2014 Index of Economic Freedom

Botswana

overall score72.0
world rank27
Rule of Law

Property Rights70.0

Freedom From Corruption61.2

Limited Government

Government Spending69.8

Fiscal Freedom81.0

Regulatory Efficiency

Business Freedom68.5

Labor Freedom69.7

Monetary Freedom72.4

Open Markets

Trade Freedom82.7

Investment Freedom75.0

Financial Freedom70.0

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Quick Facts
  • Population:
    • 1.9 million
  • GDP (PPP):
    • $31.5 billion
    • 3.8% growth
    • 2.7% 5-year compound annual growth
    • $16,820 per capita
  • Unemployment:
    • 17.8%
  • Inflation (CPI):
    • 7.5%
  • FDI Inflow:
    • $292.5 million
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Botswana’s economic freedom score is 72, making its economy the 27th freest in the 2014 Index. Its overall score is 1.4 points better than last year, due primarily to improvements in investment freedom, trade freedom, and the management of public finance. Botswana continues to be ranked the 2nd freest economy in the Sub-Saharan Africa region, and its overall score is well above the regional and world averages.

Over the 20-year history of the Index, Botswana has improved its economic freedom by 15.3 points, the 18th biggest score improvement. A series of committed reform measures has enabled the country to rise from economically “mostly unfree” to “mostly free.” Score improvements have been achieved in eight of the 10 economic freedoms, notably trade freedom, fiscal freedom, investment freedom, and freedom from corruption.

With overall competitiveness sustained by a relatively high degree of regulatory efficiency and market openness, Botswana’s economic freedom has consistently been among the highest in the Sub-Saharan African region. Its economy has been increasingly diversified, in large part due to dynamic investment attracted by low taxes, political stability, and an educated workforce. Botswana continues to set an example in the management of large endowments of natural resources.

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Background

The Botswana Democratic Party has governed this multi-party democracy since independence in 1966. Ian Khama assumed the presidency in 2008 upon his predecessor’s resignation and won a new five-year 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. Growth fell below 4 percent of GDP in 2012 partly because of a slowdown in the mining sector. In an attempt to diversify the economy through tourism, Botswana has focused on increasing conservation and creating extensive nature preserves. Botswana has one of the world’s highest HIV/AIDS infection rates but is also among Africa’s leaders in combating the disease.

Rule of LawView Methodology

Property Rights 70.0 Create a Graph using this measurement

Freedom From Corruption 61.2 Create a Graph using this measurement

Botswana, the least corrupt country on the African continent, continues to perform strongly in international measures of corruption and takes a tough approach to crime. The legal system is sufficient to enforce secure commercial dealings. A landmark High Court ruling in October 2012 held that customary law could no longer be used to deny a woman’s right to inheritance, setting a critical legal precedent.

Limited GovernmentView Methodology

The top individual income tax rate is 25 percent, and the top corporate tax rate is 22 percent. Other taxes include a sales tax, a value-added tax (VAT), and a property tax. The overall tax burden has fallen to 28.1 percent of GDP. The government has attempted to curb spending to reduce the burdens of slower growth. Spending has fallen to 31.8 percent of GDP, and public debt has fallen to 15 percent of the domestic economy.

Regulatory EfficiencyView Methodology

The regulatory framework generally facilitates entrepreneurial activity. With no minimum capital required, launching a business costs less than 2 percent of the level of average annual income. Obtaining necessary permits remains time-consuming and costly. Relatively flexible labor regulations support the development of an efficient labor market. The inefficient agricultural sector is highly subsidized, and the government influences prices through state-owned enterprises.

Open MarketsView Methodology

Botswana’s average tariff rate is 3.6 percent. The importation of containers remains costly and time-consuming. New foreign investments may require licensing from the government. The small but vibrant financial sector has contributed to dynamic economic growth and economic diversification. The private sector’s access to credit is maintained effectively by the banking sector and well-functioning capital markets.

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
1Mauritius76.5-0.4
2Botswana721.4
3Cape Verde66.12.4
4Rwanda64.70.6
5Ghana64.22.9
6South Africa62.50.7
7Madagascar61.7-0.3
8Swaziland61.24.0
9Zambia60.41.7
10Uganda59.9-1.2
11The Gambia59.50.7
12Namibia59.4-0.9
13Burkina Faso58.9-1.0
14Gabon57.80.0
15Tanzania57.8-0.1
16Côte d'Ivoire 57.73.6
17Kenya57.11.2
18Benin57.1-0.5
19Seychelles56.21.3
20Djibouti55.92.0
21Mali55.5-0.9
22Malawi55.40.1
23Senegal55.4-0.1
24Niger55.11.2
25Mozambique 550.0
26Nigeria54.3-0.8
27Guinea53.52.3
28Mauritania53.20.9
29Cameroon52.60.3
30Liberia52.43.1
31Burundi51.42.4
32Comoros51.43.9
33Guinea-Bissau51.30.2
34Sierra Leone50.52.2
35Ethiopia500.6
36Togo49.91.1
37Lesotho49.51.6
38São Tomé and Príncipe 48.80.8
39Angola47.70.4
40Central African Republic46.7-3.7
41Chad44.5-0.7
42Equatorial Guinea44.42.1
43Republic of Congo 43.70.2
44Democratic Republic of Congo40.61.0
45Eritrea38.52.2
46Zimbabwe35.56.9
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