New Economia

timothy corprew
timothy@neweconomia.com
comments:
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©2010 by new economia

Botswana 2010
 Botswana 2010: Table of Contents

Table of Contents

1 Executive Summary
4 Government
History 04
Branches 05
Legal System 07

9 Social
Health 09
Education 10
Languages & Ethnic Groups 12
Religion 13

14 Economy
History 14
Current State 15
Currency, Central Bank & Banking 18
Trade 20
Taxation 21
Development Model 23

24 Infrastructure
Transport 24
Energy 25
Communications 25

29 Business Environment
Law 29
Tax 31
Doing Business Metrics 32
Navigators 35

Select Bibliography 36

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Executive Summary
Botswana’s model works because of the size of its population
(rather small at approximately 1.8 million). Its high GDP
per capita can be traced to the solid infrastructure created
with diamond money, insightful engineering, and, above all
else, good governance. At one point, Botswana spent more
on the education of its population as a percentage of its
GDP than did any other government in the world. Likewise,
Botswana has labored to upgrade its diamond production
capacities and processes. It has, over time, taken on a more
involved role in diamond finishing – an effort to diversify its
economy outside of mining and include a value added
aspect to its already spectacular diamond reputation.
Further attempts by the government to diversify the
economy include the recent modernization of its business
laws and tax code (see Business Environment section).
These efforts have produced sustained results. Botswana has
been classified as upper-middle-income country by the
World Bank for over 14 years - a mighty accomplishment
considering that at independence, there were only a few
miles of paved road, as Botswana was one of the ten poorest
nations in the world. Two decades of positive growth have
erased those realities. Botswana has seen growth in all
sectors. More importantly, however, the country has set the
stage for massive growth in the financial sector.
Given its geographical location, the educational level of its
citizens, and the proven record of fiscal responsibility from
the Bank of Botswana and the government, Botswana is
prime for becoming the financial hub of Southern Africa.
Much like Switzerland is centrally located within Europe,
Botswana is in the middle of Southern Africa, allowing it to
service all neighboring countries without infringing on
other territories. Moreover, its proximity to each of the
countries of Southern Africa allows it build a regional
footprint more easily. The University of Botswana graduates
approximately 400 business majors and 35 business
postgraduates each year - a significant figure considering the
population is only 1.8 million. Graduates of UB have gone
on to run the very sophisticated and world-class Bank of
Botswana, work in government, run the mining sector and
New Economia
Botswana 2010: Executive Summary
local subsidiaries of foreign companies. Because of UB’s
history (See Education), the alumni base is active in several
sectors in all of the surrounding countries. Lastly, there is a
trust of Botswana’s ability to manage the financial sector
regionally and among the global community (See Banking).
Botswana does face challenges, however. These challenges
come mostly from a social perspective as Botswana’s slow
response to the HIV threat allowed the virus to reach close to
epidemic levels in the 1990s. Botswana has since reversed the
trend and now has some of the most proactive and innovative
measures to decrease infection rates. Nevertheless, significant
damage has affected the population structure that will have
lasting consequences.
Timeline
1852 – 1853 BaTswana-Boer War. BaTswana of Botswana
preserve their independence. BaTloka, BaLete, BaHurutshe,
Mmanaana Kgatla, BaRolong migrate into Botswana.
1857 BaTswana-Transvaal Boer relations improve. Lutheran
missionaries arrive.
1864 BaKwena, BaNgwaketse, and BaRolong threaten
South African Republic with renewed war if Transvaal
Boers seize baHurutshe land. SAR backs down.
1867 German explorer Karl Mauch finds gold at Tati.
1885 British proclaim the Bechuanaland Protectorate.
1889 Most BaTswana diKgosi object to colonial rule at
Kopong Conference.
1890 Over local objections, British grant themselves
right to exercise colonial control through the Foreign
Jurisdictions Act.
1891 Order-in-Council grants the high commissioner
wide-ranging administrative powers.
1893 Bechuanaland Border Police and baNgwato help the
British South Africa Company destroy the AmaNdebele
kingdom in Zimbabwe.
1895 Bathoen I, Khama III, and Sechele I travel to Britain to
oppose the transfer of their territories to British South Africa
Company’s administrative control.
1

1899 The boundaries of major BaTswana “reserves” demar-
cated. Hut tax introduced.
1899 – 1902 BaTswana fight in the South African War.
1901 Koranta ea Becoana, the first newspaper owed and run
by BaTswana, appears.
1903 – 1905 Thousands of OvaHerero and Nama flee to
Botswana to escape German oppression and genocide in
Namibia.
1908 – 1910 BaTswana campaign against incorporation into
the Union of South Africa commences.
1914 -1918 World War I; BaTswana soldiers serve in France,
East Africa, and Namibia.
1931 British depose Sebele II, Kgosi of the BaKwena, and
exile him to Ghanzi.
1933 Tshekedi Khama briefly suspended as BaNgwato regent
after having a European flogged in the Serowe Kgotla for
misconduct. British threaten to bomb Mosopa, forcing Kgosi
Gobuamang to surrender.
1939 – 1945 World War II; more than 10,000 BaTswana
serve in Europe, the Middle East, and North Africa.
1947 Village of followers of John Nswazwi stormed by
BaNgwato in presence of protectorate police.
1947 – 1949 BaTswana soldiers stationed in Middle East
after WWII.
1949 Seretse Khama banished from Bangwato Reserve.
1950 The Multiracial joint Advisory Council established.
1952 Three police officers killed in protest against Seretse’s
banishment.
1956 Seretse Khama returns to Botswana.
1957 Elected local councils introduced.
1959 Leetile Raditladi establishes the Federal Party. Tshekedi
Khama and Roan Selection Trust create Bamangwato Conces-
sions Limited to exploit copper deposits.
1960 Bechuanaland People’s Party (BPP) founded.
1961 Bechuanaland Democratic Party (BDP) founded.
1963 Independence talks lead to agreement based on one
person, one vote constitution; construction of new capital at
Gaborone begins.
1965 BDP wins by a landslide in first National Assembly
election. Seretse Khama becomes prime minister; self-rule
begins. National Development Bank established. Radio
Bechuanaland begins operation.
New Economia
Botswana 2010: Timeline
1966, September Independence. Seretse Khama sworn in as
Botswana president.
1966, October Botswana admitted to the United Nations as
its 120th member.
1967, April Discovery of diamonds announced.
1967, July Bushman Protection Bill passed.
1967, August British troops are withdrawn from the country.
1967, October Mineral Rights in Tribal territories Act cedes
all mineral rights to the nation.
1968 Tribal Land Act established district land boards with the
power to allocate land.
1969, August Bathoen resigns Ngwaketse chieftaincy and
enters politics with Kenneth Koma to form the Botswana
National Front.
1969, December Southern African Customs union agreement
renegotiated, to the benefit of Botswana.
1970 First diamond mine opened in Orapa.
1972 Botswana achieves budgetary independence.
1974 Government announces plans to withdraw its currency
from the Rand Monetary Act.
1975 Botswana government and the DeBeers Corporation
form two joint companies, Debswana and the Botswana
Diamond Valuing Company.
1976 Pula launched as the national currency, replacing the
South African rand. New central bank, Bank of Botswana, is
established.
1977 Botswana Defense Force formed.
1978 Pula revalued five percent above the South African rand.
1980, April Southern African Development Coordinating
Conference launched in Lusaka, with Botswana as chair.
1980, July Seretse Khama dies; Quett Masire elected president
by Parliament.
1980, November Pula currency pegged to a “pula basket”
comprising of Special Drawing Rights and the rand.
1981 National Census conducted; size of the National
Assembly increased to 34. International diamond market falls,
beginning a two-year financial crisis. Voice of America opens
southern African station in Selebi-Phikwe.
1983 Diamond market rebounds. Botswana economy begins
an eight-year period of high growth.
1984, October Parliamentary elections are held. Quett Masire
returned as president.
2

Timeline, continued
1985 First HIV/AIDS death occurs.
1986 Sir Seretse Khama Memorial International Airport opens
in Gaborone.
1988 Four Gaborone residents die in a night raid by the South
African Defense Force.
1989, October Parliamentary elections. Botswana Democratic
Party wins 31 of 34 seats.
1990 Opposition parties Botswana National Front (BNF) and
Botswana People’s Party (BPP) form an electoral alliance.
1991, August Botswana signs Southern African Development
Community Treaty. The National Census and Delimitation
Commission report creates four constituencies in the capital,
Gaborone, increases National Assembly to 44 seats.
1992 Botswana placed among the “middle income” national
economies of the world.
1992, August Southern African Development Coordination
Conference is reconstituted as the Southern African Develop-
ment Community (SADC) under a new treaty. Botswana and
Namibia engage in a border dispute over Sedudu Island in the
Chobe river.
1994 Botswana conducts seventh free and fair national
election. Botswana National Front (BNF) captures 38 percent
of the vote, the highest on record for an opposition party. Quett
Masire reelected to third term as president.
1995, February University and secondary students storm
Parliament, go on a rampage in downtown Gaborone leading to
45 students being arrested.
1997 National referendum approves constitutional amend-
ments establishing Independent Electoral Commission, reduc-
ing voting age from 21 to 18, limiting the presidency to two
terms, and providing for automatic succession of the vice
president in case of death or resignation of the president.
1998, March Quett Masire retires from presidency.
1998, April Festus Mogae inaugurated as president. Seretse
Khama Ian Khama joins cabinet.
1998, September Botswana Defense Force (BDF) troops and
the South African National Defense Force join in Operation
BOLEAS, entering Lesotho to restore order following a military
insurrection.
1999, March Japan grants Botswana P9.3 million in debt relief
for development projects, raising its total contribution to
Botswana since 1989 to P54.4 million.
New Economia
Botswana 2010: Timeline
1999, December the International Court of justice rules in
Botswana’s favor in its dispute with Namibia over Sedudu
Island.
2000, January Hyundai factory shuts down.
2000, February Botswana and Harvard University open
HIV/AIDS Reference Laboratory in Gaborone. The Economist
rates Botswana’s economy the world’s second-fastest growing.
2001, January Botswana Stock Exchange ranks second in the
world’s emerging markets for 2000.
2001, March Foreign reserves reach P34 billion. Botswana
awarded highest credit rating in Africa.
2002, January Bushmen Central Kalahari Game Reserve
(CKGR), assisted by Survival International and the first People
of the Kalahari, challenge the government of Botswana in court
to prevent the removal of the bushmen from the CKGR.
2002, February Relocation of Bushmen begins.
2002, July government introduces value added tax system and
establishes the Public Procurement and Asset Disposal Board.
2002, August Seventy-five percent of hospital beds occupied
by HIV/AIDS patients.
2002, December Moody’s Investors Service gives Botswana an
A2 rating for long-term foreign currency and A1 for domestic
currency debt.
2003, January Release of Delimitation Commission report
regarding the increase in Parliament seats to 57.
2004, May Government funds national polio vaccination
campaign.
2004, October Elections are held. Botswana Democratic
Party wins 44 of the 57 seats with only 52 percent of the
popular vote. Botswana National Front gains 12 seats, the
Botswana Congress Party gains only 1 seat. BDP captures 333
of the 487 council wards. Festus mogae elected to his second
and final term as president. Mogae appoints five women to his
cabinet.
2005, January Large methane gas deposits found in
Mmashoro and Lephephe coal basins.
2005, December House of Chiefs renamed Ntlo ya Dikgosi
and enlarged from 15 members to 35, 30 of whom elected by
tribal councils every five years.
3

Government
History
Initially, the people of Botswana wanted to avoid the conse-
quences of white minority rule that they had seen in territo-
ries that now comprise South Africa, Namibia, Zimbabwe,
and Zambia. In particular, after the British had declared
Bechuanaland a protectorate, the leading Tswana diKgosi (or
chiefs) worked to prevent the imposition of white minority
rule with the tribal boundaries of Tswana people. Their
efforts proved unsuccessful, however. Cecil Rhodes’s British
South Africa Company (BSAC) was the recipient portions of
the fertile eastern side extending to Zimbabwe for the
construction of a railroad and telegraph line. Rhodes was
given additional tracts of Bechuanaland, which he intended
to dole out to white farmers. Expectations were that Rhodes
would assume control of the whole protectorate. To the
delight of the Tswana kings, Rhodes’s falling out with the
British government over the Jameson raids into the Transvaal
abruptly stopped the transfer of the protectorate over to the
BSAC.
Thereafter, Britain ruled the protectorate. After the BSAC
fiasco, it was assumed that control would be transferred to
the Union of South Africa at some point. Occasionally
throughout the colonial period, efforts to incorporate the
protectorate were made, but all efforts failed due to the
Tswana cultivation of British public opinion and the growing
rift between the British and Afrikaner nationalists in South
Africa.
This dynamic led to a relatively indirect rule, whereby the
chiefs were given the power to administer the everyday affairs
of their tribes. Even with indirect rule, however, the colonial
period was continuously disputatious, with the protectorate’s
high commissioner and resident commissioner on one side
and the leading voices of the Africans on the other. The most
active opponents of British rule were many of the chiefs.
Some, such as Sebele II and Sekgoma Letsholathebe were
deposed for their recalcitrance, and some prominent figures,
such as Bathoen II and Tshekedi Khmam, fought the protec-
torate government through the courts (skillfully, it should be
noted).
New Economia
Botswana 2010: Government
The protectorate administration was meagerly funded
and supported mostly by taxes raised among the people of
the protectorate. Little was invested in the country; devel-
opments of note, namely schools and hospitals, came
from the initiative of Africans and missionary societies.
This freedom gave the chiefs an uncommon amount of
power and authority. The tendency toward authoritarian-
ism of chiefs, particularly in the later colonial period, was
an important factor in the emergence of nationalism and
antitribalism among younger, educated men prior to
independence.
Ironically, it was Seretse Khama, heir to the powerful
Ngwato chieftaincy, who became the voice of nontribal-
ism and a leader of the Democratic Party, which domi-
nated the elections leading to independence on Septem-
ber 30, 1966. Although Botswana was one of the world’s
poorest countries at independence, the discovery of rare
diamond kimberlites in the Kalahari gave it a rare oppor-
tunity. Unlike other ex-colonies in Africa and around the
world where natural resources were under the firm
control of ex-colonial interests, Botswana’s newfound
resources were to be controlled by the people and for the
people. Khama’s government made two choices with
long-term consequences when the minerals were discov-
ered. First, Botswana declared that all rights of ownership
to minerals, whether located in districts previously
known as tribal reserves, on freehold land, in national
parks, or other state land, were vested to the Republic as
a whole. Second, the government of Botswana was to
decide the method by which these resources would be
explored and exploited. Lacking in expertise and short on
capital, Botswana accepted a bid from South African
DeBeers Corporation to develop Botswana’s diamond
deposits. Production began in 1971. Renegotiations in
1975 led to government-company partnerships between
Debotswana and Botswana Diamond Valuing Company.
At independence, Botswana was a vulnerable state. It did
not allow liberation organizations from regional states to
create bases within its borders. However, sympathetic to
the cause of the movements in neighboring countries, it
4

History, continued
did open its borders to refugees from white-ruled South
Africa, Rhodesia (Zimbabwe), and South West Africa
(Namibia). In 1974 it became part of the “Front Line States”
(with Angola, Mozambique, Tanzania, and Zambia) to assist
Zimbawean liberation movements. Although Botswana’s
independence was compromised on several occasions by
incursions from Rhodesian and South African military
groups, it managed to steer clear of open conflict.
The party led by Khama at independence, the Botswana
Democratic Party (BDP), has remained in power for over 40
years and has shown no signs of losing its dominant hold on
the presidency and National Assembly. As a result, Botswana
may be characterized as a one-party state. Although, in
contrast to other similar states in Africa and around the
world, it has always faced a lively and influential, though
divided, opposition and dealt with it in the public arena
without the use of threats, violence, or imprisonment of it
opposition. Moreover, privately owned newspapers, on
balance, have been pro-opposition and critical of the BDP
government.
Khama led the government for 14 years from 1966 until his
death in 1980 of cardiac arrest. Khama gave Botswana its
national identity more so than any other figure. The accom-
plishments mentioned above helped shape Botswana’s legacy
for future generations to follow (in 1974 the budget was free
of donor assistance).
Quett Masire took over the government in 1980. Masire was
quick to action. His cabinet put its stamp on policies
attempting to diversify the diamond-dependent economy.
Himself a career farmer, Masire backed plans to increase
cattle production and access to overseas markets and to
improve crop production. Masire’s government also intro-
duced attractive terms for foreign businesses, eliminated
foreign exchange controls, and expanded training and educa-
tional opportunities in agriculture, technology, and science.
Despite the progress Masire made on the economic front, his
weakness was that he neglected the growing threat from HIV.
By the time Masire retired, Botswana’s HIV rate had reached
New Economia
Botswana 2010: Government
epidemic levels, and a major governmental response was
only beginning to get under way. His successor, Festus
Mogae, made certain not to slip into the same mistake.
Mogae was Masire’s vice president from 1992 until 1998,
when he took over as president. Under Mogae, Botswana
developed a large-scale, multidimensional approach for
combating the epidemic. Mogae led the country by having
himself tested for the virus and appointing Joyce Phumaphi
as Minister of Health in 1999. From this point, Botswana
developed a comprehensive national AIDS strategy and put
in place the means to implement it. International partner-
ships, government-provided anti-retroviral therapies and
male and female condoms, statistical gathering, and other
components of prevention and treatment policies, were
initiated.
Mogae was not lacking in the economic development side
either. Mogae cut his teeth in the Ministry of Finance and
Development. A trained economist, the intellectual Mogae
built on Masire’s tradition of developing policies aimed at
diversifying the economy while expanding it. Mogae had
more success than previous administration in tackling
economic diversification within the mineral sphere by
promoting exploration. In addition to diamonds, the extent
of which is still undetermined in the country (and likely to
be substantial), Botswana’s ample reserves of gold, copper,
high grade coal, soda ash, natural gas, and other resources
are on the threshold of significant development.
Ian Khama, the son of Seretse Khama, took over as interim
president in April of 2008. He was later elected to the presi-
dency in October of 2009.
Branches of Government
Since independence, Botswana has maintained a remarkably
stable constitutional parliamentary democratic system. The
constitution separates the government into three branches:
the executive, legislative, and the judicature. Since it is a true
parliamentary system, the president is the leader of the
National Assembly and can be removed with a vote of no
confidence, forcing new elections. By the same token, the
5
 Botswana 2010: Government

Branches of Government, continued

Quick Facts Legislative

Parliament consists of the president and the National
Type True Parliamentary Republic Assembly. The president is ex-officio a member of the
National Assembly and is entitled to speak and vote in all
President Ian Khama proceedings of the National Assembly. The National
Assembly consists of 57 elected members who are elected
Vice President Mompati Merafhe in accordance with the constitution and four specially
Presidential Term Five elected members (plus the speaker of the National Assem-
bly, if somehow elected by the National Assembly to that
Parliamentary Term Five post without first being a member of the National Assem-
bly).
Capital Gaborone
Ntlo Ya Dikgosi (House of Chiefs)
Administrative Divisions Nine The House of Chiefs consists of between 33 and 35 mem-
bers. Its membership comes from several sources: one
Official Languages English, Tswana
“Kgosi” (or chief ) is sent from each of 12 constituencies;
Last Election October, 2009 five persons are appointed by the president; and, in 20
regions, elections are held (the areas of Ghanzi and Kgala-
gadi have the option of election to the House of Chiefs or
president may dissolve Parliament at any time and call for
selection as a constituency, but not both). Members serve
new elections. Since 1999, the office of the president has
for five-year terms or until the dissolution of Parliament.
been subject to a maximum of 10 years.
House of Chiefs members are not allowed to participate
in party politics.
Executive
The executive branch is composed of the President, the vice The House of Chiefs has no legislative power and serves
president, the attorney-general and a cabinet. Members of only an advisory role, mainly, on bills concerning cultural
the cabinet are appointed by the president from among the and social matters. They may also consult ministers and
National Assembly to be endorsed by the elected members of issue reports.
the National Assembly. The president is the head of state and
government. Judicial
The judicial branch is made up of a two-tier court system
Presidential elections are held on the occasion of either the
that is complemented by the parallel, special jurisdiction
dissolving of the National Assembly, by the president or the
industrial court, and the inferior magistrate and custom-
National Assembly itself, or by the expiration of the five-year
ary courts meant to relieve congestion. The court of first
term that the National Assembly enjoys.
instance in Botswana is the High Court. The High Court
also has discretionary appellate jurisdiction to hear cases
Upon the dissolving of parliament, a general election of the
appealed from the magistrate courts that serve the petty
National Assembly elected members and the president shall
claims function. Customary courts serve the function of
be held within 60 days of dissolution. Elections are by
allowing traditional matters to be settled in a traditional
national suffrage (citizens over the age of 18). Presidential
manner.
candidates must be nominated with his or her consent by not
less than 10 members of the National Assembly.

New Economia 6

Judicial, continued
The High Court has unlimited original jurisdiction over all
civil and criminal matters. The characteristics of this “unlim-
ited jurisdiction” was clarified in two very import cases. The
first, Botswana Railways’ Organization v. Setsoga and Others,
Amissah JP, pointed out that it meant parties could bring
their dispute to the High Court if they so desire and if they
think the dispute is of a nature which is susceptible to settle-
ment by the processes of the High Court. The fact that a
subordinate court had concurrent jurisdiction does not mean
that the High Court’s jurisdiction had been thereby curtailed.
In Mafokate v. Mafokate, the sole question that the court had
to decide was whether the High Court had jurisdiction to
entertain an action and dissolve a marriage contracted under
customary law and, if it had jurisdiction, whether it should
indeed exercise the jurisdiction. The High Court held that as
a result of its unlimited jurisdiction, it had the authority to
hear the case that would ordinarily be heard by a customary
court. The court noted, however, that the dissolution of
customary marriages were better left to the customary courts
who were better equipped to manage and interpret the
customary laws.
The court also has the power to supervise proceeding in prog-
ress in any subordinate court. It exercises this general supervi-
sory jurisdiction over subordinate courts and court-martial
through the use of the orders of mandamus, prohibition, and
certiorari. This supervisory jurisdiction and the procedure
whereby it is invoked and exercised are referred to as judicial
review. By a writ of prohibition, a subordinate court or
administrative body could be prohibited from acting in
excess of its jurisdiction. Through the order of mandamus, a
subordinate court could be ordered to exercise jurisdiction
where it had been previously refusing to or an official ordered
to perform a duty she is obligated by law to perform. The
order of certiorari can be used by the High Court to request
the record of a subordinate court to be brought before it and
the proceedings of such subordinate court could be quashed
on grounds of abuse of process.
Lastly, the high Court has appellate jurisdiction over
decisions of the magistrates’ courts and the Customary Court
of Appeal.
New Economia
Botswana 2010: Government
The Court of Appeal is the highest court of the land and
officially has the power, authority, and jurisdiction of the
High Court. It is essentially an appellate court; that is, it
mainly hears appeals from lower courts. It has no original
jurisdiction although certain matters may be reserved for
it. This is provided for in section 15 of the Court of
Appeal Act, which states that a “judge of the High Court
may reserve for consideration by the Court of Appeal any
question of which may arise during civil or criminal
matters before him.” The Court of Appeal functions as
the court of final appeal and accepts appeals as a matter of
right: 1) from any final decision in any proceeding before
the High Court sitting at first instance 2) from any
decision of the High Court in exercise of its powers or
duties in enforcing the fundamental rights granted under
the constitution 3) by a convicted person from any order
of the High Court in the exercise of its jurisdiction
altering a conviction or sentence or 4) in any case where
express provision for such appeal is made under any
written law. All other appeals would be by leave.
Legal System
Background
The British formally declared a protectorate over
Botswana, then known as Bechuanaland in 1885. This
was done to prevent the Boers from using the territory for
the reinforcement of their troops in their war against the
British as well as to prevent the Germans from having a
“coast-to-coast” presence in the region. Almost as soon as
the territory came under British protection, the British
passed their administration on, into the hands of the
government of the Cape of Good Hope (or the Cape
Colony as it was then known). This association, which
ended in 1909, has had a profound and lasting effect on
the legal system of Botswana.
Roman-Dutch law, or the law of Holland, was intro-
duced to the Cape Colony in 1652 by the Dutch East
India Company when they established a post there for
their traders en route to theeast. This Dutch law was an
amalgamation of Roman law, canon law, law merchant,
7

Legal System, continued
and Germanic law as found in Holland. The law was applied
in the Cape Colony until 1795 when, as a result of the Napo-
leonic wars, the government of the Cape Colony was taken
over by the British. The British retained the Roman-Dutch
law as the general law of the Colony and thus the Bechuana-
land protectorate. The British did gradually introduce
English law through legislation.
Because the British had little interest in administering
Botswana, they interfered as little as possible with the inter-
nal administration of the country. As a result of this indirect
rule, the British decided to make use of the existing tradi-
tional dispute mechanisms they found in place in Botswana.
The policy worked out well, as Tswana tribes (who make up
90 percent of the population) had already developed what
was a highly sophisticated and effective judicial system.
The British were able to incorporate this system into the new
court structure they introduced with little difficulty. The dual
system of customary courts alongside legal courts has been in
place from the period of the protectorate, through indepen-
dence and is still working today (however, the customary
court’s role has been progressively reduced over time).
Today
The Botswana legal system is in transition. There appears to
be a shift toward the more regionally-established English
system. Botswana’s constitution stands at top of the legal
authority hierarchy. It is followed – as is the hybrid tradition
– by legislation and common law. Law reports and legal
writings hold little influence and are used mostly for policy
arguments when legislation, common law and the constitu-
tion have failed to address an issue.
Acts of Parliament or statutes are the principal source of
modern legislation in Botswana. All acts of Parliament must
conform to the constitution. The courts have not hesitated to
invalidate legislation that was found to be inconsistent with
the Constitution. For instance, in Attorney General v. Dow,
the Court of Appeal declared section 4(1) of the Citizenship
Act void for violating the constitutional prohibition of
discrimination in sections three and 15, because it denied
citizenship to the offspring of Batswana women married to
New Economia
Botswana 2010: Government
foreigners, but granted citizenship to offspring of men
married to foreigners.
Acts of Parliament may be referred to as primary legisla-
tion whereas the bulk of modern Botswana legislation
consists of delegated or subsidiary legislation, which is
created at the direction of subordinate bodies under
specific powers delegated to them by Parliament. Section
49 of the Interpretation Act, after stating that “subsidiary
legislation” has the same meaning as “statutory instru-
ment,” defines a statutory instrument as, “any proclama-
tion, regulation, rule, order, or other instrument made,
directly or indirectly, under any enactment and having
legislative effect.” However, because such legislation
further removes the ordinary citizens from the lawmaking
process, subsidiary legislation in Botswana must be
approved by Parliament. According to section nine of the
statutory Instruments Act, all statutory instruments must
be brought before Parliament, and Parliament may,
within 21 days, pass a resolution nullifying any of them
(in practice this proves to be impractical).
Judicial precedent serves as the next most authoritative
source of law in Botswana. Insofar as Botswana is
concerned, the doctrine of precedent or stare decisis (“to
stand by decided matters”) may be considered to have
been received in the country as part of the general recep-
tion of Roman-Dutch and English law via South Africa
during the colonial period. The doctrine of binding
precedence is founded on the traditional view of the
function of a judge in the English system, which is to say
that he does not make law but only applies existing law to
the facts of a particular case. Judges refer to earlier similar
court cases not only because they provide guidance, but
because the judge is bound by those decisions – especially
if it has come from a higher court. In the course applying
the law to new fact sets, they sometimes widen and
extend a rule of law or devise a rule by analogy with exist-
ing rules or even create an entirely new principle. In
declaring and applying the law in this way, judges thereby
develop the law. To this extent, judicial precedents, or
case law, as they are often referred to, constitute an
important source of law.
8
 Botswana 2010: Social

Social

Health the nearest Health facility compared to 72 percent of rural

Access
Botswana has an extensive network of health facilities
(hospitals, clinics, health posts, mobile stops) clustered in the
24 health districts. Health services are under the manage-
ment of both the Ministry of Health (MOH) which oversees
all hospitals (referral, districts, and primary) and the Ministry
of Local Government, which is in charge of clinics, health
posts, and mobile stops.
On the whole, 84 percent of the population is within a five
km radius from the nearest health facility. Eleven percent of
the population has to travel eight km to the nearest facility.
There is a sharp disparity between urban and rural access, as
96 percent of urban residents are within a five km radius from
residents. Only four percent of urban residents live within
an eight km radius from the nearest health facility. The
four percent is found in the Palapye and Jwaneng areas. In
Rural areas, 72 and 17 percent of the population are within
five and eight km radius from the nearest health facility,
respectively, giving a total of 89 percent within an eight km
radius in rural areas versus 95 percent for the country. The
North East, Southern and Kgalagadi South provinces each
have all of their inhabitants within a 5km radius from a
health facility, while Serowe, Bobirwa, Mahalapye and
Gomare each have all of their inhabitants within an eight
km radius. Kweneng West has the lowest proportion of its
population within a five km radius at five percent, followed
by South East with 14 percent.

Indicator 2001 - 2006 2006 - 2011 2011 - 2016 2016 - 2021 2021 - 2026 2026 - 2031

Birth Rate 25.4 25.8 24.8 23.4 21.7 19.9

Death Rate 13.7 13.9 11.9 10.1 8.7 7.6

Natural 1.17 1.19 1.29 1.33 1.29 1.23

Increase
Total 3.040 2.791 2.689 2.591 2.496 2.405
Fertility

Growth 1.17 1.2 1.29 1.33 1.29 1.23

Net Reproduction 1.144 1.121 1.131 1.128 1.115 1.101

Rate

e (0) 50.02 51.01 55.62 60.33 64.35 68.04

e (15) 40.12 40.41 43.97 47.80 51.15 54.3

Infant Mortality
Rate 54.5 24.7 30.8 22.3 16.1 11.2

q (5) .0807 .0668 .0455 .0222 16.1 .0150

New Economia 9

HIV
Botswana is experiencing one of the most severe HIV/AIDS
epidemics in the world. The national HIV prevalence rate
among adults ages 15 to 49 is 23.9 percent, which is among
the highest in Sub-Saharan Africa. The primary mode of
transmission is heterosexual contact, with the military and
young women at a higher risk of HIV infection than other
populations. Young men ages 15 to 24 experience an HIV
prevalence rate of 5.1 percent, while young women in the
same age group experience prevalence rates of 15.3 percent.
HIV infection rates also vary by geographical region and are
highest in towns, lower in cities, and lowest in villages. The
United Nations Development Program estimates that by
2010, more than 20 percent of all children in Botswana will
be orphaned. Extended families and communities have
exhibited resourcefulness and generosity in their willingness
to absorb and care for these orphaned children, but this
capacity is being exhausted, especially as the current genera-
tion of grandparents begins to die.
Education
History
In the colonial period, responsibility for developing educa-
tion was left up to the Batswana merafe and missionaries.
Achievements were made at the primary level, but parents
remained dependent on secondary schools in South Africa
and Rhodesia (Zimbabwe). At independence, Botswana had
only one government secondary school and was a decade
away from building its own university (although there were at
least seven nongovernment secondary schools).
Since independence, universal primary education has been
the goal of every National Development Plan, and since 1985
the share of children aged six to 12 attending schools has
risen steadily, reaching 87 percent in 2004. Since 1987, the
government has guaranteed access to 10 years of schooling.
In 2006, nominal school fees were introduced at the second-
ary level for the first time, but they have been unpopular and
unenforceable.
New Economia
Botswana 2010: Social
Tertiary education in Botswana began in 1964 with the
establishment of the University of Basutoland, Bechuana-
land, and Swaziland, which was subsequently renamed
University of Botswana, Lesotho, and Swaziland (UBLS)
with its campus in Roma, Lesotho. Following the breakup
of UBLS in 1975, Botswana and Swaziland established the
University of Botswana and Swaziland (UBS) and built
university colleges in Gaborone and Kwaluseni. In 1983,
UBS was dissolved, and the University of Botswana was
established (as was the University of Swaziland). The
University of Botswana offers certificates, diplomas, and
undergraduate and graduate degrees.
Admission into all governmental senior secondary and
tertiary institutions is through competitive examination
and earns national students a full bursary (though, in
recent years, a bursary has not been guaranteed). The
percentage of students passing through each level of the
government school system continues to rise. In 1991, only
25 percent of Botswana’s students were admitted into
senior secondary schools, while the number of university
students represented 4.3 percent of the total number of
students in senior secondary schools. By 2005, progression
rates from junior secondary schools to senior secondary
schools had risen to 63 percent.
Current
Education in Botswana is not compulsory. The educational
structure mirrors the United Kingdom system in that there
is universal access to primary and junior secondary school,
while a process of academic selectivity reduces entrance to
the senior secondary school and university education.
Primary education in Botswana begins at age six and lasts
for seven years (with each level called a “Standard”),
leading to the Primary School Leaving Certificate (PSLE).
Secondary education lasts for five years (with each level
called a “Form”), and is divided into two cycles. The first is
a three-year cycle leading to the Junior Certificate Exami-
nation (JCE). Completing the JCE may lead to admission
to the senior secondary school program. Only those
10
 Botswana 2010: Social

students whose grades are high enough on the JCE are Region Council (public) Private Total
admitted to the second cycle, the senior secondary program.
The senior secondary program is a two-year cycle preparing Central South 137 7 144
students for the Botswana General Certificate of Secondary Central North 112 8 120
Education (CSE), which determines a student’s aptitude for
higher education. Botswana is in the process of building West 85 6 91
unified secondary schools, Form I to Form V, in the remote
Central North 112 8 120
areas of the country to increase access to a senior secondary
education. North 71 5 76

South 161 6 167

One central objective of primary education is for children to
be literate first in Setswana and then in English. Other goals
are for children to become knowledgeable in mathematics
and to have a command of science and social studies. From
1991 to 1997, the number of students completing the
primary level and entering junior secondary increased from
65.0 percent to 98.5 percent. It has remained around this
level through to 2010.
Education has been given priority in the national budget.
The Ministry of Education averages 10 percent of the
national budget. The Department of Secondary Education
and Teacher Training and Development shares approxi-
mately 64 percent, and the ministry headquarters, which is
responsible for University of Botswana among other
projects, receives approximately 25 percent. The 11 percent
balance is usually spent on improving facilities and functions
under the technical education, non-formal education,
curriculum development (the ministry writes most of the
textbooks), and evaluation and special education depart-
ments. The Ministry of Education expanded from a small
unit of government at independence to one that looks after
the educational needs of hundreds of thousands students
from primary to tertiary levels.
Recently the ministry undertook to reevaluate its priorities
and strategy in the context of Botswana's changing and
complex economy; to advise on ways to ensure the education
system is sensitive and responsive to the people's wishes and
the country's manpower requirements; to study the various
methods of streaming into vocational and academic groups
at the senior secondary level; to study how the senior second-
South Central 176 29 205
Total 742 61 803
ary structure relates to the University of Botswana degree
programs and to determine how the two programs may best
be reconciled; and to advise on the organization and diversi-
fication of the secondary school curricula to prepare students
who do not continue with higher education.
Enrollment
At the beginning of 2009, there were 330,775 students
enrolled in primary schools, with female enrollment
accounting for 48.8 percent. There has been an increase of
half a percent on the previous year’s enrollment. Enrollment
in private schools was 5.8 percent (19,239) of the total
primary school enrollment. In the same year, there were
171,986 students in all secondary schools in the country.
Sixty percent of those students were female students.
Curriculum
Basic education consists of several components designed to
prepare students for the varying life paths that they may face
upon graduation. Foundation skills are meant to give
students skills applicable to work situations, such as
decision-making and problem-solving, communication,
team work, and computing. Most academic subjects are
taught with a vocation orientation. Teachers are asked to
demonstrate to students the practical application of
concepts. These measures are meant to graduate classes that
are “ready for the world of work.” Curricular and

New Economia 11
 Botswana 2010: Social

Curriculum, continued

Population
co-curricular activities are developed to provide students with
an awareness and understanding and appreciation of the Botswana 1,822,858
values of all types of work. This includes knowledge about the
Gaborone 228,166
economy, the process and organization of production, and
the demands of the working life. Francistown 98,963

Lower primary education consists of: Setswana, Mathematics, Lobatse 30,734

Environmental Sciences, English, Creative and Performance Selebi-Phikwe 51,514
Arts, and Cultural Studies. Upper primary education consists
of: Agriculture, Religious and Moral Education, Setswana, Orapa 9,196
Social Studies, English, and Science. Secondary education Jwaneng 17,262
consists of a Serswana, Mathematics, English and a host of
elective subjects that students take classes in to create a Sowa Town 3,257
concentration.
Kanye/Moshopa 104,517

University Barolong 57,296

Higher Education is provided by 27 tertiary institutions
Ngwaketse West 11,634
within the country. There is currently only one public univer-
sity. There is a second public university under construction – South East 68,477
The Botswana International University of Science and Tech-
Kweneng East 214,142
nology – that is scheduled to accept its first students in 2011.
Kweneng West 43,948
The University of Botswana is divided into six faculties:
business, education, engineering and technology, humanities, Kgatleng 78,419
science, and social sciences. Between these six faculties, the Serowe/Palapye 161,767
university offers over 75 areas of concentration, with majors
ranging from African Studies to Industrial Design. Mahalapye 106,976

Bobonong 67,408

Languages & Ethnic Groups Boteti 52,776

Although Botswana is often times – presumably because of its Tutume 129,562

peaceful history – represented as ethnically homogenous (that North East 48,557
is, as a Tswana nation), Botswana is actually made up of
several distinct peoples. There are at least ten languages Ngamiland East 72,358
spoken by 10,000 people or more and several other languages Ngamiland West 63,302
and dialects spoken by smaller groups. What has distin-
guished Botswana among other African countries is not that Chobe 21,412
it lacks ethnic diversity (and thus conflict), but rather that its Ghanzi 35,678
independent government has consciously opposed policies
that entitle any of its ethnic groups to power. Moreover, the Kgalagadi South 27,538
Ntlo ya DiKgosi (House of Chiefs) represents the eight Kgalagadi North 17,995

New Economia 12
 Botswana 2010: Social

Languages & Ethnic Groups, continued

largest ethnic Tswana ethnic groups. The body is only
ceremonial, but does wield some influence as the mem-
bers of this group were selected, elected, or appointed to
represent the interest of their people who popularly elect
the National Assembly and the president.
The overwhelming majority of the people in Botswana
speak SeTswana. SeTswana is the national language of
Botswana and one of two official languages, the other
being English. According to the 2001 census, 1,253,000
persons, or 78 percent of the population, spoke SeTswana
as their first language.
or more approprietly Kgalagadi, is also used to refer to the
vast desert region of central and western Botswana. A
significant number of SeKgalagadi live in the Southern
and Kweneng districts.
Religion
Historically, Botswana has been an area of diverse religious
institutionalization, and it currently ranks among the
world’s most tolerant societies in terms of religious
freedoms. Indigenous religious beliefs vary widely.
Botswana has felt the impress of Christian missionary
activity since the mid-19th century.

Historically, The Kalanga live primarily in northeastern
Botswana and adjacent western Zimbabwe and speak
Ikalanga. The Kalanga constitute the largest non-
SeTswana-speaking peoples in Botswana.
The Kgalagadi are the people who live either in or near the
Kalahari desert or who speak a dialect of SeKgalagadi, a
language related to but separate from SeTswana. Kalahari,
In the 2001 census, approximately 72 percent of those
above age 12 identified themselves as Christian. Only six
percent classified themselves as adhering to traditional
(badimo) faiths. The majority of the country’s Christian
population belongs to Pentecostal or other independent
evangelical sects. However, the United Congregational
Church of South Africa, the Dutch Reformed Church and
the Anglican church have had much influence in practice.

Age Distribution
Age 75 plus

70 to 74 Female 2016
65 to 69 Female 2011
60 to 64 Female 2006
55 to 59
Male 2016
Male 2011
50 to 54
Male 2006
45 to 49

40 to 44

35 to 39

30 to 34

25 to 29

20 to 24

15 to 19

10 to 14

5 to 9

0 to 4

0 20,000 40,000 60,000 80,000 100,000 120,000

New Economia 13
 Botswana 2010: Economy

Economy

History
Botswana’s economy has been one of the strongest in Africa.
The government has managed the country's resources
prudently and has kept its recurrent expenditure within its
revenue, allowing for investment in human and physical
capital. The strategy of national development has been based
on the opening up of mining by private multinational
capital, with government equity participation to increase
state revenues, and on the encouragement of local private
enterprise through livestock exports and the licensing of
smaller scale commerce and manufacturing.
The result has been an economy that grew thirty-fold
between the 1960s and 1980s, with a gross domestic product
estimate to have grown from less than $80 per capita to more
than $1,000 per capita in that period.
However, it is doubtful that much more than half the popu-
lation has significantly benefitted from increased income and
standard of living - beyond the general and widespread
provision of schools, clinics, clean water and improved
roads.
Quick Facts
GDP Nominal $10.8 Billion
GDP Purchasing Power Parity $25.5 Billion
Per Capita (PPP) $13,992
Real Growth -6.7
Less than a quarter of the adult work force is in formal paid
employment. National development plans since 1970 have
identified rural development and employment creation as
the two major goals of public policy. State revenues reaped
from mining development have been spent on basic rural
infrastructure and welfare services, and on schemes to subsi-
dize the development of cattle and crop production - which
have benefitted richer rural households.
Employment creation, to keep up with the increasing supply
of secondary school graduates, has been largely left to private
enterprise with government fiscal incentives. Some success
has been achieved in expanding formal wage employment
with a significant expansion of manufacturing industries in
the 1990s. Botswana remains heavily dependent on its
diamond sector, accounting for more than one-third of
GDP and 70% of export earnings.
Botswana's economic growth rate – averaging slightly over 7
percent over the past two decades – has been among the
highest in the developing world. The mining industry,
particularly diamonds, has historically contributed about 35
percent of Botswana's GDP. At independence, mining
contributed only one percent of GDP. Manufacturing,
construction, and agriculture each have historically contrib-
uted about three to six percent of GDP, and there has been
growth in financial and government services in recent years.
This windfall in profits of diamond production, and sound
national financial management since the later 1960s have
combined to make the Botswana pula one of the 'hardest'
currencies in Africa.

Inflation 8.4 The economy has been hit by several negative shocks,
however, including a temporary decline in global diamond
Currency Pula demand and the near 40 percent depreciation in the South
African rand in 2001. Botswana also has had the unusual
Versus Dollar (one-year average) 6.91 problems of enormous foreign exchange reserves, a govern-
ment budget surplus sometimes running into billions of
Versus Pound 11.17
dollars, and excess liquidity of capital lying unutilized in
Versus Euro 9.75 private banks. Partly this was a matter of expediency - capital
held back for the rainy days of world diamond price slump
National savings as Percent of GDP 38% (2008) or deliberate destabilization by the apartheid regime in

New Economia 14

History, continued
South Africa. But it also reflected an ideological bias against
direct state investment in productive enterprise, and state
dependence on the initiative of private enterprise.
The budget surplus and bank liquidity were partially
depleted by being diverted into a late 1980s and early 1990s
construction boom, including infrastructure for new mines
and military airports. A private stock exchange was set up to
sop up bank liquidity, but local equity participation has been
limited to a few fast-growing shares in large corporations.
Industrial development in Botswana has been limited by
high power and water costs, lack of appropriate management
and labor skills, and the small domestic market. Manufac-
turing industry up to the 1980s largely consisted of meat
processing at Lobatse in the south. The early 1980s saw the
transfer of capital and textile production from Zimbabwe to
nearby Francistown in Botswana, and the growth of
diamond sorting and service industries in the booming
capital city, Gaborone. The late 1980s saw the peak of a
construction boom, driven by increased urbanization and
urban land price inflation, and expansion of the formal
waged sector of the economy. Light manufacturing industry
grew rapidly but still constituted less than 15 percent of
gross national product.
The 1990s, however, saw the rapid growth of manufacturing
of vehicles (Hyundai, Volvo) and other commodities (e.g.,
spaghetti, etc.) for the South African market. Such exports
cut Botswana's trade deficit with South Africa by a quarter,
but are always threatened by South African protectionist
measures.
Current State
Botswana is classified as an “upper middle-income country”
by the World Bank. Botswana had a nominal gross national
product per capita of US $6,406 in 2009 and a purchasing
power parity per capita GDP of $13,992. Diamonds
continue to maintain Botswana’s economy. It promotes its
diamond output as “diamonds for development,” as opposed
to the “conflict diamonds,” as much of the country’s
diamond revenue has funded and continues to fund its
New Economia
Botswana 2010: Economy
development (although as a result of the recent global
economic downturn, Botswana has had to rely more heavily
on other sectors of the economy, as demand for diamonds
decreased sharply causing Botswana’s mining sector to
contract by nearly 40 percent.).
Overall, the target for real GDP growth of 5.5 percent per
year over the 2003 to 2009 National Development Plan 9
was exceeded, with the growth rate reaching its highest point
of 9.2 percent in the 2005. During that same period, annual
inflation oscillated within a band of about 13 (2008) percent
and six percent. The rise of inflation can be attributed to the
increased cost of food and petroleum, which Botswana must
import. To help control inflation, the government has
insisted that the parastatals exercise restraint in pricing and
to achieve their revenue targets through improved produc-
tivity and efficiency rather than price increases.
The Bank of Botswana, the country’s central bank, for many
years struggled with the delicate balancing act in setting the
value of the pula. On the one hand, its value against the
dollar was crucial, as global diamond sales are denominated
in dollars; on the other hand, the pula’s value against the
South African rand is also important, because South Africa is
Botswana’s main import partner. After several years during
which the trends of the rand and the dollar were at odds, the
Bank of Botswana instituted a new exchange-rate regime in
May 2005, termed the “crawling band.” This broadened the
margins between the buy rate and the sell rate of the pula by
the Bank of Botswana, the effect of which was to spur a
significant increase in interbank trading and fostered consid-
erably more competition among banks in the foreign-
exchange market. In November of 2008, Botswana’s
foreign-exchange reserves stood at $9.2 billion – the equiva-
lent of 24 months of import cover, and the longest forward
import cover in the world by a wide margin.
In the global context, Botswana’s reputation for sound
economic management is evidenced in a number of ways,
not least the country’s A-grade rating for five successive years
by both Moody’s and Standard and Poor’s. The World Bank’s
Worldwide Governance Indicators 1996-2006 ranked
15

Political Climate, continued
Botswana first in Africa in terms of control of corruption
and 16th worldwide out of 212 countries in terms of stabil-
ity and absence of violence.
Agriculture
Botswana’s agricultural sector employed about 45 percent of
the economically active population in December of 2008 (a
level that has not changed much in more than a decade) yet
contributed no more than 1.4 percent of the total GDP.
Most of these workers are actually subsistence farmers and
grow little excess crops. It is therefore necessary for the coun-
try to import foodstuffs to feed the urban populations.
Composed partly of semi-desert and partly of a savannah
area, with erratic rainfall and relatively poor soils, the coun-
try is more suited to grazing than arable production.
Attempts were made to compensate for this shortage of
arable land by developing the country’s irrigation potential,
but agricultural remained largely dominated by the livestock
sector, and by the cattle industry in particular.
Botswana’s cattle sector is strongly focused on beef produc-
tion rather than dairy output, and milk has to be imported.
Meat and meat products are fourth largest in terms of export
receipts.
Mining
In 2007 Botswana was Africa’s third largest mineral producer
by value. The mining industry accounted for 43 percent of
GDP in 2007. Besides diamonds, Botswana also mines
significant amounts of hard coal, copper ore, nickel ore,
gold, cobalt, salt, and soda ash. Plans to exploit Botswana
coal reserves have been restricted by the level of international
prices and by the great distance to major coal markets.
Around 17,000 million metric tons of steam coal suitable for
power-plant use have been identified in the east. Coal is
currently extracted from the Morupule Colienry (a subsid-
iary of Debswana). The government has encouraged domes-
tic coal use to cut back on wood fuel as a power source, but
currently most coal production is used to power plants in the
mining industry, including the soda ash plant at Sua Pan.
New Economia
Botswana 2010: Economy
Diamonds
Diamonds are a crystalline form of carbon, and are the
hardest naturally occurring substance. They are of two
categories: gem quality, which are superior in terms of
color and quality, and industrial, which are used for high
precision machining or are crushed into an abrasive
powder called boart. The primary source of diamonds is a
rock called kiberlite, occurring in volcanic pipes and
fissures. There are four methods of diamond mining, of
which open cast mining is the most common. Diamonds
are also recovered by underground, alluvial, and offshore
mining. The diamond is separated from it or by careful
crushing and gravity concentration. The size of diamonds
and other precious stones is measured in carats. One
metric carat is equal to .2 grams, so one ounce avoirdupois
equals 141.75 carats.
In terms of volume, Botswana ranks as the world’s largest
producer of diamonds, which is the country’s principal
source of export earning, normally accounting for about
three-quarters of export receipts and as much as 50
percent of government revenues. In 2007, the diamond
sector alone accounted for 27 percent of the country’s
GDP. The mines are all open-cast, but the feasibility of
underground mining at Jwaneng was to be explored in
2009.
According to the U.S. Geological Survey, output from
Botswana Orapa mine reached its maximum of 13 million
carats in 2000 and will be able to maintain that output for
another 26 years. Other mines include: the Damtshaa
mine, which has a life-of-mine expectancy of 32 years at
700,000 carats per year; the Jwaneng mine which has a
life-of-mine expectancy of 36 years at 12 million carats per
year (considered the world’s richest diamond mine); and
the Lethakane mine which is expected to produce for the
next 13 years at a rate of one million carats per year.
Manufacturing
The annual rate of growth of the manufacturing section of
Botswana’s economy was 2.4 percent per year from 1996
to 2006. The government hopes to increase this rate of
16

Manufacturing, continued
growth, as the manufacturing section is seen as the catalyst
for job creation. The main hindrances to faster growth have
been the small size of Botswana’s market and the trade barri-
ers that prevent Botswana-based manufacturers from operat-
ing in larger markets, such as South Africa.
Government finance
In 2002 Botswana added a value-added tax (VAT), which
replaced the old sales tax. The 2010 budget unusually called
for deficit spending (total grants and revenue were forecast at
P24,390 million, while total expenditure was forecast at
P37,920 million, of which P27,370 million was recurring
and P10,560 million was for development). The deficit was
P13,530 million equivalent to $1.9 billion. After many years
of balanced budgeting, the 2008-2009 budget had also
carried a deficit; the shortfall had been forecast as a small one,
of just P331 million, equivalent to .4 percent of GDP. The
deficit turned out to be P6,200 million, equivalent to seven
percent of GDP. Botswana is not a debtor to the IMF. The
government possesses the ability to finance 100 percent of
the P12,530 million 2010 deficit by simply drawing down
some of its foreign reserves which amount to P72,400
million.
Bonds
Under Section 13 of the Stocks, Bonds and Treasury Bills Act
of 2006 the Bank of Botswana is the sole agent for Govern-
ment in the issuance of bonds and related securities. This also
gives the Bank the responsibility of appointing primary
dealers and conducting auctions of government bonds.
Also in its capacity as the agent for the government, the Bank
appoints and enters into agreements with institutions setting
out the rules established by the Bank regarding the role of
custodians, transfer and settlement agents. This is meant to
ensure that the ownership of Government bonds is protected,
including the accurate and timely recording of any transfers,
and that settlement of payments is effected on time in order
to develop a secure and robust market in such debt instru-
ments. The agreement, among other things, outlines: the
obligations of agents, criteria for determining an agent, the
role of agents in the settlement and transfer of notes, and the
New Economia
Botswana 2010: Economy
sub-custodian agreement between an agent and its client.
Upon issuing the bond, prior to the auction, the Bank
prepares a prospectus (see Business Environment section
for more information prospectuses) describing the instru-
ment (the bond or Treasury Bill), the coupon rate if any,
the maturity of the instrument, etc. After the auction, the
auction results are published, including on the Bank of
Botswana website.
Due to many years of sustained, substantial budget
surpluses that commenced in the early 1980s, the
Botswana Government did not need to borrow to finance
budget shortfalls. As a result, the market for domestic
government bonds has been dormant. However, recog-
nizing that this could undermine broader capital market
development, in March of 2003 the government initiated
a limited series of bond issues in order to establish a risk-
free yield curve that would, in turn, facilitate wider bond
issuance by both parastatals and the private sector. In
total, P2.5 billion was issued under three separate bonds
with maturities ranging from 2 to 12 years.
In March 2008, the Government commenced a new note
program that provided for the issuance of up to P5 billion
of additional domestic government debt. While this
coincided with a period when the government budget
was about to move into substantial deficit owing to the
global economic crisis, this new program was primarily
aimed at supporting market development rather than
government borrowing. It also helped alleviate the cost to
the Bank of Botswana of absorbing surplus liquidity in
the economy. As well as additional bonds, the program
has included the issuance of six-month treasury bills. As
of March 2010, the amount of outstanding debt under
the program was P4.5 billion.
17

Economy continued
Currency, Central Bank, & Banking
Currency
The currency in Botswana is made up of the pula and thebe,
where 100 thebes equal one pula. The banknote family
includes five notes in a denomination structure comprising:
P10, P20, P50, P100, and P200. Coins are issued in
denominations of: t5, t10p, t25, t50, P1, P2 and P5. The
current family of banknotes was launched on August 21,
2009, Pula Day. The previous family of banknotes was
formally withdrawn from circulation as of March 2010.
The new banknotes were introduced to help prevent coun-
terfeiting and contain several of the latest security devices
available for currency. All notes feature a zebra watermark.
Each note also uses micro-lettering, a windowed security
thread, enhanced intaglio, and tactility. Notes P50 and
above use a holographic strip. To add to the sophistication of
the currency (a sophistication that truly does exceed that of
most industrialized countries) each note features a blind
recognition system consisting of a varying number of holes
punched on the notes.
Bank of Botswana · Monetary Policy
The Bank of Botswana Act gives the Bank of Botswana (the
central bank) the principal objective of maintaining mon-
etary stability. A secondary objective, insofar as it is consis-
tent with the primary objective, is for the Bank to use its
available policy instruments in support of orderly, balanced,
and sustained economic development in Botswana.
Despite this primary objective, the Bank does not yet
formally target inflation (due to its reliance on imported
energy – see Infrastructure section – and other factors), as
some of the essential prerequisites are not in place. Monetary
policy in Botswana, instead, focuses on price stability, which
is closely related to inflation. Price stability preserves the
value of money. Notwithstanding the similarity with the
inflation targeting framework, implementation of monetary
policy decisions is principally through open market opera-
tions conducted by the Financial Markets Department.
Semiannually, the policy stance in regard to the Bank’s goals
New Economia
Botswana 2010: Economy
is announced: once in the annual Monetary Policy State-
ment (MPS), which is released in February each year; and
second in the Mid-Term Review of the MPS conducted
mid-year. Discussion and data relating to recent monetary
policy developments are also included in other Bank publi-
cations, including annual and quarterly reports.
To implement its goals, the main policy instrument by the
Bank is open market operations (OMOs) which influence
the availability of commercial banks' loanable funds, and
thereby maintain market rates at a level that is consistent
with the monetary policy stance. Other monetary policy
instruments, including reserve requirements and standby
facilities, can also play a supportive role.
The operational implementation of monetary policy is
undertaken through trading various money market instru-
ments with the domestic banks. The aim of OMOs is to
maintain liquidity and short-term interest rates at levels that
are supportive of monetary policy.
The banking sector in Botswana has maintained a net
positive position relative to the Bank over many years; conse-
quently, the main instrument used in  OMOs is weekly
auctions of Bank of Botswana Certificates (BoBCs).
Through the sale of BoBCs, the Bank is able to influence
liquidity conditions in the domestic money market which,
in turn, maintains short-term market interest rates in line
with the monetary policy stance as indicated by the Bank
Rate (policy rate, or the rate at which the Bank lends to
commercial banks through the discount window).
OMOs are centered upon weekly sales by auction of 14-day
BoBCs and monthly sales of 91-day BoBCs. Since these
instruments are designed to control liquidity in the banking
system, and are not intended for general investment
purposes, since 2006, only commercial and merchant banks
have been allowed to hold BoBCs.
To facilitate the day-to-day liquidity management, the Bank
also conducts repos and reverse repos (that is lending and
borrowing for a short time period – sometime overnight –
using securities as collateral). For fine-tuning the OMO
18

Bank of Botswana, continued
both during and at the end of the day, the Bank offers a credit
facility (the Secured Lending Facility) for banks, where the
borrowing rate is linked directly to the bank rate.
Effective conduct of these various instruments that consti-
tute the Bank’s OMO requires daily forecasts in order to
determine liquidity conditions. In addition, a variety of
money market statistics are published, including the BoBC
auction summary (published weekly on the Bank’s website),
and total outstanding BoBCs. These are included in the
Bank’s various statistical publications, including the Annual
Report and Botswana Financial Statistics.
To ensure that its monetary policy is open and transparent,
the Bank produces several publications that apprise the
public about the monetary policy framework, policy stance
and performance, discussions relating to recent monetary
policy developments, and macroeconomic indicators.
The MPS is published annually to inform stakeholders about
the policy framework, performance over the past year and
future stance in the context of the inflation outlook. The
Mid-Term Review of the MPS reviews the implementation
and performance of monetary policy over the first six months
of the year, as well as the inflation outlook.
The Annual Report describes the Bank's operations during
the course of the year and includes both a review of recent
economic developments and a collection of statistical tables.
This helps put monetary policy in the context of broader
developments affecting the domestic economy.
The Bank publishes a selection of economic research, as
research bulletins, which is intended for a wider, less techni-
cal audience, including research related to monetary policy
issues.
The Botswana Financial Statistics publication provides
monthly updates of macroeconomic and financial indicators.
Exchange rate policy
Inflation has traditionally wreaked havoc with Botswana’s
exchange rate policy. Because of its troubles, Botswana has
moved toward an inflation cautious approach – deemphasiz-
New Economia
Botswana 2010: Economy
ing bilateral movements of its currency against other
currency and focusing on the real effective exchange rate
(REER). Botswana’s recent exchange rate policy focus has
been on the  composite trade-weighted effective exchange
rate.
To avoid a repeat of the somewhat dramatic devaluations of
February 2004 and May 2005, a crawling band exchange rate
mechanism was introduced at the time of the second devalu-
ation in May 2005 with the objective of enabling an auto-
matic nominal adjustment of the pula exchange rate with a
view of maintaining REER stability. Maintaining a credible
crawling band mechanism imposes certain constraints on
other economic policies, such as monetary and fiscal policies,
where these policies have to complement the exchange rate
policy.
The crawling band exchange rate regime is implemented
through continuous adjustment of the trade-weighted nomi-
nal effective exchange rate (NEER) of the pula at a rate of
crawl based on the differential between the Bank’s inflation
objective and the forecast inflation of trading partner coun-
tries. The rate of crawl is thus determined using a forward-
looking approach and  is revised on a regular basis. In this
forward-looking system, the authorities periodically deter-
mine the rate of crawl for the subsequent period, such as the
next six or twelve months. Since the introduction of the
crawl, Botswana’s inflation objective has, in general,  been
higher than the average inflation of its trading partners and
this has necessitated a downward crawl. However, if inflation
differentials were to be reversed such that the domestic infla-
tion objective fell below expected inflation in trading partner
countries, then an upward crawl could be introduced.
Banking
Botswana’s banking system’s resilience to the financial crisis
could be seen on both sides of the banks’ balance sheets, as
deposit liabilities continued to grow strongly, while asset
growth also firmed up to exceed the 2007 performance. The
favorable domestic macroeconomic climate, as characterized
by strong growth in the non-mining sector served as major
contributors to the positive banking sector balance sheet
performance. Against this background, the banking sector
19

Banking, continued
has seen an increase in profitability, thus sustaining the
historically high levels of shareholder value.
Banking sector assets remained predominantly domestic, as
did banking sector liabilities; only 27 percent of the latter
was denominated in foreign currency. Off-balance sheet
foreign currency holdings were minimal, thus reinforcing
the strong domestic orientation of the banks’ balance sheets.
From a risk management standpoint, the banks need to
diversify their funding to avoid vulnerability associated with
concentration of funding from a single source. Between the
banks as a whole, there is a high concentration of funding
sources. The bulk (approximately 83 percent) of the funding
comes from deposit liabilities, followed by a distant six
percent and five percent for ‘other liabilities’ and share
capital, respectively. Other funding sources account for two
percent or less of total liabilities.
However, within the category of deposit liabilities, there is a
degree of diversification; 66 percent of the deposits originate
from private sector enterprises, 22 percent from households
and 12 percent from public sector enterprises. Although the
balance between the three could be improved even at this
level of diversification, the concentration risk has been
mitigated to a certain extent. Most of the funding is mobi-
lized from the private sector, notably institutional investors
such as pension funds.
The banking sector is strong and is poised to grow stronger,
as evidenced by the positive trends seen in certain economic
indicators. Financial deepening has traditionally been
measured by the ratios of money supply (M2 which very
roughly amounts to M1 [currency and deposit accounts]
plus time deposits) to GDP and cash to M2. The M2 to
GDP ratio is a measure of the money supply relative to the
size of the economy, with a higher ratio indicating greater
financial sector depth. The lower the cash to M2 ratio,
which is a measure of liquidity preference, the more trust the
public has in bank deposits, which itself reflects a level of
confidence in the banking system.
The M2 to GDP ratio increased from 31 percent to 49
New Economia
Botswana 2010: Economy
percent between 2004 and 2008, while the cash to M2 ratio
fell from 32 percent to 19 percent over the same period. Both
measures suggest that there has been considerable financial
deepening and the confidence in the financial system has
been increasing. This is also reflected by the growth rate of
household savings by 58 percent in 2008 compared to 11
percent in 2007. Similarly, banking assets, banking deposits,
and banking credit to GDP ratios have all trended upward
suggesting a developing financial system.
One exceptional characteristic of the banking sector’s
outreach during 2009 was the fact that banks established a
presence in areas that they previously avoided. Further
indications of financial deepening have also been evidenced
by the expansion efforts of other financial entities, like the
Botswana Savings Bank through its linkage with the
Botswana Postal Services.
The banking sector is regulated by the Bank of Botswana as
proscribed by the Banking Act. The banking sector is made
up of nine commercial banks, one investment bank, three
development finance institutions and one microfinance
institution.
Trade
Diamonds have been Botswana’s principal export by value
since the 1970s, accounting for as much as 88 percent of total
earnings and for more than 50 percent of government
earning in some years. In 2007, they accounted for 64
percent of total export revenue.
Other exports include copper-nickel matte, textiles, meat and
meat products, soda ash, and salt. Botswana’s principal
imports are fuel, machinery, and electrical equipment,
chemical and rubber products, vehicles, food, and paper
products. The United Kingdom is generally the principal
client, purchasing 64 percent by value of all exports in 2007.
Other major clients include other countries of the Southern
African Customs Union (SACU). Botswana’s main supplier is
the Common Customs Area (primarily South Africa), which
in 2007 provided 84 percent of Botswana’s imports by value.
20

Trade, continued
Top Ten Export commodities
1 Diamonds (not Set)
2 Nickel Matte
3 Copper Matte
4 Copper Ores and Concentrates
5 Jerseys, Pullovers, Cardigans, etc.
6 Meat and Bovine Animals (Fresh or Chilled)
7 were P1,270 million, of which P850 million was set aside
Gold, (Unwrought or Semi-manufactured)
8 Meat and Bovine Animals (Frozen)
9 Women’s, Girl’s Suits
10 T-Shirts (Knitted or Crocheted)
Top Ten Import commodities
1 Oils Petroleum (Except Crude)
2 are not subject to the two-tier system of taxation (explained
Diamonds (Not Set)
3 Motor Vehicles for the Transport of Goods
4 Motor Vehicles for the Transport of Persons
5 Medicaments
6 gains on the sale of shares and debentures, including those of
Self-Propelled Earth Moving Machines
7 Nickel Ore and Concentrates
8 Electrical Energy
9 Structures, Iron Parts of Structures
10 Parts and Accessories for Motor Vehicles
New Economia
Botswana 2010: Economy
Botswana, the world’s largest diamond producer, has begun
to import rough diamonds - a testament to the recently
established diamond cutting and polishing operations.
Botswana operates an open economy, with combined
import and export values exceeding GDP, making both the
domestic economy and the external account vulnerable to
fluctuations in in terms of trade and exchange rates. The
government has maintained a flexible, trade-oriented
exchange rate policy.
Botswana’s balance of payments is attributable to its low
debt burden. The country’s total debt-service costs in 2006
for the redemption of a five-year domestic bond issued in
2003. Botswana’s total external debt can be paid off
completely out of the country’s foreign reserves 50 times
over.
Taxation
Corporate
A company is a resident if it is incorporated in Botswana or
managed in Botswana. Nonresident and resident entities
carrying on business in Botswana are liable for tax in
Botswana on the same basis, except that nonresident entities
below). Corporate income tax is levied on the Botswana-
source taxable income of all entities, except tax exempt
bodies (such as charities and pensions) and small companies
that elect to be treated as partnerships or sole proprietor-
ships. Taxable income is gross income, including capital
gains, less exempt income and allowable deductions. Capital
unincorporated businesses and on the sale of immovable
(real) property, are taxable in Botswana at normal corporate
rates (however, a 25 percent allowance is permitted in the
calculation of capital gains on the sale of shares). In contrast,
shares that are listed on the Botswana stock exchange are
exempt from tax, provided that they are in the hands of the
general public. Dividends received are specifically excluded
from the definition of gross income and, therefore, consti-
21
 Botswana 2010: Economy

tute exempt income. Foreign source dividends and interest

Top Ten Export Partners
are deemed to be from a Botswana source and are taxable on
accrual, while business profits are taxable only when remit- Countries Value in Millions of US$
ted to Botswana.
UK 2,749
For residents, the corporate income tax rate is split into two
tiers: a basic company tax of 15 percent (five percent for South Africa 981
manufacturing companies) and an additional company tax
China 235
(ACT) of 10 percent. Hence, the effective rate of corporate
tax for non-manufacturing companies is 25 percent. This Zimbabwe 215
two-tier system becomes relevant when the company pays
dividends. A resident company paying dividends must with- Israel 152
hold tax at 15 percent. This withholding tax can be set off
against the company’s ACT liability for the tax year, and any Belgium 123
unused ACT is accumulated and may be carried forward for
five years. The 15 percent withholding tax, which is consid- Norway 65
ered part of the corporate tax structure and not a tax on
Switzerland 51
dividends, can be reduced by ACT not previously used. In
effect, the two-tier system has the result that a resident USA 49
company incurs no additional tax cost in the distribution of
profits, provided the withholding tax payable does not Zambia 39
exceed the current year’s ACT liability. A 15 percent with-
holding tax is levied on interest and royalties paid to includes employment, business, and passive income, and
nonresidents and 10 percent on interest paid to residents. capital gains. Capital gains are subject to the normal
The withholding on interest and royalties may not be offset personal income tax rate. The tax rate in Botswana on
against the corporate liability. individuals is progressive and is maxed out at 25 percent.
Taxpayers with business income are allowed the same
There is no alternative minimum tax, but losses may be deductions as companies.
carried forward for five years. Farming and mining enter-
prises may carry forward their losses indefinitely. Moreover, Value-added taxation (VAT) replaced a simple sales tax in
relief from double taxation is provided in the form of credit 2002. VAT is charges on the supply of goods or services
against Botswana tax for foreign tax paid on the same made by a vendor in the course of doing business and on
income. The credit may be granted under a tax treaty or the importation of goods or services by any person. The
unilaterally under Botswana domestic tax law; in the latter standard rate is 10 percent. A zero rate applies to exports,
case, the credit is limited to the amount of Botswana tax the international transport of passengers or goods and the
applicable on the foreign income. insurance or arrangement of those services, and various
services rendered directly to nonresidents that are not regis-
There is a five percent transfer duty for all property sales.
tered for Botswana VAT purposes (this list is not exhaus-
Personal tive). Moreover, certain goods and services are exempt from
A resident is an individual who resides in Botswana for 183 VAT, including certain financial services, educational
days or more in a tax year. Residents and nonresidents are services, the letting of residential accommodation and
taxed only on Botswana-source income. Taxable income certain medical services.

New Economia 22
 Botswana 2010: Economy

Development Model In order to incorporate the process of consultation with

non-governmental institutions in the formulation and
National development plans
implementation of national development plans, the
The government of Botswana from the onset has made its
government decided to establish the National Economic
belief clear in its need to plan the social and economic devel-
Advisory Council, which consisted of representations from
opment of the country. The rationale for planning, as stated
the public and private sector.
by the government in 1970, was that the country’s available
resources were few and the problems facing the country were Planning in Botswana involves the participation of people
so great that it was only by careful planning that these at all levels of society, from the National Economic Advi-
resources could be put to their most effective use. The govern- sory Council to the Village Development Committee. In
ment considered that the decisions made in the planning order to ensure meaningful participation and effective
could affect the quality of life in Botswana for generations. implementation of decisions at all levels, the government
improved communication between central government
From the beginning, the plans in Botswana were meant to agencies and local government machinery.
describe the direction the nation was heading. The plans were
intended to explain the objectives and policies that were
meant to guide the government in attaining the stated objec-
tives and policies. The first plan was published in 1966, at the
time of independence. Since then, there have been nine
successive plans created and implemented, with the most
recent plan ending in 2009.

New Economia 23

Infrastructure
Transport
Roads
Botswana is a landlocked country which is located in the
southern part of Africa. It shares a border to the south with
South Africa, to the west with Namibia, to the north with
Zambia, and to the northeast with Zimbabwe. This puts
Botswana in the center of the Southern African region. As a
result of this geographical location, its roads are put under
strenuous use having to act as the central nerve of regional
traffic between neighboring countries. Since independence
there has been a deliberate policy by the government through
the Roads Department under the Ministry of Works and
Transport to provide a road network to link all population
centers, cities, towns and neighboring countries.
During the years 1966 to 1986 more than P260 million was
invested in new roads. During the National Development
Plan Seven, for the period from 1991 to 1997, P870 million
was spent for the development of the network. During the
National Development Plan Eight, for the period from 1997
to 2003, P2.6 billion was spent. For National Development
Plan Nine for the period from 2003 to 2009, the estimated
amount was P 2.4 billion.
The paved road network has almost entirely been constructed
after independence. The network consists of approximately
6,116 km of paved and 2,800 km of unpaved road. This is
complemented by a further 9,000 km of district roads which
fall under the responsibility of the district councils. Road
transportation is the major mode of travel in Botswana,
covering about 93% of the total volume of passenger trans-
port. The railway, a single line, which runs from south to
north on the eastern side of the country, together with air
transport, have been responsible for about 7% of passenger
transportation.
The Roads Department has established a number of rotating
traffic measuring stations across the country used to closely
monitor the growth rate in terms of vehicle characteristic and
axle load. The overall traffic growth rate is in the order of 10
percent per year. It is expected to grow by six to seven percent
New Economia
Botswana 2010: Infrastructure
in the coming years. The most rapid growth of traffic has
been in the eastern part of the country.
Road traffic accidents in Botswana are increasing at an alarm-
ing rate and such accident cost is estimated equivalent to one
to two percent of the GNP. Gaborone accounts for about 50
percent of accidents and they mostly occur at night on unlit
sections of the network. New road projects are beginning to
focus on this problem.
A number of foreign funding agencies have been involved in
road projects, studies and technical assistance. Contributions
have been received from the African Development Bank,
Kuwait, and USAID, among others.
Railways
For many decades Botswana’s principal lifeline to the outside
world was the railway running along its eastern border. With
a total length of 642 km, the railway exits into Zimbabwe at
Bakaranga in the northeast and into South Africa at Ramatla-
bama in the southeast. The original line was built between
1894 and 1897 by the British South Africa Company.
The railway has been operated by the parastatal Botswana
Railways since 1994. For most of this run, roughly 85
percent of the railway’s revenue was derived from freight
transport. As of February, 2009, however, all revenue will
come from freight transport, as passenger transport has been
indefinitely suspended.
Airports
Botswana has six international airports – the main one being
Gaborone International which is also known as Sir Seretse
Khama Airport – and over 80 other regional and private
airports, the majority of which are not paved or heavily
travelled.
Seaports
Botswana does not have any seaports as it is a landlocked
country. It does have access to neighboring country seaports.
24
 Botswana 2010: Infrastructure

Infrastructure, continued

Energy Since 1996, it has been in competition with two private

Since the early 1980s, Botswana has been gradually connect-
ing its national electricity grid to all but the smallest and
most remote villages. Photovoltaic stand-alone systems have
been installed in the sections not reached by the grid.
Botswana produces approximately one-half of its electricity
and imports the bulk of the rest of needs from South Africa’s
Eskom. At Palaye, the Morupule Colliery (93 percent owned
by Debswaba) mines nearly a million tons of coal annually to
supply the nearby Botswana Power Corporation’s Morupule
Power station.
In 2007, the Morupule Colliery began an expansion, with an
expected commission date of 2011. The new expanded
facility will be capable of producing 30 million tons annually
to meet the demands of a 1,300 megawatt (mw) expansion of
the Marupule power station. The expansion will also facilitate
the development of a new 4,500 mw power station at
Mmamabula. Botswana’s massive coal reserves will eventually
be able to generate enough energy to power all of Botswana’s
needs, with excess for export.
cellular providers, who have installed hundreds of towers
throughout the country. Teledensity has exploded from 10
percent in 1998 to 60 percent in 2007. The country’s inter-
national connection is transmitted via satellite through its
station near Kgale, south of Gaborone. Botswana recently
completed installing a 2,400-kilometer fiber optic cable ring
covering the bulk of the country and providing connectivity
to Namibia.
In 2006, government regulations, overseen by the ministry
of Communications, Science, and Technology and the
independent Botswana Telecommunications Authority,
opened the telecommunications market to the private
sector, ending BTC’s monopoly and moving closer to priva-
tization.
Two Cable Projects
The Eastern Africa Submarine Cable System (EASSy) is an
initiative to connect countries of eastern Africa (Sudan,

Botswana is also partnering with other regional countries in

planning and developing three hydroelectric dams, which is
projected to be capable of supplying all of southern Africa
with its electricity needs.

In Botswana, connectivity has increased from 12 percent of

the population in 1998 to 47 percent in 2007. Currently
Botswana imports all of its liquid fuel needs from South
Africa.

Communications
Botswana maintains a modern telephone and telecommuni-
cations system, largely operated by the government-owned
parastatal Botswana Telecommunications Corporation
(BTC). BTC provides wired and wireless networks, basic
voice telephony, Internet Protocol services, high-speed Inter-
net, and fiber optic connectivity. BTC provides broadband
connectivity to government, corporate customers, and
private Internet users.

New Economia 25

Two Cable Projects, continued
Djibouti, Somalia, Kenya, Tanzania, Mozambique and South
Africa) via a high bandwidth undersea fiber optic cable
system to the rest of the world via Europe. The EASSy project
is now in the operational phase and Botswana is an investor
in the project. The project will be ready to carry traffic in June
2010.
The West African Cable System (WACS) is led by private
telecommunications operators  in South Africa and has
thirteen consortium members: Broadband Infraco (South
Africa), Telkom South Africa (South Africa), Vodacom
(South Africa), Neotel (South Africa’s second network opera-
tor), MTN (Dubai), Telecom Namibia (Namibia), Angola
Telecom (Angola) Tata Communications Limited  All foreign mail is routed to Gaborone for onward dispatch
(Bermuda), Portugal Telecom (Portugal), Cable & Wireless
(UK), AT&T (USA), Togo Telecom (Togo) and SOTELCO
(Congo Brazzaville).  The system is to run from South Africa
(Cape Town) to Portugal (Seixal) and UK (London) with
intermediate landings along the west coast of Africa. The
WACS cable complements the capacity acquired in EASSy by
providing additional capacity and alternative connectivity to
New Economia
Botswana 2010: Infrastructure
Europe. The project is led by private telecommunication
operators who have an urgent requirement for additional
capacity in the region and the whole of Africa. The cable is
expected to be ready for commercial service in the first quar-
ter of 2011.
Postal
Botswana Postal Services is a parastatal organization operat-
ing more than 100 post offices and 70 agencies throughout
the country. The internal mail is conveyed by road or rail.
Mail to and from South Africa is conveyed by road. There
are no door-to-door deliveries but post office boxes are
available at post offices and there is also a private bag service.
by air, sea and road via Johannesburg.
Radio
As a result Botswana’s geography and several sparsely popu-
lated areas, it is not possible to provide a regular supply of
newspapers and other publications to areas secluded areas,
including populated areas of the Kalahari Desert. In these
areas telephone service may also not exist. Radio broadcast-
ing has become the only regular link connecting some of
these areas to the rest of the country. There are now two
state radio channels providing radio service to the public.
These are Radio Botswana One (RB1) and Radio Botswana
Two (RB2).
Radio Botswana One
When Radio Bechuanaland began to transmit in 1965, it
was inheriting a one-kilowatt medium wave transmitter
from the veterinary department of the out-going colonial
government based at Mafeking. The transmitter had been
used for communications among veterinary field staff
within a 20-mile radius since World War II.
Shortly before independence, three more transmitters were
acquired so that Radio Bechuanaland would be able to
prepare Batswana during the run-up to independence. Since
then, more and better equipment has been made available,
and its operation time has increased from a mere one and
26

Judicial, continued
half-hours to the present 18 hours a day. Radio Botswana
established a newsroom in the early 1970's and the number
news bulletins were increased from one to four a day. Today,
bulletins are available every hour.
The station is made up of two sections, namely culture and
entertainment, and news and current affairs. The News and
Current Affairs programs include programs such as Around-
the-World-Today, Masa-a-asele/Morning Show, and
Tatediso-ya-Dikgang/Newsreel. Newsreel and the Morning
Show are mainly composed of local current affairs issues.
Around-the-World-Today, on the other hand, features inter-
national current affairs.
The Culture and Entertainment Section of RB 1 is respon-
sible for the general programs and features cultural themes,
music and drama. Most of the programs are designed to
educate the public, especially about government programs,
but also to entertain.
Radio Botswana Two (RB2)
The first commercial radio channel - RB2- started operating
in April 1992 as a government pilot project to find ways to
offset increasing expenditure through advertising. It initially
utilized a 100-watt transmitter, whose coverage extended 50
km around the capital city, Gaborone, however, the radio,
dubbed "FM 103" (from its initial Gaborone reception
frequency), can now be tuned to across the country.
RB2 caters to an audience ranging in age from 15 to 45 years
comprising mainly urban and suburban dwellers. The radio
station features contemporary entertainment appealing
especially to the younger members of society and young
urban professionals.
RB2 also carries the full Radio Botswana news bulletins
several times every weekday. Bulletins are also available
during weekends. Unlike its sister channel, RB2 broadcasts
around the clock.
As a commercial channel, it generates some revenue of its
own. As a result, it provides recording facilities for commer-
cials, and accepts sponsored programing which may be done
New Economia
Botswana 2010: Infrastructure
either from the studio or on location using an outside
broadcast van.
Television
Botswana's first national television service started in 2000
following a 1997 government charter. The station delivers
eight hours of local and international programs daily on
weekdays and 10 hours of programing on weekends.
Since it was launched on 31st July 2000, BTV has estab-
lished itself at the center of Batswana's viewing habits.
The station has committed itself to provide at least 60
percent local content to meet the diverse needs of
Batswana. According to its guiding principles, the station
is upbeat and forward looking, and seeks to align its
strategy with the national vision, Vision 2016.
BTV is the first station in Africa and the second in the
world after ITN (UK-based Independent Television
News) to fully utilize digital technology. It signal is
carried on a PAS 7 satellite with a significant footprint,
which covers the whole country, and most of the South-
ern African Development Community (SADC) region.
The station is fully Serial Digital Video, 4:3 and 19:9
switchable, but with the flexibility of analogue with dual
language stereo capabilities.
The station uses the Quantel Inspiration System for
processing and transmission with the news processing
software ENPS (Electronic News Production System) in
the newsroom. Its server-based technology gives the news
the speed and flexibility sought by journalists and news
editors.
To cover the wide area of the country, two satellite News
Gathering (SNG) teams are based in the North and
North-West - Francistown and Maun respectively. Their
area of responsibility stretches from Palapye/Serowe to
the border with Zimbabwe and Zambia. The Maun team
also covers Ghanzi the extreme West.
The only practical means of ensuring complete national
coverage in a vast country such a Botswana is via satellite.
27
 Botswana 2010: Infrastructure

Television, continued

Both radio and television programs are available country-

wide direct-to-home via satellite. Satellite newsgathering
vehicles also use the same transponder to file stories from
anywhere across the country back to headquarters.

However, satellite-receiving equipment is expensive to the

majority of viewers as compared to the terrestrial receiving
gear. As a result, parallel to satellite coverage, this low entry
medium must continue to be extended to the public. It is for
this reason that the department is expanding its terrestrial
transmitter network for both radio and television to cover
settlements around the country. Radio and television trans-
mitters are located at various points across the country.
The national terrestrial transmitter coverage is extensively
provided in medium, UHF, VHF, and FM bands, and to a
lesser extent via short wave.

New Economia 28

Business Environment
Laws
Companies
Regulation of companies is managed by one central author-
ity, the Registrar of Companies, which itself is a part of the
Ministry of Trade and Industry. The Registrar of Companies
is responsible for the administration of the Companies Act.
Under the Companies Act, a company falls into one of three
categories: 1) a close company 2) a company limited by
shares and 3) a company limited by guarantee. A company
limited by shares or guarantee will either be a public or
private company. Moreover, every company limited by shares
or guarantee will be a public company unless stated other-
wise in the articles of incorporation or constitution. A
company shall have: one or more shares in the case of a
company limited by shares; one or more members in the case
of a close company or a company limited by guarantee; one
or more directors for private companies and two or more
directors for public companies; and a secretary in the case of
companies except close companies which must have an
accounting officer.
Moreover, the Companies Act requires that unless a license
has been issued, the registered name of a company shall end
with the word “limited,” except in the case of close compa-
nies, which must place “CC” at the end of its registered
name. The motivation is to inform the public of the type of
business with which they consider conducting business and
therefore the Registrar of Companies does allow the substi-
tutes “Ltd” and “Pty” to be added in the stead of “limited.”
To properly charter a company, the incorporators or promot-
ers must file articles of incorporation. Likewise, all external
(foreign) companies must register with the Registrar. How-
ever, every company is not required to have a constitution
(the equivalent of corporate bylaws) and those that choose to
forgo a constitution by default accept all of the rules, rights,
and duties of the Companies Act. Companies that do decide
to have a constitution are granted rather broad authority to
create their own rules. The constitution of a company
controls to the extent that the Companies Act allows.
New Economia
Botswana 2010: Business Environment
The constitution may be used to alter certain rights of
shareholders. By default, shareholders are given a few
rights: first, a shareholder has the right to one vote on a poll
at a meeting of the company on any resolution. Sharehold-
ers are also granted rights to an equal share in dividends
authorized by the board and the right to an equal share in
the distribution of surplus assets of the company. Lastly
shareholders have preemptive rights, whenever unissued
authorized shares are to be offered to the public. However,
as mentioned before, all of these rights can be altered or
stripped entirely by the constitution. The constitution can
even determine the transferability of shares.
The transfer of shares is done through entry in a company’s
share register. The Companies Act requires that all compa-
nies having share capital maintain a share register that
records the shares issued by the company, and in the case of
a public company the register shall state: 1) whether there
are any restrictions or limitations on the transfer of shares
and 2) where the document that contains the limitations –
constitution or terms of issue for shares – may be located.
This register serves as rebuttable proof of ownership; save
for the power of the court to rectify share register, the entry
of the name of a person in the share register is prima facie
evidence of legal title.
Share management is not entirely by company book entry,
however. Share and debenture certificates are issued to
owners as they come and go. The Companies Act requires
that a public company, within 20 working days of an issue
of shares or the registration of a transfer, send a share
certificate to every new holder of the shares stating: 1) the
name of the company 2) the class of the shares held and 3)
the number of shares held. Shares trading electronically on
the Botswana Stock Exchange are exempt from this
requirement.
Conversion between company types is allowed given that
the surviving company complies with the requirements of
its new form.
29
 Botswana 2010: Business Environment

Company Characteristics

Public Limited by Shares Limited by Guarantee (private) Close Company

Usually open to Private companies must limit
all public. their membership to no more
Membership than 25. Two or more
shareholders holding a share
jointly counts as one
member. Employees holding
shares do not count as
members
Private companies must limit
their membership to no more
than 25. Two or more
shareholders holding a share
jointly counts as one member.
Employees holding shares do
not count as members
Close company membership
cannot exceed five members.
Two or more persons cannot
be joint holders of the same
interest

Limited to the Limits the liability of its Members are only liable for Any amount which the
Liability investment in members to the capital their original guarantee. member has contributed to
shares. Liability originally invested in the Liability can be altered by the the company or undertaken
can be altered by shares of the company. Can constitution or agreed to contribute to
the constitution be altered by the constitution the company. Liability can
be altered by the constitution.
Members also have a fiduciary
responsibility to other
members with regards to
company management

Subject to any A private company cannot A private company cannot Transfer of shares is only
limitations on the make any offer to the public make any offer to the public allowed to qualified individu-
transfer of shares to subscribe to its securities to subscribe to its securities or als. Moreover, any transfer of
Alienability in the constitu- or debentures. May provide debentures. May provide in its shares cannot cause member-
tion, shares of a in its constitution that the constitution that the right ship to increase to five
public company right transfer shares is transfer shares is restricted
are transferable restricted

Securities The prospectus is meant to inform potential investors of the

Securities are regulated by the Registrar of Companies. All
securities trade within the country must be registered with
the Registrar. In fact, no person is allowed to make any offer
to the public for the subscription for shares unless it is accom-
panied by a prospectus complying with requirements of the
Companies Act and registered with the Registrar. Moreover,
no person is allowed to issue such a prospectus unless it has so
registered as a body corporate with the Registrar.
condition of the business and to describe the securities that
are to be offered. Legally, it must be detailed, accurate, and
updated whenever facts change. It is to include information
about directors and management. Among other things
regulators want investors to know the borrowing power
exercisable by the directors. The prospectus is also required
to describe in-depth information about the company. For
instance, the prospectus should include (among other

New Economia 30

Securities, continued
things): 1) a summary of any offers of shares of the company
in the past three years 2) the date of conversion into a public
company 3) any outstanding loans and the particulars of
those loans 4) interest of the directors 5) profits or losses
before and after taxes 6) dividends paid, and 7) the dividends
paid in pula per share.
The prospectus has to include a list of all material contracts.
The list should include the dates and nature of, the parties
to, and expiration of every material contract entered into by
the company or its subsidiaries (contracts entered into more
than two years before the issue are excluded from the
requirement). The prospectus should include the purpose of
the offer. Moreover, if any of the proceeds of the issue are to
be applied to the acquisition of another company, then the
prospectus should give the history of the target company as
if it were the issuing company.
A statement as to the adequacy of capital is required in the
form of an opinion from the directors that the issued capital
(including the amount to be raised) is adequate for the
purposes of carrying on the business of the company and its
subs. This statement is to be accompanied by a report from
the auditor of the company and an audit report from the
target company if any of the funds raised is to be used
directly or indirectly for the purpose of acquiring another
company.
Complex advertising rules do apply, as do multijurisdic-
tional rules in cross-border offerings.
Arbitration
Any arbitral award made after the coming into force of this
Act in any country which is a party to the Convention on the
Recognition and Enforcement of foreign Arbitral Awards,
shall be binding
and may be enforced in Botswana in accordance with and
subject to the provisions of the Convention, in such manner
as an award may be enforced under the provisions of the
Arbitration Act and the laws of Botswana, which call for full
enforcement of awards.
New Economia
Botswana 2010: Business Environment
Botswana 2010: Business Environment
Botswana’s enforcement of foreign awards only apply to
awards arising out of legal relationships, whether contractual
or not, considered as commercial under the laws of
Botswana. Moreover, no arbitral award made in any country
which is a party to the Convention shall be enforceable in
Botswana unless a similar award made in Botswana would be
enforceable in such country.
Tax
Corporate
A company is a resident if it is incorporated in Botswana or
managed in Botswana. Nonresident and resident entities
carrying on business in Botswana are liable for tax in
Botswana on the same basis, except that nonresident entities
are not subject to the two-tier system of taxation (explained
below). Corporate income tax is levied on the Botswana-
source taxable income of all entities, except tax exempt
bodies (such as charities and pensions) and small companies
that elect to be treated as partnerships or sole proprietor-
ships. Taxable income is gross income, including capital
gains, less exempt income and allowable deductions. Capital
gains on the sale of shares and debentures, including those of
unincorporated businesses and on the sale of immovable
(real) property, are taxable in Botswana at normal corporate
rates (however, a 25 percent allowance is permitted in the
calculation of capital gains on the sale of shares). In contrast,
shares that are listed on the Botswana stock exchange are
exempt from tax, provided that they are in the hands of the
general public. Dividends received are specifically excluded
from the definition of gross income and, therefore, consti-
tute exempt income. Foreign source dividends and interest
are deemed to be from a Botswana source and are taxable on
accrual, while business profits are taxable only when remit-
ted to Botswana.
For residents, the corporate income tax rate is split into two
tiers: a basic company tax of 15 percent (five percent for
manufacturing companies) and an additional company tax
(ACT) of 10 percent. Hence, the effective rate of corporate
tax for non-manufacturing companies is 25 percent. This
31
 Botswana 2010: Business Environment
Botswana 2010: Business Environment

Tax, continued

two-tier system becomes relevant when the company pays
dividends. A resident company paying dividends must with-
hold tax at 15 percent. This withholding tax can be set off
against the company’s ACT liability for the tax year, and any
unused ACT is accumulated and may be carried forward for
five years. The 15 percent withholding tax, which is consid-
ered part of the corporate tax structure and not a tax on
dividends, can be reduced by ACT not previously used. In
effect, the two-tier system has the result that a resident
company incurs no additional tax cost in the distribution of
profits, provided the withholding tax payable does not exceed
the current year’s ACT liability. A 15 percent withholding tax
is levied on interest and royalties paid to nonresidents and
10 percent on interest paid to residents. The withholding on
interest and royalties may not be offset against the corporate
liability.
There is no alternative minimum tax, but losses may be
carried forward for five years. Farming and mining enter-
prises may carry forward their losses indefinitely. Moreover,
relief from double taxation is provided in the form of credit
against Botswana tax for foreign tax paid on the same
income. The credit may be granted under a tax treaty or
unilaterally under Botswana domestic tax law; in the latter
case, the credit is limited to the amount of Botswana tax
applicable on the foreign income.

Starting a Business

Survey Subject Standard Medium-Sized Company (between 10-50 employees; does not own real estate)*

Status Moderately Cumbersome and Formal ( Ranked 83 out of 183 countries)

• Select and reserve company name

Procedures • Sign the declaration of compliance of statutory requirements for incorporation before a commissioner
for oaths
• Return the complete statutory return to the Registrar of Companies about re-allotment, directors,
auditors, company secretary, and registered officers
• Register the company with the Registrar of Companies at the Ministry of Commerce and Industry
• Advertise the intention of applying for a license in the official gazette
• Obtain an approval of the working condition after an inspection of company premises
• Obtain an industrial license from the Industrial Affairs Department, Ministry of Commerce and
Industry; or obtain a trading license from the local authority
• Register for Corporate Income Tax number with the Botswana United Revenue Services and obtain
the approval from the Commissioner of Taxes for the appointment of a public officer who is in charge
of tax return
• Register for VAT with Director of Customs & Excise
• Register employees for the work injury insurance

Time 61 days

Cost 2.1 percent of income per capita

* The time necessary for a company of any size to start a business would be substantially reduced with the use of a navigator (see below)

New Economia 32
 Botswana 2010: Business Environment
Botswana 2010: Business Environment

Construction
Survey Subject Building a new warehouse *

Status Overly Cumbersome (Ranked 122 out of 183 countries)

• Obtain a site plan from the Department of Surveys and Maps

Procedures • Obtain a certified copy of rates certificate from the Gaborone City Council
• Obtain an environmental management plan
• Obtain an environmental impact assessment
• Submit permit application at Gaborone City Council
• Receive inspection from the Gaborone City Council
• Obtain planning and building permit from the Gaborone City Council
• Apply for sewage connection
• Receive on-site inspection
• Receive inspection from Gaborone City Council of the start of excavation work
• Receive labor inspection
• Receive inspection from City Council of the start of foundation work
• Receive inspection from City Council of the start of concrete work
• Receive inspection from City Council of the start of slabs and damp-proof course
• Receive inspection from City Council of the setup of structure
• Notify the City Council of the practical completion of the building
• Receive on-site inspection
• Request and receive electricity inspection
• Obtain electricity connection
• Obtain water connection with Water Utilities Corporation
• Obtain telephone connection
• Obtain occupation permit

Time 254 days

Cost 247 percent of GDP per capita

* The time and difficulty of building a structure of any size or purpose would be substantially reduced with the use of a navigator (see below)

New Economia 33
 Botswana 2010: Business Environment
Botswana 2010: Business Environment

Property Transactions

Survey Subject Full sequence of procedures necessary for one business to sell purchase property (two-story
warehouse) from another business and transfer title from seller to buyer.*

Status Efficient (Ranked 44 out of 183 countries)

Procedures • Obtain certificate of compliance at the Lands Department

• Obtain a rates clearance certificate at the Gaborone City council
• Notify BURS (Botswana unified revenue services) of VAT payment
• The conveyancer prepares the deed of transfer
• The deed of transfer is lodged at the Deeds Registry

Time 16 days

Cost 5 percent of GDP per capita

* The difficulty of selling real property (land and buildings) can be significantly reduced with the use of a navigator (see below).

Enforcing Contracts
Survey Subject Contract for the sale of goods between two businesses.

Status Hard to get a timely decision and to recoup a worthwhile award considering the costs.

Procedures Twenty-nine procedures at an average cost of 28 percent of the claim. (Ranked 79 out of 183)

Time 687 days

* The use of navigators can help reduce time necessary to reach a conlusion on contract disputes. New Economia employs several
attorneys who have experience in international sales conracts and ADR (see below)

Trading Across Borders

Survey Subject Ordinary, legally-manufactured products transported in a dry cargo 20-foot full container cargo.

Status Overly Cumbersome (Ranked 150 out of 183 countries)

Documents Import: Nine Export Six

Time Import: 41 days Export: 30 days

Cost Import: $3,264 Export: $2,810

New Economia 34
 Zambia 2010: Business Environment

Navigators

New Economia Aon

New Economia is an emerging market consulting firm
based in New York. It focuses on certain countries of the
Southern African Development Community (SADC) –
namely, Zambia, Botswana, South Africa, Angola, Mozam-
bique, Namibia, and Tanzania. Members of the firm
specialize in law, economics, business, and other disciplines
that related to investment. Services offered include:
Consultancy
• Southern Africa (SAf ) Strategy Consulting
• Product Adaptation Consulting
• Emerging Markets Consulting
Facilitation
• Lobbying (SAf and US)
• Legal Services (SAf and US)
• Corporate Tax Services (SAf, US, and EU)
• Legal Compliance (SAf )
• Due Diligence
• Market Research
Coordination
• Logistics
• Political risk Insurance Brokerage
• Talent Strategy (SAf )
Aon Corporation is a multinational insurance brokerage
company based in Chicago, Illinois. It has strong founda-
tions in political risk insurance and specialty insurance
underwriting. The economy operates 500 offices in 120
countries, employing around 36,000 workers. Services
offered in Zambia include:
• Political Risk Insurance
• Risk Consulting
• Management Consulting
• Outsourcing Management
• Global Compensation Consulting and
Management
• Specialty Insurance Underwriting
www.aon.com

www.neweconomia.com

New Economia 35
 Zambia 2010: Select Bibliography

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Jackson, A., Botswana, 1939-1945: An African Country International Monetary Fund

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36
New Economia