The Sir Seretse Khama International Airport (SSKIA) City Special Economic Zone (SEZ) is Botswana’s latest ambitious development project, aiming to transform the Gaborone area into a “world-class Diamonds and Logistics City,” as described by former President Mokgweetsi Masisi.
This SEZ, covering 800 hectares near the airport, is designed to attract investors with incentives such as reduced tax obligations, VAT exemptions, and streamlined business services. Targeted industries include diamond beneficiation, aerospace, cargo handling, pharmaceuticals, agro-processing, and more. Ultimately, it is expected to drive exports, national economic growth, job creation, and local opportunities, with a projected P4.2 billion investment and over 1,000 new jobs.
With the governmentโs investment of P700 million in infrastructure at the siteโincluding roads, drainage, water and power systems, and telecommunicationsโthe SEZ sends a strong signal to investors that Botswana is open for business.
However, a recent report by Business Botswana highlights significant challenges that may impede the SEZโs success. While the growth potential is clear, the business advocacy body stresses that careful implementation is essential to realise SEZโs benefits.
โUnless carefully implemented, there is a risk that it could perpetuate tensions and perceptions of FDI limiting Botswana’s control over investment,โ the report said. According to Business Botswana, the primary challenge is to develop an autonomous SEZ ecosystem that can operate effectively and harness benefits without compromising Botswana’s economic sovereignty.
Another concern is the slow pace of investor facilitation, which has stalled the SEZโs growth prospects.
โOne of the shortcomings is a limited commitment to the improvement of the doing business environment,โ Business Botswana noted. Policy uncertainties and regulatory challenges have resulted in missed opportunities and underwhelming investment; while P4 billion has been secured, the potential was for far more.
โHad Botswana seized the many lost opportunities, the conversation today could be about realising more than P10 billion instead of P4 billion, the implications of which have been lost opportunities for the private sector from the intricate imperatives of SEZs. Further, the nine already licensed investors are inadequate towards reaching the journey to P50 billion,โ the report said.
The development of Botswana’s airport economy remains in its early stages, and Business Botswana argues that the country lacks both the theoretical framework and practical experience required for effective SEZ planning and construction.
โIndustry support and planning are not strong,โ it stated, emphasising the need for strategic positioning and a coherent industrial structure. There is a risk of arbitrary industrial planning and construction, which could create structural conflicts, undermine the SEZโs development, and damage its relationship with the local economy.
Innovation is also crucial for the SEZ’s success, especially as the new economy, driven by the Internet, continues to expand. However, the SSKIA Airport City SEZ faces a considerable gap in this area, lacking the innovation capacity and high-level talent needed to advance the airport economy.
Business Botswana further noted that the feasibility of developing a world-class SEZ within a decade remains uncertain, especially given the governmentโs fiscal constraints.
โWe assess that with the current fiscal constraints at the Government enclave, reflecting revenue shortfalls, most of the SEZ projects will be postponed or cancelled, putting a dent in the momentum. Essentially, with the shortfall in funds, this is not feasible or achievable, putting everything to a standstill,โ it noted.
A public-private partnership (PPP) model is seen as a potential solution, but delays in concluding PPP legislation have left SEZ development in limbo.
The report also highlighted that while the private sectorโs role in the SEZ’s success is critical, the public sector is not leveraging this partnership adequately to improve airport infrastructure. A more collaborative approach, based on clear objectives and shared goals, is essential to advance the SEZ. This process should be “ground-up,” involving local stakeholders to ensure the development reflects Botswana’s needs and aspirations.
Building business linkages within the SEZ remains a significant challenge. Without a deliberate strategy to connect SMMEs and informal sectors to the benefits of the P4 billion already invested, these sectors risk exclusion from SEZ’s opportunities.
While the Airport City SEZ has the potential to transform Botswanaโs economic landscape by enabling Meetings, Incentives, Conferences, and Exhibitions (MICE) and manufacturing, critical shortcomings related to investor facilitation, external dependency, arbitrary planning, and the relationship between the SEZ and the local economy could render it ineffective.
โThe activity risks being another white elephant reinforcing Botswanaโs position as a consumer rather than a creator and producer of products and services. The launch by itself is inadequate, for us to celebrate,โ Business Botswana stated.
