The story of the rise of Africa, the result of consistent economic growth and political stability on the first continent of the Millennium, has been hit hard in recent years. Headwinds from falling commodity prices have caused many African countries to experience a significant economic slowdown. Some of the continent’s largest economies, such as Nigeria, South Africa and Egypt, have officially fallen into recession. The COVID pandemic, which has devastated economies around the world, has exacerbated these.
Despite the challenges, there is hope that the continent is on a slow path to recovery. Africa was fortunate enough to escape the worst of the first wave of the COVID pandemic. This allows you to prepare for subsequent waves while saving resources that are already scarce. In addition, the launch of the African Continental Free Trade Area (AfCFTA) in 2021 opens the entire continent to larger intracontinental trade and partnerships. All of these provide African countries with opportunities for growth and development.
Some countries are better suited to take advantage of new opportunities and prosper despite challenges than others. One such country is South Africa’s desert oasis, Botswana, a fascinating investment and trade destination.
First, it is important to understand the background of the formation of Botswana. Independent in 1966, this sparsely populated country was one of the poorest in the world. The annual income per capita was about $ 70. To make matters worse, about 60% of government spending consisted of international aid. The country’s infrastructure was seemingly hopeless, with only about 12 km of paved roads, and agriculture (mainly beef cattle breeding) accounted for 40% of gross domestic product (GDP).
The situation has changed significantly since independence, especially in the last two decades, driven by relative political stability and economic growth. Botswana currently has a standard sovereign credit rating of “A” (Moody’s, S & P). High GDP growth rate (consistently about 5% over the last 10 years). Ease of Business Index ranked 87th out of 190 countries and 8th in Africa (World Bank Report, 2020). It has also received the same reputation from Transparency International for 18 consecutive years and has an identity as Africa’s least corrupt country. A labor force with a high literacy rate of 87%. We strongly adhere to the rule of law and the independence of the judiciary. Its per capita GDP moved from $ 70 in 1960 to $ 7,859 in 2019.
Botswana is currently one of the few high- and middle-income countries in Africa. In this position, it provides clues as to how African countries can achieve economic prosperity. In the 35 years to 2001, it had the fastest per capita growth rate of any country in the world. Given that most of Africa’s counterparts have struggled in the same way, it shows sustainable and stable economic prosperity, a high level of intolerance to corruption, and relative political stability. These are essentially the pillars of about 2 million landlocked nations that have built economic prosperity.
With the discovery of diamonds in the early 1970s, Botswana had two options. Either fritter or manage the resources carefully, as many other African countries used to do with mineral resources. Thankfully, choosing the latter, the government chose to own only half of the country’s single diamond mining company, Debswana (owned by the global mining group De Beers). More importantly, they chose to use the proceeds from diamond exploration carefully in their social development efforts.
National leadership has always been different from what African responders had to provide. The decision was made to protect the country from the dangers of mineral discovery. One was the government’s decision to make a large investment in public infrastructure. It also improved government efficiency by curbing the expansion of civil servants. By saving mineral revenues, we overcame the curse of commodity volatility and prevented exchange rate volatility due to business cycle government spending. This approach to governance has helped reduce incentives for corruption and facilitate the transfer of power. This can be seen in the fact that the country’s former president, Ian Khama, voluntarily resigned, paving the way for former vice president, Mokgweetsi Masisi, to become president.
Botswana has a corporate tax rate of 22% to make it more investor friendly to the country. This is below the global average of 23.5% and well below the African average of 27.85%. The country offers tariff exemptions on imports of plants and machinery, and there are no restrictions on foreign ownership. Attempts at economic diversification of the country presuppose commercialization, mining, manufacturing (particularly focusing on import substitution), and services in the agricultural and agribusiness sectors. Other diversification opportunities include infrastructure and real estate development, hospitality and tourism, energy and transportation and logistics.
The Special Economic Zone (SEZ) allows the country to develop infrastructure, state-of-the-art technology, beneficial inter-sectoral collaboration, economies of scale, specially trained and skilled workforce, and targets for domestic and international investors. We provide focused economic incentives.
Another major contributor to its growing economy is tourism. Botswana is a popular tourist destination, rich in flora and fauna and glorious in the Kalahari Desert. Botswana has many tourist lodges and is a tourist paradise that can be booked all year round. This is further accentuated by its reputation for producing the best beef on the continent.
The story of Botswana is really inspiring. One shows that frustration can actually be used as an elixir for the growth of prosperity and change, with a vision and a focused attention to good governance. Many African countries have studied how this small country, which focuses on peace, tranquility, good governance, and the rule of law, stands out on a continent that longs for good news. Suitable for learning. From this small oasis in the desert, the stability required of a country pursuing industrialization and economic development is very visible.
Botswana, the land of Zebra, is open. Spread your hands and hug them.
Adefeco is the Honorary Consul of Lagos from Botswana to Nigeria.
Botswana, an African oasis-Businessday NG
https://businessday.ng/opinion/article/botswana-an-african-oasis/ Botswana, an African oasis-Businessday NG