According to UNCTAD's World Investment Report 2022, FDI inflows into Botswana increased from USD 32 million in 2020 to USD 55 million in 2021, as the global economy bounced back from the initial impact of the pandemic. That same year, the total stock of FDI in Botswana reached USD 5.1 billion. The mining sector attracts most of the FDI in the country. However, investments in the services industry (insurance and banking) have been growing in recent years. FDI primarily comes from the Southern African Customs Union (SACU), the European Free Trade Association (EFTA), Canada and Zimbabwe.
The Government of Botswana is seeking to diversify its economy and secure more FDIs. The government encourages new investments and joint ventures, and has put measures in place to increase investment in the agriculture, diamond, education, health, and transportation sectors. Furthermore, to assist foreign investors, the government has created the Botswana Investment and Trade Centre (BITC). The country’s strengths lie in its low levels of corruption (the lowest in Africa), its good economic governance, its liberal tax system and its stable democracy. Botswana has also received positive reviews from various international rating agencies, and the country is ahead of many of its neighbours. However, high production costs, a lack of skilled labour and the country’s landlocked position are significant obstacles for potential investors. Furthermore, leading economists in the country have reported that the significant financial reserves generated by the diamond industry have resulted in a lack of interest from international investors led to believe that the country does not need an inflow of foreign capital.
|Foreign Direct Investment||2020||2021||2022|
|FDI Inward Flow (million USD)||32||-319||216|
|FDI Stock (million USD)||5,733||5,011||5,211|
|Number of Greenfield Investments*||3||4||8|
|Value of Greenfield Investments (million USD)||137||346||297|
Source: UNCTAD - Latest available data.
Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.
The strong points of the Botswana economy include:
The main challenges for foreign investors include:
The Government of Botswana grants the following measures to facilitate foreign investment:
Foreign investors usually receive equal treatment; however, this is not guaranteed by law, as there is no legal provision on the matter. There are also additional restrictions in favour of local investors:
Any Comment About This Content? Report It to Us.
© eexpand, All Rights Reserved.
Latest Update: September 2023