When lenders have both strong legal rights and easy access to a wide variety of information about the client’s creditworthiness, reasons the bank, the more available credit will be. When information on borrowers is significantly lacking – as is the case in most of Africa – legal protections for creditors must in turn be very strong.

In Botswana, creditors have fairly strong legal rights and private credit bureaus hold information on a little over half of the country’s adult population.

Figure 2:

How the World Banks Conceptualizes Credit Acquisition

When it comes to protecting investors and minority shareholders Botswana continues to do very well. Here, the country ranks 44^th out of 183 countries – making the country a good one for shareholders. Botswana received this score because it has strong disclosure requirements for corporate officials, has very strong director liability laws, and is a moderate place to bring shareholder lawsuits.

Botswana does even better when it comes to paying taxes. The World Bank estimates that pleasing the tax man in Botswana requires a total of 19 payments over the course of a year which, in turn, takes up to 152 hours to complete and can consume up to 19.5-percent of a company’s profits. Accordingly, Botswana’s tax burden is ranked 21^st out of 183 nations – one of the best in the world in this category.

Unfortunately, when it comes to engaging in cross-border trade, Botswana receives a much lower score – largely due to its landlocked geographic location. In Botswana, to import goods into the country one is required to have nine documents for customs’ officials to inspect. On average, it takes a total of 41 days to import goods into Botswana with the cost amounting to $3,390 (excluding tariffs) per container shipped into the country.

The cost to export goods, though still bad, is somewhat smaller as Botswana requires six documents to be inspected by customs’ officials, while the total cost (excluding tariffs) is $3,010 per container, with delivery taking up to 28 days from point of origin. Compared to global averages this nets Botswana a ranking of 151^st out of 183 on ease of engaging in cross-border trade.

Botswana does better when it comes to contract enforcement, where it ranks 70^th out of 183 countries ranked on this issue by the bank. On average, reports World Bank analysts, it takes a total of 29 legal procedures to take a contract from dispute to resolution, at the cost of 625 days spent in court or otherwise attending to legal issues. The financial cost of pursing a contract claim, says the Bank, typically accounts for 28.1-percent of the value of the claim.

Finally, in terms of closing or liquidating a business Botswana returns to form. In this area the country ranks 27^th out of 183 countries. Here, it takes 1.7 years to close an estate at a cost of 15-percent of the value of said estate, for a recovery rate of 63.7 cents on the dollar.

Table 1 presents a summary of these rankings as well as Botswana’s overall ease-of-doing business rating. Clearly, Botswana does well in a number of areas, but excels in the area of tax and closing out businesses and estates. It does less well in the area of trading across borders – not unexpected given its geography – and in the area of construction permits. Overall, however, Botswana is exceedingly business friendly and one of the easiest countries to do business in all of sub-Saharan Africa.

Table 1:

World Bank Ease of Doing Business

Assessment and Rankings: Botswana

 

 

Prospects

Botswana, as one of the most prosperous countries in Africa, has unsurprisingly had an impressive history of solid, steady growth. Between independence and 1999, for example, growth averaged nine percent per year as the developed world ate up the country’s diamonds, nickel, and gold – all of which continue to be the bedrock upon which Botswana’s modern economy is built. More recently, as the figure below shows, growth has dipped somewhat, averaging just over four percent over the past decade largely due to the deleterious effects of the global economic downturn since 2008.

Figure 3:

Botswana Economic Growth,

Percent Increase, 2003 – 2013

While the country remains heavily dependent on diamond and mineral extraction for its wealth, the recent global downturn has forced something of a reassessment of the economy.