procurement Agreement within the framework of the WTO.

### Privatization Program 

The GOB has committed to privatization on paper.  It established a task force in 1997 to privatize all its state-owned companies and formed a Public Enterprises Evaluation and Privatization Agency (PEEPA) to oversee this process.  Implementation of its privatization commitments has been limited to the January 2016 sale offer of 49 percent of the stock of the state-owned Botswana Telecommunications Corporation to Botswana citizens only.  In February 2017, the GoB issued an Expressions of Interest for the privatization of its national airline, but progress stopped due to the decision to re-fleet the airline before privatization.  In 2019, President Masisi announced the Botswana Meat Commission would be placed in the hands of a private management company prior to privatization, but this has yet to occur.  Conversely, the GoB has created new SOEs such as the Okavango Diamond Company, the Mineral Development Company, and Botswana Oil Limited in recent years.   A Rationalization Strategy covering all parastatals has been developed and its implementation will address issues such as duplication of activities, overlapping mandates and issues of corporate governance.  This may finally result in some SOEs being privatized or merged while some may be closed.

							8. Responsible Business Conduct 					

The GoB, some foreign and local firms, and customers, recognized and embraced Responsible Business Conduct (RBC), although Botswana is not an adherent of the OECD’s RBC Guidelines for Multinational Enterprises and has not specified its definition of RBC.  Large companies in the mining, communications technology, food supply, and financial services sectors have established RBC programs, sponsor projects, and support local nonprofit concerns.  However, the ethos has not taken hold in many smaller firms.  The U.S. Embassy worked with the local chamber of commerce, Business Botswana, on the issue of corporate social responsibility and ethical compliance, to help enlist companies to sign onto a Corporate Code of Conduct that covers, among other things, conflicts of interest, bribery, political interference, political party funding, procurement and bidding, and issues surrounding residence and work permits.  To date more than 300 firms have signed the Code of Conduct.

The Companies Act also sets out the expectations of business conduct and governance for directors and shareholders for both private and public companies.  Botswana is not a member of the Extractive Industries Transparency Initiative.  Botswana’s Mines and Minerals Act and associated regulations govern mineral contracts and licenses.  Botswana’s laws and procedures for awarding mining contracts are fairly well developed.  Mining licenses are required to undergo a public comment period before they are awarded, and that rule is followed.

### Additional Resources

Department of State

- Country Reports on Human Rights Practices ;
- Trafficking in Persons Report ;
- Guidance on Implementing the “UN Guiding Principles” for Transactions Linked to Foreign Government End-Users for Products or Services with Surveillance Capabilities ;
- U.S. National Contact Point for the OECD Guidelines for Multinational Enterprises ; and;
- Xinjiang Supply Chain Business Advisory 

Department of the Treasury

- OFAC Recent Actions

Department of Labor

- Findings on the Worst Forms of Child Labor Report ;
- List of Goods Produced by Child Labor or Forced Labor ;
- Sweat & Toil: Child Labor, Forced Labor, and Human Trafficking Around the World  and;
- Comply Chain .

### Climate Issues 

The GoB is committed to reducing carbon emissions to 15 percent by 2030 and thus adopted a Climate Change Policy in April 2021.  The policy promotes access to carbon markets, climate finance, and clean technologies such as solar and wind energy.  Botswana has mobilized $30 million from the Green Climate Fund to implement agriculture related adaptation interventions for three districts (Ngamiland, Bobirwa, and Kgalagadi).  The GoB has also, in collaboration with the UNDP, been rolling out a Biogas Technology program that aims to deliver small scale digester plants to reduce greenhouse gas emissions by 1,650,000 million tons of carbon dioxide by 2023.  The gas is used for cooking, heating, and lighting.  231 units have been installed, mostly in the southern part of the country.  Standards have been developed to monitor emission concentrations in the country and the GoB has expanded its air monitoring network to cover more areas in the country.  The level of ambient air quality in the country is 95 percent.

							9. Corruption 					

Botswana’s Corruption Perception Index (CPI) has deteriorated significantly, eroding its previously held reputation as the ‘least corrupt country in Africa’.  Transparency International ranks Botswana at 45 out of 180 countries in 2021 falling from 35th place in 2020 with a score of 55 out of 100, a change of negative 5 from the previous year.  The Human Rights Report (HRR) 2020 for Botswana also notes increased media reports of government corruption, mostly related to COVID-19 projects.  The HRR also states that a poll conducted by Transparency International in 2019, indicated that 7 percent of those polled had paid bribes to government officials, jumping from only 1 percent in 2015.  Private sector representatives also note rising corruption levels in government tender procurements.

The major corruption investigation body is the Directorate on Corruption and Economic Crime (DCEC).  Anecdotal reports on the DCEC’s effectiveness vary.  The DCEC has embarked on an education campaign to raise public awareness about the cost of corruption and is also working with GoB departments to reform their accountability procedures.  Corruption is punishable by a prison term of up to 10 years, a fine of $50,000, or both.  The GoB has prosecuted high-level officials.  Corruption trials and investigations of some government officials on cases of money laundering, abuse of office, receiving bribes and embezzlement of funds continued during 2020 and are still on-going. Human rights issues reported in the HRR included restrictions on press and internet freedom of expression, interference with freedom of association, child labor including commercial sexual exploitation of children.  On a positive note, while such crimes exist, the GoB officials were reported to be cooperative and responsive to domestic NGO’s views on most subjects and placed no restrictions on domestic and international human rights groups nor did they interfere with their investigations and publishing findings on human rights cases.

The 2000 Proceeds of Serious Crime Act expanded the DCEC’s mandate to include combatting money laundering.  The 2009 Financial Intelligence Act provides a comprehensive legal framework to address money laundering and establishes a financial intelligence agency (FIA).  The FIA, which operates under the Ministry of Finance and Development Planning, cooperates with various institutions, such as Directorate of Public Prosecutions, Botswana Police Service, Bank of Botswana, the Non-Banking Financial Institutions Regulatory Authority, the DCEC, and foreign FIAs to uncover and investigate suspicious financial transactions.  Botswana is a member of the Eastern and Southern Africa Anti-Money Laundering Group, a regional standards-setting body for ensuring appropriate laws, policies, and practices to fight money laundering and the financing of terrorism.  In 2021, Botswana was removed from the FATF grey list on which it had been placed on in October 2018 and was subsequently removed from the EU blacklist.

Botswana is not a party to the OECD Anti-Bribery Convention, but it is a party to the 2005 United Nations Convention against Corruption.

### Resources to Report Corruption 

Contacts for agencies responsible for combating corruption:

Mr. Tymon KatlholoDirector GeneralDirectorate on Corruption and Economic CrimeMadirelo Extension 6, Gaborone, Botswana+267 3914002/+267 3604200dcec@gov.bw

Ms. Tumelo Motsumi (Acting)Executive DirectorPublic Procurement and Asset Disposal BoardPrivate Bag 0058, Gaborone, Botswana+267 3602000bmaster@ppadb.co.bwtmotsumi@ppadb.co.bw

Ms. Bopelokgale SokoDirectorFinancial Intelligence AgencyPrivate Bag 0190, Gaborone, Botswana+267 3998400ethibe@gov.bwkmosimanengaka@gov.bw

Complainants can also reach out to ministers of the relevant ministries for a particular tender and provide a copy of the complaint to the Public Procurement and Asset Disposal Board (PPADB) Executive Chairperson.

							10. Political and Security Environment 					

The threat of political violence is low in Botswana.  Public demonstrations are rare and seldom turn violent.  The last large-scale strikes, which involved public sector employees, occurred April-June 2011 and were not violent.  In September 2015, roughly 200 people participated in a peaceful march organized by an opposition political party to protest water shortages in the capital.  In August 2016, police forcefully dispersed a small demonstration protesting unemployment outside the National Assembly.  In February and March 2017, some student-led protests occurred at tertiary institutions necessitating police deployment but were not overtly political.  There were multiple reports of police brutality, including the use of rubber whips and rubber bullets.  Another peaceful march against corruption was held in March 2018.  This followed allegations of embezzlement of the National Petroleum Fund by a company charged with the management of the funds together with some GoB officials.  In late 2019, following general election, the Umbrella for Democratic Change (UDC) held a peaceful march of no more than 200 people protesting the election results.

							11. Labor Policies and Practices 					

Botswana has a high unemployment rate and a constricted worker skills base.  In her 2022 budget speech, the Minister of Finance and Economic Development reported an unemployment rate of 26 percent, up from 20 percent reported by Statistics Botswana in 2019, showing the effects of the COVID-19 pandemic on the economy.  Employers can expect to engage in significant training efforts, depending on the industry, due to shortage of skills.  Retention of workers and absenteeism can pose problems.  In addition, managers often cite workforce productivity as a point of frustration.  The lack of trained local citizen professionals is generally addressed by contracting expatriates if they can secure work permits.  There is minimal labor strife in Botswana.  In 2015, there were a handful of small and peaceful strikes, the most notable of these was by a portion of BURS officials, but as with most unions across sectors, only a portion of BURS officials were unionized, allowing the GoB to maintain customs operations.

The Employment Act provides basic guidelines for employment in Botswana.  The legislation sets requirements for a minimum wage, length of the workweek, annual and maternity leave, hiring and termination.  Standards set by the Act are consistent with international best practice as described by International Labor Organization (ILO) model legislation and guidelines.

Employment-related litigation occurs and is both an example of trust in the court system and a cost to doing business in Botswana.  Employers avoid considerable expense and frustration if they observe the provisions of the Employment Act, relevant labor regulations, and prudence in advance of potential litigation.  Before a potential litigant goes to one of 11 labor courts, the parties must attempt mediation through the Department of Labor.  Court cases offering severance terms for employees laid off due to fluctuating market conditions are also common.  Section 25 of the Employment Act allows employers to terminate contracts for reducing the size of their work force, known as redundancy, using the first-in-last-out principle.  This method of terminating contracts is separate from firing for serious misconduct as specified by Section 26 of the Act. The GoB has social safety net programs in place to assist the unemployed and destitute.

Collective bargaining is common in government and the private sector, and the Labor Commissioner can grant collective bargaining authority upon request.  The largest unions are comprised of public sector workers.

In August 2016 Parliament passed a Trade Disputes Act with a list of services deemed “essential” and barred from striking that exceeds international labor standards.  The Ministry of Employment, Labor Productivity, and Skills Development is coordinating with the ILO and other partners to review labor laws to ensure they align with ILO standards.  The tri-partite labor law committee recommended that all services listed as essential be cancelled except aviation, health, electrical, water and sanitation, fire, and air traffic control services.

							12. U.S. International Development Finance Corporation (DFC), and Other Investment Insurance or Development Finance Programs 					

The DFC is present in Botswana through its previous Overseas Private Investment Corporation (OPIC) and the Development Credit Authority (DCA) programs.  DFC has a US$ 250 million loan guarantee facility for the local diamond industry, and two separate SME loan facilities with local financial institutions.  It also has a loan facility in place which targets SMEs through a commercial bank.

Botswana is a member of the Multilateral Investment Guarantee Agency (MIGA), which offers investors protection against inconvertibility, or transfer of currency, expropriation, breach of contract, and war and civil disturbance.

The Export Credit Insurance & Guarantee Company (Botswana) Pty. Ltd. allows investors to purchase coverage against certain events and losses such as the insolvency and inability of buyers to pay for purchases, unanticipated import restrictions, or the blockage by the buyer’s country of foreign exchange transfer.

							13. Foreign Direct Investment Statistics