Economic Overview
Since picking up freedom from the United Kingdom, Botswana has been one of the world’s quickest developing economies, averaging 5% per annum over the previous decade. Be that as it may, its dependence on wares renders it defenseless against universal market variances. Genuine monetary development quickened to 4.4% in 2018 (the quickest development rate over the most recent five years) and will stay at around 4% up to 2021. Financial development will be driven by mining action, development, administrations segment and heightened open ventures.
The National Budget was exhibited to Parliament on February 4, 2019, the new spending puts all out consumption and net loaning at P67.54 billion, 32.7% of the nation’s (GDP), an expansion of P2.4 billion (3.6%) contrasted with the past financial year. The capital spending plan is P17.03 billion, up by P0.4 billion (2.3%) over the past monetary year. A spending shortfall of P7.3 billion (3.5% of GDP) is normal regardless of the positive local monetary standpoint.
Monetary spending will keep on progressing at the present increasingly fast pace, with need for territories recognized in the National Development Plan 11 (NDP11) that concentrations in three key areas:(i) handling destitution, (ii) comprehensive development, and (iii) job creation.
Main sectors of Industry
Mining Industry
The nation developed at a rate of 9.1% between the year 2000 and 2001. The development was for the most part ascribed to the solid execution of the mining area which saw a development of 19.6% after the extension of Orapa precious stone mine. The relationship indicates exactly how indispensable the jewel mining industry is in the nation. The country is the biggest exporter of precious stones. Precious stone mining contributed up to 33% of the country’s GDP. In 2013 the segment contributed half of all administration income.
Agriculture
At freedom, the nation’s agribusiness represented the biggest part of the GDP. The rate has dropped from that point forward to an insignificant 3%. Produce from the division is devoured locally. Be that as it may, the generation is lacking in light of the fact that the nation needs to import sustenance items from South Africa. Regardless of the low monetary commitment to the general economy, farming is drilled by about 80% of the rustic populace and gives in any event 15% of the country’s formal business openings.
Manufacturing
Manufacturing represents 4% of the country’s GDP. A noteworthy segment of the division is attached to the precious stone industry. The part completely utilizes around 35,000 individuals. The division had seen enduring development from 2001 separated from 2007 when the area encountered a little plunge. The plunge was credited to the worldwide money related emergency. The development in the area is supported by the country’s sure simplicity of working together appraising which puts the country at position 56 out of 185. Assembling centers around handling precious stones, meat, and materials. Different components that support the proceeded with development of the division incorporate low corporate assessment rate which is simply 15%, laws permitting outside organization possession. The administration is progressively hoping to enhance to the assembling division as it hopes to investigate different parts separated from precious stone mining. Territories that present open doors for venture incorporate materials, refreshments, sustenance handling, adornments making, and metal items producing.
The travel industry
The travel industry and travel represent 6.5% of the GDP in Botswana. The business contributes 7.6% of work in the country including 45,000 direct employments. The business is in this manner positioned 124th most astounding on the planet dependent on its commitment to the economy. In 2010, the country got 2,145,000 voyagers for the most part from other African nations like South Africa and Zimbabwe. Guests outside Africa came for the most part from the United States and the United Kingdom.
Broadcast communications and Internet Services Industry
The broadcast communications and web administrations industry is genuinely immature. The nation has encountered significant cell phone infiltration lately. The area represents an expected 3% of the country’s absolute GDP. The principle supplier of media transmission benefits in the nation is the Botswana Telecommunications Corporation Limited (BTC). The organization offers fixed-line administrations to the private and business markets and furthermore has web bundles.
Banking and Financial Industry
The banking and budgetary industry has risen altogether in the nation. The area saw a 11.3% development somewhere in the range of 1995 and 2008, which was about twofold the general normal rate of financial development. The part is fundamentally overwhelmed by Banking and different organizations, for example, annuity reserves. Real banks in the country incorporate Barclays Bank, Capital Bank, Bank of Gaborone, Bank of Baroda, African Banking Corporation, and One Investment Bank.
Taxation in Botswana
CIT is charged at a single flat rate of 22%. Manufacturing companies having the approval from the Minister of Finance for a special tax rate will be charged at the rate of 15%.
International Financial Services Centre (IFSC) profits
IFSC companies are currently taxed at a flat rate of 15%. Companies must apply for a certificate to be classified as IFSC companies, which deal only in specified services and only with non-residents.
Mining profits are taxed according to the following formula:
Annual tax rate = 70 minus (1,500/x), where x is taxable income as a percentage of gross income.
The tax rate shall not be less than the flat CIT rate of 22%.
Diamond mining. Usually taxed in terms of an agreement with the government of Botswana.
Local income taxes. There are no local, state, or provincial government taxes on income in Botswana.
Corporate – Branch income. CIT payable on branch profits is 30%.
Investing in Botswana
- Botswana is committed to sound fiscal policy, economic freedom and has a steady and dramatic growth rate
- Provides investors with preferential market access to the Southern African Development Community (SADC), entire market place – over 293 million people in 14 countries, with the combined GDP of more than USD 700 billion;
- The country has no foreign exchange controls or restrictions on business ownership;
- Taxes are very low – 15% for manufacturing, IFSC and Innovation Hub companies, maximum 22% corporate tax for other sectors; and maximum 25% for individual;
- Botswana allows remittance and full repatriation of profits and dividends;
- Duty – free import of machinery and equipment for manufacturing purposes;
- Possible tax holidays for 5 – 10 years under the Developmental Approval Order;
- The workforce is well educated (82% are literate) and most speak English, government allows for 200% tax allowance for training costs;
- Preferential incentives in Special Economic Zones;
- Effective investor facilitation through the Botswana One Stop Service Centre