Sunday, December 5, 2021

Investors drool over Botswana’s mining practices

The Fraser Institute Annual survey of mining companies 2020 revealed that Botswana is the most attractive jurisdiction in Africa in terms of both policy and mineral potential, and the most appealing to mining investments in Africa.

The Fraser Institute’s Investment Attractiveness Index (IAI), formed from both the Policy Perception Index (PPI) and the Best Practices Mineral Potential Index, measures the attractiveness of a country based on policy factors such as onerous regulations, taxation levels, the quality of infrastructure, and the other policy-related questions that respondents answered to. 

Botswana is the highest-ranked jurisdiction in Africa on policy, ranking 15th (of 77) in 2020, after ranking 22nd (of 76) in 2019. In the comments of the survey, the Fraser Institute said Botswana’s increase in its PPI score of almost eight points, reflects decreased concerns over labour regulations and employment agreements (-43 points), its taxation regime (-33 points), and uncertainty concerning protected areas (-29 points). Botswana is also the most attractive jurisdiction in Africa when considering both policy and mineral potential ranking 11th out of 77 in overall investment attractiveness.

Last year, Botswana scored the highest IAI in Africa scoring 81.48, making it the country’s highest IAI since 2016. In 2019, the country scored 63.39 in the IAI. Out of 77 countries, Botswana was ranked number 11, after being number 25 out of 76 countries last year.

The PPI provides a comprehensive assessment of the attractiveness of mining policies in a country and can serve as a report card to governments on how attractive their policies are from the point of view of an exploration manager. It captures the opinions of managers and executives on the effects of policies in jurisdictions with which they are familiar. 

Botswana’s PPI score in 2020 was at 92.20, making it the 15th country out 77 countries in the PPI. The highest the country ever scored in this area was in 2016 when it attained 91.79. In 2019. the country scored 83.48. Once in 2018, Botswana became the closest to reaching top ranks becoming number 12 out of 83 countries, and twice in 2016, when she became number 21 out of 104 countries.

The World Bank has said mining dependent economies, such as Botswana and Guinea, are expected to see robust growth in 2021. The rise in metal prices is expected to reduce balance sheet pressures in metal exporters and underpin their recoveries. Botswana is projected to return to robust growth in 2021, supported by a recovery in diamond demand, according to the World Bank’s analyses. 

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