2017 Index of Economic Freedom

Botswana

overall score70.1
world rank34
Rule of Law

Property Rights58.1

Government Integrity57.6

Judicial Effectiveness54.0

Government Size

Government Spending61.2

Tax Burden77.1

Fiscal Health99.4

Regulatory Efficiency

Business Freedom68.8

Labor Freedom68.6

Monetary Freedom77.9

Open Markets

Trade Freedom83.8

Investment Freedom65.0

Financial Freedom70.0

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Quick Facts
  • Population:
    • 2.1 million
  • GDP (PPP):
    • $34.8 billion
    • -0.3% growth
    • 4.6% 5-year compound annual growth
    • $16,368 per capita
  • Unemployment:
    • 18.6%
  • Inflation (CPI):
    • 3.0%
  • FDI Inflow:
    • $393.6 million
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Botswana’s economy has rebounded from the 2008 global economic downturn. Good management of public finance has resulted in budget surpluses in recent years. The regulatory environment encourages growth, and openness to foreign investment and trade promotes competitiveness and resilience.

The financial sector is fairly well developed, with an independent central bank and little government intervention. The independent judiciary provides strong protection of property rights. In an effort to lessen dependence on diamond production, the government has instituted competitive corporate tax rates, streamlined the application process for business ventures, and committed to increased transparency.

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Background

The Botswana Democratic Party has governed this multi-party democracy since independence from Britain in 1966. The most recent elections, held in 2014, were the most competitive in the country’s history. President Ian Khama won a second term in October 2014, though the BDP for the first time won less than 50 percent of the vote as opposition groups gained significant support from young and urban middle-class voters. Botswana and the U.S. cooperate closely on military issues and are in talks to have Botswana host a U.S. military airfield. Botswana has abundant natural resources, a market-oriented economy, and one of Africa’s highest sovereign credit ratings. In an attempt to diversify the economy through tourism, Botswana focuses on conservation and developing its extensive nature preserves.

Rule of LawView Methodology

Property Rights 58.1 Create a Graph using this measurement

Government Integrity 57.6 Create a Graph using this measurement

Judicial Effectiveness 54.0 Create a Graph using this measurement

Protection of property rights in Botswana is among the best in the region. The government generally respects judicial independence, but because of severe staffing shortages and a case backlog, courts do not provide timely trials. Botswana also is still rated the least corrupt country on the African continent, although there are almost no restrictions on the private business activities of public servants.

Government SizeView Methodology

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 34.4 percent of total domestic income. Government spending has amounted to 36 percent of total output (GDP) over the past three years, and budget surpluses have averaged 2.1 percent of GDP. Public debt is equivalent to 17.8 percent of GDP.

Regulatory EfficiencyView Methodology

The regulatory environment protects the overall freedom to establish and run a business relatively well. A one-stop shop for entrepreneurs is in place, and the process for business closings has become easy and straightforward. Employment regulations are relatively flexible. One of the aims of the 2016–2017 draft budget is containment of subsidies and transfers to state-owned enterprises, but progress has been slow.

Open MarketsView Methodology

Trade is important to Botswana’s economy; the value of exports and imports taken together equals 99 percent of GDP. The average applied tariff rate is 0.6 percent. State-owned enterprises distort the economy, and foreign investment in some sectors is restricted. Generally adhering to global standards in the transparency of banking supervision, the financial sector provides considerable access to credit and has expanded.

Country's Score Over Time

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Regional Ranking

rank country overall change
1Mauritius74.70.0
2Botswana70.1-1.0
3Rwanda67.64.5
4Côte d'Ivoire 633.0
5Namibia62.50.6
6South Africa62.30.4
7Seychelles61.8-0.4
8Swaziland61.11.4
9Uganda60.91.6
10Burkina Faso59.60.5
11Benin59.2-0.1
12Mali58.62.1
13Gabon58.6-0.4
14Tanzania58.60.1
15Madagascar57.4-3.7
16Nigeria57.1-0.4
17Cabo Verde56.9-9.6
18Democratic Republic of Congo56.410.0
19Ghana56.2-6.8
20Guinea-Bissau56.14.3
21Senegal55.9-2.2
22Comoros55.83.4
23Zambia55.8-3.0
24São Tomé and Príncipe 55.4-1.3
25Mauritania54.4-0.4
26Lesotho53.93.3
27Kenya53.5-4.0
28The Gambia53.4-3.7
29Togo53.2-0.4
30Burundi53.2-0.7
31Ethiopia52.71.2
32Sierra Leone52.60.3
33Malawi52.20.4
34Cameroon51.8-2.4
35Central African Republic51.86.6
36Niger50.8-3.5
37Mozambique 49.9-3.3
38Liberia49.1-3.1
39Chad492.7
40Sudan48.8N/A
41Angola48.5-0.4
42Guinea47.6-5.7
43Djibouti46.7-9.3
44Equatorial Guinea451.3
45Zimbabwe445.8
46Eritrea42.2-0.5
47Republic of Congo 40-2.8
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