Country Risk Rating

A somewhat shaky political and economic outlook and a relatively volatile business environment can affect corporate payment behavior. Corporate default probability is still acceptable on average. - Source: Coface

Business Climate Rating

The business environment is acceptable. Corporate financial information is sometimes neither readily available nor sufficiently reliable. Debt collection is not always efficient and the institutional framework has shortcomings. Intercompany transactions may thus run into appreciable difficulties in the acceptable but occasionally unstable environments rated A4.


  • Abundant natural resources (especially diamonds)
  • Low public and external debt
  • Substantial currency reserves
  • Political stability and level of governance put the country in the top tier of sub-Saharan African countries in international business environment rankings
  • Member of the Southern Africa Customs Union (SACU)


  • Dependent on the diamond sector (more than 90% of exports)
  • Insufficient infrastructure (production and distribution of water and electricity)
  • Inequality and high unemployment. Poverty stuck at a relatively high level

Current Trends

Mining industry to drive growth

Growth, mainly linked to the extractive industries (25% of GDP), will remain strong in 2020, driven by the gradual increase in diamond production and the ramp-up of several copper mines. Debswana, a partnership between De Beers, a UK group, and the government, is forecasting an increase in production at the Orapa mine, which is the country’s largest. The start of the USD 2 billion Cut-9 project to extend the life of the Jwaneng mine (one of the highest value mines in the world) will also encourage the development of related activities, such as construction and services. These various projects will be financed mainly by foreign private investors. Private investment will also be supported by the accommodative monetary policy of the Central Bank of Botswana, which includes a low borrowing rate (4.75% since September 2019, the lowest ever). The government aims to pursue its policy of economic diversification and will continue to spend on education, health and the construction of roads and electricity infrastructure. However, public investment will be contained, with the reinvestment of mining revenues limiting the possibility of spending, which, combined with the high unemployment rate (18% in 2018) and the pick-up in inflation, will squeeze household purchasing power. Agriculture (mainly subsistence farming, employing nearly a quarter of the population) is expected to do well, with the FAO forecasting heavy rainfall for the 2020 season (after the exceptional drought of 2018/2019).

Fiscal imbalance and current account surplus

The budget deficit is expected to decline in 2020, as fiscal policy becomes more cautious again after increased spending in 2019 in connection with the pre-election period. Revenues from the mining industries (one-third of the total) are set to decrease due to their reinvestment in the Cut-9 project. Customs revenues paid by the SACU (a quarter of revenues) will likely be weaker, owing to low growth in South Africa. While efforts to modernize tax administration and more efficient tax collection could increase revenues, budget consolidation will come mainly from reduced public investment.

The chronic current account surplus is expected to decline due to a widening trade deficit. The slowdown in global demand, particularly in the US and Chinese markets, will depress diamond exports (90% of goods exports), while capital goods imports will continue for projects related to the mining industry. The balance of services is largely in surplus thanks to tourism (15% of total exports). Transfers from the SACU (9% of GDP) could decline. Thanks to the favorable external situation, the country has high foreign exchange reserves (more than ten months of imports in 2018). The remaining reserve surplus, after the central bank has withdrawn what it needs for its activity, is transferred to the Pula Fund, a sovereign fund created in 1994, which finances a large part of the budget deficit. As a result, the use of domestic and external debt will remain limited and debt will remain low, as will its external portion (15% in 2017, almost exclusively from multilateral creditors).

Political continuity after the parliamentary elections

The Botswana Democratic Party (BDP), which has been in power since the country’s independence in 1966, won 56% of the votes in the October 2019 parliamentary elections, representing 38 of the 57 seats in the National Assembly. The opposition, represented by the Collective for Democratic Change (UDC), a coalition of four parties (BNF, BCP, BPP and BMD), won only 15 seats, or two fewer than in previous elections. Waning support for the BDP suggested a closer-fought election, but the UDC, which is plagued by internal conflicts and struggles to offer a credible alternative, failed to convince electors. Incumbent President Mokgweetsi Masisi therefore stayed on as head of state. In a context of high poverty and unemployment, the new government will have to address the lack of economic diversification and persistent social inequalities, as Botswana is the 10th most unequal country in the world according to the World Bank.

Botswana is consistently well placed among its sub-Saharan African peers in international rankings, but there is still room to improve its business environment and support private sector development (87th out of 190 in the Doing Business 2020 ranking). In addition, the country has recently been placed on the FATF’s grey list, which includes countries with inadequate regulations to combat money laundering and terrorism financing.


Coface (02/2020)