Current Market Trends
Procurement & Tenders
Population: 2.2 million
GDP: $18 billion
Currency: BWP (Pula)
Language: Setswana and English
Botswana offers a stable political, fiscal, and macroeconomic environment. Botswana’s GDP per capita of $6,750 (Pula (BWP) 67,500) makes it an Upper Middle-Income Country according to World Bank standards. GDP for 2017 was measured at approx. $18 billion (BWP 180 billion) by the Bank of Botswana.
Botswana has historically enjoyed one of the highest economic growth rates in the world. Botswana has a small population of 2.2 million; however, it has the potential to leverage its position in the region to serve as a gateway to the southern African market.
Botswana’s export-driven economy is highly correlated with global economic trends. During the global financial crisis, Botswana’s economy went into recession, posting a negative GDP growth rate of 4.9%. The country recovered, with 9.3% real GDP growth in 2013 and 3.9% in 2014. The Government of Botswana (GOB) reports the economy declined by 1.7% in 2015, and registered 5.6% growth in 2017. Although the Bank of Botswana projects GDP to grow 5.3% in 2018, the International Monetary Fund projects 4.7% growth. The downturn in 2015 was largely due to reduced global diamond demand. The diamond market has since improved, although industry insiders express continued caution.
Botswana is facing major challenges in addressing health threats such as HIV/AIDS, malaria, and tuberculosis. To improve service delivery in the health sector, the government has prioritized human resources development, technology and supply chain capacity. The government also seeks to improve healthcare infrastructure and provide and upgrade medical and surgical equipment. Currently there is no pharmaceutical production capacity in Botswana; however, companies are engaged in the importation and repackaging of bulk commodities.
For the 2018/19 financial year, healthcare is scheduled to account for roughly 16.7% of the government’s recurrent budget, or BWP7.54 billion. Over the past several years, in part due to generous financial assistance from the United States under the President’s Emergency Plan for AIDS Relief (PEPFAR), Botswana has made giant strides in the response to HIV/AIDS. Health sector improvements include construction of new and rehabilitated health facilities, the
introduction of data collection and storage technologies, and other innovations such as telemedicine. Botswana’s Ministry of Health and Wellness is planning a series of hospital infrastructure improvements, including improvements to several district medical facilities. Due to shortages of trained healthcare professionals, the government may seek to outsource several health services. To meet this shortage, the Government of Botswana with the University of Botswana has built a 450-bed academic teaching hospital which is still yet to be opened. The hospital construction is complete and is currently being furnished with furniture and equipment.
Participation in Botswana tenders can be done remotely as there are some tenders that are open for international bidding. However, market entry is easier when partnering with a local firm, using an agent, or registering a local company. This is because of the agent’s knowledge of the local market and also because the government has and is continuing to introduce local preference when it comes to awarding of tenders. This is also to encourage foreign direct investment. To register as a local company, a foreign company does not need to partner or have a citizen as part of the company. In addition, foreign investors are given equal access to investment incentive schemes (grants and loans) for medium and large projects when they have partnered with a citizen of Botswana.
Botswana has access to more than 277 million people in the South African Development Community (SADC) region. They are also a member of the Southern African Customs Union (SACU) which provides duty and quota free access to more than 56.9 million consumers in Botswana, South Africa, Lesotho and Swaziland. Botswana’s eligibility for the African Growth and Opportunity Act (AGOA) has also been extended, providing duty and quota free market access to the United States. Recently, the country signed an Economic Partnership Agreement as part of SADC with the EU, acquiring duty and quota free access into the EU market.
In March 2018, African member states signed the African Continental Free Trade Area agreement (AFcFTA) to remove tariffs on 90% of goods, in an effort to boost intra-regional trade. The agreement awaits ratification by individual countries and will come into effect when at least 22 countries have ratified.
Botswana recently approved incentives in the SPEDU (Selibe Phikwe Economic Diversification Unit) region. These include a 5% corporate tax (compared to 22% or 15% in the case of manufacturing) for the first 5 years, and 10% thereafter. Zero customs duty on imported raw materials, minimum 50 years land leases, duty free importation of manufacturing equipment and machinery for manufacturing purposes, just to name a few.
The GOB has set up a Special Economic Zone (SEZ) authority to implement the 2015 SEZ law. This initiative is geared to streamline investment in sector-targeted geographic areas in the country including two Gaborone-area SEZs (multi-use, diamond processing, and financial services); two Selibe-Phikwe SEZs (mineral processing and horticulture); and additional SEZs
in Lobatse (beef, leather, biogas); Palapye (energy); Pandamatenga (agriculture); and Francistown (mining and logistics).
Market trends in the health sector show that there is need for improved healthcare services, in terms of improved technology in the screening of patients, administration of drugs, capturing of data and aftercare treatment. There is also the need for improved supply of drugs and commodities, and supportive healthcare services for treatment of HIV/AIDS and related infections.
Europe dominates as the principal source of foreign direct investment (FDI) (56%) in Botswana. South Africa is a significant contributor of FDI as well due to their involvement with the financial institutions in Botswana.
There is demand for biomedical and surgical equipment, diagnostic facilities (imaging and laboratory) and also for other medical supplies like drugs, consumables, etc. Most medical supplies are from outside the country due to minimal domestic manufacturing.
The Botswana Investment and Trade Centre (BITC) offers investors a one-stop shop service for all the necessary requirements of setting up a business in Botswana i.e. company registration, acquisition of the necessary licenses and permits, office space, etc. For more information visit www.bitc.co.bw
BITC has also recently introduced a trade portal that will assist traders to do business across the borders, providing all the forms needed for international trading including legal documents. More information can be found at www.botswanatradeportal.com
Botswana has several medical aid companies. Through these companies, employees (along with their immediate family members) receive healthcare by paying a monthly subscription. The Government of Botswana enrolls all their employees on Botswana’s version of medical aid, Botswana Public Officers Medical Aid Scheme (BPOMAS), while private sector companies enroll about 80% of their employees on various private medical aid companies. Thus, doctors must register with all private/public organizations for reimbursement.
Foreign and local business managers noted increasing difficulty obtaining work permits for foreign skilled workers and managers. This has since been addressed together with the cost of doing business by new leadership, and improvements will soon be realized. There is a local skills deficit and constrained labor productivity. However, foreign companies are allowed to bring in skill from outside for as long as they can show lack of those skills in the local labor force. Companies can also be reimbursed at 200% for training their employees and this has to be arranged in advance with the Botswana Qualifications Authority.
Public procurement in Botswana is centralized. The Public Procurement and Asset Disposal Board (PPADB) awards government tenders valued within a range of BWP50 and 100 million (approximately USD$4.7 million to $9.5 million). The tender process generally follows relevant regulations and procedures. The PPADB’s Complaints Review Committee reviews PPADB decisions challenged by stakeholders. The PPADB publishes decisions concerning awarded tenders, prequalification lists, and newly registered contractors on its web site and in the Government Gazette. Although lobbying the PPADB directly is prohibited, foreign businesses may contact the individual government departments which request the creation of PPADB tender offers to discuss the products and services they offer.
Global Expo Botswana
October 30- November 2, 2018
The best prospects highlight the provision of construction, medical technology and surgical equipment, the supply of drugs and commodities, and supportive healthcare services for treatment of HIV/AIDS and related infections.
Infrastructure improvements and equipment upgrades at several hospitals and medical facilities are planned as part of the government’s infrastructure development plans. The government also intends to develop a local pharmaceutical production capacity. Some international companies have shown interest in expanding regional production capacity by opening facilities in Botswana. Currently there are two companies that are engaged in the importation of bulk commodities for repackaging and distribution in the country; with plans to manufacture here in the future.
Other opportunities may include investment in the training of health personnel in the country, particularly in areas such as commodity supply planning and forecasting, contract management, as well as logistics and supply chain management. Finally, the technology sector may find opportunity through Botswana’s plans to strengthen its health information systems in order to improve the collection, dissemination and storage of data.
U.S. Commercial Service Contact Information
Name: Goitseone Montsho
Position: Economic Commercial Specialist
Phone: +267 3953982
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