Business freedom in the country is at 68.7%. The overall freedom to start, operate, and close a business is relatively well protected by Botswana's national regulatory environment. Starting a business takes an average of 108 days, compared to the world average of 43 days. Obtaining a business license takes less than the world average of 234 days, the report said.
Botswana scored 67.6% in trade freedom and its weighted average tariff rate was 11.2 percent in 2005. There are very few non-tariff barriers to trade, but the government maintains import bans on some products, import licensing requirements, a restrictive standards regime, domestic bias in government procurement, and weak enforcement of intellectual property rights.
The index said the fiscal freedom in the country is 76.4%, boosted by the tax burden, which is one of the lowest in southern Africa. Both the top income tax rate and the top corporate tax rate are 25%. The overall tax revenue, as a percentage of GDP is 33.3%. Total government expenditures, including consumption and transfer payments, are high. In the most recent year, government spending equaled 35.7% of GDP and that gave country a 61.8% on freedom from government.
"Although Botswana has pursued privatisation and other initiatives to improve the performance of its remaining public-sector enterprises, further reducing the size of government and its role in the economy remains a necessity," the report says.
In monetary freedom, the country scored 69.7%. The Index noted that relatively unstable prices explain most of the monetary freedom score. Most prices are set by the market, but the government maintains price policies for some agricultural and livestock goods and is able to influence prices through numerous state-owned enterprises and service providers. The report says the country's laws encourage foreign investment, particularly in the non-mining sector which gives a better score of 70%. In investment freedom, the government has implemented reforms expediting the application process for business ventures.
It however restricts foreign investment in some areas reserved for Botswana citizens, including butchery and produce, gasoline filling stations, bars and liquor stores.
Botswana's banking system is competitive and is one of Africa's most advanced. Hence the report ranked the country's financial freedom at 70%. The Central Bank is independent while the small stock market is growing as the result of an extended bull market. The government is in the process of introducing bonds of varying maturities to stimulate the domestic capital market.
Freedom from corruption scores 56%, while Botswana is ranked 37 out of 163 countries in Transparency International's Corruption Perceptions Index for 2006. Botswana is rated as Africa's least corrupt country. It is ahead of many European and Asian countries and has a proven record of good economic governance.
Labor freedom in the country is at 75.9%. Botswana maintains relatively flexible employment regulations that could be improved to enhance employment and productivity growth. The non-salary cost of employing a worker is very low, and dismissing a redundant employee can be relatively costless.
The employer is not required to make pension, health insurance, and unemployment insurance contributions, the report noted. "The overall business climate is superior for Africa and a model for the world. Botswana could improve on its relatively weak scores in government size, trade freedom, and monetary freedom," the report says.
Source: Mmegi Online
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