Botswana – How has the global commodity slump impacted business set up and FDI ?

Okavango Delta, Botswana

Okavango Delta, Botswana

If you have been listening to the news recently, it’s hard to have missed the global commodity slump that’s unfolding. Botswana in South Africa has been hit badly and commodity prices are at almost a decade low. Botswana relies heavily on natural resources and its copper and diamond mining industries have been hit badly due mainly to drastically reduced exports of the raw material to China and worldwide.

BD Live, webnews have written that “State-owned BCL, Botswana’s biggest copper miner, estimates it will have to cut as many as 2,000 of its 6,000 workforce as it streamlines operations in the face of weak copper prices, currently at six-year lows, the department’s director told local newspaper Mmegi.”

Additionally London based Dem Diamonds is also said to be planning up to 50% staff reductions later in the year. It is hoped that a new and upcoming Copper Mining and Lerala Diamond Mine in Khoemacau will mitigate some of the redundancies caused by the slump.

Despite this bad news, Botswana is still considered a good bet for FDI compared with the rest of Africa. It is the least corrupt country in Africa and FDI inflow has recently been reported to be US$393.2 million by the 2016 Index of Economic Freedom Report. In the same report, Botswana is ranked 30th globally in terms of Economic Freedom and as 2nd regionally classifying the economy as mainly free.

Unfortunately, The Ease Of Doing Business 2016 Report is not terribly positive about doing business in Botswana and ranks it as 72nd out of 189 world economies. Business startup is ranked even lower at 143rd out of 189 economies. Area’s of difficulty include enforcing contracts and in the area of awarding tenders and contracts which are often given based on political alliances.

Botswana has deservedly earned its reputation as a good place to invest because of its low tax rate (22% for corporations), skilled work force, advanced financial and banking industry and low corruption rates compared to the rest of Africa but do bear in mind that there is still a lot of restrictions in the area of foreign investment like the fact that most of the land cannot be owned by foreigners and there are restrictions in investment into certain sectors.

Healy Consultants Group has 10+ years in business incorporation in Botswana and has in-house experts who will navigate you successfully through the steps required for business set-up.

Company Registration Botswana:

Image attribution
Photo by Joachim Huber, available under a Creative Commons Attribution 2.0 Generic (CC BY 2.0) license.

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