Thursday, October 1, 2020

Botswana as a “spring board”

By Bonnie Modiakgotla

The Botswana government which has earmarked non-mining exports as a panacea to diversification has been advised to do more to ensure that the country attract investors which will prop up Botswana’s industrialization efforts.

Landlocked and with a small population, Botswana at a glance will not appeal to an investor with interests in manufacturing who is looking for growth and high returns. But for Vijay Naik, Flo-tek CEO, the country is a favorable destination base for any company that wants to expand through Africa. He cited Botswana’s sound political and economic environment, and its strategic location.

“While some choose to see Botswana as landlocked, we see it as land-linked. We believe the actual market is 242 million which is the entire SADC region. We are easily able to export because of the SACU and other trade agreements,” said Naik when making his presentation on industrialization during the FNBB budget review seminar.

Flo-Tek is the largest manufacturer of PVC and HDPE pipes in Southern Africa and although based in Botswana, it only sells about 30 percent of its products in the country and exports the rest.

He said manufacturing is a capital intensive undertaking, hence access to low cost capital is critical. Botswana is said to be a great place to raise capital, leading to confidence in making capital allocation decisions due to low cost of capital, Naik explained. Other strong points outlined for setting up a manufacturing business in Botswana includes the country’s “relatively simple and friendly labour policies.”

Naik said some of the challenges encountered were due to narrow technical talent base in the plastic manufacturing sector, resulting in Flo-Tek importing skills. He says the company is in the process of setting up a training institute in Botswana to ease this over a period of time.

However other challenges were beyond their control, and called on the government to do its part. This related to clarity on immigration policies, which at the moment is not clear on what is prioritized when assessing visa applications: capital or skills. Naik says Botswana could benchmark countries like the USA and South Africa which have clearer terms on visa requirements for investors.

He urged the country to invest heavily on infrastructure, and in some instances should pursue the Public Private Partnership (PPP) model to share the risk as government tends to overspend or underspend on projects, while private companies are good with containing costs and delivering projects on time due to expertise in the field.

The country allocates a huge share of the budget to education, and while this is commendable, the expenditure should be more targeted – with more focus on actual job opportunities and practical skills, Naik said as he made a case for preferential funding for courses that will bridge the skills mismatch.

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