BITC Surpasses FDI Target

Monday, 20 January 2014

In its first full year of operation, the Botswana Investment and Trade Centre (BITC) attracted P698.97 million in Foreign Direct Investment (FDI), exceeding its target of P600 million by 16.4%.

However, domestic investment expansions at P362.5 million failed to reach the P500 million target. BITC also failed to create 2,276 jobs as forecasted, offering 1,206 employment opportunities.

BITC acting chief executive officer, Letsebe Sejoe has indicated that there are 47 projects in the pipeline to bring investment estimated at P4.7 billion and create 4,075 jobs. He said challenges include land allocation, stakeholder engagement and lack of factory shells.

The manufacturing import bill was P38.6 billion with machinery and electrical supplies at 17.5%. The fuel bill stood at 14.8%; food, beverages and tobacco at 12.5%; and chemicals and rubber products at 10.9%. Sejoe stated that agriculture production is currently below capacity but opportunities exists in cereals, pork, honey, small stock, vegetables, fruits and dairy.

BITC was formed in 2012 through the merger of BEDIA and IFSC. BEDIA was formed in 1997 having attracted and facilitated P3.6 billion worth of FDI and creating 16,160 jobs, achieved after enticing 47 businesses and financial services companies to invest in Botswana.

IFSC was formed in 2003 and attracted P13 billion worth of FDI, creating 300 jobs before the merger in 2012.

Total FDI inflows to Botswana dropped 29 percent to $293 million (P2.5 billion) in 2012, reflecting similar declines in other Southern African national markets as global investment slowed.

Estimates by the United Nations Conference on Trade and Development (UNCTAD) indicate that of the total FDI inflows to the local economy, $148 million (P1.3 billion) was dedicated to greenfield investments. The remainder is attributable to mergers, acquisitions and expansions.

Botswana's estimated FDI inflows were classified as being near the average of developing landlocked countries, headed by Kazakhstan. The Central Asian state attracted $14.1 billion (P121 billion) in FDI inflows last year mainly due to its oil and gas industry.

Landlocked developing countries category generally have a disadvantage in attracting FDI according to UNCTAD, as investors prefer more developed coastal markets with more accessible economies.

UNCTAD data show that Botswana's FDI inflows last year were towards the lower end of 10 surveyed countries within the Southern African region. Heading the list was Mozambique, which attracted $5.2 billion (P45 billion) in FDI, mainly due to its gas and coal projects, followed by South Africa with $4.6 billion (P39.3 billion).

Botswana's $293 million (P2.5 billion) in FDI inflows was only larger than those of Swaziland, Malawi, Lesotho and Angola, which recorded a massive negative FDI inflow of $6.9 billion (P59 billion). Negative FDI inflows point to disinvestment by foreign owned entities as opposed to investment.

All Southern African countries, except Mozambique and Zimbabwe, recorded annual decreases in FDI inflows, with Angola and South Africa suffering the biggest drops.

FDI flows to southern Africa plunged from $8.7 billion (P75 billion) in 2011 to $5.4 billion (P46.2 billion) in 2012, according to UNCTAD research.

"The decreases in Angola and South Africa were partly offset by the near doubling of flows to Mozambique, where the appeal of huge offshore gas deposits helped to attract investor interest." - UNCTAD

Source: Mmegi Monitor