Botswana’s score reflects increased concerns over political stability and taxation regime
GAZETTE REPORTER
The Fraser Institute’s Annual Survey of Mining Companies for 2021 shows that Botswana lost its ranking as the top African jurisdiction in terms of policy, this publication can reveal.
The survey by Fraser Institute is an attempt to assess how mineral endowments and public policy factors such as taxation and regulatory uncertainty affect exploration investment.
The survey, which is sent to approximately 2,200 exploration, development and other mining-related companies around the world, was conducted from 23 August to 19 November 2021. The companies that participated in the survey reported exploration spending of US$2.51 billion in 2021 and US$1.79 billion in 2019.
To measure a country’s overall Investment Attractiveness Index (IAI), the survey combines the Best Practices Mineral Potential index, which rates regions based on their geologic attractiveness, and the Policy Perception Index (PPI), a composite index that measures the effects of government policy on attitudes toward exploration investment.
The survey of the year under review provides an evaluation of 84 jurisdictions (around the world) as compared to 77 of 2020.
“While it is useful to measure the attractiveness of a jurisdiction based on policy factors such as onerous regulations, taxation levels, the quality of infrastructure, and the other policy-related questions that respondents answered, the Policy Perception Index alone does not recognise the fact that investment decisions are often sizably based on the pure mineral potential of a jurisdiction,” the report reads.
“Respondents consistently indicate that approximately 40 percent of their investment decision is determined by policy factors.”
The latest survey indicates that Botswana is no longer the highest ranked jurisdiction in Africa on policy (PPI) after being ranked 4th out of 15 African countries that were evaluated in the survey in the period under review. Of all 84 countries evaluated (globally), Botswana is ranked 31st on PPI score, which is 22 percent drop as compared to the 15th position (of 77) of 2020.
According to the survey, Botswana’s significant decrease in its PPI score reflects increased concerns over the uncertainty concerning protected areas, political stability, labour regulations/employment conditions, and the taxation regime.
The survey also found out that Botswana has dropped in the IAI score as it now ranked 66th (of 84) as compared to the 11th position (of 77) in 2020. Continentally, the country ranks 9th out of 15 African countries evaluated.
Meanwhile, Fraser Institute Survey indicates that the median score for Africa on the Investment Attractiveness Index showed a decrease of almost 9 points in the year under review.
“With a median score of 51.87, Africa is the second least attractive region for mining investment when accounting for both mineral potential and policy, according to miners,” the survey reads.
“In addition, Africa’s median PPI score decreased by almost 1 point. All African jurisdictions, with the exception of Namibia, Tanzania, and Mauritania saw declines in their policy scores.”