Sunday, June 23, 2024

Investment could stall on fears of strict regulation

The World Bank’s Doing Business data for 2013 shows that Botswana has dropped a rung down in the 185 countries ranked on the ease of doing business. From 59 in the rankings for 2012, Botswana slid to 58.

According to the World Bank stats, Botswana has seen a steeper drop in the ranks of countries assessed on ease of starting a business and protecting investors.

Out of 185 economies, Botswana went down three places in the rankings of starting a business. Similarly, it dropped three places in the ranking of protecting investors.

Botswana experienced further falls in other World Bank indices. For example, in the area of dealing with construction, it slipped from 132 to 131.

There was also a fall in rankings of getting credit from 52 to 53 while in paying taxes Botswana fell from 38 to 39. In enforcing contracts Botswana fell down two places. Despite these falls, Botswana went up five places in trading across borders.

Overall, the country’s regulation system is seen as tough; but the system hinders quick emergence of new businesses. Cumbersome procedures for starting a business are said to be making investors uneasy.

“The process of starting a business is too slow and some potential investors end up giving up on the interest of starting a business,” says Othata Batsetswe of the Economics Association of Botswana.

“Investors are also threatened by tough regulations which are said to be made in the national interest.”

Speaking in his personal capacity, Batsetswe also points out at that the new Point Based System (PBS) can make Botswana be ranked as poor in attracting investors with the strict regulatory regime scaring away potential investors.

The PBS, initiated by government to evaluate and examine the quality of foreign investors and employees, was enacted under the new Immigration Act.

In this point system the capacity of skills one has determines him or her scoring more points. PBS is also said by the government to have been, “implemented for transparency and standardization of applicant assessment to attract and retain value adding investors and workers.”

However, this system has elicited mixed feelings among investors in the private sector and NGOs since its inception in April, with some saying the system has made it difficult to obtain work and residence permits in Botswana than anywhere else.

“In a country where there are scarce skills like Botswana, investors tend to import skills outside borders. The cut off points for both investors and employees is highly demanding, making it difficult for investors to take quality employees outside. This alone could make investors feel threatened and unsafe in doing business as they cannot acquire quality skilled employees outside borders,” said one investor, who asked not be named.

The perceived flaws in the PBS ÔÇô which has a high cut off of 75 percent ÔÇô has forced government to start reviewing it.

“As a matter of urgency, the system is now undergoing review to address some early challenges that were discovered in its implementation,” President Ian Khama said in this year’s state of the nation address. ┬á

Briefing the media recently, Minister of labour and Home Affairs, Edwin Batshu, said his ministry had met various members of the private sector, NGO’s and religious organizations to hear from those being affected by the system how it could be improved.┬á


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