Tuesday, January 18, 2022

Investors see FDI-seeking Botswana as ‘closed for business’

As the pit of Jwaneng mine deepens and its diamonds are being mined out, there is understandable anxiety to attract more foreign direct investment (FDI) into the country. So far, Botswana is not doing too well in that regard and the diagnosis from the Botswana Confederation of Commerce, Industry and Manpower (BOCCIM) is that the approach is not right.

The Confederation’s Chief Executive Officer, Maria Machailo-Ellis, says that rather than go it alone, Botswana should market itself as a part of the Southern African Development Community (SADC). Similar sentiment has been expressed by a University of Botswana researcher, Dr. Trywell Kalusopa, who told a Southern Africa Trade Union Coordination Council meeting at Oasis Motel in 2012 that SADC’s economic paradigm is flawed in that nations within this regional economic community compete against each other for FDI. He gave the example of Malawi which has lowered its labor and environmental standards in order to attract foreign investors to its shores.

To back up her own argument, Machailo-Ellis points to the example of the European Union which acts a bloc for purposes of attracting FDI. She acknowledges though that SADC has taken a step in the right direction by forming the Association of SADC Chambers of Commerce and Industry (ASCCI) which is headquartered in Botswana. ASCCI represents 18 national chambers of commerce and industry, confederations of industries, trade associations and employer organizations in all the SADC member states. Mandated to be the voice of the private sector, ASCCI aims to enhance the private sector’s role in the regional integration agenda and its driving principle is to ensure that there is a strong and unified voice to support private sector growth and the development of a free market economy system in the SADC region. However, Machailo-Ellis laments that this body has not developed into a private sector force because of the low level of inter-regional trade.

The other aspect that she brings up is that investors are attracted to countries where doing business is easy and cheap.

“As much as we have good ratings, peace and political stability and the rule of law, those factors seem not to be enough to spur the level of investment that we aspire for,” Machailo-Ellis says.
Indeed such factors are overrated for purposes of attracting FDI. Even with its security problems and unfavorable rankings by Transparency International, Nigeria receives the largest amount of FDI in Africa and is one of the top 20 global destinations for such commodity.

Machailo-Ellis also points to the administration of land, planning processes and turn-around time for permits as areas where Botswana is underperforming when compared to countries it is competing with FDI for.

The upshot of it all is that there is a perception in both the international and local investor community that “Botswana is not open for business”. In November this year, BOCCIM will hold its biennial National Business Conference in Maun under the theme “Opening Botswana to the World: Attracting FDI and ensuring that Botswana’s firms can compete in the global Economy”. Machailo-Ellis says that the theme is purposefully crafted to deal with issues that create the impression that Botswana is closed for business.

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