FAQs

 

Why Botswana?

Botswana is a shining example of stability in Southern Africa, maintaining a stable society record since independence in 1966, with regular multi-party democratic elections. According to the United Nations, “Botswana’s greatest assets are peace, law & order, disciplined fiscal and monetary policies, capable public institutions.” This fact has been also confirmed by Moody's Investor Services as well as Standard and Poor’s (S&P). Both agencies have given Botswana sovereign credit ratings of ‘A' which have remained unchanged for seven consecutive years.

Doing Business in Botswana

In terms of ease of doing business, Botswana was rated third among African countries by the World Bank survey of “Doing Business” in year 2015. Botswana has investor-friendly business reforms. Botswana is cited among the leading global innovators in the critical areas of the ease of starting a business, reform of labour laws, and contract enforcement procedures. Companies starting business in Botswana can enjoy packaged investor solutions not only from the Botswana Innovation Hub (BIH) but also from governmental investment agencies and enjoy the benefits of several schemes.

Business Opportunities from Economic Growth

Botswana has a reputation as the best-performing economy in Africa. From the ‘60s to the ‘90s Botswana made an impressive leap from being one of the poorest nations in the world to becoming a middle income country and therefore has been compared to the South East Asian “tiger” economies. The largest contributor to economic development is the mining industry. Botswana is among the world's biggest producers of diamonds. To maintain the economic growth rates, the Botswana government is now implementing a well planned policy of economic diversification. Thus, initiatives such as Botswana Innovation Hub are geared towards diversifying the country's economy from heavy dependence on mining.

Access to Educated and English Speaking Workforce

Education has been and continues to be a high priority in Botswana and has always been allocated the highest portion of the national budget. The country has produced a workforce with a literacy rate of nearly 80%, a high rate among African nations. The medium of instruction at schools and universities is English, thus giving a language advantage to local people. Botswana continues to invest heavily in education, with all secondary schools equipped with computer equipment.  The government is now finalising internet connections and personal e-mails for all students.  Government is also investing in attracting educational institutions of repute from all over the world.

A Liberal Financial Environment and Free Flow of Capital

The country has a thriving domestic financial sector, which includes banks, insurance companies and a growing stock market. The country has one of the highest foreign exchange reserves among the developing world and a well regulated commercial banking system.

Capital can be moved without restriction in Botswana. There are no foreign exchange controls and profit, dividends and capital can be readily repatriated. Investors will also have access to Botswana's expanding Double Taxation Treaty network, at present comprising South Africa, United Kingdom, Mauritius, Sweden, France, Zimbabwe, Namibia, India, and Russia, Barbados and Seychelles.

Low Corporate Tax

Corporate tax rates in Botswana are the lowest in the sub-region at 15% for specific sectors, such as manufacturing (for approved companies), as well as financial services and BPO's for export, and at 22% for other companies. In special cases companies can negotiate for a tax holiday under a Special Tax Agreement.

The personal income tax system is progressive and the top marginal rate is 25%. VAT is at a low rate of 10% on standard rated supplies while some supplies are zero-rated and others are exempted.

A Hub for International Trade

Botswana enjoys good market access not only in the sub-region but also to US and EU:

  • Duty and Quota free access to a market of more than 50 million consumers through the Southern African Customs Union (SACU), comprising Botswana, South Africa, Lesotho, Swaziland and Namibia.
  • Preferential access to more than 200 million consumers in the Southern African Development Community (SADC) market under the SADC Free Trade Area.
  • Duty and Quota free access to the US market through the African Growth and Opportunity Act, AGOA.
  • Duty and Quota Free market Access under the Interim Economic Partnership Agreement (IEPA) between SADC and the European Union (EU).

Botswana also enjoys good labour relations, including a good relationship with the trade unions.

How Much Money am I Expected to Bring into the Country to Invest in Botswana?

Currently there is no legislation nor an investment code which stipulates how much an investor expected to bring into the country as contribution to the project. However financial institutions like BDC and NDB require a minimum of at least 25% of the total project cost from the investor. On a case by case basis, BITC encourages investors to contribute as much as is possible to demonstrate investor commitment to the project.

Is it Compulsory to Have a Local Partner?

Investors are not obliged to enter into partnership with local parties unless they elect to do so. However it is advisable to engage with locals due to market knowledge and access. BITC can assist in identifying potential local partners.

Will I be Allowed to Bring Some Skilled Labour to Botswana to Train Local Staff for a Given Time Period?

Yes, it's allowed as long as the investor provides proof that the equivalent skilled personnel are not locally available.

Are There any Tax Holidays?

The Development Approval Order (DAO) is available to qualifying investors for a period of 5 to 10 years. It is administered by the Ministry of Finance and Development Planning.

What are the Working Hours in Botswana?

A nine hour/five day week or an eight hour/six day week is normally observed. A break of at least 30 minutes must be given after five consecutive hours of work. A rest day of at least 24 consecutive hours, typically including a Sunday, is given in every period of seven consecutive days.

What is the Minimum Wage in Botswana?

The following is the breakdown of Statutory Hourly Wage Rates for various trades and industries:

Trade/Industry

Basic Minimum Wage

1.

Building, Construction, Exploration and Quarry Industries

BWP 5.46 per hour

2

Wholesale Distributive Trade

BWP 5.46 per hour

3

Manufacturing, Service and Repair Trades

BWP 5.46 per hour

4.

Hotel, Catering and Entertainment Trades

BWP 5.46 per hour

5

Garage, Motor Trade and Road Transport

BWP 5.46 per hour

6.

Retail Distributive Trade

BWP 4.85 per hour

7.

Watchmen employed  in the above Industries and Trades or any sector thereof

BWP 4.61 per hour

8.

Security Guards employed by security companies

BWP 5.46 per hour

9.

Domestic Service Sector

BWP 3.03 per hour

10

Agricultural Sector

BWP 620.00 per month

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



The new rates were payable effective 1st June 2015.

What investment incentives are available to investors?

  • Low general tax rate: resident companies pay company tax at 22% of the taxable income and the general rate of withholding tax is 7.5% on all dividends distributed.
  • Manufacturing companies pay tax at 15% of taxable income, subject to approval.
  • Development Approval Order (DAO) 'tax holiday' (zero corporate tax) may be available to investors for a period of 5 to 10 years.
  • There are no foreign exchange controls in Botswana hence free repatriation of profits, dividends and capital.
  • Operational double taxation avoidance agreements with South Africa, United Kingdom, Sweden, France, Mauritius, Namibia and Zimbabwe and Russia.
  • International Financial Services Centre (IFSC) accredited companies pay tax at 15% on profits from approved operations.
  • Companies accredited by the Business Innovation Hub (BIH) pay tax at 15% of profit.
  • International Financial Services Centre Company Certificate (IFSC).
  • Flat 15% Corporate Tax Rate.
  • No withholding tax on dividends, interest, royalties, management fees.
  • Unilateral credit for withholding tax suffered in other jurisdictions whether or not a Double Tax Avoidance Agreement exists.

Specified Collective Investment Undertakings (CIU’s) managed by IFSC companies are tax exempt.

What are the requirements to become an IFSC Company?

To register as an IFSC company, the company must be registered in Botswana and make a formal application to the International Financial Services Centre Certification Committee through BITC. If the company meets criteria for IFSC certification, BITC will forward a recommendation to the Minister of Finance and Development Planning who will issue a certificate stipulating approved activities.

Activities Eligible for IFSC Certification

The following activities are approved financial operations, broadly defined in the Income Tax Act, provided they are carried out by non-residents or IFSC companies:

1.       Banking and finance operations transacted in foreign currency

2.       Broking and trading of securities denominated in foreign currency

3.       Investment advice

4.       Management and custodial functions related to CIUs

5.       Insurance and related activities

6.       Registrars and transfer agency services

7.       Exploitation of intellectual property

8.       Development and supply of computer software for use in provision of the aforementioned services

9.       Accounting and financial administration

10.   Holding and administration of group companies

11.   Business process outsourcing and call centers

12.   Shared financial services

13.   Mutual funds

14.   Other operations that the Minister may declare by order to be approved financial operations on a case by case basis