Botswana WT/TPR/S/35
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IV. TRADE POLICIES AND PRACTICES BY SECTOR
(1) Introduction
1. Although the Botswana economy remains generally open, the ratio of merchandise exports and
imports to GDP has declined with growth of the domestic economy.  In the 1980s exports were
normally over 60% of GDP (reaching 80% in 1987/88)  with high diamond exports, but have declined to
around 50% since 1992/93.  Imports were over 50% (a peak of 67% in 1982/83) but have fallen to
below 40% in recent years.
2. Mining replaced agriculture as the major contributor to GDP in the mid-1970s (Tables A1-A4),
and during the 1980s value added by the mining sector almost trebled, peaking at 51% of GDP
in 1988/89 in current prices.  In 1994/95 its share had fallen back to 33%.  A substantial amount of
activity is indirectly related to the diamond-mining sector.  In contrast, agriculture's share of GDP at
current prices declined from 16% in 1978/79, the last entirely drought-free year, to 3.8% in 1995/96.
3. The manufacturing sector, which has been heavily promoted by the Government under its
economic diversification strategy, has expanded rapi dly, albeit from a narrow base, and has begun to
make a significant contribution to exports.  The sect or averaged annual real growth of 9% in the 1980s.
However, its share of GDP at current prices declined from a peak of 6.7% in 1982/83 to 4.7%
in 1995/96.
(2) Agriculture, Fisheries and Food Processing
(i) Background
4. Botswana is composed partly of semi-desert and partly of savannah, with erratic rainfall and
relatively poor soil;  this makes the country more suited to grazing than to arable production.  While the
agricultural sector contributed about 40% to GDP at independence (1966), its share has now declined to
about 4% due to the rapid development of the mini ng sector, particularly diamond mining, and rapid
urbanization.1  Despite this decline, agriculture remains an important source of food, income,
employment and capital formation for the majority of the population living in the rural areas.
About 2% of formal employment comes from the sector.
5. At the beginning of NDP7 (1991-97), the catt le industry accounted for 3.8% of Botswana's
exports.  This rose to 5% in 1994, constituting 1.4% of GDP.  Beef export earnings still adequately
cover imports of basic cereals;  however, Botswana's food requirements are increasingly purchased byexport earnings from the diamond sector.
6. During 1988/89, the Ministry of Agriculture commissioned  the first comprehensive
Agricultural Sector Assessment review to evaluate the performance of the sector and its contribution to
socio-economic goals such as household food secur ity, employment creation, economic diversification,
and the provision of raw materials for agro-industries;  identify sectoral policy issues and constraints;
and provide policy recommendations to improve the sector's contribution to the economy.
7. The report of the Agricultural Sector Assessment was then considered by the Ministry together
with other ministries and institutions and a draft policy paper was produced for consultations with the
                                                     
1There have also been periods of drought, but the country has always suffered periodically from drought
and this was not the cause of the relative declin e of the agricultural share in economic activity.WT/TPR/S/35 Trade Policies Review
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farmers, local authorities, banking institutions and all other NGOs.  A White Paper on Agricultural
Development Policy was considered and approved by Parliament in 1991.
(ii) Agricultural policy objectives and instruments
8. Botswana's agricultural policy objectives are:
- improving food security at the national and household levels, bearing in mind that
Botswana is highly dependent on imports for food supplies;
- diversification of the agricultural production base;- increasing agricultural output and productivity;
- increasing employment opportunities for the fast growing labour force;
- provision of a secure and productive environment for agricultural producers;  and
- conserving the scarce agricultural and land resources for future generations.
9. These policy objectives are to be achieved through the following broad strategies:
- provision of adequate assistance and incentives to both arable and livestock farmers,
particularly resource-poor farmers;
- the provision of physical infrastructure such as good roads and marketing infrastructure
in the major production areas;
- research, technology development and extension support for farmers;  and
- manpower development through long-term and short-term training programmes.
(iii) Main features of the agricultural sector
10. The agricultural sector in Botswana is co mposed of two distinct production subsectors,
traditional and commercial (Box IV.1).  Each s ubsector comprises both crop and livestock farming
activities. Structural changes have resulted in increasing concentration of cattle ownership, growing
commercialization of cattle farming and increased importance of freehold farming.Botswana WT/TPR/S/35
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Box IV.1:  Commercial and Traditional Agriculture in Botswana
The difference between commercial and traditional farming is based on land tenure, technology and market integration.
Land tenure:   Commercial farms, mainly freehold or leasehold, comprise 8% of the total land area.  These farms hold
about 14% of all cattle and account for about 37% of the total production of cereals (maize and sorghum) and pulses.
Commercial farms tend to specialize in cattle production.  Traditional farms cover about 71% of Botswana's total land
area.  Two thirds of traditional farms practice mixed farmin g, with individual managed arable holdings and communal
grazing of livestock.  Traditional farms hold about 86% of all cattle, 98% of goats and 83% of sheep.  (Botswana
Agricultural Census, 1993)
Technology and Market Integration:   Commercial farming tends to adopt a business approach in the management of
farm enterprises.  The commercial sector uses modern technology and applies purchased inputs, such as hybrid seeds,
agro-chemicals, and exotic livestock breeds.  It is also mo re likely to require hired labour, while traditional agriculture
typically uses family labour.
Commercial agriculture is fully integrated in formal market s, but the traditional sector covers a spectrum from those
who produce predominantly for the market, through those who produce surpluses or shortages depending on the
weather, to those resource-poor farmers who do not own cattle and are engaged in marginal crop production and are net
food buyers.  Such households supplement their own production through wage earnings, transfers, and off-farm
activities.
There is great disparity in performance between the two sectors.  Some indicators are:
Commercial Traditional
Livestock (cattle)
Annual calving rate 60% 50%
Annual off-take rate 17% 8%
Annual mortality 5% 12%
Cereal crops
Average yield 500 kg./ha 200kg./ha
(iv) Policy by type of product
(a) Food crops
11. Successive droughts in the periods 1981-87 and 1991-95 strained arable production and
threatened the food security of the rural population.  Successive crop failures necessitated theimplementation of drought assistance programmes for arable farmers to try to sustain basic cereal
production.  Crop production indicators from 1979 to 1993 for the main cereal crops, namely, sorghum,
maize, millet and pulses show a high degree of variation in area planted, average yields and production
in response to the erratic rainfall conditions during the period (Charts IV.1, IV.2 and IV.3).  Less
important crops are groundnuts, sunflowers, and horticultural products.
12. The Government has encouraged crop diversification. Farmers are encouraged to plant more
drought-resistant crops, and high-value crops that  can be easily marketed;  irrigation is encouraged
where possible.  In recognition of the need to improve the productive capacity of resource-poor farmers
in the arable subsector, the Government introduced the Arable Lands Development Programme(ALDEP) in 1982.  The programme is designed to as sist farmers with on-farm investment packages
(ploughs, draught-power, fencing, planters, cultivator s/harrows, scotch carts, threshing machines, etc.).
In 1987, the second phase of a drought recovery programme - the Accelerated Rainfed Arable
Programme (ARAP) - was introduced for medium-scale farmers.
2   ARAP offered a 100% subsidy for
ploughing/planting, seed, fertilizer, weeding and de stumping.  However, the scheme was later found to
be in conflict with ALDEP and as a result was phased out.
                                                     
2 The first phase of the drought recovery programme was directed at small-scale farmers.WT/TPR/S/35 Trade Policies Review
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Chart IV.1
Sorghum, production and planted area, 1979-93
Source :    Data provided by authorities of Botswana.Planted area (left scale)
Production (right scale)
1979 80 81 82 83 84 85 86 87 88 89 90 91 92 19930510152025('000 tonnes)Chart IV.2
Production of selected agricultural products, 1979-93
Source :    Data provided by authorities of Botswana.1979 80 81 82 83 84 85 86 87 88 89 90 91 92 1993050100150200250300
020406080100('000 hectares) ('000 tonnes)
Millet Maize Beans/pulses Botswana WT/TPR/S/35
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1979 80 81 82 83 84 85 86 87 88 89 90 91 92 199300.511.522.533.5
020406080100120('000 tonnes) ('000 tonnes)Chart IV.3
Production of selected agricultural products, 1979-93
Source :    Data provided by authorities of Botswana.Groundnuts Sunflower Right-hand scale:
Other cropsLeft-hand scale:
13. Sorghum is the predominant and staple crop in Botswana.  Maize and wheat have also recently
gained popularity, especially in urban areas.  Most of the country's sorghum is grown by smallholders
throughout Botswana and by commercial farms in Pand amatenga area in the Chobe district.  One of the
cornerstones of the Agricultural Development Policy is the pricing of food-grains at export parity prices
for export crops and import parity prices for imported crops.  This ensures that consumers can obtain
the lowest possible prices and that producers will be guided in their production decisions by
competitive domestic and international prices.  In 1992, in line with the Government's policy ofpromoting food security at the household and national levels, Botswana Agricultural Marketing Board's
(BAMB) monopoly on sorghum imports was removed.  This meant that licensed private traders could
freely import food grains including sorghum.  The BA MB is now responsible for managing strategic
grain reserves on behalf of Government.  The Board has a storage capacity of 140,000 tonnes,  of which
a target of 80,000 tonnes is earmarked as the Strategic Grain Reserve.  BAMB purchases in 1994/95amounted to 8,400 tonnes of sorghum and 2,900 tonnes of maize.
14. Food crop production constitutes less than one third of consumption even in drought-free years.
Botswana is therefore a net importer of cereals, with South Africa as the main source of imports.  One
of the contributing factors to the ever increasing cereal imports is Botswana's rapid population growth.
Since Botswana is a member of the Southern Africa n Customs Union (SACU), tariff levels set by South
Africa are binding for Botswana.WT/TPR/S/35 Trade Policies Review
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15. In line with the SACU Agreement, Botswa na can impose a ban (though it has never been
applied) on imports of controlled products such as  horticultural products whenever local producershave produced enough to feed the country for a certain period. With these controlled products an import
permit system applies.  Restricted goods are govern ed by the Controlled Goods Act of 1985 (Cap 3:07),
under which cabbage, fresh milk, milled maize, onions, oranges, potatoes, pulses, sorghum and
sorghum products, tomatoes, and wheat are restricted imports. For all these products an import permit
must be obtained from the Ministry of Agriculture.  Likewise, castor beans, groundnuts, maize andmaize products, millet, millet products, pulses, sorghum and sorghum products are restricted exports.
(b) Livestock
16. The cattle industry is still dominated by traditional farming, which accounts for more than 80%
of the total cattle, sheep and goat population (Chart IV.4).  Recent trends in cattle numbers show a
significant decrease from 2.7 million in 1990 to 1.6 million cattle in 1993.  This figure is expected to
decrease further due to the impact of cattle lung disease (Contagious Bovine  Pleuropneumonia ) which
affected the north-western part of the country, where over 300,000 cattle had to be destroyed in1995/96.  The small-stock (sheep and goats) populat ion is estimated at 2.1 million (1.8 million goats
and 0.3 million sheep).
17. The Government has aimed to maintain a high, but sustainable, level of cattle production
through improved livestock management and husbandry techniques, land conservation, and a more
efficient land-tenure system.  The On-farm Artificial Insemination Pilot Programme and range resourceconservation played a vital role in improving the value of the national herd.  The Ministry of
Agriculture has also placed more emphasis on the prevention and control of diseases of economic
importance.  As a result, Botswana has been free of foot-and-mouth disease since 1980, through the
establishment of an effective network of veterinary cordon fences and quarantine camps.  The cordon
system has effectively controlled disease outbreaks, and as a result maintained access to export markets,especially the European Union, which offers preferential terms to Lomé Convention signatories able to
satisfy the stringent disease-control criteria.
18. Botswana is a net exporter of beef;   beef processing accounts for 80% of agricultural output,
and over 95% of production is exported.  The normal yearly off-take of 10% is processed by the
Botswana Meat Commission (BMC).
3  The capacity of its abattoir in Lobatse, Africa's largest, is
800 head of cattle and 500 small stock per day.  A second abattoir with daily throughput of 115 head of
cattle was opened in Maun, and a third at Francistown in 1990 with a daily throughput capacity of 400
cattle.  However, the Maun abattoir was closed in 1996, as a result of the contagious lung disease in
Ngamiland, and is not expected to open for some years.  The three abattoirs have a combined annual
slaughtering capacity of 300,000 cattle and 130,000 small stock.  The decentralization of slaughtering
facilities was designed to make it easier for all breeders to market their cattle.  However, BMC has not
operated at full capacity, largely due to low off-take rates caused by inadequate marketing infrastructure
and low prices.
                                                     
3BMC has a statutory monopoly over exports of meat, canned meat and live cattle, and is the main outlet
for the country's beef producers.  It assumed its present form in 1965, and functions as a producer cooperative.  Itpays a turnover tax in lieu of income tax, and aims to maximize its suppliers's returns.Botswana WT/TPR/S/35
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1979 80 81 82 83 84 85 86 87 88 89 90 91 92 199305001,0001,5002,0002,5003,0003,500('000)Chart IV.4
Livestock population, 1979-93
Source :    Data provided by authorities of Botswana.Goats Cattle Sheep
19. Under the provisions of the Lomé Convention, Botswana's exports to the EU market benefit
from a rebate of 90% of the former variable levy (now 90% of the specific element of EU "tariffied"
duties under the WTO Agreement on Agriculture).  Botswana has an annual export quota of nearly
19,000 tonnes, but has rarely filled it.  There is a cannery producing corned beef for export, and the
BMC has established a cold storage and distribution company in London, which handles the marketing
of beef to the EU and also acts as sales agent for beef from Zimbabwe, Namibia and Swaziland.
20. Between 1991 and 1995, BMC produced 20,867 tonnes of beef annually and exported
19,500 tonnes. BMC contributed 5% annually to domestic consumption, while beef consumption
countrywide averaged 50,000 carcasses in municipal (local) abattoirs and home slaughter.  Table IV.1
shows BMC sales by product and market share in 1993.WT/TPR/S/35 Trade Policies Review
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Table IV.1
BMC sales by product and market share, 1993
(P million unless otherwise indicated)
Product / MarketUnited
Kingdom GermanyOther
Europe Reunion South Africa Totala% product
share
Beef
ChilledFrozen27.3
11.918.0
14.03.2
12.9
b34.8
1.00.4
18.383.8
58.050.5
34.9
Corned beef3.5 0.0 0.2 0.0 0.1 3.8 2.3
Wet blue hides0.0 0.0 12.8c 0.0 2.8 15.6 9.4
Carcass meat0.0 0.0 0.0 0.0 0.1 0.1 0.0
Edible offal3.1 0.0 0.1 0.0 1.5 4.7 2.8
Totala45.8 32.0 29.2 35.8 23.2 166.0 100.0
Market Share (%)27.6 19.3 17.6 21.6 14.0 100.0 -
a Including other lesser-value products and smaller markets (Hong Kong, Mauritius).
b Netherlands.c Italy.
Source: Central Statistics Office.
(c) Forestry
21. There are large areas of deciduous forest in the north-east of Botswana, with mopane trees
prevalent throughout the north;  six areas have been gazetted as reserves in Chobe district, containing a
minimum of 320,000 cubic metres of timber in total.  A sawmill has been established in Kasane, with
teak, mukwa and mukusi the main species felled.  Resource inventories of forest reserves in the north
are being made and, pending their outcome, no further concessions will be granted.  Natural forest and
bush continue to be overexploited as a source of fuel for domestic heating and cooking.
(d) Fishing
22. Fishing is not conducted on a commercial scale and is confined to the Chobe river and
Okavango Delta, where it provides a small supplementary food source.
(3) Mining
23. Mining has provided the basis for Botswana's economic development, and the country is now
the third largest African mining producer, after South Africa and the Democratic Republic of the
Congo.  Diamonds, copper-nickel, coal and soda ash ar e exploited, together with small amounts of gold.
The mining sector contribution to GDP rose from only 1% in 1971/72 to 51% in 1988/89 on the back of
diamond output and a strong recovery in the world diamond market in the late 1980s. The sector's
importance had declined to 33% of GDP in 1994/95.
24. The primary legislation governing the disposition of mineral rights in Botswana is the Mines
and Minerals Act, (Cap. 66:01).  All mineral rights in Botswana are vested in the State, but the private
sector is actively involved in all facets of mine ral resources development such as exploration and
exploitation.  Mineral exploration and development are controlled by the Ministry of Mineral Resources
and Water Affairs, MMRWA.  The Ministry has two main departments dealing with mineral resources:
the Department of Geological Surveys (G S) and the Department of Mines (DOM).Botswana WT/TPR/S/35
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25. The primary function of GS is to carry out fundamental research and monitor private sector
exploration.  Among some of its activities is pro duction of high quality geological maps and brochures
against which the possibility of mineral occurrences can be assessed.  The main activities of DOM
include the appraisal of all mining lease applications;  monitoring of mining operations;  monitoring
progress and project development through regular visits;  and routine inspection of mining and
quarrying operations.
26. In addition, DOM administers the following Acts which cover all mining-related activities:
Mines and Minerals Act (Cap. 66:01);  Mines, Quarries, Works and Machinery Act (Cap. 44:02);
Precious and Semi Precious Stones Industry (Protection) Act (Cap. 66:03);  and the Atmospheric
Pollution (Prevention) Act, (Cap. 65:03).
27. Reconnaissance permit and prospecting licence applications are made to the Minister through
the Director of Geological Surveys.  Parts IV and V of the Mines and Mineral Act outline the
requirements of the Act as they relate to application of reconnaissance permit and prospecting licence
respectively.  A reconnaissance permit is issued for a maximum period of one year, free of charge, butdoes not entitle the holder to any exclusive rights over any area.  A prospecting licence is issued for
three years, renewable twice for two-year periods, with a 50% reduction of the licence area at each
renewal.  The maximum area given under the licence is 1,000 km
2, at a basic arrival charge of P l/km2
with a minimum charge of P 250 per annum.  Companies are not restricted in the number of prospectinglicences they hold on the condition that they have the necessary financial and technical resources tocarry out their prospecting programmes.
28. Mining leases in Botswana are of two types:  ordinary and restricted. The ordinary mining lease
granted for a period not exceeding 25 years, and renewable for a further 25 years maximum, gives the
investor the exclusive right to extract the mineral(s) only within the defined lease area. The basic charge
is P 48.00/km2 per annum.  The restricted mining lease, which is issued mainly for building andindustrial minerals, is granted for a period not exceeding 15 years, also renewable for a period not
exceeding 15 years.  The basic area charge is also P 48.00/km
2 per annum. Applications for all types of
mining leases are made to the Minister through the Director of Mines.  All the requirements for mining
lease applications are stipulated in Part VI and Part VII of the Mines and Mineral Act. Precious and
semi-precious stones dealers are charged a fee of P 250 per licence per annum.
29. The private sector continues to be the main vehicle for exploration and development of
minerals in Botswana.  The Government's role is to maintain a general business climate conducive to
private-sector activity and provide efficient administration of mineral concessions.  The Government,
therefore, does not reserve any mining and processing activities to public enterprises;  however, it
maintains a policy of state participation in mining projects, where Government may take 15 to 20 %
equity in a mineral development project.
30. Mining operations in Botswana are subject to corporate tax, currently 15%, and an additional
10% company tax.  A 15% withholding tax, which can be offset against the additional tax, is levied on
dividends.  Royalty rates are calculated as a percentage of the gross market value of the mineral
(Table IV.2).WT/TPR/S/35 Trade Policies Review
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Table IV.2
Royalty rates for various mineral types
Mineral type % Royalty
Precious stones10.0
Petroleum and natural gas10.0
Radioactive minerals5.0
Precious metals5.0
Semi-precious stones5.0
Coal5.0
Oil shale5.0
Building and industrial minerals3.0
Others3.0
Source:  Department of Mines, Botswana.
31. The taxation of diamond mining is subject to an agreement between the Government and the
foreign shareholder.  The diamond mining company, Debswana, pays all the usual company taxes, plus
a dividend to the Government on its 50% shareholding in such a way that the total amount of revenue to
the Government equals a percentage of profits ag reed between the two parties.  The exact amount of
this percentage has never been made public, but is believed to be more than 75%.
32. There are no governmental controls on mineral prices, which are determined in the world
market. There are also no governmental controls on the export and import of minerals.  Companies are
only required to comply with Customs regulations.
33. Botswana pays attention to environmental protection.  In addition to the environmental
requirements stipulated in the Mines and Minerals Act, other Acts which provide guidelines for theprotection of the environment include:  the Mines, Quarries, Works, and Machinery Act and the
Atmospheric Pollution Prevention Act.  One of the requirements of the Mines and Minerals Act when
applying for a mining lease is that an Environm ental Impact Assessment (EIA) study be undertaken;
the EIA provides a baseline environmental status of the area in and around the proposed project site.
Companies are also required to provide an Environmental Management Programme which shouldensure minimal environmental degradation due to the mining operation. Upon expiry of the mining
lease or termination of operations, the company is required to rehabilitate sites adversely impacted by
mining operations.
(i) Diamonds
34. Diamonds remain the leading export commodity, contributing 68.6% of total exports during the
first half of 1996 compared to 71% during the same period in 1995.  Botswana's output is marketed
exclusively by De Beers' Central Selling Organiza tion, and Debswana renewed its five-year exclusive
marketing arrangement with the CSO in 1996.  Sorting is carried out in Gaborone by a Debswana
subsidiary, the Botswana Diamond Valuing Company, and the valuations are checked by a
government-appointed firm, Diaval Ltd. before th e stones are exported. In 1982-85 Botswana had to
stockpile an estimated 20% of annual output under the CSO deferred-purchase clauses. With increases
in capacity at Jwaneng and the depreciation of the pula against the dollar, exports have continued togrow in pula value terms despite the quotas imposed by the CSO;   in 1995, export earnings set a new
record of P 4 billion.Botswana WT/TPR/S/35
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35. The existing diamond mines had reached planned production limits by the early 1990s, making
Botswana the second largest volume producer after Australia, and second only to Russia in value ofoutput.  In 1991 production was reduced to 16.5 million carats, in line with the long-term mining plan,
and to 15.9 million and 14.7 million carats in the fo llowing two years.  With the commissioning of the
fourth stream at Jwaneng, late in 1994, production for the year rose to 15.5 million carats and to 16.8
million in 1995.  Further expansion is limited by market considerations rather than by physical or
financial constraints, but the introduction of seven-day continuous working weeks in January 1997 isestimated to have increased capacity by some 15%.  By the year 2000 a major new investment in
treatment capacity at Orapa will double output there, bringing the national capacity to an estimated 23
million carats.
36. The vulnerability of the industry to adverse trends in the world market was heightened in 1992,
when increased supply, mainly in the form of smuggled Angolan diamonds, caused a 13% drop in
Botswana's sales of rough diamonds.  The CSO was forced to introduce quotas in September 1992,
reducing all producers' delivery entitlements by 25%.  This was eased to 15% in July 1993.  Total salesof rough diamonds through the CSO in 1994 were $4.25  billion, rising to a record $4.3 billion in 1995.
37. Botswana has two diamond cutting and polishing factories.  A subsidiary of Debswana,
Teemane Manufacturing began operations in mid-1992 at Serowe in Central district, and a U.S. firm,
Lazare Kaplan International (LKI), opened its P 60 million plant in Molepolole near Jwaneng in
mid-1993.  The latter plant, in which the Botswana Development Corporation (BDC) has 15% equity, istreating uncut gems that would otherwise be worked in Puerto Rico.
(ii) Other minerals
38. Other minerals mined in Botswana include coppe r-nickel, coal, soda ash, salt, gold, manganese
and semi-precious stones (Table IV.3).
39. Production of copper-nickel matte at Selebi-Phikwe began in 1974, and output rose steadily,
reaching 50,000 tonnes per year by the late 1980s.  However, the value of sales of matte declined
consistently during the 1980s, owing to depressed international prices of copper and nickel. In 1995, the
high-grade matte production from BCL amounted  to 48,500 tonnes containing some 18,000 tonnes of
nickel, 20,500 tonnes of copper and 271 tonnes of cobalt. Copper-nickel matte output is refined in
Norway and Zimbabwe, under long-term sales contracts.
40. It has been estimated that there are at least 17 billion tonnes of coal reserves suitable for power
plant use in eastern Botswana. Plans to exploit Botswana's coal reserves have been restricted by the low
level of international prices. Coal is mined only at Morupule for use within Botswana. Morupule
Colliery commenced production in 1973 and produced 898,000 tonnes in 1995.
41. Soda ash production started in 1991, with production of 62,000 and 2,600 tonnes of soda ash
and salt. The Sua Pan, covering roughly 3,500 square kilometres, contains estimated brine reserve
deposits of 16 billion cubic metres.  In January 1996, severe flooding halted production, which resumedon a smaller scale in April and full production was restored by the end of 1996.  South Africa is the
main market for soda ash for use in the production of chlorine alkalis. Zambia and Zimbabwe are also
sizeable markets. Soda ash is also a raw material for local industries such as glass manufacture.WT/TPR/S/35 Trade Policies Review
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42. Gold is produced in small quantities in the Francistown area, and in 1989 production more than
trebled to 67 kg. with the commissioning of a new underground mine at Map Nora.  The old Monach
mine was re-commissioned with modern technology and now produces the bulk of Botswana's output.
43. Semi-precious stones, mainly pink carnelians and agates, are collected in small quantities, and
local cutting and/or polishing has been made a condition for the granting of new licences.  Two
companies processed a total of 67 tonnes in 1994 but one was forced to close the following year and
production dropped to 20 tonnes.
Table IV.3
Minerals output and value of production, 1991-96
(Thousand tonnes unless otherwise indicated)
1991 1992 1993 1994 1995 1996
Diamonds (mn carats)16.5 15.9 14.7 15.5 16.8 13.1
Copper-nickel matte48.3 48.1 50.8 51.5 48.5 46.0
Soda ash56.7 123.6 126.0 174.0 201.7 119.0
Salt3.0 54.0 98.0 186.0 208.0 94.0
Coal783.9 901.5 890.0 900.3 898.4 765.0
Semi-precious stones (tonnes)1,124.0 994.0 910.0 712.0 963.0 914.0
Gold (kg.)20.0 165.0 192.0 234.0 86.0 ..
Valuea (P million) 3,318 3,121 3,079 3,951 .. ..
of which diamonds2,652 2,671 2,642 3,348 .. 4,069
.. Not available.
a Officially estimated production values, not equivalent to mineral export earnings or sales.Source: Department of Mines, CSO and EIU.
(4) Manufacturing
44. Although the manufacturing sector accounted for only 6% of GDP in 1994-95, manufacturing
output expanded rapidly in the 1980s and into the early 1990s, with export-oriented textiles and vehicle
assembly showing strong growth. Manufacturing and agricultural processing industries are mostly
privately owned with the exception of the slaughter of cattle at the Botswana Meat Commission.
45. Manufacturing GDP increased by an annual average of 8.9% over the period 1980-92.
However, the sector's output contracted in 1992/93 a nd 1993/94, as the textiles subsector was adversely
affected by trends in export markets, particularly in Zimbabwe, where demand was reduced temporarilyby the drought and in the longer run, by devaluation of the Zimbabwean dollar. Constraints such as
shortages of serviced land and high rents, high utility and transport costs, and low labour productivity
are also inhibiting  expansion of the manufacturing sector, despite the Government's stated commitment
to manufacturing-export-led economic diversification.
46. In 1994-95, the sector started to recover strongly with diversification of markets for textile
products, as well as exports of new products such as  assembled motor vehicles.  Formal employment in
manufacturing increased from 21,700 in March 1994 to 23,444 in March 1995.  This expansion
represented a considerable diversification of Botswana's manufacturing base, with textiles, beverages,
chemicals, paper, metals, plastics, and electrical products experiencing the highest rates of growth.Botswana WT/TPR/S/35
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47. The New Industrial Policy is aimed at fostering a core manufacturing capacity that is export
oriented, highly productive, competitive and sustaina ble.  Emphasis is given to developing small and
medium-scale component and supplier firms, both for products and services, that will create strong
linkages with large core firms and increase employment and valued added in Botswana.  The industrial
policies seek to continue to improve the environmen t for investment in Botswana through maintaining
or improving international market access and improving services for domestic and foreign owned
investors and exporters.
48. The production of labour-intensive goods, such  as textiles, appears to have considerable
potential since labour costs are relatively low. Botswana was not a signatory to the Multifibre
Arrangement and its exports of textiles and clothing are not subject to quantitative restrictions.
Table IV.4
Manufacturing output, employment and exports, 1986-95
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995a
Output
Current prices (P million)124 168 192 289 324 362 412 449 500 594
Constant prices (P million)124 146 190 242 254 270 288 285 281 293
Real growth (%)18.0 30.0 27.0 5.0 6.0 7.0 -1.0 -1.0 4.0
Employment
Manufacturing 10,600 12,900 15,300 18,100 23,300 26,000 25,500 22,100 21,700 23,400
Growth (%)22.0 19.0 18.0 29.0 12.0 -2.0 -13.0 -2.0 8.0
Total private66,900 80,300 93,800 104,900 124,200 142,500 141,500 131,800 136,200 136,500
Exports
Textiles (P million) 43 59 60 80 112 123 76 95 177 103
Vehicles (P million)00 000 00 9 1 3 0 1 6 0 4
Other (P million)122 144 143 181 197 213 240 334 261 221
Total non-trad (P million)165 203 203 261 309 336 316 520 739 928
Total (P million) 1,619 2,665 2,678 3,743 3,319 3,738 3,675  4,179 4,964 4,300
a Estimates.
Source: Central Statistics Office.
49. While there is a good potential for manufacturing activities in processing minerals including
diamond polishing and agricultural products - as the le vel of local processing of such products is low -
the automobile industry (largely directed to the Southern African market under the SACU Agreement)
remains one of the priority sectors through which the Government hopes to intensify its economic
diversification efforts.  This sector offers opportunities for manufacturing of tyres, batteries, leather
seats, and paint as well as vehicle assembly.  The light industrial sector offers opportunities in leathergoods manufacturing, jewellery (diamonds), computer  assembly and household equipment.  Likewise,
opportunities exist in agri-business for processing of hides and skins into finished products.  Currently,
skins from Botswana Meat Commission abattoirs are processed up to the wet blue stage and then
exported for final processing abroad.
(5) Services
(i) Energy
50. The three main sources of energy supply in Botswana are wood, coal and petroleum;
electricity is generated from coal and diesel oil.  Electricity production was 1.3 billion kWh in 1994/95,WT/TPR/S/35 Trade Policies Review
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including 310 million kWh imported from South Africa and Zambia.  In 1994 about 58% of total
energy supply came from wood, 23.1% from coal, 18% from petroleum products and about 0.5% fromelectricity.  The country also has abundant potential for power from solar energy resources, but its
current contribution to energy use is negligible.
51. The energy unit of the Ministry of Mineral Resources and Water Affairs (MMRWA) is
responsible for the formulation, direction, and coordination of national energy policy. At present,
generation, transmission and distribution of electricity  are under the monopoly of the Botswana PowerCorporation (BPC), a parastatal under MMRWA.
52. Nearly all Botswana's refined oil needs are supplied from South Africa, with storage tanks
providing several months' reserves in case of interruption of supply.
(ii) Transport and communications
53. Existing transport facilities are concentrated in the eastern corridor and most international trade
goes via South Africa.  The Beira Corridor through Zimbabwe and Mozambique provides an alternative
route to the Indian Ocean.  The main north-sout h highway provides a through-route between South
Africa and Zambia.  The Trans-Kalahari highway, now under construction, will provide Botswana with
an additional outlet to world markets via Walvis Bay on the Namibian coast and will shorten the road
distance between Johannesburg and Windhoek by about 400 km.
54. There are regular domestic flights between major centres in Botswana. Air Botswana flies to
four regional destinations, including Johannesburg, Harare and Windhoek.  Intercontinental flights arealso serviced through the Gaborone international airport, which opened in 1986.
55. Botswana's main railway line runs for 640 km. from Plumtree in Zimbabwe to Ramatlabama on
the border with South Africa, via Francistown, Gaborone and Lobatse. It carries the bulk of the
country's exports of copper-nickel and beef for shipment via Cape Town and is also an important route
for transit traffic between Zambia, Zimbabwe and South Africa.
56. The road network in Botswana comprises some 8,000 km. linking the main population centres;
over 3,000 km. are tarred.
57. Botswana Postal Services (BPS) operates a po stal services network throughout the country, in
competition with private courier companies.
(iii) Telecommunications
58. The telecommunications sector showed significant growth during NDP7.  The number of
telephone lines increased from 31,000 to 70,000 during the planning period (Table IV.5).  Telephone
penetration increased from 2.5 to 4.5 direct exchange lines per 100 inhabitants which in Africa, is
surpassed only by Namibia (4.9), South Africa (9.6) and Mauritius (13.5).
59. The present telecommunications sector is singularly dominated by the Botswana
Telecommunications Corporation that provides mainly voice, telex, data and facsimile services.  The
new Telecommunications Act, 1996 (No. 15 of 1996) established a regulatory body entitled BotswanaTelecommunications Authority.  The prime objective of the Authority is to guide and promote the
telecommunications industry for the benefit of Botswana.  The Authority, which assumed its licensing
powers on 1 July 1997 is responsible for a sound development of telecommunications services in
Botswana and will licence operators in the liberlized telecommunications industry.  It will also act as
the referee in the market, issue regulations and adjudicate in disputes.Botswana WT/TPR/S/35
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Table IV.5
Botswana telecommunication indicators, 1990-97
Year ending 31 March
Indicator 1990 1993 1994 1995 1996 1997
Main telephone lines22,195 36,477 43,487 50,447 59,673 72,189
Main lines per 100 inhabitants1.85 2.81 3.35 3.55 3.99 4.7
Telephone stations (sets)41,253 66,095 76,069 86,401 98,546 112,737
Total line exchange capacity27,186 50,677 58,924 65,512 71,596 84,912
Percentage of digital main lines94.2 97.00 99.7 100.0 100.0 100.0
Waiting list4,585 11,230 11,842 24,786 11,484 9,300
Public pay-phones207 413 528 457 636 1,028
Telex subscribers 684 419 383 344 402 194
Facsimile machines160 235 1,700 2,100 3,149 291
Full-time telecommunications staff961 1,579 1,602 1,645 1,624.1 1,610
Telecom staff per 1,000 main lines43.3 43.29 36.84 32.61 26.18 22.3
Total telecom revenue (P million)86.47 147.94 164.1 185.06 203.5 233.3
Telecom revenue as a % of GDP1.3 1.6 1.8 1.7 1.6 1.3
Annual investment in telecom (P million)67.64 160.75 134.55 102.61 101.05 68,618
Source:  Botswana Telecommunications Corporation.
60. The Authority released an international tender for the procurement of mobile telephone services
in May 1997.  The Board of Botswana Telecommunications Authority accepted tender bids in respect
of Mascom Wireless Consortium and Vista (Pty) Ltd. on 17 December 1997 pending the final
confirmation of the Authority's acceptance of the tender after the approval and finalization of the
appropriate terms and conditions of two licences.  The licences will, on confirmation, be issued in the
first instance for duration of 15 years each and may be renewed.  The two licence packages entail a
common mandatory coverage area - essential covering of the most populous part on the eastern side of
Botswana.  Both licensees will be for country coverage.  Whilst Botswana TelecommunicationsCorporation (BTC) will compete freely with new entrants on equal terms, the Government nevertheless
decided in the policy framework that BTC should  in the meantime be contracted to operate and
maintain the national network under a performance contract which will define the performance target
within a given period.
(iv) Financial services
61. The Botswana banking system currently comprises five registered banks:  the Bank of
Botswana (The Central Bank) and four commercial banks (Barclays Bank, Standard Chartered Bank,
First National Bank and Stanbic Bank Botswana Lt d.).  The Bank of Botswana is responsible for
management of Botswana's monetary policies and foreign exchange reserves.  The bank also
administers exchange controls and regulates financial institutions operating in Botswana.  Non-bankfinancial institutions include six registered parastatals:  Botswana Development Corporation, Botswana
Building Society, National Development Bank, Botswana Savings Bank, Tswelelo, and ULC
(a hire-purchase/leasing company).
62. Under the Banking Act, 1995, the guidelines for the granting of banking licences and the
minimum criteria for the authorization of new banks, are applied equally to all new entrants to thebanking system, irrespective of the origin of the bank.  However local participation in the ownership
and management of financial institutions/banks is encouraged.  The Act also requires the Bank of
Botswana (the reserve bank) to determine the minimum prudential requirements for a banking licence,
with capital adequacy, ownership and management, acceptable legal form, realistic business plan and
consolidated supervision being the critical factors.WT/TPR/S/35 Trade Policies Review
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63. The minimum prescribed capital for the various categories of financial institutions is the greater
of P 5 million of 8% of the risk weighted assets and other risk weighted exposures of the bank, for
commercial banks and investment/merchant banks.  For discount houses and credit institutions the
minimum prescribed capital requirements are the greater of P 2.5 million or 8% of the risk-weighted
assets and other risk-weighted exposures of the bank.
64. The Banking Act, 1995, requires that no applicant shall be granted a licence unless it is
incorporated under the Companies Act and limited by share capital, and the bank is satisfied that theapplicant is a fit and proper person to be a recipient of a banking licence.  The licensing application by a
branch or subsidiary of an international bank or  international banking group, will be considered only
where the supervisory authority in the country of origin of that bank or group, effectively exercises its
supervisory responsibilities on a consolidated basis.  Moreover, the Bank of Botswana will follow theinternationally recommended Basle Committee of Bank Supervision procedures of ensuring that the
parent bank is adequately supervised and that the parent bank's supervisory authority can comment
favourably about the applicant.  Prior consent of th e home country shall be obtained in respect of an
application for authorization from an international bank, international banking group or international
financial group.
65. Any new applicant for a banking licence must be committed and be able to provide effective
competition in the banking sector.  In this regard, the applicant must submit a detailed business planincluding intended products and services, scope of business operations, markets to be served and
realistic financial forecasts for a period of at least three years.  The structure, expertise and experienceof the board and senior management should relate to the type of banking operations to be undertaken by
the applicant.  The Bank must be satisfied that executive directors and senior executives are fit and
proper persons and have appropriate competence and experience in financial services and banking.  The
Bank of Botswana will view the proposed Chief Executive Officer as one of the most important factors
of the bank's chance of success.  The Bank may conduct background investigations of the director's
executive officers and controlling shareholders as it deems fit, to determine if they are fit and proper
persons for purposes of satisfying the requirements of the Act.
66. Commercial banks are required under the Act to report any transactions by their clients which
they suspect to be of a money-laundering nature. Further, the new Act restricts lending by the
commercial banks to their directors and related inte rests, without the Bank of  Botswana's approval, to
10% of the bank's core capital.
67. An Insurance Act has been in effect since 1987.  Under the Act, only resident registered
insurers can be licensed.  This automatically restricts the rights of residents to purchase foreign
insurance.  The licence is granted by a Registrar.  Each insurer is expected to maintain a Statutory
Reserve Solvency Account and shall in every year, before any dividend is declared, transfer to such
account a sum equivalent to 10% of its gross profits.  Currently, the insurance industry is dominated by
Botswana Insurance Holdings Ltd. (BIHL) and Botswana General Insurance, although they face
competition from two smaller companies, namely, Botswana Eagle and Mutual and Federal Insurance.The Government intends to review the present pol icy of protecting the Botswana insurance industry
against foreign competition.
68. Short-term finance, including pre- and-post-shipment credit, is readily available through the
commercial banking system at market rates of interest.  Export credit insurance is available through
local insurance companies.  Foreign exchange is available to local importers upon proof of receipt of
the goods and the amount of payment due.Botswana WT/TPR/S/35
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(v) Tourism
69. Botswana's tourist attractions are mostly based on its significant wildlife resources.  National
parks and game reserves occupy 17% of the total area, with a further 20% set aside for wildlife
management areas.  A wide range of tours and safaris is available in most of the parks and reserves to
cater for interests such as bird-watching, fishing, photography, and hunting.
70. According to the latest estimates by the Hote l and Tourism Association of Botswana (HATAB)
and Botswana Confederation of Commerce,  Industry and Manpower (BOCCIM) (Tourism
Development Guide of June 1995), the tourism industry contributes about 3% to GDP per annum.  The
number of people employed in tourism-related activities (e.g. hotels, airlines, safari companies,
handicrafts, transport, etc.) was estimated at 27,000.
71. In 1995, the number of tourist visitors to national parks and game reserves stood at 50,000, a
two-fold increase over the 1994 figure. The total reception capacity of establishments, including lodges,
hotels and motels, increased from 2,211 beds in 1990 to 3,298 in 1995.  However, a declining trend was
recorded for occupation rates (Table IV.6). Tourism makes a small, but growing contribution toexternal revenue.
Table IV.6
Hotel capacity, 1990-95
Year 1990 1991 1992 1993 1994 1995
Rooms1,234.00 1,412.00 1,629.00 1,709.00 1,773.00 1,724.00
Beds2,211.00 2,560.00 3,081.00 3,131.00 3,242.00 3,298.00
Occupation rates (Rooms, %)54.00 57.20 54.60 52.40 51.40 50.60
Occupation rates (Beds, %)40.30 41.10 37.90 35.30 38.30 33.90
Source:  Central Statistics Office, Statistical Bulletin, 1996.
72. Government policies on wildlife and tourism are embodied in key policy documents and
relevant legislation, such as the National Conservation Strategy of 1990, Tourism Policy of 1990,Tourism Act of 1992, Wildlife Conservation Policy of 1986, and Wildlife and National Parks of 1992.
Tourism policy is aimed at keeping Botswana in the upper bracket of tourist destinations.  The
Government continues to promote tourism-led economic growth in order to obta in the greatest possible
net social and economic benefits from natural resources.  The current emphasis is to shift the mix of
tourists away from casual campers towards visitors who occupy permanent accommodation
4;  to
increase substantially the financial returns from tourism to the people of Botswana, especially those
living in the local communities near wildlife habitants;  and to ensure that tourist activities are carried
out in an ecologically sustainable manner.
73. The tourist industry is encouraged principally through financial assistance under the FAP;  this
may be in the form of capital grants, unskilled labour grants, or training grants.  The total value ofunskilled labour plus training grants, summed over a five-year period, should not be more than 50% of
the domestic value added accruing to Botswana citizens over the period.
5  In the tourism sector such
                                                     
4"Casual campers" refers to tourists who, for example, bring with them all their provisions, camp on
public ground for which no charge is levied, purchase no services and pay no local taxes - hence imposing costson the Government from overcrowding of public facilities and degradation of the environment.
5"Domestic value added" is defined as sales revenue minus tradeable inputs minus transfers to citizens.WT/TPR/S/35 Trade Policies Review
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assistance is available to hotels, motels, lodges, guest houses, tourist apartments, tourist camping sites,
caravans, hunting camps, tented-camp safari and tour operators, urban tourism, horse back safaris, walktrails safaris and transport of guest travellers and tourists including travel agents.
74. The key responsibility for the operation of wildlife and tourism related policies falls under the
Departments of Tourism, and Wildlife and National Parks, both of which are within the Ministry of
Commerce and Industry.Botswana WT/TPR/S/35
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