While its Policy Perception Index (PPI) declined slightly in 2015, Botswana is still the highest ranked jurisdiction in Africa on policy factors in a survey of mining companies that has just been published by a Canadian think tank. Internationally, the country is ranked 14th out of a total of 109 countries.
“Botswana’s slightly lower score on the PPI reflects increased concerns over trade barriers (-19 points), the geological database (-15 points), and the availability of labour and skills (-7 points). Botswana also experienced a number of improvements which helped mitigate the above mentioned declines,” says the Survey of Mining Companies 2015 published by Fraser Institute.
The think tank says that while geologic and economic considerations are important factors in mineral exploration, a region’s policy climate is also an important investment consideration. The PPI is a composite index that measures the overall policy attractiveness of the 109 jurisdictions in the survey and is composed of survey responses to policy factors that affect investment decisions. Policy factors examined include uncertainty concerning the administration of current regulations, environmental regulations, regulatory duplication, the legal system and taxation regime, uncertainty concerning protected areas and disputed land claims, infrastructure, socioeconomic and community development conditions, trade barriers, political stability, labour regulations, quality of the geological database, security, and labour and skills availability. For the third year in a row, Ireland had the highest PPI score of 100. Zimbabwe is the fourth worst jurisdiction for investment based on PPI rankings.
Botswana also did well internationally, beating First World jurisdictions like Arizona, Washington, Michigan, Idaho, Colorado, New Mexico (all states in the United States of America) as well as South Australia, Quebec (Canada), Spain, New Zealand, Poland and France. A Botswana respondent identified only as “Company president” is quoted as saying “Improving the fiscal regime in a period of depressed commodity prices rather than increasing taxes/royalties in order to try and maintain government revenues was a positive.”
More important though is the Investment Attractiveness Index (IAI) which is a composite index that combines both the PPI and results from the Best Practices Mineral Potential Index. PPI alone does not recognize the fact that investment decisions are often sizably based on the pure mineral potential of a jurisdiction. Fraser Institute says that “respondents consistently indicate that only about 40 percent of their investment decision is determined by policy factors.” On the continent, Botswana is knocked off its pedestal when it comes to the IAI, coming fifth after Morocco, Burkina Faso, Ghana and Namibia. Of the 109 jurisdictions surveyed, Botswana comes in at number 39.
