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What’s next for Botswana?

What’s next for Botswana?

Following last week’s election win by the ruling Botswana Democratic Party (BDP) where does ‘Africa’s most stable democracy’ go from here? Naomi Nwauzu spoke to Bologo Kenewendo, Botswana’s minister of investment, trade and industry to find out the administration’s priorities going forward.

The BDP, which has governed Botswana since 1966, won last week’s general election: handing president Mokgweetsi Masisi additional time in office and his first public election win.

Prior to the results,  Ms Kenewendo told African Business that president Masisi wants the economy to grow by 8% annually, and for Botswana to transition from an upper-middle-income to a high-income country.

The World Bank forecasts the southern African country’s 2019 annual GDP growth at 3.9% and predicts a 0.2% increase in 2020. While Botswana’s $7,750 nominal gross national income (GNI) per capita is the highest in mainland Africa, the World Bank’s high-income threshold is $12,615.

Ms Kenewendo says the government has and will continue to accelerate business reforms to help achieve this target. There is now an online business registration system and the government is also building an e-commerce platform to diversify the retail sector in Botswana. The online platform is 75% complete and supported by the United Nations Conference on Trade and Development (UNCTAD).

Botswana, the only African country with an A-class sovereign credit rating – where Standard & Poor’s and Moody’s rate Botswana A- and A2 respectively – is ranked 6th in Africa in the World Bank’s 2019 Ease of Doing Business Index.

Their continental ranking is one place lower than it was in last year’s index but this year its overall index score increased, helped by improvements in the process of applying for construction permits. Though, data in this year’s index is current as of May 2018, one month after president Masisi and Ms Kenewendo came into office. This means that the 2020 index should better reflect the effects of new business reforms under their leadership.

As well as business reforms, the government also plans on reforming the diamond industry.

Ms Kenewendo explained that Botswana, the world’s second largest producer of diamonds, is working on better positioning itself along the diamond value-chain. Post-extraction, most of their rough diamonds are cut and polished abroad – exporting a source of revenue and jobs for the economy, where its 2018 unemployment rate was 17.9%, according to government statistics.

In addition to greater domestic diamond beneficiation, “the next leg is jewellery that is being made in Botswana,” she explained.

Last year, president Masisi told Bloomberg that: despite a “wonderful relationship” with De Beers, the South African mining company with which Botswana has a key diamond joint venture, the government needs to secure a better deal in their 10-year contract renewal next year.

We are “dead determined” that Botswana diamonds, which currently account for about 73% of the country’s share of total exports, are processed locally, he asserted.

As well as improving the diamond and mining industry, Ms Kenewendo also highlighted that Botswana needs to strengthen the tourism industry, the country’s second largest sector, which grew by 3.4% in 2018 and contributed at least $2.7bn to the economy, according to the World Travel and Tourism Council (WTTC). It relies on “low-volume high-value tourism,” with the key tourist attraction, the Okavango Delta costing around $5000 a night, she continued.

According to Ms Kenewendo, it is important to target domestic and middle-income foreign tourists. To do this Botswana needs to start pushing their other tourist attractions, which are also appealing yet a fraction of the price of the Okavango, she added. “There’s a lot more to Botswana than the delta…we can create a package and people can enjoy but we also believe that it starts with domestic tourism seeing them and then spreading the word,” she explained.

Despite reform plans and implementations, including in tourism, mining and business, Botswana’s neighbours are facing challenges – Zimbabwe is facing food shortages, a recession and triple digit inflation; South Africa is grappling with state capture and ethnic tensions and, drought has led to sustained power-cuts in Zambia, owing to its reliance on hydropower.

Can these issues affect Botswana, the most stable country in mainland Africa, according to the Fragile States Index?

Ms Kenewendo acknowledged that regional challenges could affect Botswana by reciting a saying in the Setswana language: “When your neighbour’s house burns, yours is most likely to burn too. So, you cannot watch your neighbour’s house burn and fold your arms and claim ignorance. So, we feel our neighbour’s problems are our problems…The South African issue of power is our issue because we are getting power from South Africa,” she continued.

Though, Botswana’s dependence on South Africa’s troubled power company Eskom has decreased due to the development of its power sector – it used to import around 70% of its power from its neighbour, now it imports roughly 30%, Ms Kenewendo estimated. Botswana is currently developing its power station to ensure that it can export to South Africa, she added.

Despite challenges, Ms Kenewendo remains positive about Botswana’s “transformation dreams.”

“I think we have the fundamentals. We have the governance, the peace [and] we have a very strong sovereign credit rating,” she concluded.

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