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Country Commercial Guides FY 2000: Botswana Report prepared by U.S. Embassy Gaborone, released July 1999 Note*

CHAPTER VIII. TRADE AND PROJECT FINANCING

The central bank, Bank of Botswana, was established in 1975 and is responsible for monetary policies, central banking services, supervision of financial institutions, issuing of bank notes, implementing exchange rate policies, administering exchange controls and foreign exchange reserves management. The bank's financial statements are in compliance with international standards and audits are performed by Price Waterhouse Coopers and KPMG, both internationally recognized accounting firms. There are four major commercial banks operating in Botswana: Barclays Bank of Botswana, Standard Chartered Bank, First National Bank, and Stanbic Bank, and recently, an investment bank, Investec Group. All are geared to arrange finance for new businesses. Development Financial Institutions, six in number, offer specialized services to specific economic sectors.

Short-term finance, including pre-and-post-shipment credit, is readily available through the commercial banking system at market rates of interest. Export credit insurance is available through local insurance companies. Foreign exchange is available to local importers upon proof of receipt of the goods and the amount of payment due.

The provisions for U.S. and other foreign firms borrowing in Botswana are liberal while local banks remain highly liquid. The country's commercial banks, however, have difficulty making long-term credit available due to the short maturity nature of their deposits and small capital bases. At present, commercial banks finance only about one-third of the annual investment taking place in Botswana.

Botswana has kept its external borrowing to a minimum. Outstanding public debt reached approximately $447.9 million in March 1999 while the debt to GDP ratio was about 10% (down from 15.5% in 1989). Moreover, the country's favorable balance of payments situation has meant that -- with one or two exceptions -- it has not been forced to borrow externally on commercial terms.

OPIC's finance and insurance programs are operable in Botswana, and it has provided finance for U.S. tourism companies' investments and expansions. Eximbank financing is available to exporters for exports to Botswana. Eximbank has not, however, been active in Botswana in recent years.

All four major commercial banks operating in Botswana have correspondent relationships with U.S. banks.