Botswana: Startups Needed
Botswana is among Africa’s richest countries and the continent’s oldest functioning post-colonial, multi-party democracy. It has low taxes and a stable government that has been ranked as Africa's least corrupt. But it needs entrepreneurs.
While mining has been the pillar of Botswana’s wealth (diamonds account for about half the government's revenue and over a third of its GDP), the country has largely avoided the “resource curse” that stymies economic growth in similar nations. The country’s income from diamond mining is spread widely enough to provide almost half the population with middle-class status. Articles about the economy of Botswana always hail its development performance and the example of stability it sets for the rest of the continent, but warn that the country must diversify before the mines run out—a deadline that is currently estimated at 2030. Entrepreneurs will play an important part in this.
Diversifying is no simple task for any nation. However, despite the recent diamond market downturn, the Botswana economy is, relatively speaking, not under stress which makes it easier for those with political will to take a long-term view as they embark on a new economic path. Currently, the government drives the economy, but building an entrepreneurial economy means empowering entrepreneurial communities and the private sector. At the present, according to the World Bank, local companies are not very competitive compared with those in other middle-income countries. Its small domestic market of 2 million people represents a challenge for entrepreneurs. Moreover, the country is fighting one of the highest HIV infection rates in the world.
To get the country moving in a new direction, the Small Business Act of 2004 took the first step by establishing the Local Enterprise Authority (LEA) as a Statutory Authority of the Government of Botswana with the mandate of supporting entrepreneurship and enterprise development. The LEA prides itself on having an extensive country-wide footprint of 13 branches, and a board of directors drawn from both the private and public sectors. This focused one-stop shop has concentrated mainly on the needs of small, medium and micro-enterprises (SMMEs) by encompassing training, mentoring, and market access facilitation. In pursuit of economic diversification, LEA has targeted interventions in various business sectors, such as commercial farming and safari tourism. The Government of Botswana has also partnered with UNDP and the private sector to form an Enterprise Botswana program to target growth- and export-oriented companies. Further, the government has tapped into the University of Botswana for entrepreneurship training, and has worked with foreign embassies to offer business development workshops, for example, in Gaborone for women and young entrepreneurs.
However, Botswana still needs a parallel focus that will look beyond SMMEs to enabling new entrepreneurs and high-growth startups. This is where the great untapped opportunities lie. Given its small local market, building bridges to other entrepreneurship ecosystems is a must. Botswana joined the Global Entrepreneurship Monitor for the first time in 2012 through the University of Botswana Faculty of Business, but it has yet to join global networks like Global Entrepreneurship Week (GEW) or engage in other ways. For example, a GEW movement in Botswana could add a missing component of what is a nascent ecosystem: networks and cultural capital to support high-growth ventures.
In 2010, Legatum and the Omidyar Network nominated Botswana’s NTR Technology, a diversified engineering group, for its Africa Awards. Unfortunately, little is known of other success stories and there are few local rock star entrepreneurs. Given that the Index of Economic Freedom ranks Botswana 2nd out of 46 countries in the Sub-Saharan Africa region, and its overall score is well above the regional and world averages, Botswana offers a fertile environment for startup community teams and investors looking for a base in Africa. Low taxes, political stability, a relatively educated work force and an English speaking market lend themselves to further foreign investment as startups scale. Now all Botswana needs is entrepreneurs. Geeks on a Plane and other roving startup junkies take note!