Botswana Economy Overview

Currency

Botswana Pula (BWP)

Working hours

48 hours/week

Public/bank holidays

11 public holidays

Capital

Gaborone

Languages

Tswana, English

Population

~2.4 million

Minimum hourly salary

7.34 BWP

Tax year

1st July – 30th June

Date format

YYYY/MM/DD

Misclassification penalties

Botswana’s labor market laws require that workers be classified correctly. Employers who misclassify employees as independent contractors can face penalties, including back payment of taxes and possible fines.

Fun fact

The Okavango Delta in Botswana is one of the world’s largest inland deltas, covering an area of approximately 15,000 square kilometers. Unlike typical deltas, its waters spread over the land rather than flowing into the sea.

Botswana is a large, landlocked country in southern Africa. It borders Namibia, Zambia, Zimbabwe, and South Africa, which all also block its access to the sea and shipping. This country was previously a British possession but gained independence in 1966. Unlike many other countries, Botswana has had decades of stable democratic leadership.

Since independence, the population has grown steadily, reaching 2.72 million in 2024. The economy has also continued to expand with its GDP, reaching $19.97 billion by the end of 2024. This economy is largely based on agriculture and mineral extraction, most especially diamonds.

In this article, we’ll look at the business opportunities that the economy offers, the qualities of the workers here, and the main ways your business can expand into the Botswanan market.

Overview of Botswana’s Economy

Agriculture is the biggest economic sector employing Botswanans. Roughly 70% of Botswanans work in agriculture, much of it subsistence-based, though this sector contributes very little to the country’s GDP. More important are industry and services, each accounting for about 15% of employment in the country.

The total labor force in Botswana in 2023 was reported as 1,083,957 workers. This is noticeably much less than half of the country’s population and reveals two important characteristics. One is that the population of the country is quite young, with over a third under the working age.

The other is that unemployment is quite high in this country, reaching 27.6% in 2024. This is not bad news for employers, however, as it represents a huge pool of workers that could be hired for new ventures. Botswana’s economy has enjoyed steady growth for decades due to both governmental stability and sound fiscal policies.

From 1980 to 2024, the GDP grew from $1.17 billion to $19.97 billion, or over 17 times its size. While growth was just 1% in 2024, it is expected to increase to 5.2% in 2025. Inflation, which spiked at 12.2% in 2022 due to the global pandemic, has come back under control to 3.8% in 2024 and an expected 4.5% in 2025.

Industry Importance
Mining Botswana is a leading global producer of diamonds, with mining contributing significantly to the country’s GDP and accounting for approximately 80% of its export earnings. Other minerals include copper, nickel, and coal.
Agriculture Agriculture remains a vital source of livelihood for rural populations, focusing on livestock (particularly cattle) and subsistence farming.
Manufacturing The manufacturing sector is developing, with efforts to diversify the economy beyond mining. Industries include beef processing, textiles, and beverages.
Tourism Leveraging its rich wildlife and natural landscapes, tourism is a growing industry contributing to employment and foreign exchange earnings.
Financial Services The financial sector, including banking and insurance, plays a crucial role in supporting economic activities and attracting foreign investment.
Construction Driven by infrastructure development and urbanization, the construction industry contributes to economic growth and employment.
Energy Botswana is investing in energy production, particularly coal and solar power, to meet domestic demand and reduce reliance on imports.

While agriculture is the country’s largest employer, the main GDP-contributing activities in Botswana are tourism, mineral extraction, construction, and government services. At least 10% of the economy is driven by safari-style tourism in the country’s various game reserves. Mineral extraction is a major industry, and Botswana is one of the world’s biggest diamond producers. It also produces gold and coal in significant quantities.

Construction, ICT, financial, professional, scientific, health, administrative, and educational services have all seen growth in the past few years since the pandemic. Botswana’s major export partners include the United Arab Emirates, Belgium, India, South Africa, and Hong Kong. The top products it exports are diamonds, copper ores, ignition wiring, and live cattle.

However, the country also imports diamonds for value-added processes as well as petroleum and electricity. Its main import partners include South Africa, Namibia, Belgium, India, and Canada. 

Botswana uses its own currency, the Botswanan pula (BWP), which is currently worth around 0.072 USD. While this currency has consistently dropped in value for the past 15 years, the country’s per capita GDP has steadily increased to reach $7,340 in 2024. This is the fourth highest in Africa and has turned Botswana into an upper-middle-income country.

Taxes

Employer Tax

In Botswana, employers and employees do not contribute to a social security system as the country does not have a mandatory social security scheme.

However, employers are required to deduct and remit income tax (PAYE) for their employees to the Botswana Unified Revenue Service (BURS).

Employer Contributions

  • Social Security Contributions: 0% (no mandatory contributions).
  • Unemployment Insurance: 0% (not applicable).
  • Other Mandated Contributions: None.

Employee Tax

Income Tax

Employees in Botswana are subject to income tax, which is deducted at the source through the PAYE system. The tax rates are progressive, meaning they increase with higher income levels. For resident individuals, the tax brackets for the 2024 tax year are as follows:

Taxable Income (BWP)

Up to 48,000

48,001 to 84,000

84,001 to 120,000

120,001 to 156,000

Above 156,000

Tax Rate

   0%

   5%

   12.5%

   18.75%

   25%

For non-resident individuals, the tax rates are:

Taxable Income (BWP)

Up to 84,000

84,001 – 120,000

120,001 – 156,000

Over 156,000

Tax Rate

 5% 

 12.5%

 18.75%

 25%

It’s important to note that certain benefits provided by employers, such as airfares and medical costs for the employee and their immediate family, are not taxable if stipulated in the employment contract.

Additionally, for employment contracts signed on or after 1 July 1999, gratuity payments are partially taxable; two-thirds of the gratuity amount is subject to tax, while the remaining one-third is tax-free.

Overview of Botswana’s Business Regulation

Doing business in Africa can be a major challenge for companies located in other parts of the world. The local tax and employment rules can be confusing and complicated, and language and cultural differences can make it difficult to work effectively with employees. Businesses also have to choose how to enter these markets and how to maintain workers in compliance with local laws.

In Botswana, some of the most important points of regulation to know about are as follows:

Registration and Compliance

If you want to enter the Botswanan market, your first step will be deciding on the type of entity you wish to incorporate. Most foreign investors choose limited liability companies (LLCs), public limited companies (PLCs), or offshore companies (IFSC or International Financial Services Center companies).

  • An LLC can be registered with only one resident director and one shareholder of any nationality, and no minimum paid-up capital is required.
  • For a PLC, you’d require two directors, one of whom must be a Botswana resident, and seven shareholders of any nationality. Again, no minimum paid-up capital is required.
  • An IFSC company can only do business with non-residents of Botswana and receive tax incentives for hiring local workers. One can be set up with just one shareholder of any nationality and one resident director. 

Taxes and Investments

As a part of incorporation, all businesses set up in Botswana need to obtain Tax Identification Numbers (TINs) from the Botswana Unified Revenue Services. This allows them to pay corporate income tax (CIT) at the normal rate of 22%.

However, manufacturing and IFSC companies pay a reduced GIT rate of 15%. VAT is 14%, and there is no stamp duty or local tax in Botswana. There are also no social security taxes in the country. Dividends and interest are taxed at 10% for residents, but interest is taxed at 15% for non-residents.

Employment Laws

Botswanan workers are protected by several pieces of legislation, most notably the Constitution of Botswana 1966 and the Employment Act 2010. Employees work either eight hours a day, six days a week five days a week, and up to nine hours a day. Overtime hours must be paid at a rate of at least 1.5 times normal wages, and employees cannot work more than 14 overtime hours per week.

Workers receive 15 days of annual leave per year as well as 12 paid public holidays. Expecting mothers are entitled to 12 weeks of maternity leave paid at 50% of normal wages by the government. Paternity leave is not mandated in Botswana.

Intellectual Property

Intellectual property (IP) rights are protected by the Companies and Intellectual Property Authority of Botswana. Trademarks in Botswana can be registered for ten years and renewed after that for ten-year periods. Copyrights generally last for the author’s lifetime plus 50 years afterward. Patents last for 20 years.

Benefits of Doing Business in Botswana

Botswana’s strategic location, positioned as a major trade route, offers businesses access to both the Western and Eastern markets.

  • Political stability: Unlike many neighboring countries, Botswana has been politically stable and democratically led since its independence in 1966.
  • Low corruption levels: Botswana is rated as the least corrupt country in Africa and 39th in the world for low corruption levels.
  • Language skills: While the country’s national language is Setswana, English is its official language for government, education, and business.
  • Growth: Botswana’s GDP has averaged over 5% growth for the past four decades.
  • Affordability: The minimum wage of 9.06 BWP/hour (around 0.65 USD) demonstrates just how affordable Botswanan workers can be for foreign businesses.

Downsides of Doing Business in Botswana

There are clear advantages to doing business in Botswana. However, for a balanced view, it’s also important to consider the downsides, which include:

  • Infrastructure gaps: As a landlocked country, Botswana faces challenges getting products to market. It’s also challenging to access electricity here and obtain construction permits for new businesses.
  • Small domestic market: While Botswana is a large country geographically, the local market represents less than three million people.
  • Worker skills and education: Botswanan workers have low levels of education in general, with only 12.2% of students enrolling in tertiary education institutions and roughly 12,000 graduating annually.

International Expansion into Botswana

Whether your goal is to set up an entity in Botswana or hire local workers to join your team remotely, you have several choices for your business. The main ways companies expand into Botswana include:

Botswana Employer of Record (EOR)

An EOR can help you hire local Botswanan workers by becoming their legal employer. It contracts your workers directly and takes care of all of their HR concerns over the long term for a monthly fee.

LEARN MORE

Recruitment Agencies

Recruitment agencies in Botswana help businesses expand by connecting them with skilled local talent across various industries.

Remote People provides recruitment solutions that simplify hiring and ensure compliance with Botswana labor laws.

For businesses looking to grow in Botswana, Remote People offers the expertise and resources needed to build a local workforce quickly and effectively, making it a practical solution for market expansion.

LEARN MORE

Botswana Professional Employer Organization (PEO)

If you register an entity in Botswana, you can also work with a PEO to manage your employees. This type of service provider will manage HR compliantly for you, so you don’t need to learn the ins and outs of payroll, benefits administration, or administration in the country.

Subsidiary incorporation

While they can select PLCs and offshore companies, the most common entity that foreign investors choose to incorporate is the LLC. The World Bank gives Botswana a score of 76.2% and a global rank of 159th for ease of starting a business. The steps needed to incorporate an LLC include:

  • Reserving a business name.
  • Identify officers and shareholders and sign a statutory declaration of compliance.
  • Registering the company at the Registrar of Companies at the Ministry of Trade and Industry.
  • Having premises inspected.
  • Obtain a business license.
  • Opening a company bank account.
  • Obtaining a TIN.
  • Registering for VAT.
  • Registering employees for workplace injury insurance.

Branch Registration

A simpler and potentially faster way to start doing business in Botswana is to register a branch office. This branch of your business registered in another country can engage in business practices in Botswana and can be completely foreign-owned. It requires only one shareholder and one director for incorporation.

However, a branch office pays CIT at 30%, which is significantly higher than the 22% for locally incorporated businesses.

Business Opportunities in Botswana

Botswana, one of Africa’s most stable economies, offers a wealth of business opportunities driven by its robust governance, rich natural resources, and strategic location. Known for its thriving diamond industry, Botswana is diversifying its economy with a focus on tourism, agriculture, renewable energy, and manufacturing.

With investor-friendly policies, low corruption levels, and significant infrastructure projects underway, the country is becoming an attractive destination for businesses looking to expand into Southern Africa.

Business Opportunity Reason for Opportunity
Tourism and Ecotourism Botswana’s rich wildlife and UNESCO sites, like the Okavango Delta, present immense opportunities for sustainable tourism ventures.
Mining and Mineral Processing Beyond diamonds, Botswana is rich in minerals like copper, nickel, and coal, creating opportunities for mining and value addition.
Renewable Energy Projects Botswana’s push for solar energy aims to diversify its energy sources and reduce reliance on imported electricity.
Agribusiness and Livestock With large expanses of fertile land, Botswana is investing in commercial agriculture, cattle farming, and food processing.
Infrastructure Development The government’s focus on improving transport, water, and housing infrastructure offers opportunities in construction and logistics.
Financial Services Botswana’s stable economy and growing middle class drive demand for banking, insurance, and microfinance services.
Manufacturing and Export Incentives for manufacturing, especially in textiles and consumer goods, align with regional trade agreements like SADC.
Education and Skills Training Investments in education, vocational training, and ICT align with Botswana’s goals to build a knowledge-based economy.

Botswana has been one of the highest-performing economies in Africa for decades. With steady growth and a stable government, this country is a land of opportunity for international investors looking for low-cost locations to hire workers and set up new businesses.

Are you interested in doing business in Botswana? Remote People can help.

Contact us today to assess your business needs and learn how we can assist you in achieving your objectives.