World Bank enterprise surveys in Botswana: 13 years later

As the Government of Botswana intends to facilitate business development, one dataset to consider is the World Bank Enterprise Surveys (WBES). The most recent WBES in Botswana, conducted between May and October 2023, reveals that while the productivity of Botswana's private sector has increased significantly since 2010, substantial obstacles still hinder its expansion and export activities.

The WBES is a firm-level survey of a representative sample of an economy’s private sector. It aims to achieve two objectives: (1) to benchmark the business environment experienced by firms and (2) to analyze firms’ outcomes, such as performance and employment growth, to determine the impact of the business environment on firms. The WBES uses standardized survey instruments and a uniform sampling methodology to yield comparable data across the world’s economies. The WBES currently covers over 222,000 interviews in 159 economies since 2006.

The most recent WBES in Botswana covered the entire country and included 622 establishments, compared to the 268 businesses surveyed in 2010, which were limited to Gaborone and Francistown. The survey collects data on all privately owned manufacturing sectors and selected services sectors, referred to as the "private sector." The full list of the sectors covered by WBES is available here.
 

Key Findings:

1. Increased Productivity: The private sector in Botswana has seen an increase in productivity, performing above the Southern Africa average in terms of total factor productivity and real annual sales growth. Businesses in Botswana are more productive than the average of the African economies, and real annual sales growth is almost seven times more than the Southern Africa average as in Figure 1. However, annual employment growth in the private sector has fallen from 7 percent in 2010 to just under 2 percent in 2023.

2. Obstacles to Expansion: Despite increased productivity, the private sector faces significant obstacles. Figure 2 shows that access to finance is the most cited biggest obstacle in the 2023 survey, followed by access to land. In 2010, workers with limited formal education were the most cited biggest obstacle, but this issue has significantly decreased in importance by 2023. These findings are telling of the obstacles that the private sectors are facing.

3. Focus on Domestic Sales: The private sector in Botswana is heavily focused on domestic sales, with over 95 percent of total sales being domestic and less than 5 percent being export sales. The number of businesses that export at least 1 percent of their sales has decreased from 9.6 percent in 2010 to 9.0 percent in 2023, placing Botswana below the Southern African average of 14.8 percent as shown in Figure 3.

These findings highlight the areas where Botswana's private sector is performing well and the challenges that need to be addressed to foster further growth. Increased productivity indicates potential for growth, but the significant obstacles and limited export activities suggest that there are underlying issues that need to be resolved to fully realize this potential.
 

Relevance of the Findings

The WBES provides a useful window into the state of private sector development in Botswana. In this blog, we present updated empirical evidence on business constraints and productivity trends, filling a knowledge gap since the last survey. The WBES also contributes to the Business Ready indicators which provide a more comprehensive framework to assess the readiness of business environment.

These findings are crucial for informing development policy debates in Botswana and Southern Africa regarding private sector growth and economic diversification. They are also relevant for policymakers aiming to foster a business-friendly environment and transition Botswana to an export-led growth model. The data identifies structural challenges such as access to finance, land constraints, and low export activity as potential key barriers to private sector expansion, despite productivity improvements. This informs policy discussions on supporting business development beyond traditional macroeconomic stability measures. The data’s ability to compare Botswana’s performance to other Southern African countries provides a benchmark for assessing progress and identifying areas for policy intervention.