2013 Index of Economic Freedom

Botswana

overall score70.6
world rank30
Rule of Law

Property Rights70.0

Freedom From Corruption61.0

Limited Government

Government Spending65.1

Fiscal Freedom79.5

Regulatory Efficiency

Business Freedom69.0

Labor Freedom69.8

Monetary Freedom72.0

Open Markets

Trade Freedom79.7

Investment Freedom70.0

Financial Freedom70.0

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Quick Facts
  • Population:
    • 1.9 million
  • GDP (PPP):
    • $29.7 billion
    • 4.6% growth
    • 2.8% 5-year compound annual growth
    • $16,030 per capita
  • Unemployment:
    • 7.5%
  • Inflation (CPI):
    • 8.5%
  • FDI Inflow:
    • $587.1 million
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Botswana’s economic freedom score is 70.6, making its economy the 30th freest in the 2013 Index. Its overall score is 1.0 point better than last year, due primarily to continuing improvements in freedom from corruption and the management of government spending. Botswana is ranked 2nd out of 46 countries in the Sub-Saharan Africa region, and its overall score is well above the regional and world averages.

Botswana’s levels of economic freedom are consistently among the region’s highest. Its economy is diversifying, in large part because of foreign investment attracted by low taxes, political stability, and an educated work force. Botswana 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.

Competitiveness has been underpinned by a relatively efficient regulatory environment and open trade policies, while 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. Although public debt remains low, the government has undertaken fiscal consolidation to reduce high deficits following the global slowdown.

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Background

The Botswana Democratic Party has governed this multi-party democracy since independence in 1966. Ian Khama became president in 2008 upon his predecessor’s resignation and won a full term in 2009. With significant natural resources and a market-oriented economy, Botswana has Africa’s highest sovereign credit rating. Minerals (principally diamonds) account for three-fourths of exports and over 40 percent of GDP. Reduced demand for diamonds during the global economic crisis has contributed to slower GDP growth. Botswana has worked with other countries in the Southern African Development Community to mitigate the impact of the turmoil in neighboring Zimbabwe. Botswana has one of the world’s highest HIV/AIDS infection rates but is also one of the most advanced in combating the disease.

Rule of LawView Methodology

Property Rights 70.0 Create a Graph using this measurement

Freedom From Corruption 61.0 Create a Graph using this measurement

The legal system is sufficient to ensure secure commercial dealings, although a growing backlog of cases prevents timely trials. Protection of intellectual property rights has improved significantly. Botswana remains the least corrupt country on the African continent. The major corruption investigation body, the Directorate on Corruption and Economic Crimes (DCEC), is well regarded.

Limited GovernmentView 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 (VAT). The overall tax burden is equivalent to 30.7 percent of total domestic income. Government spending amounts to 34.1 percent of total domestic output, with budget deficits narrowing. Public debt remains under 20 percent of GDP.

Regulatory EfficiencyView Methodology

The overall regulatory environment encourages entrepreneurial activity. Launching a business costs less than 2 percent of the level of average annual income and requires no minimum capital. Labor regulations are relatively flexible and support the development of a modern labor market. Most prices are set by the market, but the state maintains pricing policies and can influence prices through state-owned enterprises and service providers.

Open MarketsView Methodology

The trade-weighted tariff rate is 5.2 percent. Import licensing and other non-tariff barriers add to the cost of trade. Foreign investment has played a significant role in the privatization of state-owned enterprises. Most land is not available for purchase by foreign investors. The financial sector is one of Africa’s most advanced, and the Botswana Stock Exchange has been growing. There have been no bank failures, and the banking sector continues to expand.

Country's Score Over Time

Bar Graph of Botswana Economic Freedom Scores Over a Time Period

Country Comparisons

Bar Graphs comparing Botswana to other economic country groups

Regional Ranking

rank country overall change
1Mauritius76.9-0.1
2Botswana70.61.0
3Rwanda64.1-0.8
4Cape Verde63.70.2
5Madagascar62-0.4
6South Africa61.8-0.9
7Ghana61.30.6
8Uganda61.1-0.8
9Namibia60.3-1.6
10Burkina Faso59.9-0.7
11The Gambia58.80.0
12Zambia58.70.4
13Tanzania57.90.9
14Gabon57.81.4
15Benin57.61.9
16Swaziland57.20.0
17Mali56.40.6
18Kenya55.9-1.6
19Senegal55.50.1
20Malawi55.3-1.1
21Nigeria55.1-1.2
22Mozambique 55-2.1
23Seychelles54.91.9
24Côte d'Ivoire 54.1-0.2
25Djibouti53.90.0
26Niger53.9-0.4
27Cameroon52.30.5
28Mauritania52.3-0.7
29Guinea51.20.4
30Guinea-Bissau51.11.0
31Central African Republic50.40.1
32Ethiopia49.4-2.6
33Liberia49.30.7
34Burundi490.9
35Togo48.80.5
36Sierra Leone48.3-0.8
37São Tomé and Príncipe 48-2.2
38Lesotho47.91.3
39Comoros47.51.8
40Angola47.30.6
41Chad45.20.4
42Republic of Congo 43.5-0.3
43Equatorial Guinea42.3-0.5
44Democratic Republic of Congo39.6-1.5
45Eritrea36.30.1
46Zimbabwe28.62.3
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