The ace up Botswana’s sleeve at US-Africa Summit
As the competition for investor attention peaked amongst African nations at the recent summit called by President Joe Biden for the continent’s leaders, Botswana, which had appeared to be losing ground to its continental rivals, pulled out a trump card. Staff Writer, MBONGENI MGUNI was in Washington DC and reports
They may call each other ‘brothers’ and pass ‘fraternal greetings’ at every opportunity. And indeed they are. But African countries are also each other’s rivals for foreign investor attention, the kind that brings in capital, skills transfer, job creation, economic deepening, and for many countries the possibility that the investor will export back to their home country and generate valuable foreign currency. This is not to say African countries aren’t also trying to boost investment and trade amongst each other. The African Continental Free Trade Area (AfCFTA) is a continental priority being pushed for at all levels of governance in all countries. But when the captains of the private sector of the world’s most industrialised and richest nation heed their President’s call to engage with Africa, brothers and their fraternal greetings give way, at least momentarily, to quiet competition, a battle of strategy and skill. Over and above the natural resources, logistical access and population sizes that investors generally hunt for, the key weapon countries wield in the battle for Foreign Direct Investment (FDI) is their investment climates.
Botswana has spent time and millions of pula fine-tuning its investment climate, while also curating Africa’s longest-standing image of peace, stability, prosperity, opportunity and economic liberty. But as the US Africa Leaders’ Summit got underway in the icy American capital last week, the country’s gradual slide down Doing Business and Global Competitiveness reports over the years could be seen in real-time.
I was reminded of the frustration the country collectively feels whenever the global tech giants, such as the Googles, Facebooks, Twitters, Amazons and others, name their African headquarters. The line-up is often the same: Nigeria, Kenya, Ghana, South Africa, and lately, Rwanda.
We shared these concerns as local media in Washington, as Summit organisers frequently popped into the media centre to announce the next US government bilateral engagement with an African government or private sector signing ceremony. Botswana’s name was seldom heard. Instead, the same countries that have been gradually gaining ground on the country in terms of global competitiveness and the attractiveness of investment climates, kept coming up. I put these questions to Keletsositse Olebile, CEO of the Botswana Investment and Trade Centre (BITC), the country’s primary agency for investment attraction.
“Botswana on a relative basis, we are at a heightened level, but the issue of doing business is something that you have to pay attention to on an ongoing basis,” he said, in an interview at the convention centre hosting the summit.
“As you are trying or thinking that you are OK, other countries will be accelerating the reforms that make them better.
“The investor of today is not short of choices on where they can land. “I think we are quite happy with the commitment by government in terms of continuously effecting the ease of doing business reforms and we do advise in that regard as BITC.” According to the CEO, Botswana did receive some attention from the US private sector and leads are being followed up.
“We have specific measures that we are always tracked on,” he explained. “For example, you can talk about FDI, you can talk about joint venture partnerships, you can talk about mobilising domestic investment, but in the end, real success has to be the impact that these things carry on the life of a Motswana and that will be jobs, transfer of skills, transfer of technology, and those are some of the parameters that we will be following.” Olebile added: “The idea is to be very focused and targeted.
When you come here, you come with a plan. You already know the people that will be attending an event of this nature and you need to be targeted on those that could be good prospects to invest in Botswana.” According to the CEO, much interest was garnered from US venture capitalists who are interested in the country’s gas resources as well as rare earth minerals necessary for the electric vehicle batteries. The BITC was also able to explore export opportunities in the US for the mammoth Selebi-Phikwe Citrus project, where production is fast advancing.
In a separate interview a few blocks away, Trade and Industry minister, Mmusi Kgafela was a picture of calm on Botswana’s competitiveness and investor appeal. In Washington DC, Kgafela was Botswana’s point-man, leading both the state-level economic issues and heading the private sector interests championed by the BITC.
“Competitiveness, yes, there were reports to the effect that we have declined, but the latest I saw was that there was a slight improvement,” Kgafela said.
“Where do we place ourselves to ensure that as a country we are more competitive? “Well, we always communicate our attributes to potential investors, industry players for whom we are competing with others and the overwhelming or the narrative which keeps coming up very prominently about Botswana is our stability, our fiscal discipline, the fact that we undergo peaceful elections from time to time with report after report of good elections.
“We embrace human rights and we are considered, looking at all the reports that have been generated, to be the least corrupt. “I’m not suggesting that our neighbours are, but I’m just talking about us and the reports that say so.
“We also are working on infrastructure development which will enable trade. “Often we cite the Kazungula Bridge which gives access to the North and other developments within the country, but our ICT is also developing.
“Our tax regime as well gives us a competitive edge over others.” For the minister, Botswana has legacy attributes which put it a nose ahead of its rivals. Trade relations with the United States date back to the 1980s while the close diplomatic ties precede that. The result is a shared value system around democracy, good governance, economic liberties, and the pursuit of growth, the type of nebulous factors investors look for beyond the codified investment policies. “Because of our history and we being known for peace, investors feel a lot more comfortable when they are domiciled in Botswana than anywhere else.
“There are no threats of compulsory acquisition of investors’ property. “Investors often worry about a change of regime and whether the next one will regard their investment but we have a reliable legal system which knows no regime at all. “Our courts are known in terms of dispute resolution to be reliable and predictable in how they decide their matters. “There’s this general attribute to Botswana which really, at least speaking from my end when I open up all these reports, you find Botswana standing aside from all others.” He adds: “I can tell you Botswana is loved. I was not aware just how much Botswana is loved before I became a minister and I don’t think we know how much we are loved by people. “Obviously some advisers tell me that hey Minister, sometimes the floodgate of interested people be careful of because you may find that some are really money launderers and they will make use of you to launder money, but overall the impression I have is that Botswana is loved so much and there is optimism ahead of us.
“We need to attract and have more conversations with Americans.” The sight of rival government and private sector dealmakers scurrying about in Washington, however, could shake the confidence in the “love” felt for Botswana. A deal room was set up on the second day of the summit from where continuous announcements of agreements were streamed into the media centre. Botswana’s name was not mentioned. Behind the scenes, however, Botswana’s own negotiators were hammering out a trump card deal, which would scoop the efforts being made by continental ‘brothers’ in the US capital. The Corporate Council on Africa, the leading US business association focused solely on connecting business interests between the United States and Africa, announced that Botswana would host its 15th US-Africa Business Summit in June 2023.
The announcement reminded me of the expression: “If the hill will not come to Mahomet, Mahomet will go to the hill”. In this case, however, the hill is willing to come to Mahomet. “The summits are the premier platforms to bring together African heads of state and other senior US and African government officials with top African and American senior business executives,” reads a statement from the council. “The summits address all major economic sectors that are critical to the continent’s development including infrastructure, ICT, health, energy, mining, manufacturing, and the creative industries.” For both Olebile and his minister, the opportunity is a huge opportunity. The deal will essentially bring the US private sector to Gaborone’s doorsteps and give home-ground advantage to the local private sector, which largely could not make it to the Washington Summit. It’s also a checkmate in the battle for strategy and competitiveness among the African ‘brothers’. “I think the best outcome of our participation here is the fact that we have secured hosting the US Africa Business Forum next year in June in Gaborone,” Olebile said. “You know that it’s an event that we observed in Mozambique in 2019 as well as in Morocco recently where the President participated. “We know that we are talking in excess of 2,000 people coming to Gaborone. “That will tend to entrench targeted discussions on what Botswana can do with the US and it will also give the majority of the participating US companies, a first-hand exploration of Botswana in terms of how we look as a country, what pertains there and what they can identify as immediate opportunities to undertake.
“We do believe that yes there’s competition but we have a very good opportunity to direct the interests in the best way we can.”
For Kgafela, the upcoming meeting will more than makeup for the absence of the local private sector at the Washington Summit. “We didn’t come with them this time because it’s more of a government-to-government engagement, but obviously they had expected that because we always try by all means to invite them. “However, it’s more of state-to-state and we didn’t think it would be much worthwhile.
“Once it comes to Botswana, that one will be a business-to-business meeting and there will be ample opportunity for them to network and forge sales relations.” The ball will be in the local private sector’s court to interface with the Americans when they descend on Gaborone next year. The US may be one of the world’s richest partners to trade with, but the private sector there is also notoriously stringent on standards, particularly sanitary and phytosanitary standards.
In addition, the US, in line with the rest of the developed world and agreements made at the United Nations, has hard and fast rules around Environment, Social, and Governance (ESG) standards. These standards spread throughout the value chain and will apply to partners and source markets in Botswana and elsewhere across the continent. In addition, consumers in the US are not only famously litigious but also increasingly ethical in their choices of what to buy, making the American market the ultimate challenge for Botswana and African businesses.
Kgafela says the local private sector has to take on the challenge. “We have to up our game and the quality of our goods and services must be international standard because, at the end of the day, you want your goods and services to be sought-after and the only way to do that is quality.
“There are no quick wins and even our young people must get used to slowly growing their quality. Rome wasn’t built in a day and sometimes the urge to make money overwhelms the importance of paying attention to the quality.
“Perhaps it’s about the pursuit of fast profit at the expense of sustainable growth or accomplishing qualities that can then sustain trade. “This is work for all of us to do.”
As fraternal greetings are exchanged in Gaborone next year, Botswana enjoys a seat at the top table for FDI, but it is those private sectors that are best positioned to engage their US counterparts that will reap the most benefits.