Wednesday, November 30, 2022

Botswana’s investment climate worsening – Study

World Bank study ranks Botswana along side Zimbabwe as worst SADC countries in protecting investors

Botswana slips four positions from last year on “Ease of doing business” index

Botswana red tape worst in the region

It is more difficult to start a business in Botswana today compared to last year

It is easier to close down a business in Botswana today compared to last year

An investor can expect to take up to five months longer to set up a business in Botswana compared to competing countries in the region like South Africa, Namibia, Zambia or even Zimbabwe.

A Sunday Standard comparative study of bureaucracies involved in setting up businesses in the five SADC countries, based on figures gleaned from the World Bank (International Finance Corporation) 2006 report, revealed how Botswana’s red tape ÔÇô the worst in the region ÔÇô may be frustrating the country’s campaign to attract foreign investors and diversify its economy.

First, investors have to knock on at least 11 doors. Then there is the long wait, more than 108 days, on average, before they can launch a business in Botswana. Some do not even make it that far. Those who do would then have to go through the whole process of shuffling from door to door ÔÇô 24 of them over 169 days to complete the licencing paper work.

A country report on “ doing Business in Botswana” recently compiled by the International Finance Corporation, a private sector arm of the World Bank, gives a detailed account of the bureaucratic gauntlet that investors have to run before they can open businesses in Botswana.

According to the report, an investor setting up in Botswana can expect to go through 11 steps to launch a business over 108 days on average.

A country report on South Africa revealed that an entrepreneur setting up in Botswana’s southern neighbour goes through nine steps to launch a business over 35 days on average, while in Zambia, an investor can expect to go through six steps over 35 days. In Namibia and Zimbabwe, which ranked a notch better than Botswana, an investor can expect to go through 10 steps to launch a business over 95 days in Namibia and 96 days in Zimbabwe.

Botswana’s bureaucracy is relatively even more stifling when it comes to complying with licensing and permit requirements. The country ranks worse than all three regional countries in the number of steps, time and costs involved in complying with licencing and permit requirements.

It takes 24 steps and 169 days to complete the licencing process in Botswana, while in Namibia it takes 11 steps over 105 days, South Africa 17 steps over 174 days, Zambia 16 steps over 196 days and Zimbabwe 21 steps over 481 days
The World Bank study further reveals that although Botswana’s environment for investors to do business is still good, it is worsening instead of improving. Botswana slipped four positions over last year and is currently ranked 48 out of 175 countries in the world. The study, which is titled Doing Business 2006: how to Reform, indicates that Botswana did not make any positive reform on nine of 10 areas studied over last year.

The 10 areas that were measured include starting a business, dealing with licenses, employing workers, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and closing a business.

On each category, the worst rank for Botswana is “protecting investors” which it stands at 118 alongside Zimbabwe, while South Africa is ranked 9, Namibia 60, Zambia 60.

The only positive reform that Botswana recorded was on “Closing a Business.” According to a report, it is easier for investors to wind up and close businesses now than it was last year.


Read this week's paper