DOING BUSINESS WITH BOTSWANA

Keletsositse OlebileChief Executive Officer

13th August 2020

PRESENTATION OUTLINE

KEY FIGURES & FACTS

BOTSWANA’S COMPETITIVENESS

TRADE BETWEEN BOTSWANA & GERMANY

KEY SECTOR OPPORTUNITIES

INVESTMENT INCENTIVES

ABOUT BITC

KEY FIGURES

& FACTS

BOTSWANA: KEY FACTS & FIGURES

BOTSWANA LOCATION IN AFRICAUSD 18.347 Bn (WB, 2019)

USD 7,961(WB, 2019)

2.333 MILLION

(0.9 % June 2020), BoB Target is 3% - 6%

Bank rate 4.25%: Prime Rate 5.75%

(Total merchandize exports = US$5.23 million) Diamonds, copper, nickel, Ignition wiring sets and other wiring sets for vehicles, boneless beef, soda ash, and copper ores and concentrates

(Total merchandize imports US$6.56 million)Non-industrial diamonds, petroleum products, Industrial diamonds

20192019

BOTSWANA’S

COMPETITIVENESS

BOTSWANA’S INVESTMENT CLIMATE

Sustained periods of economic growth: (4.5%: 2018 | 4.2%: 20194.8% 2020)

Prudent macro-economic management(EIU, 2020)

Strong balance sheet,With net external creditor position

Sound legal system and adherence to the rule of law Political stability

Incident free elections every 5 years

Labour market stabilityEducated workforce - 87.7% literacy rate (34%:1981)(World Bank, 2018; EIU, 2020) Highest sovereign credit rating

in Africa: “A” investment grade rating from both Moody’s and Standard & Poor Moody's 2020; S&P 2020)

Ease of Doing Business: 86/190 | 7th in Africa (World Bank, 2019)

LOCATION ADVANTAGE

Botswana has devised national strategies to effectively link its priority sectors with regional value chains.

Preferential market access to SACU, SADC, EU, MERCUSOR and US markets.

TRADE BETWEEN BOTSWANA AND GERMANY

BOTSWANA’s TRADE AGREEMENTS

Product label

Botswana's imports from Germany (USD’000)

Value in 2017

Value in 2018

Value in 2019

Total for All products 52356 64844 48051

Electrical apparatus for switching electrical circuits, or for making connections to or in ... 4432 6889 5961

Sacks and bags, for the packing of goods, of textile materials (excluding man-made, cotton, ... 0 1720 4238

Instruments and appliances used in medical, surgical or veterinary sciences, n.e.s. 1637 9238 3806

Parts suitable for use solely or principally with the apparatus of heading 8535, 8536 or 8537, ... 1632 2787 3057

Boxes, cases, crates and similar articles for the conveyance or packaging of goods, of plastics 43 321 2751

Pallets, box pallets and other load boards, of wood; pallet collars of wood (excluding containers ... 20 579 1756

Insulating fittings for electrical purposes, of plastics 1818 2539 1685

Electric conductors, for a voltage <= 1.000 V, insulated, not fitted with connectors, n.e.s. 1145 1537 1592

Medicaments consisting of mixed or unmixed products for therapeutic or prophylactic purposes, ... 4261 1767 1366

Centrifuges, incl. centrifugal dryers (excluding isotope separators, cream separators and clothes ... 19 719 1187

Product label

Botswana's exports to Germany (USD’000)

Value in 2017

Value in 2018

Value in 2019

Total for All products 3870 4651 1158

Transmission apparatus for radio-broadcasting or television, incorporating reception apparatus 0 0 478

Parts of machinery of heading 8426, 8429 and 8430, n.e.s. 131 0 239

Extracts of pyrethrum and of roots containing rotenone 0 0 99

Fully or partly automatic machines for resistance welding of metals 0 0 79

Ignition wiring sets and other wiring sets for vehicles, aircraft or ships 30 42 61

Printing ink, whether or not concentrated or solid (excluding black ink) 0 3 51

Commodities not elsewhere specified 20 30 33

Instruments, appliances and machines for measuring or checking, not elsewhere specified in ... 0 0 31

Ink, whether or not concentrated or solid (excluding printing ink) 0 0 17

Source: ITC Trademap, 2020

Trade Between Botswana and Germany

BOTSWANA EXPORT PRODUCTS WITH POTENTIAL TO GERMANY

GERMANY’ EXPORTS WITH POTENTIAL TO BOTSWANA

Ostrich Production: Population 77,000;Opportunity: Breeding & HatchingEU Compliant Abattoir capacity – 20 000 birds; Anchor tenant at DOMU

Zambezi Integrated Agro-commercial project: 25000ha (15000ha rainfed & irrigation of field ccrops; 10000 horticulture; Investment Cost: BWP3.8 bn US$ 380mn

Aquaculture Production:Consumption – 4, 000 t/yrProduction - 300 tonsImports – 3, 700 tons

Dairy ProductionMilk production: 8.08m Litres (2019)Imports: 38.9 m Litres (2019)National Milk Demand: 65 m LitresValue Chain analysis cost the Invt Opportunity at BWP 1.83 bn (PSDP, 2015)

Other Agribusiness Opportunities• Chemical Fertilizer production –

market valued at US$19.1m (imports) – limited or no local production

facilities• Animal Feed. In 2019 BW imported

US$ 41 m of HS23 from RSA, Zambia, Zimbabwe & as far Europe):

Opportunities for import substation.

PRIORITY INVESTMENT SECTORS: COMMERCIAL AGRICULTURE & AGRO PROCESSING

HorticultureFresh Fruits Imports in 2019 –US$29.5 m (RSA – 99.7%) (apples –33%; bananas – 23% etc (ITC 2020)

THE AUTOMOTIVE SECTOR IN BOTSWANA – A GLIMPSE

> Kromberg & Schubert one of Botswana’s flagship companies with German origins

> Grown from strength to strength owing to its presence in Botswana and today employs 2 400

> Service tier 1 automotive plants in South Africa with Wiring Sets

> Chloride Exide Botswana – est. 1990, full capacity 500 000 automotive batteries per annum; 70% exported to 8 SADC countries

>Employs 130 people and sitting on a 15 000 sqm at its new facility in Phakalane, Gaborone

Website: www.chloride.co.bw

> Pasdec is one of the latest entries, relocated plant from Brits, RSA into Botswana in 2015, and the relocation completed in 2017

> Located in Lobatse and employs 573 people

> Services Nissan, VW and Renault

• BMW & Mercedes

EXPORTS OF AUTOMOTIVE PARTS

Product Description United States Dollars

2013 2014 2015 2016 2017 2018

Total Total 8,041,025,844 7,141,938,874 6,198,296,557 7,253,366,526 5,793,910,801 5,307,857,907

710231 Diamonds, Nonindustrial, Unworked Or Simply Sawn, Cleaved Or Bruted 5,908,759,371 5,132,649,373 4,687,664,574 5,961,959,113 4,616,311,314 4,003,729,946

710239 Diamonds, Nonindustrial, Worked, Including Polished Or Drilled 773,435,177 809,748,557 434,904,773 400,878,455 543,362,530 663,929,011

854430 Insulated Ignition Wiring Sets And Other Wiring Sets For Vehicles, Aircraft And Ships

34,605,299 31,073,368 100,495,986 110,901,700 83,340,720 102,110,457

20230 Meat Of Bovine Animals, Boneless, Frozen 73,607,009 62,917,056 51,807,094 51,163,400 46,580,152 47,425,337

283620 Disodium Carbonate 35,872,497 36,416,573 34,783,046 39,926,696 41,680,544 45,008,961

710812 Gold, Nonmonetary, Unwrought Nesoi (Other Than Powder) 55,098,268 41,178,302 26,055,726 38,238,008 35,590,818 43,510,40

PROXIMITY TO LARGEST AUTOMOTIVE MANUFACTURERS

Gaborone - Rosslyn 350 km

Gaborone – Durban 917 km

Gaborone – Eastern Cape 1000 km

• One of Botswana’s strongest value propositions is its location.

• It is both in close proximity of the largest automotive market in

Africa, as well as the largest automotive manufacturer and

exporter in Africa − both being South Africa.

• Botswana has a delivery time advantage over major

competitors in Asia, Europe and North America.

• In this regard, Botswana has a proven track record in supply

to the South African components market, increasing its

component exports tenfold in the past 20 years

THE FUTURE OF MOBILITY

• President’s commitment to produce an electric car in Botswana,

• Universities and Tech Developers took up the challenge.

• A number of concepts/prototypes under development,

• Opportunity for more players to come in and bolster Botswana’sDevelopment progress.

OTHER PRIORITY INVESTMENT SECTORS

Mining/Resource

BeneficationSoda Ash

Coal

Diamonds

Base Metals

ManufacturingAutomotive Components

General Manufacturing

Services

ICT

Financial & Business

BPO

Energy

Solar

Coal-bed methane (CBM)

Biogas and Biodiesel

Coal to Liquids

Transport & Logistics

Rail Projects:

Mamabula – Lephalale (57km)

Mosetse - Kazungula (356km)

Botswana - Mozambique

Aviation

Tourism & HospitalityHotels & Lodges

Tented CAmps

Air Charter Services

Medical Tourism

INVESTMENT

INSTRUMENTS AND INCENTIVES

TAX COMPETITIVENESS

Botswana’s Corporate Tax Rate is Highly Competitive

Botswana General: 22%African Average: 27,5%Global Average: 23,57%

Source: Worldwide Corporate Tax Guide, EY 2019

0 5 10 15 20 25 30 35 40

Mauritius

Botswana

Global

Lesotho

Zimbabwe

Swaziland

Africa

South Africa

Tanzania

Malawi

Mozambique

Namibia

Zambia

DRC

Angola

INVESTMENT INCENTIVES

Botswana’s Corporate Tax Rate is Highly Competitive

TAXATION

15% for Manufacturing, IFSC, Innovation

Hub

5 -10% for SPEDU Region

Maximum 22% for

Other Sectors

Value Added Tax at 12%

Maximum 25% Personal Income

Tax

Possible tax holidays of up to 10 years under Development

Approval Order

IFSC No Exchange Controls

Up to 15% Tax Credit for non DTA

jurisdictionsZero rated for VAT

Exemption WHT when distributing to nonresidents

Exemption from CGT where

shareholding is > 25%

CUSTOMS DUTY

Duty Free import for manufacturing and agricultural

machinery & equipment

TRAINING COSTS

200% Tax rebates

ABOUT

BITC

INVESTOR VALUE ADDED SERVICES

Investment facilitation services through Botswana One Stop Service Centre offering:

Company & Business Registration

Opening of Bank Accounts

Entry Visas, Work & Residence Permits & Exemptions

Trade & Business License Applications

Utility Connections

Income Tax & VAT Registration

Industrial & Commercial Land / Factory Shells

Incentives; IFSC, Manufacturing, Tax Holidays (DAO)

Aftercare Services –renewals, expansions etc.

Environmental Impact Assessment Compliance

THANK YOU

www.gobotswana.com

Twitter: @Go_Botswana | Facebook & Linkedin: Botswana Investment and Trade Centre

Keletsositse OlebileChief Executive

BITC HQPlot 54351, Off PG Matante Road,

Central Business DistrictGaborone, Botswana