Botswana is slowly losing its shine as the best place in Africa to do business as it lost ground for the second time in a row, owing to the deterioration in macroeconomic environment that was buttered by economic downturn as a result of undiversified economy.
The Global Competitiveness Report for 2010/2011 by World Economic Forum has revealed a shocking picture that showed the country has failed to act on some of the challenges that have hindered investment growth in the country.
The report showed Botswana has been skipped by Namibia and Morocco (not in SADC), which therefore means Botswana sits at position 4 in the region after South Africa, Mauritius, and Namibia–the country’s major competitors.
The slip in ranking, analysts say, shows that Botswana has done less to address the challenges of doing business in the country amongst the 12 pillars that are gauged.
Key features that have worked against the country are the deterioration in the macroeconomic stability that could be explained by undiversified economy that was buttered by recession leading to reduction in government revenues.
Another structural weakness includes lack of proper infrastructure, which would include proper transportation systems, while a country like Namibia has a good transportation network.
Botswana’s market size also works against the country and it is made worse by the fact that it is a landlocked country. But, what is surprising is that despite the challenges of being landlocked and size of the market, a country like Barbados is doing well.
Technological readiness of the country has also been seen as a challenge in a country where internet connectivity is still low and only few people have computers.
Another feature that makes the country uncompetitive is poor work ethic, which has been ranked as one of top impediments.
“If nothing is done even in areas we think the country has strengths, it might turn into a challenge,” Dr Phumzile Thobokwe commented on the report findings.
Globally, Botswana is at position 75, Morocco (74) and Namibia at position 73. South Africa sits comfortably at position 54 while Mauritius is at number 55.
Switzerland has maintained position number 1 for successive periods followed by Sweden and Singapore.
However, the country’s strengths lie in the institutions (ranked 38 in the world), efficiency in government spending and the public trust in politicians.
World Economic Forum describes the Botswana’s economy as the one in transition because it is a factor driven economy owing its reliance on raw materials, which means Botswana is still an agrarian economy and mineral driven.
It will have to transform to the efficiency economy in order to compete with South Africa, which has already moved to the second stage of development.
“Botswana has well functioning institutions, but other countries have improved in other pillars,” said Thobokwe.
“Despite South Africa being the best, in terms of other pillars, it is not the best in the region. It is the fundamental areas (market size, technological readiness, good market efficiency, financial market efficiency) that matter,” she added.
Namibia, which competes with Botswana for investment, has surpassed the largest rough diamond producer because of its good infrastructure, which has passed the 3 point benchmark.
Its transport system is regarded as reliable and efficient compared to that of Botswana.
“On the other hand, Mauritius is doing better in the area of labour market efficiency and financial market development,” added Thobokwe.