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World Bank Document Public Disclosure Authorized Public Disclosure Authorized Botswana Institute for Development Policy Analysis Gaborone Botswana Public Disclosure Authorized The World Bank Poverty Reduction and Economic Management 1 Southern Africa Africa Region Public Disclosure Authorized ISBN: 99912-911-7-2 Prospects for Export Diversification in Botswana Botswana Institute for Development Policy Analysis Gaborone, Botswana The World Bank Poverty Reduction and Economic Management 1 Southern Africa Africa Region ii PROSPECTS FOR EXPORT DIVERSIFICATION IN BOTSWANA © BIDPA and The World Bank 2006 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the written permission of the copyright owners. Design and layout: Impression House, Gaborone, Botswana Printed by: Impression House, Gaborone, Botswana, 2006 ISBN: 99912-911-7-2 The views expressed in this book do not necessarily represent the opinion of BIDPA or The World Bank but that of the authors. Contact details: Botswana Institute for Development Policy Analysis Private Bag BR-29 GABORONE, Botswana Tel: +267 397 1750 Fax: +267 397 1748 Homepage: http://www.bidpa.bw iii CURRENCY EQUIVALENTS Currency Unit = Pula (P.) US$1 = P4.54 (Effective April 27, 2005) FISCAL YEAR July 1 - June 30 Acronyms and abbreviations ACBF African Capacity Building Foundation ACP African, Caribbean and Pacific AGOA African Growth and Opportunities Act ARCS Administrative and Regulatory Cost Survey ASYCUDA Automated System of Customs Data Management ATC Agreement on Textiles and Clothing BDC Botswana Development Corporation BDVC Botswana Diamond Valuing Company BECI Botswana Export Credit Insurance and Guarantee Company Limited BEDIA Botswana Export Development and Investment Authority BIDPA Botswana Institute for Development Policy Analysis BLNS Botswana, Lesotho, Namibia and Swaziland BMC Botswana Meat Commission BNCS Botswana National Conservation Strategy BoB Bank of Botswana BoBCs Bank of Botswana Certificates BOBS Botswana Bureau of Standards BOC Botswana Ostrich Company BOCCIM Botswana Confederation of Commerce, Industry and Manpower BOTA Botswana Training Authority BOTASH Botswana Ash BPC Botswana Power Corporation BPO Business Process Outsourcing BSE Bovine Spongiform Encephalopathy BTA Botswana Telecommunications Authority BTC Botswana Telecommunications Corporation BURS Botswana Unified Revenue Service BWP Botswana Pula CAP Common Agricultural Policy CET Common External Tariff CEDA Citizen Entrepreneurial Development Agency CET Common External Tariff CIF Cost Insurance and Freight CITES Convention on International Trade in Endangered Species iv COMESA Common Market of Eastern and Southern Africa COR Certificate of Rights CSO Central Statistics Office CYTAX “current year tax” DAHP Department of Animal Health and Production DCC Duty Credit Certificate DFID Department for International Development DoT Department of Tourism DTI Direct Trade Input DWNP Department of Wildlife and National Parks EAOB Exporters Association of Botswana EPA Economic Partnership Agreements EPZ Export Processing Zones ERP Effective Rate of Protection ESAMLG Eastern and Southern Africa Anti-Money Laundering Group EU European Union FAP Financial Assistance Policy FDI Foreign Direct Investment FIAS Foreign Investment Advisory Service FMD Food and Mouth Disease FOB Free on Board FPSG Fixed Period State Grant FSC Financial Sector Commission FTA Free Trade Area GATS General Agreement of Trade in Services GATT General Agreement on Trade and Tariffs GCC Gaborone City Council GDFI General Directorate for Foreign Investment GDP Gross Domestic Product GNI Gross National Income GoB Government of Botswana GRCO Gaborone Regional Customs Office HATAB Hotel and Tourism Association of Botswana HHI Hirschmann-Herfindahl Index HIES Household Income and Expenditure Survey HLCC High Level Consultative Council IBCs International Business Corporations ICC International Chamber of Commerce ICD Inland Clearance Depot IDA Industrial Development Act IDZs Industrial Development Zones IFSC International Financial Services Centre IMF International Monetary Fund ISC International Services Centre JITAP Joint Integrated Technical Assistance Programme LDC Less Developed Countries LITS Livestock Identification and Trace Back System LLA Local Licensing Authority v MCI Monetary Conditions Index METRs Marginal Effective Tax Rates MFA Multi-Fibre Agreement MFDP Ministry of Finance and Development Planning MFN Most Favoured Nation MIDP Motor Industry Development Programme MLHA Ministry of Labour and Home Affairs MoA Ministry of Agriculture MoE Ministry of Education MoH Ministry of Health MTI Ministry of Trade and Industry MTR Mid Term Review NCSA National Conservation Strategy Agency NDP National Development Plan NEER Nominal Effective Exchange Rate NEMIC National Employment, Manpower and Incomes Council NILA National Industrial Licensing Authority NISB National Immigrants Selection Board NLA National Licensing Authority NTBs Non Tariff Barriers OECD Organization for Economic Co-operation and Development OIE Office International des Epizooties OMPP Ostrich Management Plan Policy PAYE Pay As You Earn PEEPA Public Enterprise Evaluation and Privatization Agency PPI Producer Price Index PPP Public Private Partnership PSM Per Square Meter RC Registrar of Companies RCA Revealed Comparative Advantage REER Real Effective Exchange Rate RIR Real Interest Rate RISB Regional Immigrants Selection Board RLA Regional Licensing Authority ROE Return on Equity ROW Rest of World RPMD Registrar of Patents, Marks and Designs SACU Southern African Customs Union SACUA Southern African Customs Union Agreement SAD Single Administrative Document SADC Southern African Development Community SARS South African Revenue Service SAT Self Assessment Tax SLAAC State Land Allocation Advisory Committee SMEs Small and Medium Enterprises SPS Sanitary and Phytosanitary Standards SPVs Special Purpose Vehicles TCDA Trade Cooperation and Development Agreement vi TCPB Town and Country Planning Board TEC Tertiary Education Council TILB Tourist Industry Licensing Board TIN Taxpayer Identification Number TRIPS Trade-Related Aspects of Intellectual Property Rights TPRM Trade Policy Review Mechanism TRQ Tariff Quota TSA Tourism Satellite Accounting TSG The Services Group UNCTAD United Nations Conference on Trade and Development UNICITRAL United Nations Commission for International Trade Law USA United States of America USAID United States Agency for International Development VAT Value Added Tax VET Vocational Education and Training VCF Venture Capital Fund VOIP Voice-Over Internet Protocol WIPO World Intellectual Property Organization WTO World Tourism Organization WTO World Trade Organization WUC Water Utilities Corporation vii TABLE OF CONTENTS EXECUTIVE SUMMARY AND ACTION MATRIX................................................................................... I 1. DIVERSIFICATION AND EXPORT GROWTH................................................................................1 ECONOMIC AND EXPORT CONCENTRATION – SOME INDICATORS ........................................... 1 COSTS AND BENEFITS TO CONCENTRATION .......................................................................... 2 EXPORT PERFORMANCE OVERVIEW ..................................................................................... 6 2. THE ENABLING ENVIRONMENT I: THE NATIONAL POLICY FRAMEWORK................................13 NATIONAL POLICY DEVELOPMENT – AN OVERVIEW............................................................ 13 BUSINESS REGULATION AND FOREIGN DIRECT INVESTMENT POLICY.................................... 16 THE INCENTIVES REGIME .................................................................................................. 20 THE EXCHANGE RATE AND EXPORTS.................................................................................. 29 THE LABOR MARKET......................................................................................................... 36 3. THE ENABLING ENVIRONMENT II: EXPORT AND SECTOR-SPECIFIC POLICIES.........................40 SECTOR POLICIES - CASE STUDIES...................................................................................... 40 IMPORT TARIFF AND EXEMPTION SCHEMES FOR EXPORTERS ............................................... 60 EXPORT PROMOTION AND PRIVATE SECTOR SUPPORT INSTITUTIONS.................................... 62 TRADE FINANCE AND EXPORT CREDIT INSURANCE ............................................................. 64 LICENSING RULES AND STANDARDS................................................................................... 65 4. TRADE POLICY FOR EXPORT GROWTH...................................................................................69 MAIN TRADE AGREEMENTS ............................................................................................... 69 MARKET ACCESS ISSUES ................................................................................................... 73 DOMESTIC PROTECTION AND THE TERMS OF TRADE............................................................ 82 5. TRADE FACILITATION AND INFRASTRUCTURE.......................................................................96 CUSTOMS PROCEDURES, MANAGEMENT AND VISA RULES................................................... 96 SHIPPING AND PORTS .....................................................................................................
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