Botswana leading destination for Africa's FDIBy XINHUA | Tuesday, May 15   2012 at  10:12

Botswana attracted approximately $13.5 billion in Foreign Direct Investment (FDI) between 2003 and 2011, placing it among the continent's top 15 targets for foreign capital.

The data is contained in an influential Ernst and Young survey, which includes data compilation and a 500-person field research, released last week.

According to the survey, Botswana attracted approximately 1.5 per cent of FDI that flowed to Africa between 2003 and 2011, with a total of 80 new projects created as a result.

That performance landed Botswana at number 15 among the top FDI targets in Africa, a list led by South Africa, Egypt, Morocco, Algeria and Tunisia.

Botswana's allure within the top 15 is even more remarkable when the oil producers, who are traditionally the top targets of FDI, are removed from the list.

Outside of the oil producers, Botswana was the sixth most attractive target for foreign direct investment, between 2003 and 2011, coming after Kenya, Uganda, Tanzania, Zambia and Mozambique in descending order.

Available documents indicate that between 2003 and 2009, investment in Botswana's minerals sector accounted for the bulk of the FDI (at 38 per cent) with major investors including De Beers and LionOre, which formerly owned the Tati Nickel Mining Company.

Other sectors targeted by foreign capital include metals, financial services, communications, real estate and hotel and tourism. Bucking the trend however, the Ernst and Young survey indicates that nearly 70 per cent of the capital invested into Africa between 2003 and 2011 went into manufacturing-type and infrastructure- related activities and not extractive activities such as mining.

"Of the investment into manufacturing, a large proportion of the capital has gone into natural resource sectors such as oil and gas and mining," the survey says.

"Sixty-four percent of FDI capital investment into the manufacturing sector in Africa from 2003-11 has gone into processing and beneficiation-type activities in the extractive sectors. This is as opposed to simply extracting resources from the ground and shipping these raw materials to foreign markets."

In Botswana, nine new companies accredited by the Botswana International Financial Services Center (IFSC) have committed to injecting $600 million FDI into sectors such as financial services, technology and renewable energy, in their first year of operation.

Improving perceptions

Ernst and Young researchers said perceptions among foreign investors towards investing in Africa were slowly improving, particularly when respondents were asked about their long-term view.

"Sixty per cent of our respondents say that their perception of Africa as a place to do business has improved over the past three years against only 11 per cent who say their perception has deteriorated," the researchers said.

"Some 73 per cent of respondents anticipate that Africa's attractiveness will improve over the next three years, while only four per cent believe that it will deteriorate."

To further sharpen its thrust for export promotion and investment attraction, Botswana has merged the export development and investment authority with the international financial services center.

The new body, the Botswana Investment and Trade Center, is set to launch soon.