BMI View: The infrastructure and construction sector of Botswana is heading into a period of sustained growth on the back of continued investment in the mining sector and development of associated transport and power infrastructure. However, we highlight challenges to sector development resulting from electricity and water shortages.
We expect the power and transport sectors to continue to ouperform as the country works hard to reduce its reliance on South African electricity and caters to growing domestic demand from its mining sector. There are a number of projects being developed and due to come online over the medium term. These include the long-delayed Morupule B coal-fired plant, which has had its implementation date pushed back several times. International companies are also expanding their business and investing in mining projects.
|f = BMI forecast. Source: Central Statistics Office, BoB, BMI|
|Construction industry value, BWPbn||8.69||9.41||10.45||11.60||12.93||14.35||15.79|
|Construction Industry Value, Real Growth, % y-o-y||2.80||5.00||6.85||6.00||6.50||6.00||5.00|
|Construction Industry Value, % of GDP||6.1||6.3||6.4||6.5||6.6||6.7||6.7|
The timeframe for the National Development Plan (NDP) 10 has been extended until the end of March 2017. It will be followed by NDP 11, starting April 2017. The reason for the delay is to enable new parliamentarians to participate in drafting NDP 11.
Botswana will become an increasingly significant player in the global coal market, given the country's huge reserves. In total, Botswana has an estimated 212bnt (billion tonnes) of coal resources, the highest in Africa and almost all remain unexploited. Currently, the only operating coal mine in the country is the Morupule colliery, supplying the Botswana Power Corporation. Yet a number of companies have the potential to significantly ramp up coal output in the country and export to India and China in particular.
Shumba Coal plans to develop a solar power station to generate up to 200MW, with power from the station supplying upcoming copper mines in the Kalahari copper belt. This follows an announcement from Cupric Canyon Capital on June 9 2015 it will begin construction of a copper mine in Botswana's Kalahari copper belt in 2016, close to where the solar power station will be built. In addition, African Energy Resources is considering doubling its investment at the Sese power project. Current plans are for a 300MW coal-fired plant with an estimated cost of USD750mn.
Away from the mining sector, private demand for construction projects will remain robust as the country's private consumption story benefits from an accommodative monetary policy and benign inflation. Furthermore, Botswana's banking sector is set to increase its lending in the next year as a result of a reduction in the banks' reserve requirement.
Botswana is expediting the construction of a BWP16bn (USD1.6bn) pipeline, which will supply water from the Zambezi River to southern Botswana, and plans to complete the project in seven years. Negotiations will be completed by 2016, with final implementation expected in 2026. The Ministry of Minerals, Energy and Water Resources' Permanent Secretary Kgomotso Abi revealed the government is reviewing its original designs for the project (Engineering News). The pipeline was originally planned to draw 495mn cu m/yr of water for a commercial agriculture project in the northwest, but the water shortage in the southern part of the country has forced the government to reprioritise plans. The first phase of the scheme will involve a pipeline leading to the Pandamatenga farms, while the second phase will comprise a pipeline from Zambezi to Francistown, and then continue to the southern part of the country.
Botswana has dropped to third position in BMI's Infrastructure RRI for SSA this quarter, surpassed by South Africa and a rapidly growing Namibia.
However, Botswana retains above average scores for all indicators, making the country one of the most attractive out of 16 countries in the region.
The country's economy has been growing impressively since independence in 1967, driven by a strong mining sector and political stability.
|Risk/Reward Index||Rewards||Industry Rewards||Country Rewards||Risks||Industry Risks||Country Risks|
The Botswana Infrastructure Report features BMI Research's market assessment and forecasts covering public procurement and spending on all major infrastructure and construction projects, including transportation and logistics by land, sea and air; power plants and utilities, and commercial construction and property development. The report analyses the impact of regulatory changes and the macroeconomic outlook and features competitive intelligence on contractors and suppliers.
BMI's Botswana Infrastructure Report provides industry professionals and strategists, sector analysts, investors, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the Botswanan infrastructure and construction industry.
- Benchmark BMI's independent infrastructure industry forecasts for Botswana to test other views - a key input for successful budgetary and planning in the Botswanan infrastructure market.
- Target business opportunities and risks in the Botswanan infrastructure sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in Botswana.
- Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. SWOTs, KPIs and latest activity).
BMI Industry View
Summary of BMI’s key industry forecasts, views and trend analysis covering infrastructure and construction, regulatory changes, major investments and projects and significant national and multinational company developments. These are broken down into construction (social, commercial and residential), transport (roads, railways, ports, airports, etc), and energy & utilities (powerplants, pipelines and so on).
Industry SWOT Analysis
Analysis of the major strengths, weaknesses, opportunities and threats within the infrastructure and construction sectors and within the broader political, economic and business environment.
BMI Industry Forecasts
Historic data series (up to 2012) and forecasts to end-2024 for all key industry indicators, supported by explicit assumptions, plus analysis of key developments in the market and risks to the main forecasts. Indicators include:
Construction: Industry value (USDbn); contribution to GDP (%); total capital investment (USDbn); real growth (%).
Construction industry real growth forecasts (%) and industry value (USDbn) forecasts for industry sectors are split into Residential and Non-residential and Infrastructure sectors. Where the data is available for particular countries the infrastructure is further broken down into indicators for the transport subsectors of roads, railways, airports and ports and the energy and utilities sub-sectors of power plants and transmission grids, oil & gas pipelines and water infrastructure. This dataset is unique to the market.
The reports also include analysis of latest projects across the infrastructure sectors (transport, utilities, commercial construction).
BMI’s Infrastructure Risk Reward Index
BMI’s Risk Reward Index provides investors (construction companies, suppliers and partners) looking for opportunities in the region with a clear country-comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points. These provide indices of highest to lowest appeal to investors, with each position explained.
An assessment of the competitive landscape and key challenges to entering the market. Details of the largest companies active in the sector across the sub-segments of the industry, including the key financial figures from some of the largest players in the sector.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape to generate company SWOT analyses. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.
The Infrastructure reports draw on an extensive network of primary sources, such as multilateral organisations, government departments, industry associations, chambers and company reports.
*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.