TRALAC - Trade Law Centre

African Business Needs Cross-Border Links’

Friday, 19 September 2003

Source: Engineering News

The challenge for African business leaders is to form synergies that will create business link through cross-border investments, Botswana’s Minister of Trade and Industry, Jacob Nkate, said in Johannesburg yesterday.

“We would thereby prove that South Africa's and Botswana's economic and political stability are the basic attributes essential in promoting investor confidence,” he explained.

Nkate said that such attributes were the bedrock of inducing private sector capital to any investment destination.

“One of the barometers of this confidence is the extent to which local savers in our economies reinvest in the region,” he added.

South Africa, said Nkate, has put in place the necessary mechanisms for economic, social and political stability; and for a truly non-racial, multiparty, participatory democracy to flourish.

For its part, Botswana had been cited by international rating agencies for its achievements through its political stability, its good governance and respect for human rights and the rule of law.

This has enabled Botswana to be transformed from one of the world’s poorest countries in 1966 to today’s middle-income country with a gross domestic product per capita of $3 500.

Nkate maintained that the country’s economic transformation had been made possible by a combination of three factors: government’s full commitment to the promotion of private enterprise development, minerals, and sound management of the economy.

It was Botswana’s firm belief that an enterprising and dynamic private sector was essential to achieve balanced and sustainable economic growth.

“In support of these objectives, the allocation of government resources has, therefore, been focused on the creation of an environment conducive to the promotion of private sector investment,” Nkate said.

Botswana’s prudent fiscal and monetary policies have enhanced private investor confidence, while more competitive conditions had been created through liberalisation and deregulation.

Nkate said that institutions, such as the Botswana Export Development and Investment Authority (BEDIA), a partnership between government and the private sector to spearhead investment and export promotion, had come into being to ensure that investments in the country proved to be worthwhile.

“BEDIA, which has an office in Johannesburg, endeavours to bring its services closer to the business community who wish to explore business and investment opportunities in Botswana,” he added.

Nkate drew attention to several factors that rendered Botswana an attractive investment destination:

– the manufacturing sector, in particular garments and textiles, had made significant headway in increasing its exports to the US under the African Growth and Opportunity Act (Agoa);

– AGOA presented an opportunity for investors to locate in Botswana to source raw materials from third countries and manufacture for export, duty free, to the lucrative US market;

– the Cotonou Agreement offered access, duty and quota free, to the EU;

– Botswana’s personal and marginal tax rate was 25%, while for manufacturing companies and financial institutions operating in terms of Botswana’s Financial Services Centre were eligible for a 15% tax rate; and

– investors could freely repatriate profits and dividends from Botswana, as there were no foreign exchange controls.

Nkate urged South African businesses to consider Botswana as a preferred investment location, citing as particularly conducive textiles and garments, leather products, glass products, downstream processing of diamonds, tourism and information communication technology.