IV. trade policies by sector
IV.1 Mineral
production, 1997-01 90
IV.2 Main financial
services legislation 99
I. The economic Environment
- Main
Features
- The Republic of
Botswana is located in sub-Saharan Africa and bordered by South Africa,
Zambia, Zimbabwe, and Namibia. About half of its 1.68 million
population (August 2001) live in urban centres.
- Botswana was a middle-ranking
"medium human development" country in 2000.1
Impressive economic performance since independence has raised GDP per
head, estimated at almost US$3,000 in 2001, and promoted social development
(Table I.1). It has higher living standards on average than other
sub-Saharan African countries. Development has been driven mainly by
a rich diamond mining industry. Mineral taxation has also enabled
the Government to improve basic infrastructure, such as transportation
and telecommunication networks, and social services, such as education
and health.
Table I.1
Main economic
and social indicators
Land area |
582,000 km2 |
Urban share of
population (2000) |
49% |
Population
(August 2001) |
1.68 million |
Nominal GDP at
current market prices (2001) |
US$5.3 billion |
Annual population
growth (1980-93) |
3.5% |
GDP per capita
(2000/01) |
US$2,970 |
UN human
development index (2000) |
|
GDP per capita
annual growth rate (1995-01) |
2.0% |
- Overall
ranking |
126 |
Nominal GDP at
constant 1993/94 prices (2001) |
P17.1 billion |
- Category |
Medium human
development |
GDP shares
(2000/01):
Primary
Secondary
Tertiary
|
37.4%
4.2%
58.4%
|
- Ranking
within category |
73rd |
Enrolment ratio
(net) in education (1998) |
|
Life expectancy
at birth (2000) |
40.3 |
- primary |
81% |
Infant mortality
rate per '000 (2000) |
74 |
- secondary |
57% |
Adult literacy
(2000) |
77.2 |
|
|
|
|
Source: UNDP
(2002), Human Development Report 2001;
and authorities of Botswana.
- Since the mid-1990s,
the HIV/AIDS pandemic has retarded Botswana’s economic and social
progress. Its ranking on the UN human development index fell from
a high of 71st in 1996
to 126th in 2000. It has the world’s highest (and
still rising) incidence rate of HIV/AIDs (38.8% in 2001), and crucial
social indicators have fallen drastically, e.g. life expectancy from
67 years in 1996 to 40 years in 2000. The Government’s goal is
for an "AIDS-free generation" by 2016. Its comprehensive
programme is aimed at reducing new infections by 50% by 2010; an Anti-Retroviral
Therapy Programme was recently introduced.2 Combating HIV/AIDS will have
long-term budgetary repercussions; the cost of treating it could rise
from 5% now to over 10% of GDP by 2010.3
- recent
economic developments
- Real GDP growth
dipped to 4.1% in 1998, but had rebounded to 9.2% in 2000 (Table I.2).
Although diamonds are the main impetus to growth, non-mining activities,
especially services, maintained strong growth; 4% in 2000 and 6.0% in
2001. Unemployment remains high. However, it fell from over
20% in the mid-1990s to 15.6% in 2000. Formal employment grew
by 4% in 2000 (8% in the private sector), but slowed to 0.6% in 2001.
Table I.2
Main macroeconomic
trends, 1997-01a
|
1997 |
1998 |
1999 |
2000 |
2001b |
Real GDP
growth (%) |
8.1 |
4.1 |
8.1 |
9.2 |
1.2 |
Non-mining private |
7.3 |
7.8 |
6.2 |
4.0 |
6.0 |
Unemployment
(%) |
19.8 |
17.8 |
15.8 |
15.6 |
.. |
Formal employment growth (5) |
6.1 |
6.4 |
2.1 |
4.0 |
0.6 |
Inflation
(consumer prices, period average) |
8.9 |
6.5 |
7.8 |
8.5 |
6.6 |
Money supply
(M3) growth (%) |
19.9 |
34.5 |
28.9 |
-1.1 |
27.6 |
Bank credit
growth (%) |
5.4 |
56.1 |
41.4 |
17.7 |
10.7 |
Prime lending
interest rate |
14.0 |
14.0 |
14.8 |
15.8 |
15.8 |
Central government
fiscal balance (% of GDP, before grants) |
4.4 |
-6.7 |
5.8 |
8.9 |
-3.1 |
Expenditure (% of GDP) |
37.8 |
42.8 |
42.7 |
40.7 |
44.1 |
Growth (%) |
21.6 |
22.4 |
15.0 |
10.6 |
18.5 |
Revenue (% of GDP) |
42.3 |
36.2 |
49.0 |
49.8 |
41.0 |
Growth |
12.0 |
-7.3 |
55.8 |
18.0 |
-10.0 |
Balance of
payments |
|
|
|
|
|
Trade balance (% of GDP) |
17.2 |
1.6 |
15.5 |
16.8 |
12.6 |
Current account (% of GDP) |
13.9 |
4.1 |
12.2 |
10.2 |
7.4 |
External reserves (months of imports, end-of-year) |
28.8 |
28.2 |
31.2 |
32.6 |
32.1 |
Real effective exchange rate (annual change %)c |
Na |
-0.9 |
6.0 |
3.8 |
6.7 |
External
debt (% of GDP) |
9.4 |
10.3 |
8.9 |
8.0 |
7.7 |
Debt to export (goods and services) ratio (% ) |
16.3 |
19.7 |
17.3 |
15.8 |
15.6 |
|
.. Not available.
a Certain data
are based on fiscal years (1 April to 31 March).
b Preliminary.
c Period average;
a positive figure indicates a real effective appreciation of the pula.
Source: Authorities
of Botswana.
- In early 2001, Botswana
obtained its first international credit ratings of A2 and A by Moody’s,
and Standard and Poor's, respectively. The Government was considering
an international and a domestic pula-denominated bond issue during 2002.
(i) Fiscal
policies and public sector reforms
- Recent budget surpluses
(before grants) had risen to 8.9% of GDP in 2000 (Table I.2).
Long-term prudent fiscal management has generated substantial budgetary
reserves, and the Government’s national planning objectives are closely
linked to its fiscal outcomes.4 However, the budget fell sharply
into deficit in fiscal year 2001, to 3.1% of GDP (much worse than expected)
and deficits are forecast to be well over 4% in 2002 and 2003.
While such deficits can be accommodated by accumulated reserves without
government borrowings, they may reflect unsustainable public expenditure
growth, unless accompanied by increased productive capacity and sustainable,
especially non-mining, revenue sources.5 Development spending is forecast
to accelerate towards the end of the Eighth National Development Plan
in March 2003, especially on health, for HIV/AIDS treatment, including
free access to anti-viral drugs. Revenue growth lags well behind
planned expenditure growth, despite several revenue initiatives, such
as replacing the sales tax with the comprehensive VAT from July 2002.
Volatile mineral tax receipts will also be boosted by the pula’s depreciation
against the U.S. dollar. While the Revenue Stabilization Fund
was established to accrue funds from investments as a general revenue
reserve, it has instead been used to provide loans to parastatals and
councils.
- Public sector reforms
to improve efficiency and contain costs are a government priority.6
The progressive implementation of the performance management system
is to be completed by 2004. A defined-benefit pension scheme for
public employees replaced from April 2001 (for new employees) the unfunded
scheme that had accumulated large government contingent liabilities,
estimated at P 10 billion.7 The Public Enterprise Evaluation
and Privatisation Agency (PEEPA) is preparing a privatization master
plan, despite Air Botswana’s deferred privatization in light of the
depressed global aviation market; poorly performing parastatals,
such as Botswana Railways, are being restructured and commercialized.
Their access to concessional loans from the Public Debt Service Fund
also ceased; existing debt is to be sold to financial institutions through
loan conversions to marketable securities.8
Several new autonomous authorities and boards will operate commercially,
and revised legislation will facilitate private-sector development.
- Monetary
and exchange rate policies
- The Bank of Botswana’s
principal monetary policy objective is controlling inflation.9
It maintained a restrictive monetary policy stance in 2001 to reduce
inflation in the face of demand pressures from rising commercial bank
credit and government spending.10 Buoyant foreign exchange earnings
boosted liquidity and money supply growth in 2001; M3 grew by 27.6%
(-1.1% in 2000). The Bank of Botswana certificates (BoBCs) were
sold to mop up excess liquidity; such holdings, mainly by commercial
banks, totalled P 5.148 billion at end 2001 (P 3.712 billion at end
2000). Holding weekly auctions and standardizing BoBCs maturity
at 91 days enhanced liquidity management. Inflation, rising since
1998, fell from 8.5% to 6.6% in 2001. While the Bank Rate was
maintained at 14.25% (set in October 2000), the prime-lending rate increased
from 14.75% to 15.75% in 2000, and real interest rates rose to well
above regional and international levels as domestic inflation fell.11
- The Bank’s main
monetary tool is interest rates set through open market operations.
In pursuing sustainable low inflation, it tries to maintain real interest
rates at prevailing international levels, subject to domestic demand
and inflationary pressures. In practice, it tries to keep Botswana’s
inflation rate at no higher than the weighted average level of its major
trading partners. The Bank focuses on intermediate targets that
influence domestic demand levels, especially private-sector credit growth,
which interest rates directly affect. Other demand indicators
used are public expenditure growth and factors affecting domestic costs,
such as wage and productivity growth.
- The Bank’s inflation
targets are set through exchange rate policy.12
It maintains the pula’s nominal effective exchange rate constant and
seeks to achieve an inflation rate that, at a minimum, also maintains
a relatively stable real effective exchange rate, so as to promote export
competitiveness and economic diversification. Inflation was expected
to increase in 2002, due to credit growth, sharp increases in government
expenditure, and the one-off price effects of the VAT introduction.
The Bank’s target inflation rate for 2002 of 4% to 6%, with private-sector
credit growth of 12.5% to 14.5% (credit growth of 17.7% in 2000 and
10.7% in 2001), was expected to achieve a stable real effective exchange
rate.
- Botswana has continued
to try to contain the fluctuations of the pula against the rand.
However, unstable and sharp divergence in the value of the rand and
the U.S. dollar, the major determinant of the SDR, increasingly complicated
Botswana’s exchange rate management.13 While the rand has a large weight
in the currency basket, attempts to maintain the pula’s real value
against the rand, when the U.S. dollar was also strengthening, required
periodic technical adjustments of the currency basket. Nevertheless,
during 2000 and 2001, Botswana’s international competitiveness, as
measured by the real effective exchange rate, deteriorated by about
4% and 7% respectively, thereby making domestic producers on balance
less competitive against imports and in export markets (Table I.2).
- The pula’s real
exchange rate against the rand has appreciated substantially since the
rand sharply depreciated against major currencies. The pula strongly
appreciated nominally against the rand, by 21.8% in 2001 (rising to
1.74 rand), while depreciating substantially against the SDR by 20.1%.14
Its nominal effective exchange rate appreciated by 5.1% in 2001.
Allowing for inflation differences between Botswana and its major trading
partners, the pula’s real exchange rate appreciated against the rand
by 21.8%. Recent exchange rate movements are claimed by some to
contradict the exchange rate policy, reiterated in the 2002 Budget Speech,
of maintaining and enhancing international competitiveness of domestic
producers by ensuring that the real exchange rate of the pula remains
relatively stable.15 Such developments may further
undermine Botswana’s diversification efforts. Botswana’s loss
of international competitiveness based on the real exchange rate is
compounded by its trade patterns.16
- Botswana’s balance
of payments remains strong, despite subdued diamond exports due to demand
slowdown, especially in the United States, and declining world prices,
such as for copper and nickel. Trade and current account surpluses
declined as a share of GDP from 17% to 13% and from 10% to 7% in 2001.
Foreign reserves remained substantial, providing 32 months of import
coverage at end-2001 (33 months at end-2000). Botswana has not
regulated current or capital account transactions since February 1999.
Its external debt to export ratio was below 16% in 2001.
- trade
performance
- Trade
in goods
- Diamonds dominate
exports, accounting for 85% in 2001, up from 78.5% in 1996 (Table I.3).
Other exports include mainly meat, copper/nickel, soda ash, textiles,
and vehicles (mainly Volvo tractors after the Hyundai assembly plant
closed in 2000). Exports are also heavily concentrated geographically.
Europe, especially the United Kingdom, accounted for 85% of exports
in 2001, compared up from 77% in 1996 (Table I.3). SACU members,
mainly South Africa, accounted for 10% of merchandise exports in 2001
(18% in 1996), but are important markets for manufactured products,
e.g. textiles.
Table I.3
Exports
by major commodity and destination, 1996 and 2001
(US$ million
and per cent)
Commodity/destination |
1996 |
2001 |
|
Value |
Share |
Value |
Share |
Commodity |
|
|
|
|
Mining |
1,745 |
85.7 |
2,047 |
90.1 |
Diamonds |
1,597 |
78.5 |
1,937 |
85.2 |
Nickel/copper |
125 |
6.1 |
70 |
3.1 |
Soda ash |
23 |
1.1 |
40 |
1.8 |
Non-mining |
291 |
14.3 |
|
9.9 |
Meat |
85 |
4.2 |
73 |
3.2 |
Textiles |
59 |
2.9 |
43 |
1.9 |
Other |
147 |
7.2 |
110 |
4.8 |
Total
|
2,035 |
100.0 |
2,274 |
100.0 |
|
|
|
|
|
Destination |
|
|
|
|
SACU |
372 |
18.3 |
236 |
10.4 |
Other Africa |
75 |
3.7 |
80 |
3.5 |
Zimbabwe |
63 |
3.1 |
54 |
2.4 |
Europe
|
1,564 |
76.7 |
1,925 |
84.7 |
United Kingdom |
1,106 |
54.3 |
1,512 |
66.5 |
United States |
19 |
1.0 |
16 |
0.7 |
Other |
5 |
0.3 |
17.0 |
0.7 |
Total |
2,035 |
100.0 |
2,274 |
100.0 |
|
Source: Authorities
of Botswana.
- Imports consist
mainly of machinery, including electrical equipment, metals, transport
equipment, including vehicles, food and beverages, mainly (over three
quarters) from SACU members, especially South Africa (Table I.4).
Table I.4
Imports
by commodity and source, 1996 and 2001
(US$ million
and per cent)
Commodity/source |
1996 |
2001 |
|
Value |
Share |
Value |
Share |
Commodity |
|
|
|
|
Food, beverages,
and tobacco |
294 |
16.9 |
264 |
14.0 |
Wood and
paper products |
127 |
7.3 |
153 |
8.1 |
Textiles
and footwear |
129 |
7.4 |
112 |
5.9 |
Chemical
and rubber products |
178 |
10.2 |
176 |
9.3 |
Fuel |
111 |
6.4 |
81 |
4.3 |
Metal and
metal products |
153 |
8.8 |
164 |
8.7 |
Machinery
and electrical equipment |
280 |
16.1 |
401 |
21.2 |
Vehicles
and transport equipment |
245 |
14.1 |
257 |
13.6 |
Other |
221 |
12.7 |
282 |
14.9 |
Total |
1,739 |
100.0 |
1,891 |
100.0 |
|
|
|
|
|
Source |
|
|
|
|
SACU |
1,356 |
78.0 |
1,448 |
76.6 |
Other Africa |
107 |
6.1 |
79 |
4.2 |
Zimbabwe |
100 |
5.7 |
74 |
3.9 |
Europe
|
118 |
6.8 |
174 |
9.2 |
United Kingdom |
45 |
2.6 |
51 |
2.7 |
Republic
of Korea |
76 |
4.4 |
49 |
2.6 |
United States |
22 |
1.3 |
35 |
1.8 |
Other |
60 |
3.4 |
106 |
5.6 |
Total |
1,749 |
100.0 |
1,891 |
100.0 |
|
|
Source: Authorities
of Botswana.
- Trade
in services
- Botswana is a net
importer of services, especially of transportation services. In
2001, trade in services (invisibles) recorded a deficit of P 1.2 billion
(US$202 million). A small surplus is recorded on tourism (US$26
million in 2001).
- investment
patterns
- The stock of foreign
direct investment (FDI) was P 9.8 billion (US$1,920) at end 2000 (Table I.5);
almost 60% related to non-equity investment (P 4.5 billion (US$1,225
million) at end 1997).17 About 80% of total FDI is in
mining, followed by retail and wholesale trade (8%), finance (6%), and
manufacturing (4%). Most FDI is from South Africa (61%), followed
by Europe (37%), especially Luxembourg (25%).
- Inward FDI was some
US$55 million in 2000 and 2001, down from US$96 million in 1997.
The main factors facilitating Botswana’s inward FDI have been political
stability, strong macroeconomic fundamentals, good governance, low corruption,
improved human and physical capital, low labour costs, and low tax rates.18
However, its FDI performance appears to have slipped from being a "front-runner
FDI performer with high FDI potential" in 1988-90 to "performing
below its high FDI potential" in 1998-00.19
An impediment to investment and to the country’s diversification is
increasing difficulties in employing expatriates through hindrances
in obtaining work permits.20
Table I.5
Stock of
foreign investment, by sector and source, end-2000
(P '000 and
per cent)
Sector/source |
Foreign
direct investment |
Other
investment |
|
Value |
Share |
Value |
Share |
Sector |
|
|
|
|
Mining |
7,791,739 |
79.3 |
1,363,213 |
28.6 |
Manufacturing |
343,497 |
3.5 |
233,693 |
4.9 |
Finance |
618,917 |
6.3 |
140,589 |
2.9 |
Retail and
wholesale |
773,017 |
7.9 |
95,064 |
2.0 |
Electricity,
gas and water |
0 |
0 |
403,243 |
8.4 |
Real estate
and business services |
161,145 |
1.6 |
69,620 |
1.5 |
Transport,
storage and communication |
105,177 |
1.1 |
130,214 |
2.7 |
Construction |
15,622 |
0.1 |
25,224 |
0.5 |
Hospitality |
17,371 |
0.2 |
1,261 |
.. |
Public administration |
0 |
0 |
2,304,430 |
48.2 |
Other |
0 |
0 |
15,309 |
0.3 |
Total |
9,826,485 |
100.0a |
4,781,580 |
100.0a |
Source |
|
|
|
|
North and
Central America |
96,959 |
1.0 |
242,721 |
5.1 |
United States |
96,958 |
1.0 |
242,721 |
5.1 |
Europe |
3,627,657 |
36.9 |
1,505,785 |
31.4 |
United Kingdom |
970,104 |
9.9 |
141,202 |
2.9 |
Germany |
0 |
0 |
1,207,851 |
25.2 |
Luxembourg |
2,478,342 |
25.2 |
82,601 |
1.7 |
Asia pacific |
910 |
.. |
74,217 |
1.5 |
Africa |
5,998,657 |
61.0 |
604,979 |
12.6 |
South Africa |
5,982,755 |
60.9 |
588,856 |
12.3 |
Middle East |
102,356 |
1.0 |
9,807 |
2.0 |
Other |
0 |
0 |
2,355,123 |
49.1 |
Total |
9,826,540 |
100.0a |
4,792,993 |
100.0a |
|
|
.. Not available.
a Figures may
not sum to 100 due to rounding.
Source: Bank
of Botswana (2000), Annual Report 2001, p. 57.
- outlook
- Botswana’s short-term
economic performance relies heavily on its main growth primer, diamonds.
Such exports depend in turn on global economic prospects, especially
in the major gem markets, e.g. the United States. While such developments
are volatile, diamond exports appear to be rebounding, suggesting that
future stockpiling of diamonds is unlikely. Real GDP is forecast
to improve in fiscal year 2002 to around 3-4%, fuelled mainly by buoyant
non-mining growth of over 6%.21 Diamond exports are projected
to rise by 5%, reflecting mainly the pula’s depreciation against the
U.S. dollar. Inflation is expected to rise to 7% (above the Bank’s
maximum target rate of 6%), and future trends are uncertain. Despite
a restrictive monetary policy and declining bank credit growth, further
inflationary pressures are likely due to large government spending increases
in fiscal years 2001 and 2002, and the introduction of the VAT, which
is estimated to create a one-off price increase of 3% to 5%.22
Unemployment is projected to fall slightly to 15.2% in 2002, with expected
formal employment growth of 5%. While the current account surplus
is forecast to rise by 13% in 2002, foreign reserves are expected to
fall slightly.
- The economy’s
longer term outlook will also be heavily influenced by economic strategies
used to support economic diversification, such as providing sound macroeconomic
policies, including fiscal balance with low tax rates, monetary stability
and competitive exchange rates, as government embarks on National Development
Plan 9 in early 2003. Economic diversification policies to encourage
broad-based and sustainable development should lessen dependence on
government assistance, since increasing government expenditures and
subsidies cannot be sustained without commensurate private-sector growth
and productivity improvements.23
II. trade and investment
regimes
(1) Policy Formulation and Implementation
- As a member of the
Southern African Customs Union (SACU), Botswana has, until now, had
most of its trade policy instruments (customs matters in particular)
set at the regional level (Main Report, Chapter II(2)). There
have been few changes since the last Trade Policy Review of Botswana
in 1998. The Ministry of Trade and Industry retains primary responsibility
for formulating and implementing trade and industry policies, especially
in areas not covered by the SACU Agreement. Within the Ministry,
the Department of Trade and Consumer Affairs handles foreign trade policy,
including multilateral, regional, and bilateral trade relations;
consumer protection and education; and issues import permits.
The Department of Industrial Affairs formulates and implements industrial
policy, including support measures, issues manufacturing licences, and
is Secretariat to the National Industrial Licensing Authority.
The Authority, whose members are appointed by the Minister of Trade
and Industry, approves industrial licences in accordance with the Industrial
Development Act of 1988; it also reviews industrial and licensing policies.
Applicants must meet certain zoning, health and environmental requirements.
Following the National Conference on Citizen Economic Empowerment in
1999, some industrial programmes, especially the Micro-credit Scheme
for Small, Medium and Micro Enterprises (SMME), and the Financial Assistance
Policy (FAP), which began in 1982, were abolished and replaced in 2001
with the newly created Citizen Entrepreneurship Development Agency (CEDA)
to improve effectiveness. This reflected the Government’s policy
of increasing the Ministry’s policy formulation and performance monitoring
responsibilities while devolving programme implementation to autonomous
agencies.
- Other institutions
having important inputs into trade-related policies include the ministries
responsible for finance (budget, expenditure/revenue measures, and development
plans); mineral resources, transport and communications; and agriculture;
as well as the central bank, the Bank of Botswana. The Public Enterprise
Evaluation and Privatisation Agency (PEEPA) was also established in
late 2001 to formulate and administer the Government’s Privatization
Policy. A national committee was established to coordinate the implementation
of the Government’s Industrial Development Policy with a view to stimulating
manufacturing activity; industrial development is a key objective and
has been incorporated in the Ministry of Trade and Industry’s strategic
plan for 2001-09. Furthermore, the 2002 SACU Agreement provides
for a National Body to be established in each member country;
the Body will be in charge of SACU issues (including tariff changes)
at the national level and will make recommendations to the Customs Union
Commission (Main Report, Chapter II(2)(ii)(a)).
- Trade policies are
formulated through a consultative process involving all stakeholders,
including government, business, workers, and civil society. An
initial consultancy report is prepared and released for public comment
through a national seminar. Following revisions, a white paper
is usually produced as the basis of government policy.
Trade policy coordination among officials is conducted mainly on an
ad hoc basis with few formal structures in place. The High Level
Consultative Council, chaired by the President, consists of the Vice-President,
Ministers and private-sector representatives. Discussions and recommendations
at sectoral levels are reported to the Council, and once approved, are
discussed in national seminars before draft bills are prepared.
- The Botswana Confederation
of Commerce, Industry and Manpower (BOCCIM) is the main body representing
the private sector’s views to government. Implementation of
policies at the national level is reviewed every three years under the
auspices of BOCCIM. The Botswana Chamber of Commerce and Industry
acts as the voice of small and medium-sized businesses to government.
The Exporters Association of Botswana also represents major exporters’
interests, and provides specialized export services, including assistance
in identifying foreign markets. The Botswana Federation of Trade
Unions represents workers in the tri-partisan consultative process with
business and government.
- There is no independent
statutory body that specifically reviews or advises the Government on
trade policies, including the provision of government assistance to
industry. The Government, however, established the independent
Botswana Institute for Development Policy Analysis (BIDPA), in 1995,
to conduct contractual public policy research for it and other clients,
including monitoring of economic performance. Its main research
areas are economic planning and projections; welfare, incomes, and poverty;
and structural change of the economy. BIDPA also trains local
economists in policy research and provides valuable public commentary
on topical economic policy issues.
- Trade liberalization
and investment promotion remain key elements of Botswana’s trade policy
framework and its development strategy. The Government’s main
objectives are to promote export-led industrialization; foreign
direct investment is attracted to diversify the economy away from diamond
(and other minerals) into non-traditional goods, such as textiles, clothing,
engineering products, leather goods, electronics, and pharmaceuticals.
Broadening Botswana’s manufacturing base is a key objective of the
Government’s industrial policies. Developing small and medium-sized
enterprises is also a high priority. Economic empowerment of its
citizens is to be achieved by promoting their participation in mainstream
economic activities, without compromising transparency, accountability,
competition, efficiency, and equity. The Government also wishes
to create a more enabling business environment to facilitate private
sector growth, which it sees as essential to the economy’s sustained
and balanced development. Promoting vigorous competition, including
from imports, is to be encouraged while ensuring that adequate safeguards
and regulatory measures protect consumers from monopoly prices and other
unfair trading practices, as well as ensuring environmental conservation.
- The Government's
four development planning objectives are economic growth, social justice,
economic independence, and sustained development. Its Eighth National
Development Plan 1997/98-2002/03 adopted the theme of "sustainable
economic diversification".24 The Ninth Plan, to cover the
period April 2003 until March 2009, is well advanced, and its theme
is to realize Botswana's Vision 2016 by achieving "internationally
competitive sustainable economic diversification", with ambitious
growth and poverty-reduction targets, and greater economic empowerment
of its citizens. Key priorities are to control the cost of development
projects and maintain existing public infrastructure.
- The Government views
rural development as essential for alleviating poverty. It recently
released for public comment a draft White Paper on the Revised National
Policy for Rural Development, which highlighted the urgent need to tackle
the HIV/AIDS pandemic through more effective drug distribution, as well
as other development impediments, such as ill-defined property rights
in rural areas. The Government’s National Poverty Reduction
Strategy, which was to be completed in April 2002, is aimed at designing
a cohesive national action framework to guide anti-poverty initiatives.
- Table II.1 presents
Botswana's main trade-related laws.
Table II.1
Main trade-related
legislation in Botswana, December 2002
Area |
Legislation
|
Exports and
imports |
Customs and Excise
Act, and 2001 amendments and regulations |
Government
procurement |
Public Procurement
and Asset Disposal Act, 2001 |
Competition |
Consumer Protection
Act, 1998 |
Services |
Botswana Power
Corporations Act, 1971 |
Mining |
Mines and Minerals
Act, as amended in 1999 |
Standards |
Standards Act,
1995 |
Intellectual
property rights |
Copyright and
Neighbouring Rights Act, 2000; Industrial Property Act, 1996; Industrial
Property Regulations, Statutory Instrument No. 78 of 1997; Industrial
Property (Amendment) Act, 1997 |
Price control |
Control of Goods,
Prices and Other Charges Act |
Foreign investment |
Foreign Investment
Act; Foreign Investment Code, 2001 |
|
(2) Trade
Agreements
- Botswana attaches
great importance to its WTO membership and is committed to a liberal
and fair trade regime. Table II.2 shows selected recent notifications
by Botswana to the WTO.
Table II.2
Selected
notifications to WTO, September 2002
WTO Agreement |
Description
of requirement |
Periodicity |
Most recent
notification |
Comment |
Agreement
on Agriculture (Article 18.2) |
Domestic support
|
Annual |
G/AG/N/BWA/5
15 April 1997 |
Domestic support
commitments for 1995/96 |
Agreement
on Agriculture (Article 10 and 18.2) |
Export subsidies |
Annual |
G/AG/N/BWA/4
24 February 1997 |
No export subsidies
during 1996 |
Agreement
on Agriculture
(Article 5.7)
|
Special safeguard
provisions |
Annual |
G/AG/N/BWA/3
21 February 1997 |
No special agricultural
safeguards were invoked in 1996 |
Agreement
on Implementation of Article VI of the GATT 1994 (Article 18.5) |
Laws and regulations |
Once, then changes |
G/ADP/N/1/BWA/1
29 September 1995 |
No laws and regulations
on anti-dumping practices |
TRIPS (Article
63.2) |
Laws and regulations
|
Once, then changes |
IP/N/1/BWA/1
19 February 2002 |
Copy of copyright
and industrial property legislation |
Agreement
on Safeguards (Article 12.6) |
Laws and regulations |
Once, then changes |
G/SG/N/1/BWA/1
11 February 1997 |
No laws or regulations
on safeguards |
Agreement
on Sanitary and Phytosanitary Measures (Article 7, Annex B) |
SPS to be notified
promptly |
Once, then changes |
G/SPS/N/BWA/3
29 October 1997 |
Microbiological
specifications for raw and processed milk |
GATT 1994
(Article XVII:4(a) and Understanding on the interpretation of Article
XVII:1 |
State-trading
enterprises |
Annual |
G/STR/N/1/BWA
7 February 1997 |
No state-trading
enterprises |
Agreement
on Subsidies and Countervailing Measures (Article 25.11) |
Countervailing
actions taken |
Semi-annual |
G/SCM/N/23/Add.1/Rev.8
23 April 2002 |
No countervailing
actions taken during 1 July-31 December 1996 |
Agreement
on Subsidies and Countervailing Measures (Article 25) |
Measures |
Annually |
G/SCM/N/71/BWA
7 March 2002 |
No export subsidies |
Agreement
on Technical Barriers to Trade (Annex 3, Paragraph C of Code of Good
Practice for Preparation, Adoption and Application of Standards) |
Acceptance or
withdrawal from the Code of Good Practice |
Once, then changes |
G/TBT/CS/N/109
31 August 1999 |
Acceptance of
Code of Good Practice |
|
Source: WTO
documents.
- Botswana is a member
of the Southern African Development Community (SADC) and the African
Union/African Economic Community, in which all the other SACU countries
also participate (Chapter II, Common Report).25
Botswana's capacity to negotiate trade agreements bilaterally is further
curtailed by the 2002 SACU Agreement. Botswana is concerned about
the adverse economic impact of the European Union-South Africa Trade,
Development and Cooperation Agreement (TDCA). Although the major
products of interest to Botswana, such as beef, have been excluded from
the TDCA, Botswana (and other SACU members) is de facto obliged to implement
the reciprocal tariff preferences negotiated by South Africa on EU exports,
without receiving corresponding improved market access to the EU.
This situation is to be aggravated by the establishment of the EU/South
Africa Free Trade Area in 2012, well ahead of 2020 for other ACP states.
Of further concern are the revenue losses for Botswana from reduced
tariffs on imports from the EU. To address these concerns, the
EU agreed to establish an appropriate institutional mechanism in consultation
with Botswana (and Lesotho, Namibia, and Swaziland) to consolidate its
existing trade preferences to BLNS beyond 2007, to improve immediate
access, and to assist BLNS in fiscal restructuring commensurate with
revenue losses from the TDCA.26
(i) Bilateral
agreements
- Botswana signed
a bilateral arrangement with India in 2001. Its 1988 bilateral
trade agreement with Zimbabwe provides generally for reciprocal duty-free
entry of each other’s goods. To be eligible for preferential
treatment, manufactured goods must meet rules of origin requiring at
least 25% local content and Botswana/Zimbabwe, as the exporting country,
must be the place of last substantial manufacturing (or where solely
produced or grown for non-manufactured products). The Botswana
Department of Customs and Excise issues certificates of origin to exporters.
Botswana imposes quotas on clothing imports from Zimbabwe; according
to authorities the quota has not been used since the mid 1990s.
Trade between the two countries has declined in relative importance;
Zimbabwe represented about 2% of Botswana’s merchandise exports and
4% of imports in 2001.
- Botswana has an
old reciprocal customs agreement with Malawi dating back to 1956, which
works on a de facto basis, whereby all goods, except spirits, reared,
grown or produced, can be imported duty free. Although Botswana
has occasionally imported sugar from Malawi under this agreement, it
is rarely used.
- Botswana has MFN
trade agreements with the following countries; China, Czech Republic,
Cuba, India, Slovakia, Romania, Russia, Republic of Korea, and Zambia.
These agreements provide a general framework for the bilateral trade
between Botswana and each of these countries.
- Other
agreements
- As a developing
country, Botswana is eligible for GSP treatment from most industrialized
countries, which provide preferential access to their markets (at zero
or reduced tariffs) for eligible products, subject to rules of origin.
Product coverage and origin rules vary between countries, but generally
require the goods to be wholly obtained or sufficiently processed in
Botswana, as evidenced by certificates of origin issued by the Department
of Customs and Excise. Countries providing Botswana with GSP treatment
include Australia, Canada, EU, Japan, New Zealand, Norway, Switzerland,
and the United States. These arrangements have particularly benefited
craft and leather exports.
- Botswana also has
preferential access to the EU market under the Cotonou Agreement, subject
to meeting certain rules of origin (Main Report, Chapter II(6)(i)).27
Exports of hides, skins, and leather products are duty free and quota
free. Beef exports to the EU are dutiable at a reduced rate of
10% of the specific element of the tariff, up to an annual quota of
18,916 tonnes, which is under-utilized. Botswana is ineligible
for the EU's "Everything But Arms" (EBA) Initiative, which
is available only to least developed countries.
- While a beneficiary
under the US African Growth and Opportunity Act (AGOA) (Main Report,
Chapter II(6)(ii)), Botswana was ineligible until recently for
the enhanced access afforded to "lesser developed beneficiary sub-Saharan
African countries", which extends duty-free and quota-free preferential
access to the U.S. market for apparel exports made of fabrics from any
source until end-September 2004, subject to a specific aggregate cap
on these U.S. imports from all beneficiary countries.28
This limited preferential U.S. access for Botswana’s apparel exports
to garments using U.S.-made fabric, or for some clothing items, using
sub-Saharan African-made fabrics, U.S.-made fabrics or sub-Saharan African
yarn, subject also to the specific aggregate cap on U.S. imports.
However, the United States extended from 6 August 2002 "lesser
developed country status" to Botswana, despite its relatively high
GNP, thereby allowing producers to use third-country fabric in qualifying
clothing exports (so-called AGOA II). According to authorities,
this will generate more investment in Botswana’s textiles industry.
(3) Investment Framework
- Botswana has continued
to develop a regulatory framework conducive to investment. The
Government acknowledges the critical role of private, especially foreign,
investment in stimulating growth, sustainable employment, and poverty
alleviation. It remains committed to maintaining Botswana’s
position as one of the most competitive and leading developing economies
in attracting foreign investment. This was reinforced by the release
in 2001 of Botswana’s first international credit rating by Moody’s,
and Standard and Poor's of "A2" and "A", respectively,
putting it ahead of many countries (highest in Africa). The August
2002 rating remained unchanged; "A" for long-term and "A1"
for short-term foreign currency debt, and "A+" for long-term
local currency debt. Investment incentives include a reduced corporate
tax rate of 15% (instead of 25%) for all registered manufacturing companies.
The Minister of Finance and Development Planning may also grant tax
relief for certain businesses under Development Approval Orders (Chapter
III(4)(i)). Profits, dividends, and capital can be readily repatriated,
and all remaining foreign exchange controls, including on capital transactions
were eliminated in February 1999. No restrictions exist on portfolio
investment and the Botswana Stock Exchange allows dual company listings.
- A Foreign Investment
Code was released in 2001 to guide investors and to consolidate Botswana’s
investment policies and legislation.29 Foreign investors are to be
law-abiding and support the Government’s national principles of economic
diversification, non-corruption, and democracy. Foreign investment
is allowed in all sectors, except in activities reserved for small and
micro enterprises. These include commercial activities, such as
retail functions, small general trading, petrol stations, bottle stores,
butchers, fresh produce shops, village restaurants, supermarkets (but
excluding chain stores), simple speciality operations (e.g. clothing
and footwear boutiques); taxi and security services; government building
projects, including minor maintenance and building works up to P 150,000
in value; road contracts and railway maintenance, such as fencing, road
maintenance, culvert construction, bridge painting, and plant hire;
and industrial activities, including school furniture, uniforms, ordinary
cement and bricks, bread baking, sorghum milling, and burglar-proof
security bars. Foreign investors can participate in reserved activities
up to 49% equity if the investment would expand the activity to medium
scale within an approved schedule.
- Foreign investors
are encouraged, but not compelled, to establish joint ventures; no foreign
equity limits apply. However, minimum foreign investment levels
are reduced for joint ventures by either one half, one quarter or one
third, depending upon the sector. Minimum foreign investment levels
are set respectively for non-joint-ventures and joint-ventures at US$100,000
and US$75,000 for manufacturing; US$150,000 and US$100,000 for trading
activities; US$200,000 and US$100,000 for tourism; US$75,000 and US$50,000
for other non-financial services; US$100,000 and US$75,000, to be registered
with the Public Procurement and Asset Disposal Board, for government
procurement30; US$100,000 and US$75,000 for property
and real estate; US$50,000 and US$25,000 for information technology;
and invariably at US$75,000 for agriculture. For each investment
proposal, two foreign directors/shareholders are permitted to reside
in Botswana; additional foreign directors/shareholders wishing to live
and work in Botswana require further investment of 50% of the original
amount. Business licences necessary to commence activities, such
as for manufacturing, trading, and tourism, are issued on proof of the
minimum funds being deposited in Botswana. All foreign-owned firms,
and citizen-owned companies with ten or more employees or with minimum
power consumption of 20 kilowatts (or its equivalent), must be licensed.
Licence applications are normally processed by the Ministry of Trade,
Industry, Wildlife and Tourism within four to five weeks. Work
and resident permits are issued when the investor qualifies for an operating
licence.
- The Botswana Export
Development and Investment Authority (BEDIA) commenced operation in
1998 (following legislation passed in 1997) to promote foreign investment,
especially in export-oriented manufacturing. The Government is
especially targeting investment in export-oriented or import-substitution
manufactures, including textile and garments, leather goods, electrical
products and electronics, light engineering, plastic products, ceramics,
pharmaceuticals, assembly operations, and printing and publishing.
BEDIA operates a "one stop" Investor Service Centre designed
to assist investors with pre-investment services, such as obtaining
land, buildings, work and residency permits, licences and grants, and
satisfying other regulatory requirements. It is preparing an IT
investment guide and a customized database to link all authorities and
to present licensing requirements for easy access. BEDIA
also develops industrial estates with factory buildings for lease by
investors.
- Foreigners can purchase
freehold land. Government land must be leased, for 50 years for
business purposes and 99 years for residential use, subject to renewable
options. A discriminatory transfer duty applies to property sales
at the rate of 5% of the value, subject to an exempt threshold of P 20,000.
Non-citizens, including companies with less than majority local ownership,
receive no such threshold and pay a higher rate equal to 10% on rural
property.
- No performance requirements
are imposed on foreign investors; while export-orientation is preferred,
the Government does not distinguish between inward-orientation and outward-orientation
of local production. Factors used to assess foreign investment
include company registration in Botswana and transfer of technology
and skills, such as developing training and localization programmes
to employ citizens within periods agreed with the Commissioner of Labour.
Foreign firms are encouraged to use Botswana citizens instead of foreigners,
and local materials, where possible. Botswana has a relatively
secure commercial legal system and the Constitution prohibits nationalization
of private property. Domestic law assures the right to establish,
acquire, and dispose of business interests and guarantees the right
to private ownership.
- Botswana is a member
of the International Centre for the Settlement of Investment Disputes
and the Multilateral Investment Guarantee Agency. It signed a
ten-year investment treaty with Germany in 2000 to protect bilateral
investment against nationalization and other risks. It also has
investment guarantee treaties with China (2000), Switzerland (1998),
Malaysia (1997), and France (Cooperation in Tourism in 2000 and the
Overseas Private Investment Corporation in 1997). It is negotiating
investment agreements with the United States, Italy, Belgium/Luxemburg,
the Netherlands, Egypt, the United Kingdom, Turkey, Mali, Ghana, Zimbabwe,
Kenya, and Mauritius. Botswana
has double taxation agreements with the United Kingdom, South Africa,
Sweden, and Mauritius.
(4) Trade-related
Technical Assistance
- As with other SACU-member
countries, trade-related technical assistance has a critical role in
enabling Botswana to derive benefits from open trade policies and its
participation in the international trading system. Botswana needs
technical assistance, including capacity building, in the following
areas: (i) implementation of WTO agreements (and in deriving benefits
from implementation); (ii) trade negotiations; (iii) supply-side constraints;
and (iv) the integration of trade into overall development strategies.
- For a number of
specific areas, notably in relation to "behind the border"
issues, the delivery of technical assistance and capacity building measures
to Botswana and other SACU countries has the potential, if properly
coordinated, to strengthen the integration of SACU countries into the
international trading system, as well as their integration, on a regional
basis, into an area of shared trade policy.
(i) Implementation
of WTO Agreements
- Botswana recognizes
the need to implement legislation on anti-dumping, safeguards, and countervailing
measures. The WTO provided a national technical assistance activity
on trade remedies in June 2002. Enhancing Botswana’s capacity
to develop such rules-based trade measures may help reduce the scope
for disruptions to reforms. It can also contribute to stable and
predictable trade policies within the SACU region.
- Botswana faces
the challenge of diversifying away from heavy dependence on diamonds.
Assistance is needed in identifying measures that are WTO-consistent,
and that do not introduce inefficiency. The Government has also
pointed to the need for assistance in developing a foreign direct investment
strategy. As policies in regard to export promotion are currently
not harmonized across SACU, assistance in developing a WTO-consistent
set of policies amongst members will contribute to strengthening SACU
by ensuring that its members do not engage in practices that could cause
injury to regional partners.
- As other trade
barriers are reduced, standards and sanitary and phytosanitary (SPS)
measures are increasingly likely to be binding constraints on exports.
Given the role of agricultural exports in Botswana's trade – notably
of bovine meats and products – compliance with SPS requirements is
a particular challenge. The Government has underlined the need
for training in relation to equivalence, transparency, and pest-risk
analysis. The shortage of trained personnel and "hard infrastructure"
in relation to SPS is a characteristic of BLNS countries. Consequently,
the delivery of capacity-building assistance at the regional level would
provide economies of scale, and contribute to common standards across
the SACU region.
- Botswana’s legislation
by and large complies with the TRIPS Agreement, except for geographic
indications and integrated circuits (Chapter III(4)(v)). Capacity building
is mainly needed for enforcement of intellectual property rights.
- Botswana has benefited
from technical assistance delivered by the World Customs Organisation.
The Government needs capacity-building assistance in customs reforms
and trade facilitation in general. Botswana would like to use
its relatively well developed road linkages and central position in
the SACU region to become a regional transit hub. Delays at border
crossings and lack of facilities have been cited as factors depressing
traffic levels on the trans-Kalahari highway.
(ii) Trade
negotiations
- Botswana is involved
in trade negotiations at a number of levels. These include the
EU-ACP Cotonou agreement, SADC, SACU, including the SACU-US Free Trade
Area, and the Doha Development Agenda. This overlapping negotiating
agenda entails a need to develop and coordinate negotiating positions.
Since negotiations are often a means of strengthening and "locking-in"
domestic reforms, capacity building should focus on formulating negotiating
positions and strategies that are anchored in the domestic reform process.
- In
relation to multilateral trade
negotiations under the Doha Development Agenda, the Government has highlighted
services as being a key area for technical assistance, including capacity
building needs. Three priority areas for Botswana are financial
services, telecommunications, and tourism. It has been identified
as having a key role in Botswana's economic diversification. Assistance
will be needed to craft offers that are integrated, and to reinforce
the Government's strategy in these three subsectors. The strategy
for tourism emphasizes the need for regional cooperation in the management
of trans-frontier resources, and in the provision and marketing of tourism
services. Assistance to SACU members in developing a common approach
to commitments in the GATS framework could yield benefits in strengthening
negotiating capacity, and also enhance the ability of SACU members to
develop a common approach to tourism.
- The Government
has also indicated a need for seminars to help stakeholders understand
and prepare for negotiations on: market access for non-agricultural
products; trade and investment; trade and competition; transparency
in government procurement; trade facilitation; trade and environment;
and trade and development.
- In 2001, Botswana
opened a mission in Geneva. This reflects the increased awareness and
importance attached to participation in the day-to-day work of the WTO.
In common with a number of other developing countries, Botswana therefore
faces a considerable challenge in dealing with the volume of work involved
in the WTO's current programme. While measures, taken by the WTO
and other organizations, to assist the mission in its work are helpful,
attention should also be given to strengthening links between the Geneva-based
staff and staff in Gaborone involved in policy formulation.
- Supply-side
constraints and integration of trade into development strategies
- Botswana suffers
from range of supply-side constraints. Although its land-locked
position hinders trade, it has a relatively good internal road network.
- Botswana's participation
in international trade and its adoption of relatively open trade policies
have been significant factors in promoting economic growth and alleviating
poverty. Some trade and trade-related policy issues are considered
on a sectoral basis, and policy priorities are set out in successive
national development plans. Inter-ministerial coordination exists
in relation to the formulation of trade policy. However,
greater collaboration between ministries and departments on integrating
trade into the overall architecture of development policy would be beneficial.
Botswana would also benefit from a more systematic analysis of trade
policy options geared towards poverty reduction, and a more systematic
integration of trade policy actions and capacity-building needs within
an overall policy framework geared towards poverty reduction.
The Government is currently in the process of finalizing arrangements
with the Department for International Development (UK) for the implementation
of a Trade and Poverty Programme, which could help to integrate trade
and development policy.
III. trade
policies and practices by measure
- Overview
- Botswana is streamlining
customs procedures and has amended its customs legislation to meet the
U.S. requirements under the AGOA. Few significant changes have
been made to its import-licensing regime since 1998. All imports
must be licensed; certain products are subject to non-automatic
permits and prohibitions, mainly for self-sufficiency, health, safety,
and environmental reasons. Botswana standards are based on international
norms, or those of its major trading partners. It has accepted
the Code of Good Practice under the WTO TBT Agreement.
- The Public Procurement
and Asset Disposal Board oversees government procurement. Small-scale
construction is reserved for Botswana citizens (Batswana); medium-scale
projects are also open to joint ventures with majority domestic ownership.
At least 30% of non-construction government procurement must be from
eligible firms (domestic or foreign) that have minimum 25% local content
and meet specified minimum turnover, investment or citizen employment
levels. Botswana is not a member or observer of the Government
Procurement Agreement.
- In July 2002, the
sales tax was replaced by a 10% VAT. There are no export taxes.
Some exports (e.g. agricultural products, unpolished diamonds, and hides)
are subject to non-automatic licences. Botswana has strategic reserves
of grains and petroleum products. Numerous tariff exemptions and
concessions apply to imported inputs used in goods exported to non-SACU
markets. The Botswana Export Credit and Guarantee Company (BECI)
provides export insurance; the Government reinsures the related political
risk. The Botswana Export Development and Investment Authority
(BEDIA) conducts export promotion.
- The Financial Assistance
Policy (FAP) was abolished and replaced with the Citizen Entrepreneurship
Development Agency (CEDA) to promote industrialization and economic
empowerment of citizens. Certain state-owned enterprises have
de facto or de jure monopolies over utilities, among others.
Some have performed poorly, relying heavily on concessional government
loans. A master privatization plan is being prepared. The
Government intends to introduce competition legislation to prevent anti-competitive
practices. It has taken important steps to comply with TRIPS obligations.
New copyright legislation has been passed and comprehensive amendments
made to strengthen industrial property rights.
- Measures Directly Affecting Imports
(i) Registration,
and import duties and related measures
- Under the SACU Agreement,
BLNS countries apply import duties and related measures set by South
Africa. However, in practice, applied customs tariffs, excise
duties, valuation methods, origin rules, and contingency trade remedies
are, so far, the only trade policy measures harmonized throughout SACU.
These common policy measures are covered under the Main Report (Chapter
III). For import duties and related measures, differences exist
among SACU members in customs procedures, import duties (other than
customs tariffs and excise duties), and duty and tax concessions.
- In Botswana, all
traders must be licensed with the Ministry of Trade and Industry.
Licensing is handled by the National Licensing Authority. Customs
clearing agents are licensed by the Department of Customs and Excise
of the Ministry of Finance and Development Planning. While it
is not mandatory to use an agent to clear goods, agents need to be engaged
for commercial and regular importers.
- Botswana is streamlining
its customs procedures and has adopted the ASYCUDA system. According
to the authorities, it currently takes 10-45 minutes to clear commercial
goods, providing that all documents are in order. Computerization
through ASYCUDA has been implemented at the Gaborone Inland Office and
the busiest border with South Africa (Tlokweng Border Gate). Imported
goods are randomly checked. Botswana does not have a bond guarantee
system. It introduced a Single Administrative Document for customs
declaration from 1 May 2002. The customs legislation (the Customs
and Excise Act (Cap 50:01) of 1970), was amended in July 2001
to implement the U.S. requirements for Botswana to export goods, especially
textiles and clothing, preferentially to the American market under AGOA.31
The customs legislation is being amended to update and align it with
the South African Customs and Excise Act.
- Commercial importers
(and exporters) may apply to operate customs bonded warehouses.
Using either storerooms, fixed vessels, tanks or other premises.
Security on the bonded warehouse must cover duty liability, and the
operator must maintain a stock register. Goods may be stored for
up to five years, during which time duties are paid on goods released.
Warehouses must be physically secure.
- Botswana has used
the possibility available to BLNS countries under the SACU Agreement
to protect infant industries on three occasions.32
These were to protect the Kgalagadi Soap Industry (KSI) during the 1970s
(by an additional tariff of 100%), the Kgalagadi Breweries Ltd during
the 1980s and early 1990s (by a 50% additional tariff) and Bolux Milling
Pty Ltd (by quotas for the first five years, and then an additional
tariff of 75% for three years). In each case, the temporary protection
was provided for the maximum period of eight years permitted under the
SACU Agreement. These industries still exist; Kgalagadi
Soap Indstry is exporting to such countries as Malawi, Namibia, and
occasionally South Africa, while Bolux Milling Pty Ltd is facing intensive
competition from South African suppliers and is seeking further protection
against "dumping". While no industries currently receive
infant industry protection, an application from Okavango Wineries on
bottled drinking water is under consideration. The general criteria
and procedures for determining whether to provide such protection are
being developed.
- In July 2002, the
10% sales tax, which applied uniformly to imports and domestically produced
consumer goods (but not staple foods), and some services, was replaced
with a value-added tax (VAT) of 10% with few exemptions, such as petrol,
diesel, paraffin, maize and sorghum meal, financial, educational, and
health services.33 Exports and fuel products are
zero-rated; producers can claim tax credits for VAT paid on inputs.
VAT refunds must, by law, be repaid to exporters within one month of
submission of returns, and two months for other taxpayers.34
The customs legislation is currently being amended to introduce a fuel
levy on petrol and diesel.
- The business threshold
for VAT registration is annual turnover above P250,000.35
The VAT applies uniformly to domestic and imported goods, including
from SACU members. The base for levying VAT on imports varies
slightly between SACU and non-SACU countries. For non-SACU countries,
VAT is levied on the import’s landed duty-paid price i.e. f.o.b. price
and import duties, plus the value of any services relating to the good,
such as commission, packaging, transportation, short-term warranty insurance,
and warranty expenses. Imports from SACU members are levied VAT
on the greater of their f.o.b. price plus freight and insurance costs
(i.e. landed duty free-price), and their "fair market price".
"Fair market" prices are used to stop under-valuation where
a sale occurs between related parties. It is determined using
the ruling market price of identical goods in the same market.
- Government receipts
from the SACU Common Revenue Pool are forecast to fall in 2002-03 to
P 1.541 billion, down from P 1.735 billion in 2001-02 and P 2.188 billion
in 2000-01. In 2000-01, SACU revenue accounted for 15% (13% in
2001-02) of total government revenue (including grants). The introduction
of the VAT with its extended coverage on goods and services was expected
to raise revenue substantially and thereby to reduce the share of SACU
revenue in the total.
- Import
prohibitions and licensing
- There have been
few significant changes to Botswana’s import licensing regime since
1998. Imports of certain agricultural products, such as vegetables,
dairy products, meat and meat products, and poultry must be licensed
on food-security grounds. The licences are usually issued by the
Ministry of Trade and Industry. Imports of firearms and ammunition
are also licensed for security reasons. In addition, import licences
are issued for boats and aquatic apparatus by the Department of Minerals,
Energy and Water Affairs, and for imports of second-hand goods, such
as motor vehicles and clothing. The Ministry of Environment, Wildlife
and Tourism licenses imports of endangered species covered by the Convention
on International Trade in Endangered Species of Wild Fauna and Flora
(CITES). In general, imports of agricultural products and plants
require approval from the Ministry of Agriculture in the form of a permit,
for sanitary and phytosanitary reasons.
- Imports of fresh
pork are banned; import permits are granted only on processed pork products.
Poultry imports are permitted only when there is a shortfall of poultry
products in the domestic market. Imports of some vegetables, meat,
and dairy products are seasonally banned. Import prohibitions
apply to goods such as obscene material and environmentally hazardous
products, such as toxic or radio-active waste, mainly to protect health,
safety, and morality.
- Standards
and other technical requirements
- The Botswana Bureau
of Standards was established in 1997 (Standards Act No. 16, 1995) and
is responsible for standardization and quality assurance, through testing,
including of imports, industrial metrology, quality and environmental
management systems. The Bureau, headed by a 12-member Standards
Council, is a member of the International Organization for Standardization
(ISO). It is the national contact point for SADC standardization
programmes and the national inquiry point under the WTO TBT Agreement.
The Bureau participates in international and regional standardization
initiatives.
- Technical committees,
whose members represent various key stakeholders, set standards, coordinated
by the Bureau. The number of technical committees has increased
from eight in 1998-99 to 42 in December 2002; the number of approved
standards rose from 30 to 167 over this period. In principle,
all product standards that affect health, safety, and the environment
are mandatory, such as on animal feeds and the handling, transportation,
and storage of liquefied petroleum gas. The Bureau also maintains
microbiological specifications for raw and processed milk, to protect
human safety.36 All other standards are voluntary.
Recent efforts have focused on formulating standards in agriculture
and foodstuffs, chemicals, building and construction, electronic and
electrical products, mechanical engineering, the environment, and clothing
and textiles. Labelling, presentation and advertising requirements
were adopted in 2000 for pre-packaged consumer goods (BOS 9: 2000).
- The Bureau is developing
Quality Management Systems, and recently introduced a Standards Mark
for product certification. This relies on a combination of type
testing, assessment of factory quality systems, and surveillance, including
testing of samples from the factory and the market. If acceptable,
the Bureau issues a licence to use the Standards Mark; a separate application
is needed for each standard and factory. A Batch Certification
Scheme also operates to certify that a batch of products meet the client’s
specifications.
- Standards are based
on international norms, such as ISO and IEC, and those of Botswana’s
major trading partners, especially South Africa. Botswana’s
conformity testing infrastructure is limited. It is developing
a National Testing System comprising all testing laboratories, led by
the National Testing System Advisory Committee, with the Bureau as coordinator.
The National Metrology System, comprising all calibration facilities
and led by the National Metrology System Advisory Committee, again with
the Bureau as coordinator, is also being put in place. Botswana
recognizes foreign results and standards, and uses foreign accredited
laboratories to conduct testing not available domestically. It
has not signed any mutual recognition agreements, but is collaborating
with SADC countries to develop a regional body for accreditation of
conformity assessment facilities (SADCA), which would allow mutual recognition
among all members. Botswana has accepted the Code of Good Practice
for the Preparation, Adoption and Application of Standards contained
in Annex 3 of the WTO TBT Agreement.37 Under the new SACU agreement,
Botswana and other members have agreed to strive to harmonize product
standards and technical regulations (Main Report, Chapter II).
- SPS provisions,
handled by the Department of Agricultural Research under the Pest and
Disease Act of 1959, apply to agricultural imports. Health restrictions
apply to imports of seeds, bulbs, and plants. Imports of all plants
and plant products require a Plant Import Permit, but there are no specific
regulations governing their movement. Cereal imports must be declared
free from disease e.g. grain borer and Khapra beetle. According
to authorities, Botswana’s compliance with the WTO SPS Agreement is
very low, due to a lack of technical expertise and obsolete legislation.
The Agrochemical Act, although enacted, is not yet fully implemented.
- Government
procurement
- The Public Procurement
and Asset Disposal Board (PPADB) was established as an independent statutory
body to manage public procurement. It took over the procurement
functions carried out by the Central Tender Board of the Ministry of
Finance and Development Planning, and is responsible for procurement
by all entities (Public Procurement and Asset Disposal Act No. 10 of
2001).38 The Board adjudicates and awards
tenders based on the evaluation report and recommendation of the procuring
(or disposing) entity. The entity conducts the evaluation using
"suitably qualified staff" or third-party procurement agencies.
To be eligible for procurement (and disposal) contracts, parties domiciled
in Botswana must be registered (section 118); this requires contractors
to be licensed or incorporated under the relevant laws of Botswana (section
117). Foreign firms can register as contractors, subject to provisions
reserving certain grades of activities for citizen firms (Part VIII
of the Act). In pursuing its economic and social objectives, the Government
may introduce reservation and preference schemes for citizens provided
they are: targeted and time bound; phased in and out; non-discriminatory
between targeted groups or grades of contractors; based on competition
among eligible contractors; have clear quantifiable objectives;
contain benchmarks to assess progress (section 66(1)); and the
costs are calculated relative to the costs of unrestricted procurement
(or disposal). All tenders, irrespective of value, may be subject
to such arrangements.
- For construction,
registered companies are classified into various grades based on company
size and ownership. Small-scale work (below P 350,000 for grade
OC contractor, P 900,000 for grade A contractor and P 1.8 million for
grade B contractor) is reserved for citizens. Larger jobs (grades
C and D with values up to P 4 million and P 8 million, respectively)
are reserved for citizens or joint ventures with majority domestic ownership.
The largest jobs (grade E, over P 8 million) are open to foreign suppliers.
- The Local Procurement
Programme (LPP) is an example of a preference scheme applied under the
procurement legislation. It was introduced on a three-year pilot
basis in 1997 to help local firms to access public procurement.39
The LPP was evaluated in November 2000, and extended to include services
and to cover also procurement by local authorities and parastatals.
The programme requires that 30% of annual public purchases of goods
and services be from eligible firms, which can be either local or foreign
owned. Eligible firms must be registered annually with the Ministry
of Trade and Industry (Department of Industrial Affairs) and have at
least 25% local content, defined as annual sales revenue less foreign
content, including imported raw materials, petroleum fuels, and services
and labour supplied by non-citizens.40 The firms must be properly licensed,
and their products must meet the Bureau of Standard’s requirements
or any other recognized standards.41
- An eligible firm
must also meet at least two of the following: have an annual turnover
of between P 200,000 and P 5 million; employ between ten and 200 staff;
or have total machinery investment of P 50,000 to P 5 million.
The procurement agency issues one tender specifying that 30% will be
exclusively reserved for bidding by LPP certificate holders and 70%
will be open to competition from all suppliers, i.e. both LPP certificate
holders and non-LPP certificate holders. LPP bidders must submit
the same price when bidding for the same product under the 70% share
of the procurement that is open to competition.42
Where there are no LPP certificate holders or when they do not satisfy
the requirements on which tenders are to be evaluated, such as price,
quality, timely delivery or other specifications, the tender is awarded
to non-certificate holders.
- The Local Procurement
Monitoring Committee, which includes the PPADB, government departments,
and private-sector representatives, monitors the procurement of all
authorities to ensure that the LPP is implemented effectively and that
eligibility criteria for qualifying companies are enforced. It
also hears disputes between procurement agencies and LPP holders and
ensures that the LPP remains within the "framework of the WTO".43
- Tendering procedures
are being revised, including introduction of a standardized bidding
package and a new computerized system of registering suppliers.
The PPADB is yet to approve such proposals. The Government initiated
a Quality Improvement Project designed to improve production quality
of local manufacturers, especially small and medium-sized enterprises,
to enable them to participate more successfully in public procurement.
Two pilot sectors were selected: garments, and concrete products.
Entrepreneurs are provided non-financial support. The Project
is about to be extended to other industries. A four-member Independent
Complaints Review Committee has been established to hear procurement
complaints. The Finance Minister appoints Committee members from
the public and private sector. It deals with challenges arising
from any part of the procurement cycle, including complaints by contractors
relating to registration classifications and awards made by the PPADB
or its committees (section 103).
- Botswana does not
intend to become a member or observer of the WTO plurilateral Agreement
on Government Procurement.
- Local-content requirements
- A local content
of at least 25% is among the criteria for firms to be eligible for a
30% share under the Local Procurement Programme (section (iv) above).
- Other
measures
- Botswana has no
official countertrade or offset arrangements, or agreements designed
to influence the quantity or value of goods and services exported to
Botswana.
- Botswana has no
trade sanctions in force.
- Botswana has strategic
reserve stocks in grains and petroleum products. The Botswana
Agricultural Marketing Board holds grain reserves. Under the Government’s
Oil Storage Development Programme, strategic fuel storage facilities,
constructed at Gaborone and Francistown, maintain stocks equivalent
to 90 days of national consumption.
- Measures Directly Affecting Exports
- Registration
and taxes
- The same registration
procedures apply to both importers and exporters (section (2)(i) above).
All commercial exports require an Export Declaration Form.
- An export tax applies
to beef.
- Export
prohibitions, controls, and licensing
- Export licences
are required for all exports, including to SACU members, for "food
security", sanitary and phytosanitary, and statistical reasons,
and under international conventions to which Botswana is a signatory.
- No government restrictions
apply to the export of rough diamonds. However, such exports have,
on occasions, been affected by the terms of commercial agreements governing
the sale of diamonds by Debswana (currently Botswana’s only diamond
producer, in which the Government holds a 50% stake with De Beers) to
the Diamond Trading Company (DTC), an international cartel operated
by De Beers, which is the exclusive purchaser of Debswana’s output.
The sales arrangements provide for the stockpiling of diamonds by Debswana
during periods when supply exceeds demand at ruling prices, in the form
of export quotas set by the DTC. The Government does not sanction
these quotas. Legislation is about to be introduced to enforce
restrictions under the United Nation’s Kimberley Process International
Certification Scheme to control trade in "conflict" diamonds
(Chapter IV(2)(ii)). This will require all rough diamonds exported
from Botswana to have a valid Kimberley Process Certificate (all imports
must also have a valid certificate issued by the exporting country).
- Export
subsidies, finance, and assistance
- Botswana operates
a number of schemes providing tariff exemptions and concessions on imported
inputs used in exports to non-SACU markets.44 A duty credit certificate scheme,
introduced in 1993, provides duty credits to enable imports, at reduced
customs duties, of inputs used in the manufacture and export of specified
textile and clothing products, to non-SACU members; firms must have
exported for a minimum of one year to be eligible. The duty credit
is set at a percentage of the value of exports, and varies across products;
credits are allowed against duties paid on importation of certain textile
and clothing products.45 The scheme is aimed at increasing
the international competitiveness of exporters of eligible products.46
Six firms currently benefit from the scheme; exports covered are blankets,
T-shirts, jerseys, household textiles, jeans, and duvets.
- Industrial rebates
for specific exporting industries, such as food, textiles, and beverages,
and general rebates of customs duties for exclusive exporters, also
apply. Rebates cover components and materials used in the manufacture,
processing or packaging of goods exclusively for export. The participant
should intend to manufacture the material imported under the scheme
as goods for export, and the imported material cannot be sold domestically
or within SACU (without prior permission from the Department of Customs
and Excise). All export earnings must be repatriated to Botswana.
Duty drawback on capital equipment and manufactured inputs used in exports
exists, mainly for irregular exports. Such claims must be made
within one month from the date of export and take up to three months
to be paid.
- SACU members are
to harmonize their duty and tax concessions (rebates, refunds, and drawbacks
of customs duties on imports) as required by the 1969 and the 2002 SACU
agreement (Main Report, Chapter II(2)).
- The Export Credit
Insurance and Guarantee Company (BECI) provides export insurance covering
pre- and post-shipment credit. It was established in 1996 as a
wholly owned subsidiary of the Botswana Development Corporation.
It offers insurance against non-payment by foreign buyers resulting
from commercial risk (default and insolvency) and political risk (transfer
delays, strikes, war or import restrictions that prevent entry in the
buying country). While BECI carries all insured commercial risks,
the Government has reinsured its political risks since 1997 (Political
Risk Reinsurance Act 1997). Goods and services are eligible.
Exports covered include steel, optical and computer equipment, textiles,
and motor components to countries such as South Africa, Namibia, Kenya,
and the United States. Since its inception, the BECI has covered
exports totalling P 174 million (to June 2002). BECI has recently
extended its insurance business to cover non-payment risks on domestic
credit sales. It also offers an export financing scheme to its
policy holders whereby BECI guarantees their bridging finance from commercial
banks. The Ministry of Trade and Industry is currently examining
a proposal for government involvement in the scheme.
- Export promotion
is mainly the responsibility of the Botswana Export Development and
Investment Authority (BEDIA), established in 1998. It arranges
participation of manufacturing enterprises in regional and international
exhibitions. It also conducts overseas market research aimed at
finding export markets for Botswana-made products. BEDIA is also responsible
for promoting Botswana as a viable location for foreign direct investment,
and encourages joint ventures between foreign investors and citizen
entrepreneurs.
- Measures Affecting Production and
Trade
- Incentives
- The Government funds
a number of assistance schemes under its industrial policy of promoting
export-led industrialization and the economic empowerment of Botswana’s
citizens. The main scheme was the Financial Assistance Policy
(FAP), started in 1982, to encourage investment and employment, mainly
in manufacturing, but also in agriculture (apart from cattle and dry-land
farming), small-scale mining, and more recently certain services, such
as tourism. Increasingly, the assistance, by way of grants based
on the number of jobs created by the project, had moved from small business
ventures to large-scale projects.
- Following an evaluation
of FAP in 2000, which found that there was it fraud, abuse and inadequate
monitoring and administrative capacities, especially for small-scale
activities, both FAP and Small Business Finance (MBF) ceased in June
2001 to be replaced by the newly established Citizen Entrepreneurship
Development Agency (CEDA).47 All approved projects financed
under FAP and MBF were transferred to CEDA for monitoring and management
until expiry of their agreements. CEDAs operations are designed
to increase the economic empowerment of citizens by providing training,
mentoring, monitoring, and concessional loans (instead of the previous
FAP grants) to citizen-owned businesses to develop entrepreneurial skills.
The 2002-03 budget allocation was P 250 million. CEDA provides concessional
loans at 5% interest rate for small projects (loans of between P 500
and P 150,000) and 7.5% for medium-scale projects (loans from P 150,000
up to P 2 million). By end-December 2001, 126 applications, valued
at P 74 million, had been approved. The Government announced several
administrative procedures in the 2002-03 Budget designed to accelerate
the processing processing of applications. It is also establishing
a Venture Capital Fund (VCF) to provide equity and/or loans to joint
ventures between citizens and foreign investors.
- Government policy
on small, medium and micro enterprises (SMMEs) was introduced in late
1998 following the recommendations of a SMME Task Force.48
Apart from the introduction of the micro-credit scheme, a credit guarantee
scheme was implemented through the banks to provide partial guarantees
of up to 60% for bank loans from P10,000 to P250,000. It is currently
being reviewed. A new institutional framework for SMMEs was also
implemented by the Small Business Act, which established the Small Business
Council, an autonomous mainly private-sector-based body to advise government
on policies including monitoring programmes, and identifying regulatory
and licensing changes to facilitate SMMEs. The Council is supported
by the Small Business Promotion Agency, a Secretariat in the Ministry
of Trade and Industry. All business activities, except majority-owned
citizen companies employing more than ten staff must be licensed.49
- The Citizen Entrepreneur
Mortgage Assistance Equity Fund (CEMAEF), a Government citizen-assistance
scheme, was established to intervene and empower citizen investors in
the property market. The Fund provides equity finance to eligible
citizens or wholly citizen-owned property companies facing loan foreclosure
by financial institutions. It operates on commercial lines to
rescue financially distressed entities that hold properties (commercial,
industrial, and residential). The Fund is administered by a Trust
that has been managed by the Botswana Development Corporation since
May 2001. The Trust purchases shares in qualifying companies for
future disposal. As at December 2001, five applications had
been approved, valued at P 15 million.
- The Minister of
Finance and Development Planning may also authorize Development Approval
Orders granting tax relief, such as tax holidays, and/or education training
grants for specific projects. Such projects must benefit the economy
or contribute to the economic advancement of citizens. Applications
are assessed on a case-by-case basis according to the applicants' job-creation
prospects, training plans for citizens, plans to localize non-citizen
positions, citizen participation in management, citizens’ equity,
investment location, flow on effects for other economic activities,
and effects on reducing consumer prices. Registered manufacturing
activities under the Manufacturing Development Order of 1996 are taxed
at a reduced rate of 15% instead of the standard company rate of 25%,
whether exporting or supplying the domestic market, and this was amended
to include milling and bricklaying.
- The Government also
periodically provides emergency funding to firms experiencing severe
financial difficulties. For example, P 145 million was provided
in May 2001 and a further P 150 million in November 2001 to the copper-nickel
mining company, Bamangwato Concessions Limited (BCL).50
- Under the 2002 SACU
agreement, members are to develop common policies on industrial development.
According to the authorities, this is expected to take into account
the different stages of development, economic structures, size, and
resource endowments of members, as recognized in the draft industrial
development policy among SADC members. Botswana believes SACU
should adopt the SADC approach, to ensure steady progress towards harmonizing
selected strategies.
- Farmers benefit
periodically from emergency drought relief and other forms of domestic
support, such as the free distribution of seeds and medicines for livestock,
including Green Box measures notified to the WTO.51
- Assistance
for research and development
- The Government assists
farmers with research and agricultural extension services, particularly
those located in communal areas.
- The Rural Industries
Promotion Company (RIPCO) promotes industrial development and employment
in rural areas by assisting in the dissemination of technology.
It is aimed at achieving self-sufficiency in developing technology to
reduce reliance on imports. RIPCO works closely with the Rural
Industries Innovation Centre. RIPCO, for example, was involved
with two plants manufacturing nails and pelletized animal feeds in 2001,
and transferred technologies to the private sector for the manufacture
of a maize sheller and a multi-purpose thresher. Some 18 companies
participated during 2001-02 in RIPCO technologies, valued at P3 million.
- The government-funded
Botswana Technology Centre (BOTEC), established in 1979, fosters industrial
and scientific development through research and technology innovation
in collaboration with the private sector. The Government adopted
a science and technology policy in July 1998, which involved the formation
of the National Commission on Science and Technology (NCST) in 2002.
It is the supreme advisory body to the Government. Specific responsibilities
include providing policy guidelines for the establishment of a new Science
and Technology Research Development System; promoting linkages with
other sectoral programmes and policies; advising the Government on priority
research areas; and encouraging business to invest in research and development.
It is also intended to create a Botswana Research, Science and Technology
Investment Agency as the main funding body for the recommended National
Priorities Research Fund, Non-Targeted Research Fund, and the Technology
Development Fund. It will also provide advisory functions for
coordination between the Operational Research Fund, the Education Research
Fund, and any other funds.
- State-owned
enterprises and privatization
- There are a number
of state-owned enterprises or parastatals in Botswana. They cover
de facto or de jure monopolies that provide key utilities,
including electricity and certain telecommunications, and other services,
such as air and rail transport. The parastatal Botswana Meat Commission
has a monopoly on beef exports; it has the only EU-approved slaughtering
facility. The veterinary authority renews the Commission’s export
and meat-processing licences annually. Exports of live animals
are sanctioned by the Minister of Agriculture. Parastatals
also compete commercially with private companies, for example, in the
financial services subsector. Many private firms also have indirect
state ownership through equity investments by the commercially run,
Botswana Development Corporation.52 The Botswana Agricultural Marketing
Board's import monopoly on sorghum was eliminated in 1992; it now engages
mainly in trading grains, including maintaining grain reserves, and
supplying farm inputs (imported fetilizers, seeds, and poultry feed).53
It has 26 marketing facilities with storage capacity of 140,000 tonnes;
30,000 tonnes are earmarked for strategic reserves. Most cereals
are sourced locally; grains are imported only when there is a shortfall
in domestic production.
- Some parastatals
have performed poorly, relying on substantial government financial support,
especially loans. The Public Debt Service Fund (PDSF), initially
established in 1973 to service the public debt, increasingly provided
informal concessional loan capital to parastatals, which submitted requests
annually to the Government for capital projects. Such outstanding
loans represented over 11% of GDP at end-March 1997.54
The Government recently raised interest rates on these loans to near
commercial levels, and tightened administrative and drawdown procedures
to curtail new lending. Outstanding loans from this facility declined
accordingly from P 2.168 billion at end-March 1994 (equivalent to almost
20% of GDP) to P 1.522 billion at end-March 2001 (5% of GDP). The
Government also intends to guarantee debt servicing of outstanding PDSF
loans and to sell them to private financial institutions through open
tender, expecting buyers to convert the loans to marketable securities
for sale on the stock exchange.55
- The Government announced
a Privatization Policy in April 2000 aimed at divesting partially or
fully some 15 parastatals as a means of increasing efficiency and performance.56
The autonomous Public Enterprise and Privatization Agency was established
as a registered company to oversee the policy’s implementation and
to monitor parastatal performance. It reports to the Finance Minister
and is preparing a master plan and identifying priorities for privatization.
The plan will indicate the privatization methods to be used, the extent
of foreign participation and any mechanisms for promoting citizen ownership.
Privatization is expected to be through share listings on the stock
exchange; foreign participation will be encouraged.57
The Government may establish an investment trust fund to purchase shares
for later selling to citizens in small lots.
- Little privatization
has taken place. Although it would improve the economy’s efficiency,
especially where accompanied by improved competition from deregulation
of parastatals, the Government wishes to ensure that privatization does
not result in private-sector monopolies being formed. Another
setback was the suspension, in early 2002, of the privatization of Air
Botswana, until the international business aviation environment improved;
it was due to be completed by end 2001.
- Competition
policy and price controls
- Under the new SACU
agreement, members are encouraged to develop competition policies.
Botswana does not have legislation on competition per se. Consumer
protection regulations were gazetted in 2001, following enactment of
the Consumer Protection Act, 1998 (Act No. 21). The regulations
outline the procedures for consumer protection, including on lodging
complaints and investigation. Consumer protection is the responsibility
of the Department of Trade and Industry. The Government intends
to implement a Competition Law as part of its privatization policy,
to prevent anti-competitive practices.58 A competition policy is being
drafted.
- The only product
prices currently set by the Government are retail levels and profit
margins for petroleum products (Control of Goods, Prices and Other Charges
Act). All petroleum products are imported, mainly from South Africa,
and the Government believes that price controls are necessary due to
the limited number of suppliers. The Petroleum Management Unit,
responsible for the price controls, was transferred from Ministry of
Trade and Industry to the Ministry of Minerals, Energy and Water Affairs.
The Botswana Agricultural Marketing Board also sets minimum producer
prices on cereals and pulses on the basis of import parity.
- Protection
of intellectual property rights
- Botswana has taken
important steps to comply with the requirements under the WTO TRIPS
Agreement. New copyright legislation was passed in March 2000
to replace the 1965 legislation,
and industrial property protection provided under the Industrial Property
Law of 1996 (and accompanying 1997 regulations) was amended in 1997
(Industrial property (Amendment) Act No. 19).59
In 1998, Botswana became a member of the Berne and the Paris Conventions.
It is also a member of the World Intellectual Property Organization
(WIPO), and a founding member of the African Regional Industrial Property
Organization. Botswana has not notified to the WTO any contact
points under the TRIPS Agreement.60 The WTO Council for TRIPS reviewed
Botswana’s intellectual property legislation in 2001.
(a) Copyright
and neighbouring rights
- The Copyright and
Neighbouring Rights Act No. 8 of 2000 protects literary, artistic and
musical works embodied in such mediums as films, sound recordings, broadcasts
and published editions, by providing exclusive rights to the owner as
required by the Berne Convention. Computer programs, databases
or compilations of data are protected as "literary works".
Performers also have exclusive rights to broadcast or communicate to
the public, to make fixations and reproductions. Copyright is
protected for the life of the author plus 50 years. Performers
and producers of sound recordings receive the same protection.
Rental rights are recognized, and specified according to the type of
work, such as for phonograms, computer programs, databases, and cinematographic
works. General exemptions or limitations to exclusive rights are
in accordance with international conventions, such as for personal or
educational purposes. Retroactive protection is provided for works
protected under the previous legislation.
- The right holder
(including the licensee and the author or performer) may seek civil
remedies and criminal sanctions against infringements in Botswana’s
standard courts. Relief may take the form of injunctions restraining
illegal activity and impounding or destruction of illegal works.
Imports of unauthorized reproductions of any works relating to copyright
are unlawful under the copyright legislation, which requires customs
officials to use their powers under the Customs and Excise Duty Act
to prohibit or destroy illegal imports.61 Copyright infringements are
prescribed as criminal offences subject to penalties of imprisonment
and/or fines, of up to ten years and P 20,000 for first offence, and
of up to ten years and from P 30,000 to P 5 million for subsequent convictions.
The Office of Registrar of Companies of the Ministry of Trade and Industry
is developing the implementing regulations. The Government plans
to establish a Copyright Office to administer the legislation and a
Collecting Society to distribute royalties to right holders during 2002-03.
The Government intended to ratify the WIPO Copyright Treaty and the
WIPO Performances and Phonograms Treaty during 2002.
- Industrial property
rights
- Industrial property
legislation (Industrial Property Act No. 14 of 1996; Industrial Property
Regulations, Statutory Instrument No. 78 of 1997; and Industrial Property
(Amendment) Act No. 19 of 1997) provides protection for patents, trade
marks, industrial designs, and utility models. The Industrial
Property Office of the Ministry of Trade, Industry, Wildlife and Tourism
administers the legislation. Any decision of the registrar or
the Minister can be appealed to the High Court.
- Patents
- Patents specifically
cover inventions, whether products or processes, provided they are new,
involve an inventive step, and have an industrial application.
Patent protection is for 20 years from the filing date. The legislation
provides for exclusions of patents, mainly for scientific discoveries,
diagnostic, therapeutic, and surgical methods for treatment of humans
or animals, plants and animals and essentially biological processes
for their production, and inventions contrary to public order or morality.
Patent holders have exclusive rights against making, selling or importing
illegal products, which are enforceable in the courts. There are
specific limited exceptions to exclusive rights, such as experimental
acts relating to a patented invention and right of prior use done in
good faith. Under the new legislation, the Government may authorize
compulsory non-exclusive licences (without the holder’s consent),
predominantly for domestic supply, when held to be in the public interest
or to remedy anti-competitive behaviour by the right holder, subject
to payment of "equitable remuneration". Public interest
covers national security, nutrition, health or the development of other
vital sectors. Compulsory licences can also be issued if the patent
has been insufficiently used in Botswana, or is not being "supplied
on reasonable terms", as determined by the High Court. Agreed
remuneration, set if necessary by the High Court, must be paid to the
right holder. Such action is only possible where the applicant
has taken "all reasonable steps" and failed to acquire the
licence "on reasonable terms", and after four years from the
date of filing of the patent application or three years from when the
patent was granted, whichever period expired last.62
- Remedies available
to the right holder include damages or profits derived from the infringement,
injunctions restraining the illegal activity, and destruction of illegal
works. Criminal penalties comprise fines of between P 2 million
and P 5 million and/or imprisonment of six months to two years.
The burden of proof is reversed (on the defendant) in civil proceedings
relating to the infringement of process patents where the product is
new or there is a "substantial likelihood that the product was
made by the process and the patent holder has been unable, through reasonable
efforts, to determine the process". The Government intends
to amend the legislation to make such conditions for granting unauthorized
patent use fully WTO-compliant. Imports are considered as "working
a patent"; compulsory licences cannot be granted where the product
is being imported since the legislation allows a licence to be granted
only where the market is not being supplied on reasonable terms.
- Industrial designs
and utility models
- The owner of a registered
design may seek civil remedies for illegal use by way of damages, or
profits derived from infringements, injunctions against illegal activity
and destruction of infringing products. The legislation extends
protection of industrial designs in line with the Locarno Agreement
Establishing an International Classification for Industrial Designs.
Textile designs are covered. The registered owner of the design
has exclusive rights of use, including importation. There are
no provisions for issuing compulsory licences. Registered industrial
designs are protected for 15 years (five years initially, renewable
twice).
- Utility model certificates
are granted to protect new and industrially applicable inventions for
seven years from the date of filing.
- Trade marks and
other distinctive signs
- Protected trade
marks include service marks and trade names, but not sound elements.
A mark is defined to cover any visible sign capable of distinguishing
goods and services of an enterprise. The legislation protects
well-known marks by preventing registration of identical or confusingly
similar marks. However, in determining whether a trade mark is well
known, it is unclear whether knowledge of it by the public in the relevant
sector, including through promotion of the mark, is considered.
The Government intends to address this ambiguity in the next legislative
amendments. The legislation maintains the registration period
of trade marks at ten years, renewable indefinitely every ten years,
and a minimum period of non-continuous use of three years. The
registered owner of a trade mark may take court action against unauthorized
use. Civil remedies cover damages or profits derived from the
infringement, injunctions against illegal use, and destruction of infringing
products. Criminal penalties do not apply to illegal use of trade
marks.
- Other industrial
property rights
- Current legislation
does not cover geographical indications, layout designs (topographies)
of integrated circuits or protection of undisclosed information, including
trade secrets. Amendments to the Industrial Property Act introducing
these rights are expected in 2003-04. Marks are not to be registered
under current legislation if "likely to mislead the public or trade
circles, in particular as regards the geographical origin of goods or
services concerned, or their nature or characteristics".
- No specific protection
is provided for micro-organisms, non-essentially-biological or microbiological
processes. Plants, animals, and essentially biological processes
are not excluded from patentability. Botswana is also developing a
sui generis system of protection for new plant varieties.
- Enforcement of intellectual
property rights
- Imports of illegal
products are regulated by the customs legislation, while those infringing
trade marks or patents may be suspended pending legal action.
Such legal action takes place in Botswana’s ordinary civil courts,
and may involve criminal prosecution and damages, injunctions, and destruction
of illegal works. Courts may order interlocutory or temporary
injunctions pending final judgement.
In order to obtain evidence, the High Court may also instruct its legal
officer to enter the premises of the alleged infringer to seize the
offending material and equipment (the "Anton Piller Order").
Only the police have ex officio powers under the copyright and industrial
property legislation.
- There are no reported
criminal prosecutions involving intellectual property enforcement or,
according to authorities, any reported cases of infringement.
IV. trade policies by sector
- Overview
- Botswana
is a small agrarian economy rich in minerals, especially diamonds.
Diamonds account for most exports and government revenue, but much of
the population relies on agriculture. Although an exporter of
beef, mainly to the EU under unfilled preferential quotas, Botswana
is a net food importer. While food self-sufficiency was abandoned,
food security remains a cornerstone of government policy. Agricultural
development is a high priority. Long-standing farm-assistance
schemes and past price supports have been costly, with little effect
on production. Assistance is to target "sustainable economic
diversification" in agriculture and increased employment.
Production and marketing functions are to be supplied privately, and
prices market-determined. Insecure land title from communal farming,
and a land market that is not "well-functioning" impair agricultural
productivity and investment; land reforms are a high priority to address
these concerns.
- The Botswana Agricultural
Marketing Board trades in cereals and manages the Government’s strategic
grain reserves, but it has minimal marketing, trade, and price support
functions. Trade in sensitive products, such as import of cereals,
are licensed. The parastatal Botswana Meat Commission has a statutory
export monopoly.
- Mineral revenue
consists of dividends from government equity in some mining ventures,
company tax, and royalties (10%, 5% or 3%); profit-sharing arrangements
seemingly apply to diamonds. Revised mining legislation has improved
investor security and reduced administrative uncertainties. The
Debswana Diamond Company, which is jointly owned by the State and De
Beers, mines and sells diamonds through Diamond Trading Company, the
De Beers marketing arm. This is an international cartel, which controlled
supply by commercially setting export quotas in 2001. The Government
controls trade in diamonds. Mining of other minerals, such as
copper, nickel, and soda ash, has had mixed success; one of the copper-nickel
mines required emergency government funding in 2001. Government
policy promotes mineral processing. Petrol, diesel and paraffin
prices are controlled.
- The 1998 Industrial
Development Policy guides manufacturing policy, and is aimed at expanding
exports through productivity growth. Domestic processing (e.g.
of minerals, timber, and hides) is to be promoted. Temporary infant
industry protection, using prohibitive tariffs, was previously provided
to beer and soap producers, with limited success. The garment
industry is expected to be boosted by the U.S. AGOA initiatives.
Manufacturing tariffs average 11.8%, but have a high incidence of non-ad
valorem duties.
- Services have an
important bearing on the economy’s performance. GATS scheduled
commitments are minimal; Botswana did not participate in the WTO extended
telecommunications and financial services negotiations. Although
telecommunications was deregulated in 1996 and the independent Botswana
Telecommunications Authority was created to safeguard competition and
inter-connection to the public network, the state-owned company has
a de facto monopoly as the sole licensed supplier of basic telecommunications.
A second licence is being proposed. Botswana’s telecommunications
regime follows SADC principles. A state monopoly exists over postal
deliveries. Foreign suppliers dominate the financial markets,
including insurance and licences are issued on prudential merit.
Prudential supervision is being strengthened. The International
Financial Services Centre was created to promote international business,
such as insurance. Air Botswana’s privatization was deferred.
Tourism is to be promoted by a Tourism Board and a Tourism Development
Fund is to help finance citizen-owned projects.
- Primary
Sector
- The main primary
activities in Botswana are mining and agriculture. These accounted
for 37% of GDP in 2000/01, compared with 38% in 1995/96 (Chart IV.1).
During this period, the share of mining rose from 34% to 35%, while
the share of agriculture fell from 4% to 2%. Minerals, overwhelmingly
diamonds, accounted for 90% of merchandise exports in 2000/01, from
89% in 1995/96. However, the share of diamond exports rose from
77% to 85%, while that of copper and nickel declined from 11% to 3%.
Although a relatively minor contributor to GDP, agriculture provides
the livelihood for a substantial share of the population.
- Agriculture,
livestock, and forestry
- Main features
- While agriculture
production varies depending upon climatic conditions, the sector’s
share of GDP has fallen substantially over the longer term. In
1966, at independence, agriculture’s GDP share was about 40%.
Its decline reflected the rapid growth of other sectors, especially
mining, as well as very poor performance in terms of productivity and
output growth, despite considerable government support, particularly
for basic products such as eggs and milk.63 The dualistic agriculture sector
consists of commercial and traditional subsistence subsectors; each
unedertakes both crop and livestock activities. Productivity in
traditional farming is below commercial activities.64
Commercial agriculture covers about 30% of arable land, comprising mainly
cattle grazing on freehold or leased holdings. The major subsistence
crops are sorghum, maize, millet, and pulses. Beans, groundnuts,
sunflowers, cotton, and horticultural crops, such as cabbages, tomatoes,
and potatoes, are also grown. Although the economic significance
of subsistence agriculture is declining, it remains important for many
people, particularly in rural areas with few alternatives.65
While Botswana’s urbanization is increasing, about half of its population
still resides in rural areas, of which about half depends on agriculture
for income. Agriculture also accounts for about 2% of formal and
much more informal employment. Erratic rains limit rain-fed farming,
and irrigation, which is restricted to a few relatively large-scale
commercial horticultural farms in Tuli Block utilizing the Limpopo River,
is constrained by uncertain and scattered water resources. Nevertheless,
irrigated farming is seen to have potential within existing water resources.
- Botswana is about
20% self-sufficient in grains, 15% in vegetables, 25% in fruits and
3% in dairy products. It produces almost all of its poultry requirements,
and is a net exporter of beef, exporting some 90% of production, mainly
of chilled and frozen beef to the EU under Cotonou preferences, and
to South Africa.
- Food security remains
a cornerstone of government policy, and agricultural development is
a high priority. The Government abandoned food self-sufficiency
in the early 1990s66; it was seen as an unrealistic policy
objective, given Botswana’s resource endowments. The Government
released a White Paper in 2002 on a National Master Plan for Arable
Agriculture and Dairy Development.67 The Government believes that
long-standing schemes to promote agriculture, including the Arable Lands
Development Programme (ALDEP), the Accelerated Rainfed Arable Programme
(ARAP), the Service to Livestock Owners in Communal areas (SLOCA), the
Bull Subsidy Scheme, and projects funded under the Financial Assistance
Policy (FAP), have been costly and had minimal success in expanding
output. Total government support, for example, exceeded the arable
subsectors’ contribution to GDP, and the cost of ALDEP was approximately
twice the import parity value of production.68 Farming subsidies have generally
been inefficient, subject to abuse, and poorly targeted, often benefiting
better-off farmers. Such assistance schemes encouraged farmers
to retain small inefficient land plots rather than having them farmed
by larger more efficient producers. Price support measures to
raise farm prices significantly above import parity were also terminated
because they failed to increase production and to achieve self-sufficiency.69
- Other agricultural
policy objectives are: diversified production; increased employment;
a secure and productive environment for farmers; and conserving scarce
agricultural and land resources.70 Agricultural development is
to be based on "sustainable economic diversification."
Production and marketing functions are to be privately supplied and
prices left to market forces. The Government aims to develop policies
to promote domestic and international competition within the framework
of existing trade agreements. Subsidies are to be better targeted,
monitored, and evaluated to ensure that farmers in most need are assisted.
Traditional rain-fed farms are uneconomical; larger and more mechanized
farms of at least 40 hectares are required.
- The Master Plan
calls for substantial investment, including private, in agricultural
production, of well above P 0.5 billion (at 2001 prices) over ten years,
with about one third to be spent on irrigation facilities.71
Additional public expenditure of P 423 million on infrastructure, mainly
roads and telecommunications, is also envisaged. Agricultural
output is to be increased: in particular, annual production of
sorghum is expected to rise to 114,000-147,000 tonnes (a self-sufficiency
ratio of 100%); maize to 42,000-44,000 tonnes (self-sufficiency of 20%);
vegetables to 43,000-48,000 tonnes (75%); and fruits to 64,000
tonnes, with half of output to be exported. Cotton production
of some 18,000 to 24,000 tonnes is also projected, mainly in the Chobe
district, and the Government plans to construct a P 10 million cotton-ginning
factory at Pandamatenga. Traditional farmers are to be encouraged
to form groups to improve mechanization and farming techniques.
The number of traditional farms is expected to fall from 63,000 to 15,000
over ten years. Total arable land suitable for rain-fed farming
has been identified at 190,000 hectares. It is planned to increase
irrigated land to about 5,400 hectares for horticulture, especially
grapes, apples, citrus fruit, and olives (mainly for EU markets), wheat,
and fodder, using wells and mainly reclaimed urban wastewater and sewerage.
In addition, it is planned to increase dairy production to 25 million
litres, providing some 40% self-sufficiency.
- The Government intends
to provide financial assistance to enable traditional farmers to become
commercial farmers, including forming farm groups, and for commercial
farmers to upgrade technology and management levels. Farmers are
eligible for financial assistance, for example, through the Citizen
Entrepreneurship Development Agency (CEDA) to commercialize farming
practices. The Government will also encourage private insurance
companies to establish comprehensive self-financing crop insurance to
cover agricultural losses. The Master Plan’s implementation
is to be monitored by a unit specifically created in the Ministry of
Agriculture. The Government also revised its 1973 rural development
policy in 2002 calling for a more integrated but diversified approach
to rural development in line with Vision 2016.72
The revised policy objectives are to reduce poverty, increase income
generation opportunities, create employment and achieve broad-based,
balanced, sustainable development. Privatization is seen as a
means of encouraging the private sector to supply goods and services,
which would improve efficiency and generate sustainable rural employment.
Since rural development is viewed as one of the major means of alleviating
poverty, the national Strategy for Poverty Reduction in preparation
will be a key instrument for rural development.
- Land reforms are
a high government priority, and a new land policy is being formulated.
The Agriculture Master Plan envisages improving farm lease arrangements,
including consolidation and leasing of agricultural land between farmers,
to facilitate larger holdings. Property rights on land are to
be clarified and strengthened for easier transfer and use as loan collateral.
Market forces will allow tribal land to be sub-leased; current allocations
of communal land by the Land Boards are inefficient and undermine its
effective use. The Government is also reviewing the National Water
Master Plan.
- Tariffs on unprocessed
agricultural commodities average 5.5%, and are predominantly ad valorem,
ranging from zero to 35% (Main Report, Chapter III(3)(ii)). However,
since unprocessed agricultural commodities are largely non-traded (internationally),
farmers in practice appropriate a share of tariff protection afforded
processed foodstuffs, through higher domestic prices for non-traded
farm outputs.
- Policy by product
category
- Main crops
- Sorghum is the staple
crop, but maize is also increasingly grown. A cornerstone of Botswana’s
agricultural policies is to allow domestic prices for food grains to
be at export parity for exportable crops and import parity for importable
crops.73 The Botswana Agricultural Marketing
Board (BAMB) is responsible for managing the Government’s strategic
grain reserves, set at about 30,000 tonnes.74 Although the BAMB sets minimum
producer prices, it has no compulsory acquisition powers over farm production.
- Imports of maize,
wheat, sorghum and related products, pulses, fresh milk, major fruits
(e.g. oranges, watermelons) and vegetables (e.g. cabbages, choumollier,
rape, spinach, potatoes, and tomatoes) are restricted; they require
a permit from the Ministry of Agriculture. This system is designed
to protect an infant horticultural industry, which meets about 20% of
requirements. Import permits are withheld when there is sufficient
domestic production, but this usually lasts for only up to a month.
The export restrictions on castor beans, groundnuts, maize and maize
products, millet, millet products, pulses, sorghum and sorghum products
were lifted when the policy objective was changed from food self-sufficiency
to food security. BAMB’s import monopoly on sorghum was removed
in 1992. It no longer has any privileges for the import or export
of agricultural products.
- Livestock
- Beef processing
represents some 80% of agricultural output. The parastatal Botswana
Meat Commission (BMC) has a statutory export monopoly on meat, canned
meat, and live cattle. Its main abattoir, located at Lobaste,
includes a cannery producing corned beef for export, and a tannery.
A small abattoir is also located at Francistown; the Maun abattoir is
still closed. BMC’s operating loss in 2000 was P 21.6 million,
up from P 7.1 in 1999. Cattle-slaughter numbers in 2000 were among
the lowest, but rose to 169,000 in 2001; capacity utilization increased
to 88% at the Lobatse abattoir and to 54% at the Francistown abattoir.
A strategic review of BMC is being considered by Government. Most
beef is exported to the higher-priced EU market under Cotonou preferences,
which provide access at a reduced tariff for an annual quota of almost
19,000 tonnes; this quota is rarely, but increasingly, filled (Chapter
III). Botswana is implementing the Livestock Identification and
Traceback System required by the EU for beef exports. The first
phase was completed in August 2001, at a cost of P 29.5 million, and
involved the development of a central database and identifying cattle
in two pilot districts. The system is to be fully operational
nationally during 2003, at a total projected cost of over P 300 million.
- The Ministry of
Agriculture’s Department of Animal Health handles disease control.
Imports of cloven-hoofed animals, their products, and feed from South
Africa are prohibited due to foot-and-mouth disease concerns.
Botswana also has other quarantine bans. The Animal Disease
Act and six laws on the livestock industry are under review.75
- There are no quantitative
restrictions, including licensing requirements, on imports of meat or
cattle, and private-sector imports are unrestricted, subject to meeting
quarantine and other sanitary requirements.
- Botswana imports
over 90% of its dairy requirements, including of fluid milk and milk
powder. Imports of fresh milk are licensed and require a permit.
- Forestry
- Botswana has large
areas of commercial forests and woodlands. Licensed private operators
harvest forests and pay royalties. Deforestation is a problem.
Improved inventories of timber resources are being prepared, and new
concessions may not be granted. Forestry legislation and royalty
payments are under review.
- Tariffs on forestry
and logging average 3%, and are all ad valorem, ranging from
zero to 25% (Main Report, Chapter III(3)).
- Mining
- Botswana’s mining
industry consists mainly of diamonds; it is among the world’s top
producers of gem diamonds. Other minerals include copper-nickel
matte, coal, soda ash, salt, and small amounts of gold (Table IV.1).
Most minerals are exported. The Government is also examining the
prospects of exporting coal.76 The Ministry of Minerals, Energy
and Water Resources (Department of Mines) is responsible for mineral
policy, aided by the inter-ministerial Mineral Policy Committee.
The Mines and Minerals Act was revised in 1999 to increase the sector’s
competitiveness by, inter alia, improving security of tenure
for investors by removing ministerial discretion, lowering royalty rates,
introducing retention licences that do not require immediate development
and that lengthen the time period (by six years) over which an investor
can hold uneconomic deposits, and streamlining licensing procedures
to reduce administrative uncertainties.77 It also facilitated exploration
and production of other minerals. Other mining legislation is
being revised.78
- Mineral revenue,
the main source of government receipts, rose from P 4.681 billion (69%
of total tax revenue), in 1997-98 to P 8.368 billion (67%), in 2000-01.
Almost all revenue is from diamond mining.79 The main revenue components
are dividends, company tax, and royalties. The Government holds
50% equity in diamond and soda ash mining, and 15% and 33% equity in
the two copper-nickel mining companies. Where the Government’s
equity share exceeds 15%, the additional holding was purchased while
the initial 15% equity was acquired free. However, the free equity
policy has ceased. Debswana Diamond Company recently acquired
the Morupule Colliery, in which the Government had no direct equity.
Mining companies are subject to the standard tax rate of 25%.
Royalties on mineral production are 10% of the gross market value for
precious stones, petroleum, and natural gas; 5% for precious metals;
and 3% for all other minerals. Profit-sharing arrangements seemingly
still have to be negotiated for diamond mining.80
Except for diamonds, the revised legislation provides for automatic
progression from exploration to mining. Retention licences also allow
prospectors to defer mining of uneconomic deposits for up to six years.
Table IV.1
Mineral
production, 1997-01
(P million
and '000 tonnes, unless otherwise indicated)
Mineral |
1997 |
1998 |
1999 |
2000 |
2001 |
Diamonds |
|
|
|
|
|
Volume
(million carats) |
20 |
20 |
21 |
25 |
26 |
Copper-nickel
matte |
|
|
|
|
|
Value
|
759 |
456 |
558 |
801 |
.. |
Volume |
42 |
37 |
39 |
46 |
31 |
Unit
value (pula per tonne) |
18,201 |
12,343 |
14,195 |
17,595 |
.. |
Coal |
|
|
|
|
|
Value |
25 |
30 |
26 |
30 |
.. |
Volume |
775 |
924 |
945 |
947 |
702 |
Unit
value (pula per tonne) |
32 |
32 |
27 |
31 |
.. |
Soda ash |
|
|
|
|
|
Value |
132 |
137 |
106 |
122 |
.. |
Volume |
200 |
190 |
229 |
190 |
177 |
Unit
value |
658 |
720 |
463 |
639 |
.. |
Salt |
|
|
|
|
|
Value |
37 |
30 |
19 |
32 |
.. |
Volume |
185 |
140 |
168 |
185 |
126 |
Unit
value |
202 |
212 |
115 |
175 |
.. |
|
.. Not available.
Source: Botswana
Central Statistics Office.
- Debswana Diamond
Company Pty Ltd, currently the only diamond producer, is an equal joint
venture between the Government and De Beers. Debswana has been
the only company to discover commercially viable diamond deposits.
There are no restrictions prohibiting other companies from mining diamonds
and marketing them as they wish. Other companies are exploring
for diamonds. Debswana’s diamonds are sold through De Beers’
marketing arm, the Diamond Trading Company (an international cartel).
Exports of unpolished diamonds are subject to certification under the
United Nation’s Kimberley Process International Certification System,
from 1 January 2003, to exclude trade in "conflict diamonds"
by rebels from war-ravaged areas to finance their operations.
During 2001, the diamond market was weak, and consequently De Beers
reduced its purchases from Debswana and some of its other suppliers
in the form of export quotas. When the market improved in 2002,
De Beers purchased all of Debswana’s production, including stocks
accumulated in 2001. International diamond sales depend heavily
on U.S. demand. Although the diamond market was depressed in 2001
and was facing an uncertain outlook depending on U.S. economic performance,
Botswana maintained higher production levels of, 26 million carats,
in 2001. A new Debswana mine, at Damtshaa near Orapa, is expected
to commence operations in 2003, and follows expansion of other mines
at Jwaneng and especially Orapa, where output has doubled in recent
years.
- Nickel and copper
production has performed poorly, partly due to recent depressed world
commodity prices, but also to technical problems, such as low-grade
deposits for the main producer, BCL Ltd. It mines and smelts about
40,000 tonnes of copper-nickel matte annually for refining in Zimbabwe
and Norway. BCL’s financial position deteriorated in 2001, and
emergency government funding was provided: P 145 million in May 2001
and P 150 million in November 2001.81 Due to BCL’s deteriorating
financial position, shareholders commissioned an independent review
of its operations with a view to identifying operational problems and
strategic issues to turn around the company’s performance. The
review was completed in March 2002; on-going implementation of recommendations
is generating encouraging results. The Tati Nickel Mining Company
(15% government owned) also mines copper-nickel ore at Phoenix and Selkirk.
The expanded Phoenix mine, including construction of a concentrator,
commenced operations in 2002.
- Botswana Ash mines
soda ash and salt at Sua Pan. The company has had financial difficulties,
and was restructured in 1995 when Soda Ash Botswana (SAB) was liquidated.82
Its future depends heavily on exports to South Africa, which face strong
competition from U.S. exports dutiable at a 10% tariff.
- Government policy
is to actively promote downstream processing of minerals, such as diamond
cutting. It is also looking at the opportunities for further processing
its salt and soda ash resources, for example by establishing a local
glass works.83
- Tariffs on imports
of minerals average 0.7%, and are all ad valorem, ranging from
zero to 10% (Main Report, Chapter III(3)(ii)). Tariffs on coal
and oil imports are duty free.
- Energy
- Energy policy objectives
are to supply alternative sources of energy efficiently to households
at affordable prices, and in an environmentally friendly and sustainable
way. The Ministry of Minerals, Energy and Water Resources
formulates and coordinates national energy policies. The Master
Energy Plan is based on Integrated Energy Planning (IEP) and the collective
consideration of all energy sources. Botswana’s energy is dominated
by wood fuel, followed by coal, petroleum, and electricity. All
petroleum products are imported, predominantly from South Africa. Botswana
produces virtually all of its coal requirements, mainly for electricity
generation. The Government encourages the use of coal to replace
firewood, but this is constrained by the low quality of domestic coal.
A coal briquette plant is being considered, and the feasibility of coal
beneficiation to improve quality is being examined during 2002-03.
(i) Petroleum
- The Ministry of
Trade and Industry controls the retail prices of petrol, diesel, and
illuminating paraffin, along with profit margins (Control of Goods Prices
and Other Charges Act). Domestic retail prices are based on the
imported cost plus local taxes and levies, where applicable, and the
industry and dealer margins. The Government believes that such
controls are needed to safeguard consumers against unscrupulous pricing
by the limited number of suppliers.
- The Government requires
strategic reserve stocks of petroleum products.
- Electricity
- The state-owned
national electricity utility, Botswana Power Company (BPC), operates
under the Ministry of Minerals, Energy and Water Resources. It
has a monopoly over generation, transmission, distribution, and importation
of electricity under the Botswana Power Corporations Act of 1971.
The mining industry, the largest consumer of electricity, accounts for
about half of consumption; BCL alone uses about one third. About
55% of Botswana’s electricity is imported, mainly from the Southern
African Power Pool (SAPP), but also directly from South Africa, Zimbabwe,
and Zambia through regional interconnections to meet demand surges.
Domestic production is mainly from a 132 MW thermal power base load
station at Morupule. A diesel generating facility at Ghanzi was
privately contracted in November 1999. Electricity charges have
remained constant in the past five years, causing a real decline of
almost 50%.84 The Government regulates tariffs;
increases are limited to 50% of the inflation rate, thereby ensuring
declining real prices. Prices are based on cost-recovery and the
Minister must approve increases. Cross-subsidies are likely to
exist between urban and rural consumers. Some 30% of the population
has access to electricity; 18% in rural areas.
- Since 1992, the
Government has not pursued self-sufficiency goals for power. The
Memorandum of Understanding, signed in 1995, established the SAPP to
facilitate electricity imports from neighbours to diversify Botswana’s
dependence on South Africa. Government policy is to continue importing
cheaper power; it is expected that Botswana will import some 70% of
its electricity by 2007.85 Recent infrastructure expenditure
has focused on improving cross-border interconnections and associated
transmission lines, for example, at the Phokoje sub-station in Selebi-Phikwe,
the main interconnection with the SAPP. Nevertheless, the authorities
are examining the desirability of substantially increasing Botswana’s
generation capacity and assessing the longer term cost effectiveness
of increasing its power self-sufficiency. Transmission projects
costing P 20 million were undertaken in 1999-00. The feasibility
of expanding the facilities at Morupule is being examined, and the construction
of a major transmission line to Thamaga, costing an estimated P 150 million,
is planned for 2003 to improve electricity supply to the country’s
southern parts, following opening of the Thamaga sub-station in March
2000.
- Although the Master
Energy Plan is to provide electricity at affordable prices, the government
increasingly requires parastatals, including BPC, to behave commercially.
Electricity demand has increased substantially, as BPC’s customer
base has expanded in line with government policies to improve power
access, especially in rural areas. About 25% of the population
uses electricity, but this drops to 3% in rural areas. The state-funded
Rural Electrification Project to connect 72 villages to the grid, was
due to be completed by end-2001. In addition, rural consumers
benefit from easier payment terms on electricity connections under the
Rural Electrification Collective Scheme.86 Electricity is mainly supplied
in remote rural areas by centralized power supply systems (CPSS) run
by the Ministry of Works, Transport and Communications (the Department
of Electrical and Mechanical Services) based on stand-alone diesel generators.
BPC connects them to the grid where public demand is sufficient.
- The Government has
no plans to deregulate the electricity market. However, it is
undertaking a preliminary study into restructuring the industry and
investigating the creation of an independent regulator. There
are no immediate plans to privatize BPC.
- The Government is
examining the prospects of using solar energy. The National Photovoltaic
Rural Electrification Programme establishes village installations, and
the Photovoltaic Master Plan provides a framework for promoting solar
energy.
- Manufacturing
- Manufacturing has
remained at about 4-5% of GDP since the mid 1990s, and has had relatively
slow growth overall, following higher growth in earlier decades.
The structure of the sector has changed substantially. For example,
the share of meat (mainly beef) products has fallen from 95% at independence
(and 78% in 1972), to below 15%.87 At the same time, the share
of other foodstuffs, mainly dairy and bakery products and beverages
has expanded, along with textiles, chemical products, metal products,
paper and paper products. Food and beverages now account for about
half of manufactured output. Other major exports have been vehicles
and textiles. However, Botswana’s motor vehicle production was
set back in 2000 when the Hyundai motor plant, which assembled imported
semi-knocked down (SKD) kits, mainly for export to South Africa, closed.88
Other vehicle assemblers continue to import SKD kits from Scandia and
Volvo.
- The Industrial Development
Policy (IDP), 1998, encourages greater productivity through using skilled
workers and modern technology, so as to expand efficient export industries.
It foresees downstream processing possibilities in areas such as diamonds,
salt, soda ash, timber, hides, and skins, facilitated by the expansion
of small-scale component manufacturers, including in rural areas, to
efficiently supply inputs. The IDP also shifts the provision of
incentives away from location-specific to location-neutral measures.
It allows firms to establish their own capital-labour mix, without government
intervention. Skill development and training are a key priority
of the IDP, and a Botswana Training Authority is foreseen. IDP
also provided for exclusive manufacturing licences to be eliminated
by amending the Industrial Development Act, 1998; a draft amendment
has been prepared and will be presented to Cabinet after consultations
with stakeholders.
- Botswana has used
infant industry tariff protection allowed under the SACU Agreement on
three occasions: for beer, soap and milled products (Chapter III(2)(i)).
The tariffs were set at high levels, and accompanied by price controls
to protect the consumer by linking the domestic price to that of former
imports from South Africa. Infant industry protection has not
proved effective in creating new industries in Botswana, although the
industries concerned, except milled products, have generally adjusted
to the removal of temporary protection.89
- The textiles industry
has developed on the basis of exports. Although exporters lost
competitiveness in Zimbabwe during the early 1990s, after its dollar
depreciated and an origin criterion in the bilateral agreement was increased
from 20% to 25% (due to the waiver ending), they were able to penetrate
the South African market. AGOA initiatives appear to be benefiting
the apparel industry.90 At least nine Botswana firms
are eligible to export apparel to the United States under these provisions;
five are currently exporting. These firms are expected to expand
employment by at least 2,000 by end 2002, as well as production, and
involve new investment of US$1.5 million from Sri Lanka.91
Also, AGOA benefits to Botswana may increase following the U.S. decision
to "narrowly expand" trade opportunities and to extend from
6 August 2002 "lesser developed beneficiary country" status
to Botswana (AGOA II), despite its relatively high GNP, thereby allowing
its producers to use third-country fabric in qualifying clothing.92
- Tariffs on manufactured
imports average 11.8%; ad valorem duties generally range
up to 60% (Main Report, Chapter III(3)). Relatively high average
tariffs (above 20%) apply to tobacco (36%), clothing (35%), carpets
(30%), knitted and crocheted fabrics (28%), leather products (26%),
and footwear (21%).
- Services
- Services (including
electricity and water, and construction) accounted for 58% of Botswana's
GDP in both 1995/1996 and 2000/01. They comprised mainly central
government services (16% of GDP in 2000/01), trade and hotels (11%),
banking, insurance, and business services (11%), construction (5%),
and transport (4%).
- Botswana made minimal
commitments on services under the General Agreement on Trade in Services
(GATS). They covered mainly a few professional business services,
such as architecture, engineering, medical, dental, and veterinary services;
computer and related services, such as consultancy, software implementation,
and data-base services; research and development; and real estate.
It committed to having no limitations to market access and national
treatment on these services for consumption abroad and also made commitments
on two tourism-related activities: hotels and restaurants, and travel
agencies and tour operators.93 Measures affecting supply of
computer services through commercial presence were generally either
unbound, or subject to the requirement that foreign companies must be
allowed to practice in their home country, and that qualifications of
foreign nationals must be recognized by the appropriate Botswana body.
Botswana made no commitments on supply of services by temporary movement
of people, and generally on cross-border trade, requiring in some instances
that the service be supplied through commercial presence by a supplier
who meets all residency requirements, such as for real estate services.
- Botswana did not
participate in the extended GATS negotiations on basic telecommunications
(Fourth Protocol) or on financial services (Fifth Protocol). It made
commitments in only one telecommunications subsector, courier services,
but made no commitments on financial services. While the regulatory
authority (BTA) has prepared draft WTO commitments on basic telecommunications,
these have not been submitted to the Government; BTA is not convinced
that joining the WTO Basic Telecommunications Agreement would offer
immediate benefits to Botswana.94
- The Government’s
1998 industrial policy reinforces efforts to reduce the cost of utilities,
but to ensure also that the full costs of such services are covered.
Any cross-subsidies from business to consumers are to be removed where
possible, and appropriate mechanisms established to regulate public
monopolies, whether operated privately or by the public sector.
(i) Communications
(a) Telecommunications
- Botswana has relatively
well developed telecommunications. Its all-digital microwave and
fibre-optic network links 12 main processors, with a switching capacity
of 150,000 lines. Botswana’s teledensity increased to 9 at end-2002,
with 145,852 fixed-line customers. A new 7-digit numbering system
is being implemented. Mobile use has expanded rapidly, and at
end-October 2002, there were 387,643 subscribers, corresponding to some
23% of the population. However, Internet use is very limited,
slow, and expensive, mainly because there is no formal national Internet
exchange point. All Internet traffic must pass through the parastatal
Botswana Telecommunications Corporation (BTC) network, which has very
low capacity, and the lines leased by the majority of Internet providers
are slow. However, the Internet and National and International
data gateway markets have been liberalized, with the aim of promoting
competition and improving efficiency.
- The telecommunications
market was liberalized in 1996 following the adoption of the Telecommunications
Policy of 1995 and enactment of the Telecommunications Act (Act No.
15 of 1996), which abolished BTC’s monopoly in some segments of the
market and established the independent regulator, the Botswana Telecommunications
Authority (BTA).95 However, BTC still has a
de facto monopoly as the only licensed provider of fixed-line voice
services, including international calls. BTA is examining the
possible introduction of a second licensed operator of the fixed-line
network. Voice-over Internet Protocol (VoIP) is not allowed (except
over private networks); this prevents licensed Internet providers, as
well as suppliers of international data transmission through very small
aperture terminals (VSATs), from offering voice services in competition
with BTC.
- BTA aims to facilitate
entry of service providers and a competitive market by guaranteeing
their interconnection to the public network at "fair and reasonable"
cost (section 47), and ensuring that telecommunication services are
provided on a "competitive and non-discriminatory basis" (section 48).
Interconnection charges are to be agreed between the parties, but set
by the Authority if in dispute. Certain anti-competitive conduct,
such as collusion between providers, forming price-fixing cartels and
using a dominant market position to restrict, prevent or defer another
provider from entering the market or to eliminate a competitor, is illegal
and subject to a fine of between P 10,000 and P 5 million (section 48).
All service providers, including BTC, must be licensed by the BTA, which
has almost complete freedom in deciding the number of licences and associated
conditions. BTA must approve tariffs in accordance with its published
principles for national, including mobile, telephony services.96
Draft "Guidelines and Principles for the Pricing of the Telecommunications
Services", which focused mainly on telephony services and interconnection
charges, were released by BTA for comment in late 2000. Final
pricing guidelines are being prepared. BTA also sets rules on
matters such as numbering, property access, radio communications equipment
and testing, and type approval (Telecommunication Regulations, 1997).97
- Although there are
no universal service provisions in the Telecommunications Act, BTA is
responsible for implementing government policy on such services and
on special tariffs for disadvantaged users. The Government is
currently formulating a new universal service policy to replace existing
subsidies paid annually to BTC, under the Rural Telecommunications Programme,
to provide basic services to rural users. BTA is developing a
programme based on a universal service fund, and is proposing legislative
changes.
- BTA has issued licences
for a range of telecommunication services. During 2001, it issued
four private network telecommunications licences and six licences for
the provision of national and international data services. Market
segments liberalized so far are mobile telephones, data communications,
payphones, sale of telecommunications equipment, and Internet services.
The first Internet (ISP) licence (excluding VoIP) was issued in August
1999, and in 1998 BTA issued two 15-year GSM mobile service licences
to majority-owned domestic joint ventures Mascom Wireless Pty Ltd and
Vista Cellular Pty Ltd.98 No restrictions apply to foreign
ownership in mobile services. The licences stipulated that no
additional national mobile licences would be issued for five years,
and indicate certain coverage and roll-out requirements.99
The duopolists have exceeded these requirements, although commissioning
of some base stations is awaiting BTC transmission, and they were granted
permission by BTA to cross over into each other’s mandatory coverage
areas so as to increase cellular penetration.100
Both operators referred an interconnection dispute with BTC to the BTA.
Its ruling, valid for two years, expired in February 2000. BTA
rulings need not be made public, and interconnection agreements between
parties (copies are provided to the BTA) remain confidential.
BTA intervenes only when there is a dispute between the parties.
Almost 80% of BTA’s budget is financed from telecom operators licence
fees of 5% of their net annual turnover (mobile operators also pay an
annual radio licence fee of P 300,000 and were required to pay an initial
one-off fee of P 1 million). Most other revenue is from radio
licence fees based on the number of transmitters. BTA’s tariff
decisions may be appealed to the Ministry and all other decisions to
the High Court.101
- Telecommunications
liberalization has provided a number of "best practices",
including the crafting of a regulatory environment suited to its own
circumstances, and BTA’s high level of independence from political
interference.102 BTC operates commercially and
manages the public network under a performance contract with the Government.
It is the only licensed operator to provide fixed-line voice services,
and is also licensed to provide value-added services, but not mobile
services.103 BTC must run any new telecommunications
services as subsidiaries or associated entities to allow sufficient
accounting separation from its fixed-line operations (BTC Act and 1996
amendments). BOTSNET, a BTC subsidiary, for example, is competing
in Internet services with nine other licensed providers. BTC's
privatization remains a priority policy objective, and it favours a
strategic partnership. However, the Government has not set any
dates for privatization. Competition in telecommunication services
has reduced tariffs.104
- Botswana is a founding
member of The Telecommunication Regulators’ Association of Southern
Africa (TRASA), inaugurated in September 1997 among SADC nations.105
It aims to harmonize telecommunications policies, especially regulatory
practices, in the region. TRASA has five committees covering licensing
and universal service; interconnection and competition; numbering and
standards; human resource development and empowerment; and radio frequency
planning, technology, and advanced services. Each committee is
responsible for developing agreed regulatory guidelines. TRASA
adopted a five-year Strategic Business Plan in 2000. Model guidelines
and regulations have been developed for a SADC Regional Frequency Based
Plan and on interconnection tariffs. These provide for mandatory
interconnection, time limits for negotiations, cost-based pricing, unbundling
of services, non-discriminatory terms, publication of terms, arbitration
by regulator and approval of interconnection agreements.
- Postal and other
services
- Postal services
are provided by the parastatal, BotswanaPost, which was restructured
in 2000 (previously called the Botswana Postal Services). It is
expected to operate commercially and must meet certain universal service
obligations, such as maintaining loss-making rural post offices.
BotswanaPost still has a monopoly in mail delivery; there are no plans
to privatize BotswanaPost structure. The objective is to provide
high quality postal services and Cabinet influences its price.
Competition only exists in the courier market where foreign companies
also operate. Greater private competition has increased BotswanaPost’s
services. It introduced a next-day delivery service to all urban
areas within Botswana, and built three mail-sorting centres, in Gaborone,
Francistown, and Palapye.
- There are two private
commercial radio stations, both operating in Gaborone, and both majority
domestic owned, and the national state-owned broadcaster, Radio Botswana.
The state-owned Botswana Television commenced operations in July 2000.
There is no commercial television service or cable TV, but parties have
approached BTA to obtain a cable licence.106 Both Radio Botswana and Botswana
Television are the responsibility of the Department of Information and
Broadcasting, under the Ministry of the State President.
- The Broadcasting
Act, 1998, established an independent National Broadcasting Board (NBB),
formed in August 2000. Before July 2001, BTA licensed and regulated
broadcasting. NBB is also responsible for supervising broadcasting
activities and allocating radio spectrum frequencies for the broadcasting
portion of the National Radio Frequency Plan, which remains BTA’s
responsibility. It awarded the tender for developing the National
Radio Frequency Plan to an international firm in November 2000.
BTA is the NBB’s technical adviser. NBB is preparing a draft
government national broadcasting policy.
- Financial
services
- Botswana’s financial
subsector is relatively well developed. There are five commercial
banks, three stockbrokers, four life insurance companies and seven non-life
insurers. The merchant/investment bank, Investec Bank (Botswana)
Ltd, was incorporated in 2000, and there were 159 pension funds at end
2000. The Stock Exchange was established in late 1995.
- The financial subsector
has been substantially reformed since the mid 1980s. Commercial
bank licences were liberalized in 1990 and relevant legislation was
updated in the mid 1990s, for example, the Banking Act, 1995, and amendments
to the Bank of Botswana Act (1975) in 1996 and 1999 (Table IV.2).
Private institutions, including foreign owned, dominate the financial
subsector. The main parastatals are the Botswana Savings Bank
(BSB), the Botswana Building Society (BBS), the National Development
Bank (NDB), and the Botswana Development Corporation (BDC). Both
the NDB and the BDC were heavily restructured during the 1990s following
substantial losses. The State has indirect ownership in some private
institutions through BDC holdings, such as its equity in Investec Bank,
and 25% shareholding in the life insurance company, Metropolitan Life.
The Government’s direct lending facility to parastatals, the Public
Debt Service Fund (PDSF), which was the largest lender, is being terminated.
The Government is developing an International Financial Services Centre,
through the BDC.
(a) Banking
- Commercial and investment/merchant
banks are prudentially regulated by the Bank of Botswana (the central
bank), under the Banking Act, 1995. This replaced the Financial
Institutions Act, 1986, and provides a legal framework for the ownership,
establishment, licensing, and prudential supervision (based on the Basel
Core principles) of banks.
The Bank conducts on-site examinations, off-site monitoring, and meets
with licensed banks. While it now also supervises the BSB
and collective investment undertakings (CIUs), the Ministry of Finance
and Development Planning continues to regulate the NDB and the BBS.
The Government is examining shifting their regulation to the central
bank. Banks cannot provide non-bank financial activities, either
directly or indirectly.
- Since 1990, the
Bank processes licence applications on prudential merit. It no
longer determines whether the domestic market can absorb a new bank.
The number of foreign bank licences is unrestricted. Foreign banks
must operate as locally incorporated subsidiaries; foreign bank branches
are not allowed. Some local ownership is encouraged in
each financial institution.107
The role of commercial banks has increased substantially. In 2000,
they accounted for 60% of total institutional lending, up from 41% in
1990. In 1998, they surpassed the PDSF as the largest lenders;
PDSF's share declined from 50% to 26% over this period. Government
policy has encouraged parastatals to rely on commercial credit, partly
as a forerunner to privatization.
- The payments system
is being modernized by establishing a legal and regulatory framework
to support an efficient and sound system. Botswana has actively
participated in the SADC payments system reform process. The Botswana
National Payments System Framework and Strategy Document, completed
in 2001, provides a five-year programme to develop a payments system
compliant with international standards, and is to be overseen by the
National Payments Council and the National Payments Task Force. New
legislation, The National Clearing and Settlement Systems (NCSS) Act
is being drafted. Other relevant legislation, such as the Bills
of Exchange Act, the Criminal Procedures and Evidence Act, the Companies
Act and the Insolvency Act, are also being reviewed.
Table IV.2
Main financial
services legislation
Legislation |
Content |
The Bank
of Botswana Act, 1975 and Amendment Acts, 1996 and 1999
|
- Establishes the
bank of Botswana as a central bank and mandates it to ensure efficiency
and soundness of financial markets
|
The Banking
Act, 1995 and banking Regulations, 1995 |
- Applies to the banking
industry, including commercial banks, credit institutions, investment
banks and discount houses. Provide for the prudential regulation
and supervision of banks, as well as timely exit of failing institutions
- Banks are generally
prohibited from engaging, directly or indirectly, in the merchandise
wholesale or retail business, including import or export trade; acquiring
or holding, directly or indirectly, any part of the share capital of
any financial, commercial, agricultural, industrial or other undertaking,
acquiring or taking a lease, whether directly or indirectly, on immovable
property
|
The Botswana
Savings Bank Act, 1992 |
- Establishes the
Botswana savings bank and regulates the conduct of its operations.
While the Act empowers the bank to issue financial instruments, such
as bonds, certificates and notes, or offer other viable banking and
financial services, it is silent on specific prohibitions
|
The Building
Societies Act, 1961 |
- Provides for the
establishment of building societies, such as the Botswana Building Society
(BBS). It empowers the BBS to invest in bills, bonds, certificates,
debentures, stock and municipal loans. The Act is under review
|
The National
Development Bank Act, 1964 |
- Establishes the
National Development Bank and governs its operations. The Act
empowers the bank to borrow money as necessary to meet its obligations,
including bond insurance. It further empowers the bank to lend
to and own equity in business undertakings across all economic sectors;
manage, operate or control any property, enterprise or undertaking on
behalf of any person in connection with any loan or guarantee given
by it; and to operate any savings scheme or any combined life assurance
and savings scheme approved by its board. However, the bank may
not provide financial assistance for buildings or public works
|
The Botswana
Development Corporation |
- Set up under the
Companies Act, 1959, as amended in 1995. Its memorandum and articles
of association guide its operations. It has the widest investment
and borrowing mandate. It can engage in any business as sole proprietor,
in partnership or joint venture, with local or foreign investors, in
all kinds of activities across all economic sectors; can provide financial
and management assistance to subsidiaries and associated companies;
can borrow in any manner it considers necessary, which could include
issuing all kinds of securities
|
|
Table IV.2
(cont'd)
|
The Collective
Investment Undertakings Act, 1999 and Regulations, 2001 |
- Apply to Collective
Investment Undertakings, which include investment companies and unit
trusts or mutual funds. The Act and regulations compare favourably
with modern legislation overseas for such undertakings
|
The International
Financial Services Centre |
- Provides for the
establishment of IFSC companies in the following activities: exempt
companies, trusts, registries of ships and aircraft, international banking
and financial services (includes deposit-taking, foreign exchange services,
custodial functions), and investment business (including collective
investment undertakings, personalized investment or private banking
management and captive insurance
|
Insurance
Industry Act, 1987 |
- Applies to insurance
business (life and non0-life) and reinsurance. The Act prohibits
simultaneous transacting of both types of insurance business by a single
company
|
Pension and
Provident Funds Act, 1987
|
- Applies to approved
private pension and provident funds
|
Botswana
Stock Exchange Act, 1994 and Regulations, 1995; Botswana Stock Exchange
Listing Requirements, 1999, and Botswana Stock Exchange Members’ Rules,
1996 |
- Apply to the Botswana
Stock Exchange
|
|
Source: Bank
of Botswana (2002), Annual Report 2001, pp. 75-76.
- Insurance and other
financial services
- The Ministry of
Finance and Development Planning regulates insurance companies and pension
funds. Companies are prohibited from offering both general (short
term) and life (long term) insurance (Insurance Industry Act, 1987,
effective 1992). All insurers and insurance brokers must be registered
with the Ministry’s Registrar of Insurance. Only resident registered
insurers can be licensed. The minimum paid-up capital for an insurer
is P 2 million. New regulations were introduced on registration
renewals (Insurance Industry (Amendment) Regulations, 2000). Residents
(including companies, but not insurers) require the Registrar’s written
approval to buy insurance from overseas companies. The Government
operates an Employees Motor Vehicle Advance Scheme and a Local Authorities
Self Insurance Fund. Third-party motor-vehicle injury is covered
by the Motor Vehicle Accident Fund, which is funded from petrol levies.
- Most insurance companies
are foreign owned. Investment of insurance funds abroad
is limited to 70% of the assets of the company, and must be cleared
through the Registrar, although adherence is reportedly weak.108
Most reinsurance is placed overseas.
- The core of the
capital market is the stock exchange. It trades in corporate equities
and company bonds, such as BTC’s publicly traded long-term bond issue
in 1999. At end 2000, there were 16 listed domestic companies,
covering finance, wholesale, retail, and brewing. Total capitalization
was P 5.245 billion. Dual listings are accepted for foreign registered
public companies. Foreign portfolio investors can purchase shares
within limits.109 Pension funds have grown rapidly;
total assets were P 4.4 billion at end 2001. In April 2001, the civil
service pension arrangements were changed from a non-funded defined
benefit scheme to a defined contribution scheme. At least 30%
of pension funds are to be invested locally.
- The International
Financial Services Centre (IFSC) commenced in 2001. Incentives
for IFSC investors include a corporate tax rate of 15% and no withholding
tax.110 Ten IFSC projects operate.
Legislation is being drafted on IFSC insurance services to help Botswana
to become a centre for conducting international insurance business.
- Transport
- Transport policy
is formulated by the Ministry of Works, Transport and Communications.
Government policy is being increasingly directed at rationalizing transportation
services to ensure a balanced system that promotes competition among
the various modes.
- Road
- Road transport is
the main mode in Botswana. The road network is 18,000 kilometres
of mainly bitumen and gravel roads. Cost-recovery construction
and maintenance programmes are being implemented. A road fund
is to be established to finance road maintenance; it will be funded
by vehicle licence fees and the fuel levy. Road transport fees
and other related charges were increased in June 2000. Road tolls
are being considered, such as for the Kazungula bridge, and for some
heavily used roads.
- All commercial vehicles
operating in Botswana must have an annual (BA) permit (Road Transport
(Permits) Act). Foreign registered vehicles are issued such permits
on the condition that they do not engage in cabotage. Single
Trip (BS) permits and Transit Single Trip (TS) permits are issued to
enable vehicles registered in neighbouring countries to conduct return
and transit trips in Botswana. SACU permits are also issued to
vehicles registered in Botswana for entry into South Africa.
- Freight rates are
market determined. The Government does not regulate entry, except
for setting safety standards.
- All passenger vehicles
(e.g. combies and buses) require a route-specific (P) permit.
Taxis also require a permit; their area of operation is not defined,
only their location. The Government controls passenger bus fares
and, in the case of long-distance services, prescribes time schedules.
Government subsidies, limited to two return trips per week per customer,
are paid on a performance basis to bus operators to encourage operators
to provide rural services. For passenger transport, the Government
restricts entry by new operators to safeguard the interests of existing
firms and to avoid "unhealthy competition" in the thin transport
market.
- Botswana has transport
agreements with South Africa and Zimbabwe. An agreement with Zambia
is due to be concluded in 2003. Botswana, Namibia, and South Africa
are negotiating a trilateral agreement covering the Trans-Kalahari Highway
Corridor, which is scheduled to be signed in mid-2003.
- Rail
- The main rail network
is the line between Ramalabama and Vakaranga, with its various branch
lines that service predominantly mining operations at Selebi-Phikwe,
Morupule, and Sua Pan. The parastatal, Botswana Railways (BR),
established in 1987, was substantially restructured during the late
1990s following operational and financial difficulties. A Regional
Rolling Stock Information System is being implemented to improve freight
services. BR continues to operate under adverse commercial conditions,
including uneconomical traffic volumes, especially following the diversion
of north-south-bound transit traffic to Zimbabwe in 1999. To provide
an alternative route for north-south-bound transit traffic, BR is examining
the feasibility of constructing a railway line from Mosetse to Kazungulato,
to link with Zambia. It has established two dry container ports,
in Gaborone and Francistown.
- Botswana Railways
is keen to create an enabling environment for private-sector participation
in the railway subsector. It is reviewing the legislative and
regulatory framework to establish clear guidelines for reform, expected
to start after May 2003. The current Botswana Railways Act of
1986 does not allow private operators unless clearly agreed with Botswana
Railways, which is recognized as the statutory monopolist. Users,
such as mining companies, are prohibited from building and operating
their own rail services. Botswana railways has standing arrangements
on a haulage basis with Blue Train and Roves Rail from South Africa
to use lines in Botswana.
- Freight rates set
by Botswana Railways require ministerial approval. Discount rates
are periodically negotiated with major customers.
- Air
- The Department of
Civil Aviation regulates air transport, including air safety, aviation
infrastructure, including airports, and licensing of private aerodromes.
There are six government-operated international airports, and 28 licensed
private aerodromes. Aviation policy is directed towards increased
cost recovery and providing safe and efficient services. The Government
has approved the Department's restructuring into a parastatal semi-autonomous
Civil Aviation Authority, and draft legislation is being prepared.
It is proposed to upgrade Francistown, Kasane, Maun and Sir Seretse
Kharma Airports, starting in April 2003.
- The national carrier,
Air Botswana, is to be privatized; its privatization was deferred in
2001 due to the depressed global aviation industry. The Government
is currently finalizing the necessary legislative instruments for this
to proceed. Air Botswana operates scheduled air services from
Gaborone to Maun, Francistown, Kasane, and Mahatu (through Johannesburg),
as well as to Harare and Johannesburg. A few regional carriers,
mainly South African Express and Air Namibia, operate international
services to Botswana under bilateral air service agreements. These
allow only single entry into Botswana. However, according to authorities,
the Yamoussoukro Decision of SADC members will transform the bilateral
regime into an open skies policy.
- Tourism
- Tourism is Botswana’s
second largest foreign exchange earner, after minerals, accounting for
an estimated 5% of total exports of goods and services in 1996/97.
Tourism is currently estimated to contribute 5% of GDP. Visitor
expenditure in 2001 was estimated at P 3.8 billion, of which 40% was
spent in Botswana, compared with P1.1 billion in 1997.111
The lack of international flights servicing Botswana constrains tourist
development. Tourism development has been Government led and private-sector
driven.
- The Department of
Tourism, within the Ministry of Environment, Wildlife and Tourism, oversees
tourism development. Its primary objective is to maximize the
sustainable use of the country’s tourism resources and to promote
tourism. The Government’s tourism policy was enunciated in 1990.
The National Advisory Council of Tourism advises the Government on all
matters relating to the formulation, planning, development, and administration
of tourism policy. The Tourism Industry Licensing Board licences,
grades, and regulates facilities (Tourist Act, 1992 and Tourism Regulations,
1996). A training levy on tourist facilities finances the Tourism
Industry Training Fund (Finance (Tourism Industry Training Fund) Order,
1996), which is aimed at improving the skills of tourism employees.
Following the two-year Botswana Development Tourism Programme, in February
1999 the Government released an Outline of Marketing and Promotion Plan
and Strategy, and a Tourism Master Plan in May 2000. A National
Ecotourism Strategy supplemented this in March 2002 to support product
diversification and community involvement. A Tourism Board is
planned, to promote tourism, as well as a Tourism Development Fund to
provide technical and financial support to community and citizen-owned
projects.
- The Master Plan
shifted the emphasis from "low volume, high cost" to "modified
high volume, mixed price" tourist development. Net foreign
exchange earnings are projected to increase from P 495 million in 1996/97
to P 800 million in 2010, and formal employment from approximately 10,000
to almost 17,000 employees. Bed numbers are projected to rise
from 4,000 to 8,000, and occupancy rates from 40% in 1997 to 57% in
2010. Tourist arrivals increased by 15% in 2000 to 969,497.
Most came from South Africa (46%), Zimbabwe (30%), Zambia (3%) and Namibia
(2%). Non-African visitors were mainly from the EU (in particular
the United Kingdom, 2%) and the United States (2%). Total number
of beds was 3,972 in 2000; bed occupancy rates fell sharply in 2000
from 51.4% to 29.4%.
- Tourism became eligible
for government support under the Financial Assistance Policy (FAP) in
1996 (Financial Assistance Policy (FAP-Tourism), 1996). However, this
scheme has recently been discontinued and replaced by the Citizen Entrepreneurship
Development Agency (CEDA), which also covers tourism.
references
Bank of Botswana
(2000), Annual Report 1999, Gaborone.
Bank of Botswana
(2002a), Annual Report 2001, Gaborone.
Bank of Botswana
(2002b), Monetary Policy Statement 2002, Gaborone.
Basu, Anupam
and Krishna Srinivasan (2002), Foreign Direct Investment in Africa
– Some Case Studies, IMF Working Paper WP/02/61, March.
BIDPA (1998),
Briefing 3, The New Policy on Small, Medium and Micro Enterprises,
Special Issue No.1.
BIDPA (2000b),
Macroeconomic Impact of the HIV/AIDS Pandemic in Botswana, Final
Report, Gaborone.
BIDPA (2001),
Briefing 24, 4th quarter, Gaborone.
BIDPA (2002a),
Briefing 25, 1st quarter, Gaborone.
BIDPA (2002b),
Briefing 26, 2nd quarter, Gaborone.
BIDPA (2002c),
The 2002 Botswana Budget, Gaborone.
BTA (2002),
Annual Report 2001, p. 11.
Clark Leith,
J. (1997), "Botswana’s International Trade Policies", in
Aspects of the Botswana Economy, Selected Papers, edited by J.S.
Salkin, D. Mpabanga, D. Cowan, J. Selwe and M. Wright, Gaborone,.
Department
of Tourism (2001), Visitor Expenditure Survey 2001, Gaborone.
International
Telecommunications Union (2001), Effective Regulation Case Study:
Botswana, Geneva.
Masalila, K.
S. (1997) "Banking Supervision and Regulations: The Case of Botswana",
in Aspects of the Botswana Economy, Selected Papers, edited by
J.S. Salkin, D. Mpabanga, D. Cowan, J. Selwe and M. Wright, Gaborone.
Mattoo, A.,
D. Roy and A. Subramanian (2002), The African Growth and Opportunity
Act and its Rules of Origin: Generosity Undermined?, IMF Working paper,
WP/02/158, September.
Mfunwa, M.
(2002) IMF, Selected Issues and Statistical Appendix: Fiscal Implications
of HIV/AIDS Treatment in Botswana, 13 September.
Ministry of
Agriculture (2002) National Master Plan for Agricultural Development,
Consultant’s report, September.
Ministry of
Finance and Development Planning (2002b), Draft Revised National
Policy for Rural Development, Government Paper.
Ministry of
Finance and Development Planning (2000), Privatization Policy for
Botswana, Government Paper No. 1, Gaborone.
Ministry of
Finance and Development Planning (2001), Report on the Review of
the Rural Development Policy, prepared by the Botswana Institute
for Development Policy Analysis, Volume 3, September.
Ministry of
Finance and Development Planning (2002a), Budget Speech 2002:
Implementing Public Sector Reforms: a way Forward for sustainable Economic
Diversification, Gaborone.
Ministry of
Trade and Industry (2002a), Foreign Investment Code for Botswana,
Gaborone, April.
Ministry of
Trade, Industry, Wildlife and Tourism (2002b), Local Procurement
Programme: Draft Guidelines for the Manufacturing Sector, Department
of Industrial Affairs, Gabarone, 1 April.
Mpabanga, D.
(1997), "Constraints to Industrial Development", in Aspects
of the Botswana Economy, Selected Papers, edited by J.S. Salkin,
D. Mpabanga, D. Cowan, J. Selwe and M. Wright, Gaborone,.
National AIDS
Coordinating Agency (2001), Botswana 2001 HIV Sero: Prevalence
Sentinel Survey Amongst Pregnant Women and Men with Sexually Transmitted
Diseases, Gaborone.
UNCTAD (2002),
World Investment Report, Paris.
UNDP (2002),
Human Development Report 2001, Geneva.
USTR (2002),
2002 Comprehensive Report on US Trade and Investment Policy Toward Sub-Saharan
Africa and Implementation of the African Growth and Opportunity Act,
Report submitted by the President of the United States to the United
States Congress, Washington D.C., May,.
World Bank
(1999), Botswana, A Case Study of Economic Policy Prudence and Growth,
, Washington DC, 31 August.
1 UNDP (2002).
2 National AIDS Coordinating
Agency (2001). The current programme also aims to increase the
rate of access to basic, intermediate, and advanced care to 95% and
to cut the impact of HIV/AIDS on the population by 50%.
3 Mfunwa (2002). See
also BIDPA (2000).
4 The fiscal goal of NDP
8 is to maintain a sustainable budgetary position, whereby non-mining
government revenue at least equals "non-investment recurrent expenditure"
(recurrent expenditure apart from outlays on health and education).
5 BIDPA (2002c).
6 The theme of the 2002
Budget Speech was Implementing Public Sector Reforms: a way Forward
for sustainable Economic Diversification,
Ministry of Finance and Development Planning, Gaborone.
7 Bank of Botswana (2002a),
p. 51.
8 It has been suggested
that if the Government ends up guaranteeing the debt service of PDSF
loans, then the privatization of the PDSF loan portfolio will be meaningless
since the loans will be equivalent to government bonds. See BIDPA
(2002c).
9 Bank of Botswana (2002b),
p. 1.
10 The Bank was also concerned
about the inflationary impact of rising disposable incomes due to public
sector salary increases and tax cuts from raising the tax-free threshold.
Bank of Botswana (2002b), p. 7. Public sector salaries were again
increased by 6% from April 2002.
11 The real three-month
yield on BoBCs rose, for example, from 3.9% at end-2000 to 6.1% at end-2001.
The real prime-lending rate also rose from 6.5% in February 2000, to
7.8% in February 2001, and to 9.5% in February 2002. BIDPA (2002a),
p.2.
12 The pula exchange rate
is pegged to a basket of currencies comprising the South African rand
and the IMF’s Special Drawing Right (SDR), in unpublished proportions
that broadly reflect Botswana’s trade patterns. The SDR’s
value is set by the IMF as a weighted average of the U.S. dollar, the
euro, the yen, and pound sterling.
13 Botswana also needed
to avoid the so-called "Dutch disease" of a diamond-led exchange
rate appreciation that would make non-mineral exports less competitive
and expand the non-traded sector relative to the traded sector, thereby
hampering the economic restructuring needed to diversify production
and exports.
14 During 2001, the pula
depreciated against individual currencies by 23.2% (U.S. dollar), 21%
(pound sterling), 19.5% (euro) and 12.1% (yen).
15 BIDPA (2002c), and BIDPA
(2001).
16 The pula’s sharp real
appreciation against the rand makes its non-mineral products, such as
textiles, less competitive against South African products. While
the pula’s real depreciation against the U.S. dollar will improve
pula-denominated export earnings, it is unlikely to boost the volume
of diamond exports.
17 Bank of Botswana (2002a),
p. 57. The stock of FDI declined during 2001 to US$1,734 (UNCTAD,
2002). Botswana has nine foreign affiliates.
18 Basu and Srinivasan (2002),
p. 22.
19 UNCTAD (2002).
The analysis uses two indices. The Inward FDI Performance Index,
the ratio of a country’s share in global FDI flows to its share in
global GDP, indicates how a country has performed in attracting FDI
relative to its economic size. A value below unity means it has
attracted less FDI than expected by its size. The Inward FDI Potential
Index measures a country’s potential for attracting FDI given its
structural factors. It is derived from the unweighted normalized
values of eight variables: GDP growth; GDP per capita; export share
of GDP; telephone lines per 1,000 inhabitants; commercial energy use
per capita; R&D share in gross national income; share of tertiary
students of population; and country risk. Despite obvious limitations,
comparing these two indices may give a rough guide to whether countries
are performing adequately given their (restricted set of) structural
assets. Botswana fell in world ranking from 29th in
1988-90 to 109th in 1998-00 on FDI Performance and from 41st
to 45th on the FDI Potential Index.
20 BIDPA (2002c).
21 BIDPA (2002b).
22 BIDPA (2002a), and (2002b).
23 BIDPA (2001).
24 Six-year national development
plans are subject to mid-term reviews; the Eighth Plan was reviewed
in 2000 with the theme of "accelerating economic diversification."
25 Botswana ratified the
SADC Trade Protocol on 7 January 1998 and the SADC Amendment Protocol
on 1 December 2000 (signed 10 November 2000).
26 Resolution adopted by
the ACP-EU Joint Parliamentary Assembly on 1 November 2001 (ACP-EU 3296/01/fin).
27 The Agreement permits
cumulation of origin between ACP countries and the EU. Cumulation
with South Africa will be permitted from 2003.
28 Botswana’s per capita
gross national product in 1998 exceeded the threshold of US$1,500 set
under the AGOA for "lesser developed beneficiary sub-Saharan African
countries". Botswana was declared by the United States as
eligible for AGOA benefits on 2 October 2000 and eligible for the apparel
provisions on 3 December 2001. Also covered are non-clothing products
grown or produced in sub-Saharan African beneficiary countries, subject
to rules of origin requiring local materials and direct processing costs
to be at least 35% of the product's appraised value when it enters the
United States (the transaction value or adjusted f.o.b. price).
29 Ministry of Trade and
Industry (2002a). The discussion in the text is based on the Code.
However, authorities indicated that although the Government had approved
the Code, it had not been implemented. It is currently being reviewed.
30 The construction industry
is subject to a building code whereby smaller contracts (below P 8 million)
are reserved for local or joint-venture companies.
31 Customs and Excise Duty
(Amendment) Act. Accompanying regulations (Customs and Excise
(Amendment) Regulations) were introduced in August 2001 requiring textile
and clothing manufacturers and exporters to keep appropriate records
for at least five years.
32 Mpabanga (1997), p.377.
33 Value Added Tax Act,
2000 (Act No.1 of 2001).
34 Interest will be paid
on overdue amounts at the rate of 1% per month. The law also permits
such refunds to be offset against the taxpayer’s other tax liabilities.
35 Auctioneers must register
irrespective of turnover, and voluntary registrations for lower turnover
may be allowed.
36 WTO document G/SPS/N/BWA/3,
29 October 1997.
37 WTO document G/TBT/CS/N/109,
31 August 1999.
38 Procurement using government
funds by entities outside the scope of the legislation, such as parastatals,
local authorities, private companies, non-government bodies, charities
and trusts, must be in accordance with the Act’s provisions (section
8).
39 It replaced the Local
Preference Scheme (LPS), which provided domestic suppliers a 40% price
preference over foreign providers on their local content.
40 Also included as foreign
content are: depreciation on imported machinery, dividends, and
rent paid to non-citizens, and interest and loan amortization payments
to non-citizens or to institutions not registered under the Financial
Institutions Act. Non-citizens include majority-owned foreign
companies.
41 The Industrial Development
Act requires all firms to be licensed, except citizen companies employing
less than ten people.
42 Ministry of Trade, Industry,
Wildlife and Tourism (2002b), p. 8.
43 Ministry of Trade, Industry,
Wildlife and Tourism (2002b), p. 7.
44 To be eligible exporters
must be registered with the Department of Customs and Excise.
45 The percentages used
to determine the amount of duty credit are 25% of the export value for
clothing and accessories, 8% for yarns, 17.5% for household textiles,
and 12.5% for fabrics and other textiles.
46 The scheme covers clothing
and clothing accessories (tariff headings 61.01 to 61.17 and 62.01 to
62.17); household textiles (63.01 to 63.04); fabrics and other textiles
(several items in 51 to 56 and 58 to 60); and yarns (51.06 to 51.10,
52.04 to 52.07, 54.01 to 54.06 and 55.08 to 55.11).
47 The review found that
75% of small-scale FAP projects failed to survive past the period of
assistance. The corresponding rates for medium- and large-scale
projects were 45% and 35%.
48 There are an estimated
50,000 micro-enterprises (annual turnover of below P60,000) in Botswana;
6,000 small enterprises (annual turnover below P1.5 million); and 400
to 500 medium enterprises (annual turnover under P5 million).
See BIDPA (1998).
49 Trade and Liquor Act
of 1986, as amended. Many of the recommendations of the Task Force,
including especially the deregulation, de-licensing, and de-zoning proposals
and opening of reserved activities to foreign participation, were not
implemented. However, the Government is in the process of separating
the 1986 legislation into two separate Acts aimed at liberalizing the
trading system to promote competition. The Government also intends
to introduce new companies legislation during 2002-03.
50 BCL also received an
emergency government loan to meet its operating costs in 1998.
51 WTO document G/AG/N/BWA/5,
15 April 1997.
52 The Corporation is the
largest state-owned entity and provides long-term loans and guarantees.
It is involved in various activities, including property development
and hostelry. Its board comprises representatives of both the
public and private sectors.
53 Botswana notified to
the WTO in 1997 that it had no state-trading enterprises within the
meaning of Article XVII:4(a) of the GATT 1994. WTO document G/STR/N/1/BWA,
7 February 1997.
54 World Bank (1999), p.22.
55 Budget Speech 2002, p.
23.
56 The Eighth National Development
Plan referred to the introduction of a privatization scheme. The
parastatals listed for privatization in the Government's white paper
included Botswana Railways, Botswana Telecommunications Corporation,
Botswana Postal Services, Air Botswana, Botswana Development Corporation,
the National Development Bank, Botswana Building Society, Botswana Savings
Bank, Botswana Meat Commission, and the Botswana Agricultural Marketing
Board.
57 Some reports indicate
that local investors may be given preference, and that foreign equity
limits may be set for strategic or other reasons on a case-by-case basis.
58 Ministry of Finance and
Development Planning (2000), p.18.
59 WTO document IP/N/1/BWA/1,
19 February 2002.
60 WTO Document IP/N/3/Rev.6,
1 March 2002.
61 The customs legislation
also allows for exports of counterfeit goods to be suspended.
62 The legislation does
not define what is "reasonable"; this is determined in each
case by the courts.
63 Bank of Botswana (2000),
p. 68.
64 Bank of Botswana (2000),
p. 69.
65 Report on the Review
of the Rural Development Policy, prepared by the Botswana Institute
for Development Policy Analysis for the Ministry of Finance and Development
Planning, Volume 3, September 2001.
66 Bank of Botswana (2000),
p. 73.
67 Government White Paper
No. 1, 2002, National Master Plan for Arable Agriculture and Dairy
Development. This was based on an earlier consultant’s report
(Ministry of Agriculture, 2000).
68 Government White Paper
No. 1, 2002, pp. 4 and 7.
69 Ministry of Agriculture
(2002), p. 3-2. According to the Bank of Botswana, the practice
of generally avoiding policies to influence prices has been sound.
Bank of Botswana (2000), p. 72.
70 Government White Paper
No. 1, 2002, p. 10.
71 Projected spending depends
upon the option chosen to develop rain-fed and irrigation farming.
The Plan has two policy options. The socially oriented policy
involves intensive government intervention and support of traditional
farming, while the economically oriented policy is based largely on
private-sector investment and larger farms of over 1,000 hectares.
The Ministry of Agriculture recommended that the socially oriented policy
be applied to most of the country.
72 Ministry of Finance and
Development Planning (2002b).
73 Government White Paper
No. 1, 2002, p. 10.
74 BAMB’s operations are
being restructured in order to reduce losses. Revised BAMB legislation
is due in 2002.
75 Botswana Review,
21st Edition, p. 88.
76 Budget Speech 2002, p.
25. Coal is used by Botswana Power Corporation to generate power.
77 Botswana Review,
21st Edition, p. 60.
78 Other legislation includes
the Mineral Rights in Tribal Territories Act, which deals with exploitation
of industrial minerals by various districts for domestic purposes; the
Precious and Semi-Precious Stones (Protection) Act, which regulates
dealings in precious and semi-precious stones; and the Petroleum (Exploration
and Production) Act.
79 The two major non-diamond
mining projects, copper-nickel and soda ash, have failed to achieve
their intended profitability due to technical and financial problems.
80 For example, Debswana
has agreed to pay usual company taxes plus dividends on the State’s
50% equity so that the overall government profit share is 75%.
81 Budget Speech 2002, p.
24. BCL also received an emergency government loan in 1998 (Botswana
Review, 21st Edition, p. 66).
82 SAB’s shareholders
repaid all outstanding state guaranteed loans, including P 135 million
to the Government.
83 Eight National Development
Plan, p. 273.
84 Botswana Review,
21sr Edition, p. 143.
85 Morupule’s small capacity
prevents it from realizing the economies of scale of larger stations,
such as South Africa’s Matimba Station. It has a long run cost
of electricity of US$0.037 per kWh compared with US$0.005 per kWh at
Matimba. See Eight National Development Plan , p. 219.
86 Individuals connecting
pay 5% of the fee upfront and repay the rest to the Government over
15 years. The scheme is administered by BPC on behalf of the Government.
87 Bank of Botswana (2000),
p. 100.
88 It has been suggested
that a major reason behind the plant’s closure was a decision in 1998
by South Africa that required Hyundai to change its assembly operations
from using imported semi-knocked-down (SKD) kits, subject to low tariffs
under a special provision of the Common External Tariff, to using imported
completely-knocked-down (CKD) kits, dutiable at a much higher tariff
of 75%. Hyundai agreed to change its operations, and subsequently
closed. See. Mpabanga (1997), p.377. The Company also produced
only 7,000 units over two years, well under the annual break-even level
of 15,000 units. Loans and interest arrears were not repaid to
the Botswana Development Corporation.
89 See Clark Leith (1997),
p.537.
90 It has been estimated
that AGOA will raise the level of non-oil exports from sub-Saharan Africa
to the United States by between 8% and 11%, depending on how restrictive
the rules of origin in the non-apparel sector are in practice.
However, these trade benefits would have increased by up to fivefold
if no products had been excluded from AGOA, and if less stringent rules
of origin (the multifibre or MFA rules) had been applied. Such
gains from the AGOA represent losses for other suppliers due to trade
diversion. See Mattoo, Roy and Subramanian (2002). The trade
diversion in favour of sub-Saharan African countries may be at the expense
of other, including developing countries.
91 USTR (2002), p. 77.
92 U.S. Trade Act of 2002,
6 August.
93 WTO document GATS/SC/109,
30 August 1995.
94 International Telecommunications
Union (2001), p. 4.
95The agreement for Cable
and Wireless to manage BTC as the sole provider of telecommunication
services was terminated in November 1995.
96 Charging tariffs that
are not in accordance with the applicable tariff structure or charging
unreasonable prices for telecommunications equipment is also outlawed
(section 48). Charges for international calls as well as for other
services, such as packet switched data services, e-mail and paging,
are not regulated.
97 Type approval is required
for switching equipment, VSAT, and fixed line handsets to protect the
public network. However, BTA does not require type approval for
network equipment used by licensed operators. Mobile networks
are also excluded from type approval.
98 Mascom is domestic-owned
by DECI investments; foreign interests include Portugal Telecom and
T.S. Masiyiwa Holdings of Zimbabwe. Vista is 51% domestic-owned,
mainly by Mosokelatsebeng Cellular; its foreign partner, France Telecom,
was replaced by Orange SA.
99 The criteria used to
award the licences were coverage (45%), overall experience (10%), experience
outside country of origin (5%), level of local ownership (15%), roll-out
speed (10%), and creativity, including strategic ownership, local employment
policy, training, technology transfer, and service innovation (15%).
100 BTA also suspended national
roaming, a licence condition for the mobile operators, in October 2001
because it felt that this would discourage both operators from rolling
out their network.
101 For example, BTC is
disputing, in the High Court, BTA’s ruling directing it to provide
leased line capacity to two Internet service providers.
102 International Telecommunications
Union (2001), p. 13. See also statements by ITU’s Secretary-General,
Mr Yoshio Utsumi, that "BTA’s level of independence and effectiveness
may develop as a world model", Accra Mail, 8 September 2002,
"Botswana Telecommunications Authority May Develop as a World Model".
103 BTC’s joint venture
with Vodacom of South Africa was unsuccessful in bidding for a mobile
licence.
104 BTA (2002), p. 11.
105 Other founding members
are Mozambique, Namibia, South Africa, Tanzania, and Zambia.
106 ITU (2001), p. 4.
107 See K. S. Masalila,
Banking Supervision and Regulations: The Case of Botswana, in Aspects
of the Botswana Economy, Selected Papers, edited by J.S. Salkin,
D. Mpabanga, D. Cowan, J. Selwe and M. Wright, Gaborone, 1997, p.278.
108 Report of the Registrar
of Insurance for the Year Ended 31 December 2000, p.11.
109 Individual non-residents
cannot own more than 5% of a company’s shares, and foreign ownership
of any company is limited to 49% of its "free" share capital
(that not controlled by the parent company).
110 Financial entities pay
the general company tax rate of 25%. Specified CIUs and the BBSs
are exempt from company tax.
111 Department of Tourism,
Visitor Expenditure Survey 2001.