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BOTSWANA
Economic Freedom Score
25
World Rank:
30
Regional Rank:
2
Least
free 0
otswana’s economy has been diversifying, largely
Bpolitical
because of foreign investment attracted by low taxes,
stability, and an educated workforce. The coun-
50
75
Most
100 free
71.1
Freedom Trend
73
try continues to set an example in the management of
large endowments of natural resources. The level of
corruption is the lowest in Africa. An independent judiciary enforces contracts effectively and protects property rights.
ECONOMIC FREEDOM SNAPSHOT
• 2016 Economic Freedom Score: 71.1 (up 1.3 points)
• Economic Freedom Status: Mostly Free
• Global Ranking: 30th
• Regional Ranking: 2nd in Sub-Saharan Africa
• Notable Successes: Open Markets and Fiscal Freedom
• Concerns: Corruption, Management of Public Finance, and
Regulatory Efficiency
• Overall Score Change Since 2012: +1.5
A relatively efficient regulatory environment and open
trade policies have underpinned competitiveness, and
diamond exports have ensured adequate flows of foreign
exchange. The financial sector is fairly well developed,
with an independent central bank and little government intervention.
BACKGROUND: The Botswana Democratic Party has governed
this multi-party democracy since independence from Britain
in 1966. President Ian Khama won a second term in October
2014, though the BDP for the first time garnered less than 50
percent of the vote as opposition groups gained significant
support from young and urban middle-class voters. The 2014
elections were the most competitive in Botswana’s history.
Botswana has abundant natural resources, a market-oriented
economy, and one of Africa’s highest sovereign credit ratings.
Diamonds account for one-third of GDP. In an attempt to
diversify the economy through tourism, Botswana focuses on
conservation and developing its extensive nature preserves. It
has one of the world’s highest HIV/AIDS infection rates but is
also among Africa’s leaders in combating the disease.
How Do We Measure Economic Freedom?
See page 467 for an explanation of the methodology
or visit the Index Web site at heritage.org/index.
72
71
70
69
68
2012
2013
2014
2015
2016
Country Comparisons
71.1
Country
World
Average
60.7
Regional
Average
55.5
Free
Economies
83.9
0
20
40
60
80
100
Quick Facts
Population: 2.1 million
GDP (PPP): $33.7 billion
4.9% growth in 2014
5-year compound annual growth 6.0%
$16,036 per capita
Unemployment: 18.2%
Inflation (CPI): 3.9%
FDI Inflow: $393.2 million
Public Debt: 14.5% of GDP
2014 data unless otherwise noted.
Data compiled as of September 2015.
127
BOTSWANA (continued)
THE TEN ECONOMIC FREEDOMS
Score
RULE OF
LAW
Property Rights
Freedom from Corruption
Country
World Average
70.0
63.0
0
20
40
60
80
Rank
1–Year
Change
28th
32nd
0
–1.0
100
Botswana is still rated the African continent’s least corrupt country, but there are almost no
restrictions on the private business activities of public servants, and political ties often play a
role in awarding government jobs and tenders. Critics have accused President Ian Khama, a
large stakeholder in the tourism sector, of creeping authoritarianism. The legal system is sufficient to enforce secure commercial dealings but very slow.
Fiscal Freedom 79.1
GOVERNMENT
Government Spending 68.4
SIZE
89th
94th
0
20
40
60
80
–0.4
+6.5
100
The top personal income tax rate is 25 percent, and the top corporate tax rate is 22 percent.
Other taxes include a property tax, an inheritance tax, and a value-added tax. The overall tax
burden equals 31.3 percent of total domestic income. Government spending amounts to 32.4
percent of total domestic output. Public debt equals less than 20 percent of GDP.
REGULATORY
EFFICIENCY
Business Freedom
Labor Freedom
Monetary Freedom
66.4
68.5
76.3
84th
51st
103rd
0
20
40
60
80
–0.4
–1.5
+2.4
100
The overall freedom to establish and run a business is relatively well protected. With a one-stop
shop for entrepreneurs in place, opening a business is easy and straightforward. The mismatch
between labor market demand and the supply of skilled workers continues. Governmentadministered prices for electricity and water have risen, but the IMF reported that total grants
and subsidies amounted to less than 7 percent of GDP in 2015.
OPEN
MARKETS
Trade Freedom
Investment Freedom
Financial Freedom
84.0
65.0
70.0
60th
70th
19th
0
20
40
60
80
+11.8
–5.0
0
100
Botswana has a low 0.5 percent average tariff rate, but importing goods can be costly. Many
sectors remain closed to foreign investment, and in most cases, land cannot be sold to foreign
investors. The financial sector is one of Africa’s most advanced, and the stock exchange has
been growing. There have been no bank failures, and the banking sector continues to expand,
although access to financial services remains low.
Long-Term Score Change (since 1995)
RULE OF LAW
Property Rights
Freedom from
Corruption
128
0
+13.0
GOVERNMENT
SIZE
Fiscal Freedom
Government
Spending
+25.4
+13.3
REGULATORY
EFFICIENCY
OPEN MARKETS
Business Freedom
–3.6
Labor Freedom
+1.9
Monetary Freedom +10.4
Trade Freedom
+37.8
Investment Freedom +15.0
Financial Freedom +20.0
2016 Index of Economic Freedom