From being one of Africa’s top three business reformers, Botswana’s ranking as a friendly investment destination has been dropping gradually since 2008 when President Ian Khama took over from former president Festus Mogae ÔÇô Sunday Standard investigations have revealed.
When President Khama took over the country’s leadership, Botswana was a star performer having moved up 14 slots to thirty-eighth in the World Bank’s ease of doing business rankings. This covered the period April 2007 to June 2008 a few months after Mogae vacated office.
Since then, Botswana’s ranking as a business friendly country has been going down and the country is now at 52 in the 2011 World Bank ease of doing business from the 2008 position of 38. The country’s waning appeal to prospective investors poses a threat to President Khama’s plans of eradicating poverty by diversifying the economy. In his first year in office, Khama saw Botswana’s ranking dropping by a point to position 39 in 2009.
Ease of doing business index ranks economies from 1 to 183, with first place being the best. A high ranking means that the regulatory environment is conducive to business operation. The index ranks the simple average of the country’s percentile rankings on 10 topics covered in Doing Business report. The ranking on each topic is the simple average of the percentile rankings on its component indicators.
Last year Botswana went down six points with the World Bank Doing Business 2010 Report placing the country at position 45 down from 39 out of 183 countries.
The 2010 survey showed that Botswana was becoming one of the most difficult places in the world to register a property, as the country dropped 17 points in rankings in 12 months. The bad score on property ranking coupled with perennial poor rankings of around 150 out of 183 in the┬áTrading across Borders index┬áresulted in Botswana losing its overall ranking on Ease of Doing Business by six points.
┬áThe bank, which co-published the report with the International Finance Corporation, found that on average it requires five procedures, 16 days, and costs 5.01 percent of property value to register a property in Botswana.
“Eliminating unnecessary obstacles to registering and transferring property is therefore important for economic development,” the report said.
The World Bank said simple procedures to register property are also associated with greater perceived security of property rights and less corruption. The simple procedures, the report said, benefit all entrepreneurs, especially women, the young and the poor.
Botswana has dropped further to 50th position in the 2011 World Bank survey, performing worse than the previous year in all indices except for the index on enforcing contracts where the country went up nine points from position 79 to 70.
On the ease of HYPERLINK “http://www.doingbusiness.org/data/exploreeconomies/botswana/” \l “starting-a-business” starting a business, Botswana went down seven points from position 83 last year to 90 this year. Botswana further dropped three points from 41 to 44 on the index measuring protection offered to investors. Botswana is considered one of the most difficult countries in the world to do cross border trading. The situation seems to be getting worse as the country dropped from 150 to 151 under the index. The country also dropped 2 points from 44 to 46 on the ease of raising credit and a further three points on the ease of paying tax.
The country’s worsening business climate relative to other countries threatens to frustrate Khama’s poverty eradication campaign, which is dependent on diversifying the economy away from diamonds.
The president has consistently maintained that his government’s economic diversification drive is the primary means to achieve the goal of poverty eradication. He said this at a two-day Pitso on Poverty Eradication in Mahalapye last year. Khama was reiterating what he had said in 2008 during his inauguration for the current five year term. The president warned that diversification of the economy was a key strategy for the future survival of the country.
Khama repeated the message at the BOCCIM’s 11th National Business Conference in Francistown last year.