The Botswana Commercial Property Sector; Challenges and Opportunities

January 21, 2021

3 minutes read

Population Challenge

Having a relatively small population of approximately two point three million (2.3 million), some of the market challenges that has been identified in Botswana include low supply of skilled workers- this is because Botswana does not have enough experienced managers and technical experts that would help run companies that would want to invest in the country.

Also owing to the small population density, one of the challenges affecting particularly the commercial property sector is a limited market inside Botswana boarders.

However, the country’s real estate and commercial property sector is considered to be one of the most mature in Africa, having experienced exponential growth and increased institutionalization during the past decade.

Adaptation to the Challenge

In response to the above mentioned challenge the government of Botswana took a measure to solve the problem by amending the immigration law to open up work visas and residence permits for foreigners; this was done to increase and cater for skilled workforce from other countries to settle in Botswana and consequently help run the businesses where Batswana are short.

Botswana has a relatively stable economy and is also a peaceful and free state, this has had a significant impact on the development of the sector, marking it as an attractive investment destination. Key players in the real estate sector in Botswana have benefited from these features of the market and from their own extensive knowledge of the local market, networks with tenants and other industry stakeholders, their ability to assess the potential of available opportunities, and their development capabilities.

The players in the sector have found a way around the small market challenge by expanding it into the neighboring countries like South Africa, Namibia and Zimbabwe as well as beyond the region.

Land Reforms

Land Tenure Reforms are one of the factors that can make a country to be attractive for investors; both foreign and local. The Botswana Government actively seeks out foreign investment and is happy to sell land to foreigners. This therefore is valid for freehold land which is mostly in the Gaborone area. Tribal land and state land cannot be sold to foreigners.

As for local investors, there is nothing to bring a wider smile to the face than learning about the introduced land reform initiative termed Land Administration Procedures, Capacity and Systems (LAPCAS). Formerly, tribal land could not be used as collateral or security for any commercial or mortgage loan. This limited the ability of owners to develop their land
agriculturally or residentially.

To respond to these new challenges, Botswana took a bold step toward administering tribal lands in 2008. This step is a departure from previous responses to land administration challenges as it takes a holistic approach. The Ministry of Land Management, Water and Sanitation Services started the process in partnership with the Swedish government, through the Swedish International Development Cooperation Agency (Sida), and Lantmäteriet, the Swedish mapping, cadastre and land registration authority. The land tenure administration project was named Improvement of Land Administration Procedures, Capacity and Systems (LAPCAS). The LAPCAS project included a component of Land Tenure Regularization (LTR) which involved national registration of all land parcels in the country. While government initiated LAPCAS in 2008, it implemented the project
from 2009-2013. Rollout to all land boards was expected to conclude in December 2016. All new allocations will follow the LAPCAS guidelines.

The process of land administration was undertaken to identify all land parcels in the country, their size, location and owners. The process will result in a database of plots and their owners. The process brings a number of benefits to plot owners as they will have title to their land and hence can more easily access financing from commercial banks and other institutions to develop their properties. As an outcome, it is expected that land values and productivity will rise, leading to wealth creation for land rights holders. To support the process, Botswana developed the Botswana Land Policy in 2015, which also takes a holistic view of land administration.

Youth Challenges Resolved

It is reported that some of the challenges faced by organizations in assisting the youth to get or own commercial properties included among others; low salaries, no pay slip, and no security for funds. However, these are now things of the past thanks to the new Citizen Entrepreneurship Development Agency (CEDA) new guidelines which have been simplified. Also, it is now not mandatory to acquire a license to use up to fifty percent (50%) of one’s residential or ploughing field for other commercial purposes.

Conclusion

With the above improvements, it is now possible for locals to be major players in the commercial property sector, leveling the field for both locals and foreign investors to do business in one of the most peaceful country and stable economy in Africa.

Sources: ResearchGate.com, African Development Bank, Globalpropertyguide.com, Privacyshield.gov