Foreign direct investment (FDI) and enhancing the capacity and competitiveness of local companies to compete in the global economy are the two key issues at the on going 2014 Biennial National Business Conference (NBC).
There have been a lot of discussions around why Botswana is failing to attract FDI despite its reputation as a stable and peaceful country. A recent report compiled by Botswana Institute of Development Analysis (BIDPA) disclosed among other things that the prevailing cost structure and tax system hinder Botswana’s competitiveness and that the growth of the economy will regress by almost 50 percent after diamonds run out. The report’s findings create a sense of urgency to reduce Botswana’s dependency on mineral revenue, particularly diamonds, and propel other sectors of the economy to boost their contribution to economic growth.
Rob Davies, who compiled the report on life after diamonds, asked whether the characteristics of diamonds such as high forex earnings, sheer size and high operating surplus can be replicated within the economy. Diversification efforts will in essence strive to emulate the growth achieved by diamonds in other sectors of the economy. Different policy options have been put in place while certain bills are awaiting approval by parliament. Taking into consideration the above, the NBC’s focal discussion is an opportunity for Botswana to take a bird’s eye view into the real meat of the existing issues as an attempt to provide an answer to Davies’ question.
Despite its lackluster performance, the agricultural sector carries potential to foster growth and thus return to its former glory days when it contributed significantly to the economy. The Botswana Meat Commission (BMC) experienced huge losses of about P233 million in 2011 and P 300 million in 2012. However, BMC’s fortunes improved in 2013 when it made a profit of close to P30 million.
In an interview with Gazette Business BMC’s chief executive officer Dr. Akolang Tombale disclosed that as part of efforts to increase participation and investment in the meat industry the commission’s ambition to become a limited company has been brought to the attention of government.
He gave the example of Namibia, where the meat commission is 70 percent owned by farmers through a corporative while the remaining 30 percent is owned by government. Tombale added that BMC aspires to improve and increase farmers’ participation and benefits in the agriculture sector.
“We can improve the quality of animals and reduce diseases to ensure profitability,” he said.
At the NBC, Tombale will make a presentation on improving competitiveness of the cattle and beef industry. The NBC will also cover discussions around Botswana’s competitiveness and the business environment, international competitiveness and diamond cutting and polishing, immigration and visa issues in Botswana’s competitiveness and empowering Botswana firms to export.
Anglo American Plc’s chief executive officer Mark Cutifani will be the key note speaker, largely because of his global experience in doing business. Other speakers will include chief executive officer of
Botswana Investment and Trade Centre (BITC) Letsebe Sejoe, research fellow at BIDPA Dr. Margret Sengwaketse, Econsult’s managing director Keith Jefferies and Botswana Oil Limited chief executive officer Willie Mokgatlhe.
The NBC was officially opened on Monday by His Excellency the President of the Republic of Botswana Ian Khama and will end on 26 November 2014. The Botswana Investment and Trade Centre (BITC) was set up in 2012 to drive the country’s diversification drive. In its first year of operation, BITC attracted P698.97 million in Foreign Direct Investment (FDI), exceeding its target of P600 million by 16.4 percent.
However, domestic investment expansions at P362.5 million failed to reach the P500 million target. BITC also failed to create 2,276 jobs as forecasted, offering 1,206 employment opportunities.
BITC acting chief executive officer, Letsebe Sejoe has indicated that there are 47 projects in the pipeline to bring investment estimated at P4.7 billion and create 4,075 jobs. He said challenges include land allocation, stakeholder engagement and lack of factory shells.
While agriculture production is currently below capacity, opportunities exists in cereals, pork, honey, small stock, vegetables, fruits and dairy.
Landlocked developing countries category generally have a disadvantage in attracting FDI as investors prefer more developed coastal markets with more accessible economies.