Thursday, October 22, 2020

Africa remains Botswana’s major source of FDI

The stock of Botswana’s foreign liabilities by the end of December 2015 shows that the bulk of it still comes from the African continent. 

Data contained in the latest Bank of Botswana (BoB) annual report shows that Africa is the major source of direct investment in Botswana accounting for atleast 49.9 percent. The report further shows that 32.6 percent of the African share comes from neighbouring South Africa. 

Botswana malls are generally made up of leading South African retailers, commercial banks as well as service companies. 

On the other hand, European countries come second with 43.5 percent with Luxembourg contributing mostly at 27.9 percent. 

At the same time, the BoB data shows that the mining and finance sectors remain the largest at 44.6 and 35.7 percent respectively. 

The BoB data on FDI comes at a time when Botswana has been trying to pursue strategies and incentives to attract new investments following a slow performance of the mining sector. 

Available statistics however show that not much inflow has been realised in the past few years. Official figures show that the country’s Foreign Direct Investment decreased to P965 million in the first quarter of 2015 from P1860.92 million in the fourth quarter of 2014. 

Archive official figures shows that Botswana’s Foreign Direct Investment has averaged P906.86 million from 2007 until 2015, reaching an all time high of P3368.73 million in the second quarter of 2011. A record low of P-23.27 million was registered in the first quarter of 2012. 

In its assessment of the domestic investment policy, local economic think tank, and development policy advisors, E-consult Botswana note that Botswana’s investment policy has not been successful as it should have been. 

The E-Consult Botswana’s third quarter (Q3) review provides insight based on the international investment position data over the period 2005-2014.  The review highlight that in 2011 FDI surged, indicating a sharp recovery due to Debswana’s cut 8 project and the relocation of Diamond Trade Centre from London to Gaborone. 

Official data however shows that the momentum was not sustainable as FDI began to decline in 2012 to the current levels. The E-Consult Botswana economist explained late last year that the trend was due to the dominance of the mining sector in Botswana’s FDI. 

At the same time, the E-Consult team noted that the shift from sectors such as mining, manufacturing and agriculture towards services has limited FDI given that generally service activities need somewhat of a small fixed capital compared to mining and manufacturing. 

“Overall, Botswana’s investment policy has not been successful as it should have been, despite the government’s efforts to make the business environment competitive to attract direct investment. Furthermore, better data is necessary to enable improved monitoring of FDI trends in different sector of the economy,” reads part of the E-Consult Botswana Q3 2015 review. 

Meanwhile economic experts previously noted that although the attraction of foreign direct investment (FDI) has previously eluded Botswana, the establishment of Special Economic Zones (SEZs) will add to quite a number of efforts heeded by government to diversify the domestic economy. 

The SEZs build-up is kept on track by the Botswana Investment and Trade Centre (BITC) whose role includes investment promotion and attraction and export development. 

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