Critical issues for American investors in Botswana

This report examines the advantages and constraints facing potential U.S. investors in Botswanan enterprises. Advantages include: (1) a liberal foreign exchange and payments system underpinned by massive foreign reserves equivalent to more than 30 months import cover; (2) an investor-friendly regulatory environment; (3) geographical suitability for market penetration of South Africa and Zimbabwe; (4) easy approval for import licenses for spare parts, replacement equipment, and state-of-the-art machinery; (5) amiable industrial relations (labor disputes are rare); (6) a plentiful (though not cheap) supply of unskilled labor; (7) tax incentives and training reimbursements for new investors; (7) a solid infrastructural base and strong financial markets; and (8) political stability, multi-party democracy, and harmonious race relations. Constraints to investment include: (1) the small size of the domestic market (Botswana"s 1989 import bill was $1.6 billion); (2) a narrow resource base; (3) limited availability of essential production inputs (especially skilled labor and water resources); (4) limited scope for exports; and (4) membership in the South African Customs Union, which means that domestic production must be competitive with South African goods. Promising areas of investment are specified.