Botswana aims to increase exports to DRC

The economy of Botswana is mineral-based and relies heavily on mineral exports, especially diamonds. Over the last four or so decades, the country has implemented measures aimed at diversifying production as well as exports and reducing reliance on mineral (diamond) production and exports. Diversification efforts have resulted in a drop in the mining industry’s share of GDP from 24% in 2014 to 15% in 2019. The dominance of minerals in exports, though, remains high, falling only slightly from 94% in 2014 to 92% in 2019.  

Botswana’s exports to the Democratic Republic of the Congo (DRC) have been inconsistent, with huge variations from year to year. There are many reasons for this: underdeveloped transport infrastructure between the provinces in the DRC, bureaucratic bottlenecks, and a volatile commercial and investment climate. The greatest potential lies in the southern provinces because of their geographical proximity to Botswana and the resulting logistical advantages.  

Africa RISE was asked to explore ways to increase and sustain exports from Botswana to the DRC.  The focus of the work was on the route through Zambia to the Kasumbalesa border crossing in south-eastern DRC, which provides access to the provinces of Haut-Katanga and Lualaba, both of which host substantial mining operations. The key findings of the study are as follows: 

The DRC is an important potential market. It has the 13th largest GDP in Africa and is the 15th largest importer. While growth declined due to the pandemic, the economy was not as badly affected as many African countries and it is expected to exceed the continental growth average over the next five years. 

…but the market is fragmented. Key roads are unusable in the rainy season, meaning that economic hubs operate in isolation – it is not a single market.  

The Lubumbashi region of Haut Katanga should be targeted. This southern-most region of the DRC is accessible to Botswana through Zambia. It also has a large and growing population, with high economic wellbeing relative to the rest of the country. This is driven by mineral wealth which brings dollars into the region. The Haut-Katanga region is also relatively stable when compared to some other parts of the DRC and northern Zambia is already a major conduit for trade through the Kasumbalesa border crossing. 

Exporting to the DRC is challenging. Compared to Botswana, clearance of goods at the DRC’s borders is slow and expensive. Trade is on an MFN basis; the average tariff is 10.6% and 20% for beef products. Most trade networks are informal, and Congolese traders have an edge in crossing the border. 

The best location for transit storage is Kasumbalesa. Kasumbalesa Border Post is the best option of the five entry locations considered, as it has better infrastructure, reasonable border agency staffing levels on both sides of the border, the requisite infrastructure for the operation of a warehouse, and an existing customer base (cross-border traders) to tap into. 

There are products with potential for export to DRC but opportunities in services are more limited. Some products have to be sold directly to customers based within the DRC but for many goods the most effective and least risky approach is to sell to Congolese traders on the Zambian side of the border. These traders are well practiced in navigating the border formalities and the DRC’s business environment and can provide an effective route for Botswana’s exporters into the Congolese market.