Corruption biggest obstacle to doing business, BITC firms report

Firms supported by the Botswana Investment and Trade Centre (BITC) have rated perceptions of corruption within government procurement as the biggest impediment to their operations in the country, a survey by the parastatal indicates.

The BITC’s survey was designed to gauge the investment climate for businesses that it supports, in the interests of increasing domestic investment and export earnings, while also promoting Botswana as a place to live, invest and work.

The survey, conducted amongst BITC-assisted and accredited companies, found that the major challenge mentioned by respondents was corruption perceptions, followed by cost of utilities, inefficient government bureaucracy and cost of inputs.

Of the surveyed firms, 36% of them reported corruption perception as a “severe obstacle” to doing business locally, while 33% cited inefficient government bureaucracy. Other major obstacles cited include electricity cost, poor work ethic, immigration laws and access to land.

“Challenges remain in terms of corruption perception especially in government procurement, cost of fuel, utilities and inefficient government bureaucracy,” the BITC said in a report released this week on the survey.

Although the BITC did not provide details, the high perception of corruption in government procurement resonate with long running concerns raised by businesses in the country, particularly after the Auditor General’s damning report on COVID-19 spending.

Released last November, the report found that millions of pula went wasted, unaccounted for or abused in the first eight months of 2020 following the declaration of COVID-19 as a global pandemic, with inexperienced companies grabbing tenders at inflated prices but failing to deliver.

However, the BITC survey also found that firms remained positive about investing and doing business in Botswana with about 72% of all respondents planning to expand their operations in the country in the next three years.

Most respondents noted that their main reason for expansion is to expand the local market, product diversification as well as expand their export. Other reasons include seeking new markets especially export markets and opportunities brought about by the COVID-19 pandemic.

“About 15% of the businesses noted that they will continue to operate at the same size in Botswana while about four percent are considering reducing the size of the operations in Botswana,” reads the report.

The respondent companies were from different sectors of the economy including manufacturing, agriculture/agribusiness, financial and business services, ICT, education and transport logistics. The ownership of the companies was dominated by citizen-owned companies with foreign owned companies constituting about 20%. Most of the companies made annual revenues greater than P10 million, which is considered large.

While Botswana aspires to be an export-led economy, only 50% of the responded companies were exporters. However, the majority of the respondents highlighted their desire to export and utilise trade agreements such as AfCFTA , AGOA and EU-SADC EPA amongst others.

“This will require removal of challenges including lack of incentives, capacity building issues and global competitiveness,” the BITC said.

Recommendations include development of export incentives, development of a capacity-building plans or framework for exporters, improving information dissemination on government policies, investment incentives, facilitating government private sector policy dialogues to improve advocacy as well as reducing inefficient government bureaucracy.