February 8, 2005
Investment prospects bright

Fortune has been smiling on Botswana lately. And the country’s leading ‘Three Musketeers’ in investment promotion, President Festus Mogae, Alan Boshwaen and Mmasekgoa Masire- Mwamba would be excused if they are found wearing broad smiles.

Masire-Mwamba leads the Botswana Export and Investment Authority (BEDIA), which is charged with luring market seeking investors, Boshwaen leads the International Financial Service Centre (IFSC) which seeks financial investors while Mogae presides over a cabinet seeking resource seeking investors. Recent indications are that investors are responding positively to their calls.

On February 4, investors from Australia and Southern Africa converged in Kasane where the President and the Minister of Minerals Energy and Water Affairs preached the good business environment that Botswana affords investors. In the same week, Enterprise Banking Group opened office in Gaborone; last weekend Mupane Gold Mine opened near Francistown; and this week African Copper mine was listed on the Botswana Stock Exchange, and it spoke of its advanced procedures to open a mine in Dukwi. As if that was not enough, news broke out this week that Botswana may overtake United States of America to occupy third position in the global rankings, just below Australia and Canada.

But still, none of the three is slowing down on the fight to get a better share of foreign direct investment. “It is crucial to support both expanded international trade and Foreign Direct Investment (FDI),” said the Minister of Finance and Development Planning, Baledzi Gaolatlhe on February 9 when presenting the national budget.

He detailed initiatives through which the government is aggressively stepping up efforts to strengthen the country’s fight for a better share of international investors.

Government, he said, is to adopt a foreign direct Investment strategy, a competition policy and refine the draft foreign direct Investment law. In addition, the industrial development act, the copyright and neighbouring rights act and the implementation of regulations of the new companies act are also being reviewed and modernised.

BEDIA and IFSC and are celebrating these forthcoming changes. Market seeking investors are said to be attracted primarily by a cash society, and are mainly found in highly populated countries where citizens have purchasing power. These are investors who produce huge products and are mainly looking for consumers. They can either come in with ready made goods. A good example of those with ready made products is Japan which has found a lucrative market for second hand vehicles.

BEDIA is nine years old, and it has 20 companies to its credit. They have created employment for 4400 people, according to Minister Gaolathe. The Minister said in the previous financial year, six more companies came under BEDIA’s belt, with an investment value of P52 million.

That created employment for at least 810 people. More companies are to start operations in 2005/2006 financial year with projected employment level of 1100, according to Gaolathe.

BEDIA, led by Mmasekgoa Mwamba- Masire, has investment target to the tune of P15 million next year. That will absorb 1500 of the potential labour force. Gaolathe also said a national export strategy to assist investors improve value of exports was being developed through BEDIA. Efficiency seeking investors, said to be the most demanding, are noticing Botswana at a slow rate. To date, 23 companies are accredited and these are based across a range of sectors, including cross border banking, investment, financial advisory services, ICT services and group shared services as well as administration, according to Minister Gaolathe. These investors are the most difficult to attract as they are mostly attracted to countries rich
with skilled and highly productive labour force. For resource seeking investors, the government counts African Copper, African Diamonds, Mupane Gold Mine among its big fish. Resource seeking investors are often reputed to never mind political instability or civil wars. In fact, some have been found to have fuelled or sponsored civil wars. But none of these have been associated with civil wars and political instabilities.

More resource seeking investors are coming Botswana’s way. This was emphasised by Mogae at the start of Mupane Gold Mine last Saturday. He said: "...there is growing evidence indicating that diversification within the local mineral sector is, in fact, now gaining considerable momentum.”

There have also been promising developments in the diamond industry in terms of new discoveries, as well as the prospect of greater beneficiation, Mogae said. Government is doing a study this year to draw up a mineral investment strategy to encourage diversification and investment in the mineral development. According to the 2004 World Investment Report, the level of FDI in Botswana in 2003 stood just over P380 million. - Botswana Guardian