Is AI the magic pill for export-led FDI from Asia-Pacific? Pt 1

DIPOPEGO JULIAN TSHEKO | Tuesday September 30, 2025 15:49

This article examines how artificial intelligence (AI) might be used as a transformative tool to draw export-led Foreign Direct Investment (FDI) into Botswana from the Asian-Pacific economies. It further seeks to evaluate the outward FDI patterns of major Asian-Pacific investors such as China, India, Japan, South Korea, Singapore, and Australia and identifies gaps in Botswana’s investment attraction tactics. The article shows that although FDI flows to Africa have increased dramatically from Asia-Pacific nations, Botswana has only captured a small portion of these investments. Furthermore, the article proposes AI-driven strategies like automated investor matching, digital infrastructure development, predictive analytics, and smart governance systems that may act as stimulants to increase Botswana’s appeal to foreign direct investment. Lastly, it suggests that even though AI offers a lot of potential to effectively compete for investment in the Asia-Pacific region, it needs to be supported by significant advancements in infrastructure, legal frameworks and economic diversification.

Introduction

Foreign Direct Investment is often described as the transfer of capital, technology, and expertise across national borders. According to the Organisation for Economic Co-operation and Development (OECD, 2006), FDI represents foreign capital introduction, which requires permanent investor control and significant influence across business operations in another economic territory. Research confirms FDI acts as an essential force to grow economies because it promotes industrial growth through exports, along with productivity improvements. The economic development of Botswana depends significantly on foreign direct investment, which unleashes industrial variation while strengthening infrastructure and generating new job markets.

Successful acquisition of FDI in today's competitive worldwide market demands innovative investment promotion approaches that detect market potential alongside its strategic exploitation. The established practices of investment promotion utilise market research programmes together with investor outreach initiatives and incentive schemes, yet may fail to track dynamic global investment behaviours effectively. AI has appeared in recent years as an advanced technology which demonstrates the potential to change how investment forecasting operates alongside trend analysis. Artificial Intelligence models analyse large volumes of information to find patterns and produce forecasting outcomes that result in better solutions for making decisions and operational effectiveness.

FDI attraction through AI implementation enables organisations to discover profitable investment prospects along with investor preference clarifications while improving the competitive standing of target locations. Three primary artificial intelligence technologies, consisting of machine learning algorithms and natural language processing together with big data analytics, enable organisations to achieve a superior understanding of worldwide investment patterns. Through these technologies, investment promotion agencies can analyse extensive information coming from various data sources, such as economic pointers alongside social media platforms and business documentation and news articles, which help them forecast upcoming investment patterns and market developments. Investor services become improved through AI-based chatbots and virtual assistants, which deliver real-time information and custom advice to potential investors.

Economic development is still significantly influenced by foreign direct investment, especially in emerging nations looking to integrate into global value chains, transfer technology and speed up growth. The Asia-Pacific area has become a major source of FDI in the modern global economy, with nations like China, India, Japan, South Korea, Singapore, and Australia driving significant global investment flows. With more than half of the world’s population living in these economies and accounting for more than 40% of global GDP, they present unprecedented opportunities for FDI recipients. Botswana has had difficulty drawing substantial FDI from Asian-Pacific nations despite its political stability, advantageous location in Southern Africa and reasonable level of institutional development. Even though the nation has effectively used its diamond resources to support consistent economic growth, Western investors still control most of its foreign direct investment portfolio, which is still highly concentrated in traditional industries. This presents both challenges and opportunities where the economies of the Asia-Pacific are actively seeking new investment areas and diversifying their approach in outward investment strategies.

AI is a transformative technology that presents new opportunities for reshaping FDI attraction tactics. From advanced investor targeting and matchmaking platforms to predictive analytics for spotting new investment opportunities, artificial intelligence has a wide range of potential uses in investment promotion. The question is whether artificial intelligence could be the driving force behind smaller economies like Botswana’s increased ability to compete for Asia-Pacific investment as governments around the world digitise their services and implement smart governance practices. This paper attempts to give policymakers and investment promotion organisations useful information by conducting a thorough systematic analysis of Asia-Pacific investment trends, Botswana’s current FDI position and the potential uses of AI. The article tackles the fundamental question: Can AI be the transformative tool required to successfully attract export-led FDI from the Asia-Pacific region into Botswana?

Synopsis of Selected Asia-Pacific Economies and Their Outward FDI to Africa

China

Africa’s biggest trading partner and a major source of foreign direct investment is China. By 2023, the total amount of Chinese FDI in Africa had surpassed $47 billion, with outbound FDI to Africa reaching about $4.02 billion in 2022. The main areas of Chinese investment have been telecommunications, manufacturing, mining and infrastructure development. Many large-scale projects, such as ports, railroads and industrial parks, have been made possible by the Belt and Road Initiative (BRI) throughout Africa. Amongst the major recipients are South Africa, Kenya, Ethiopia, and Nigeria, where investments are frequently accompanied by technical assistance and concessional financing. However, it is worth noting that the Chinese government has successfully delivered millions of dollars worth of development finance to Botswana that went towards financing the construction of health and education facilities, as well as the provision of low-cost housing to many deserving Batswana. Amongst the many other projects financed by China in Botswana was the construction of the Letlhakeng–Kang road project, as well as the upcoming Mosetse–Kazungula railway project, which is expected to connect Botswana and Zambia via the already completed Kazungula Bridge.

India

India’s economic involvement with Africa has greatly increased, with bilateral trade surpassing $89 billion in 2021–2022. Indian FDI to Africa has grown steadily, reaching about $2.8 billion annually in recent years, despite being less than China’s in absolute terms. Indian investments are mostly focused on the agribusiness, automotive, information technology and pharmaceutical industries. Kenya, South Africa, and Mauritius have been the main beneficiaries of Indian outbound FDI. Furthermore, India has committed more than $11 billion in credit lines to African nations as part of the India-Africa Forum Summits, which formalised economic cooperation. India’s relations with Botswana have been close and friendly, with India having established diplomatic relations with Botswana immediately after its independence in 1966 and opening its diplomatic mission in Gaborone in 1987. Botswana reciprocated and established its Mission in New Delhi in 2006. The opening of Botswana’s Mission in New Delhi in 2006 and the Botswana Export Development and Investment Authority (BEDIA), now Botswana Investment and Trade Centre (BITC), representative office in Mumbai in 2010, gave impetus to the bilateral trade and investment. Indian diamond companies and businessmen, especially from Gujarat (Surat), have always shown keen interest in buying rough diamonds as well as in investment in the downstream industries in the diamond sector, mainly in the cutting and polishing of the rough diamonds. At present, a couple of Indian diamond cutting and polishing companies have offices and factories in Botswana. Moreover, Jindal, an Indian energy giant, is developing a 600MW coal-fired power plant in Mmamabula in central Botswana at an estimated cost of P28 billion.

Japan

Japan places a strong emphasis on developing high-quality infrastructure and transferring technology when it comes to African investment. With private sector investment totalling $20 billion between 2013 and 2018, Japan has made significant financial commitments to Africa through the Tokyo International Conference on African Development (TICAD). Japanese foreign direct investment is concentrated in the automotive, electronics, manufacturing and infrastructure sectors. Significant operations have been established throughout Africa, mainly in South Africa, Egypt, and Morocco, by major Japanese corporations such as Toyota, Honda and Sanyo. However, there has been very insignificant inward investment from Japan into Botswana since the establishment of bilateral and trade relations between the two nations, save for some development loans advanced by Japan to Botswana. 1981 marked the first development programme between the two nations when Japan funded laboratory equipment for schools in Botswana, and the first Japanese loan to Botswana was issued in 1986 to fund the Morupule Thermal Power Station. Further loans were issued in the following years for the Railway Rolling Stock Increase Project in 1988, the Trans-Kgalagadi Road Project in 1991, and the North–South Carrier water pipeline in 1995. In July 2008, Japan Oil, Gas and Metals National Corporation (JOGMEC) set up a Geological Remote Sensing Centre in Lobatse, Botswana; its sole centre in Africa, and Japan’s exploration base for minerals and oil in the region.

South Korea

The amount of South Korea’s bilateral trade with Africa has increased significantly from $3.08 billion in 2000 to over $13 billion in 2022. Although small in comparison to other Asian-Pacific giants, Korean FDI in Africa has demonstrated steady growth in industries like manufacturing, construction and telecommunications. In other African markets deemed important by the Koreans, businesses like Samsung, LG and Hyundai have set up shop. Investment flows and economic engagement have increased thanks to the Korea–Africa Economic Cooperation (KOAFEC) initiative. However, since the establishment of diplomatic relations in 1968 between Botswana and South Korea, there has not been very significant foreign direct investment from Korea to Botswana. One notable investment was by Daewoo Construction, which invested $150 million between 2014 and 2021 to build the Kazungula Bridge over the Zambezi River at the Botswana–Zambia border.

Singapore

Singapore, a regional hub for South-East Asian businesses venturing into African markets, has become a major investor in Africa despite its small size. Singapore's foreign direct investment in Africa has increased significantly, reaching about $1.02 billion in 2022. Real estate, agribusiness, logistics and financial services are the main areas of investment. Government-affiliated businesses and Singapore sovereign wealth funds have made significant investments throughout Africa, mainly in the growth of the financial and infrastructure sectors. Apart from trade mainly in rough diamonds between Botswana and Singapore, there is very little inward investment from Singapore into Botswana.

Australia

Using its experience in resource extraction and processing, Australia’s investment in Africa is mostly focused on the mining industry. In 2022, Australia invested roughly $3.05 billion in Africa, primarily in copper, uranium, coal, gold and other mineral resources. The main destinations of Australian investment have been South Africa, Ghana, and Tanzania. Additionally, Australian businesses have made investments in renewable energy and agricultural technology initiatives throughout the continent. Investment from Australia to Botswana is growing, with Australian interests focused on Botswana's significant mining sector, including copper, uranium and other resources. This investment is supported by strong bilateral relations, highlighted by high-level engagement at events like the Africa Down Under conference. Australian mining firms such as Sandfire Resources and Lotus Resources are actively involved in developing projects in Botswana.

*Tsheko is the Botswana Investment and Trade Centre's Regional Director, International Business – India/Asia-Pacific. The second and final part of the article will run in the next edition of Mmegi