Commonwealth to help Botswana set up free trade zone

The Commonwealth Secretariat is providing technical assistance to help set up a modern free economic trade zone in a bid to diversify Botswana’s economy.

It is anticipated that establishment of the Free Zone (FZ)/Special Economic Zone (SEZ) will help attract more investment into the country, and reduce Botswana’s economic dependence on its mining sector, notably diamonds.

FZs/SEZs are designated areas within a country where barriers to trade including tariffs as well as bureaucratic requirements are eliminated or minimised in the hope of attracting new business and foreign investment.

Since independence in 1966, and most notably up to 1998, Botswana has had the fastest growth in per capita income in the world. The average growth rate since the 1980s has been 7.8 per cent.

However, traditional policies have not been successful in stimulating significant investment outside the mining sector. Diamond mining accounts for only 5 per cent of employment but 80 per cent of exports and half of the government’s revenues.

As part of its assistance, the Secretariat is providing a legal expert who will work with the Government of Botswana to prepare a draft policy on FZs/SEZs that spells out Botswana’s engagement with its neighbours, as well as the enactment of legislation that is consistent with commitments undertaken in the context of the World Trade Organization Agreements as well as regional arrangements, most notably, the Southern African Customs Union and Southern African Development Community.

Kathy-Ann Brown, a Legal Adviser at the Secretariat, said setting up the FZs/SEZs is in line with Botswana’s National Development Plan of Action, also known as Vision 2016, which aims to generate more employment, stimulate local business development, and contribute to poverty alleviation and sustainable development.

“FZs/SEZs are seen as a platform to attract foreign direct investment and accommodate new businesses. They provide a way to conduct experiments in taxation, labour dispensation and telecoms pricing, which can be expanded later on an economy-wide basis if they prove successful,” Dr Brown noted.

She added that in Botswana FZs/SEZs are “conceived as a means to achieve economic and investment objectives without rocking social and political boats.”

The Secretariat is mandated to provide technical assistance of this kind to support the efforts of countries in attaining the Millennium Development Goals for poverty eradication and sustainable development.

Key Links:

• Country Profile: Botswana
• Economics and Trade