Botswana has introduced a host of incentives aimed at attracting South African investment to the diamond-rich country.
Its investment-lobbying company, the Botswana Investment and Trade Centre (BITC), held its first trade contact mission in South Africa last week.
The BITC hopes to export more products to South Africa and attract investments from South Africa into priority sectors in specific Botswana regions.
Speaking to City Press on the sidelines of the event, BITC’s executive director for international business, Moshie Ratsebe, said Botswana had offered investors very competitive corporate taxes, which stood at 22%.
This was much lower than the continent’s average of 27.5% and the global average of 23.57%.
The corporate income tax rate could be as low as 5% in priority sectors, such as manufacturing, and in areas such as the town of Selibe Phikwe, a mining town in the central district of Botswana.
The valued-added tax (VAT) rate in Botswana is 12% and the maximum personal income tax rate is 25%.
South Africa’s VAT is charged at 15% and the maximum personal income tax rate is 45%.
Botswana also offered tax holidays – when there was a temporary reduction or elimination of tax – for up to 10 years under certain circumstances.
“We have done a study to understand the South African market and identified a number of opportunities for 10 Botswana companies that we believe can export goods to South Africa and we have brought them here,” he said.
Ratsebe, who is based at the BITC’s office in Sandton, said there was a particular focus on attracting investment to Selibe Phikwe because it had turned into an economic disaster after the state shut down its major mining operation there.
“That area, which is in the eastern part of the country, has huge potential, especially with regard to tourism and agriculture.
Historically, it was a mining town producing copper and nickel until the government liquidated the Bamangwato Concessions Limited mine in 2016.
“Government has put in place incentives to make sure we are able to save the economy of that area because it was heavily dependent on mining.
“Agriculture, tourism and general manufacturing are already there,” he said, adding that the identified sectors already carried with them huge tax incentives for investors.
Ratsebe said that the country was largely misunderstood, despite the tax incentives, which had generated significant inflows of investment.
“For us as a country, we think that we have always been misunderstood.
“A lot of businesses take a narrow view because of the small population of Botswana when actually they should be looking at it as part of the regional block.”
Botswana had the benefit of political and economic stability, Ratsebe said.
“We have demonstrated that we handle our economy very well.
“We have achieved the highest sovereign credit rating on the continent in the last few years.”
Once Botswana’s potential wasbetter understood then more investment would come to the country, Ratsebe said.