Botswana has been ranked as the 14th best investment destination out of 31 African countries polled by Rand Merchant Bank (RMB). Seychelles and Mauritius topped the rankings of African investment destinations. Seychelles was ranked 1st with Mauritius second.
The report highlights Botswana’s political stability as a key strength. However, the country faces challenges due to its heavy reliance on South Africa for essential imports such as electricity and petroleum. RMB, one of Africa’s leading investment banks, recently released a report, which showcases the top economies on the continent for investment.
According to RMB, Botswana’s ranking reflects its distinctive economic and political landscape. Renowned for its diamond exports, which constitute nearly three-quarters of its total exports, Botswana’s economic fortunes are closely linked to external factors. Approximately one-third of these diamonds are exported to the UAE, and another fifth to Belgium, highlighting the country’s economic vulnerability to international market dynamics, as noted by RMB.
Despite these challenges, Botswana holds an impressive first-place ranking for political stability in RMB’s model. This stability is underpinned by a tradition of free elections and strong political cohesion, making Botswana a beacon of steadiness in Africa.
According to RMB, the ruling Botswana Democratic Party, led by President Mokgweetsi Masisi, is expected to maintain its control and substantial parliamentary majority. However, this political strength contrasts sharply with the country’s struggling import sector, where Botswana ranks last in RMB’s model. The nation’s small domestic market and heavy reliance on South Africa for essential imports like electricity and petroleum further exacerbate its economic vulnerabilities, as noted by RMB.
South Africa’s current challenges further complicate Botswana’s situation. Structural issues in South Africa, such as inadequate electricity production, stagnant economic growth, deteriorating infrastructure, and political divisions, have significant repercussions for Botswana, according to RMB. Despite these challenges, Botswana’s diamond wealth and political stability contribute to a relatively high GDP per capita of around US$7,000, placing it third in RMB’s model. However, this prosperity is offset by high levels of inequality and a high unemployment rate.
According to RMB, Botswana’s strengths in political stability, income per capita, and low corruption offer a solid foundation to address its economic issues. RMB highlights that investors should keep a keen eye on Botswana’s efforts to reduce its reliance on South Africa and diversify its exports beyond diamonds. Moving towards products with greater complexity, such as industrial machinery and iron and steel, could provide Botswana with a more resilient economic future.
In the same report, Seychelles and Mauritius topped the ranking of African investment destinations, outperforming other nations due to their economic performance, market accessibility, investment climate, and social and human development.
RMB Chief Economist Isaah Mhlanga mentioned that these two economies stand out in an investment climate buffeted by significant turbulence, including tensions from Russia’s war in Ukraine and the conflict between Israel and Hamas, which have impacted trade flows. Persistent global economic pressures have also forced central banks to maintain high interest rates, elevating the cost of funding for African borrowers, he added.
