Is AI the magic pill for export-led FDI from Asia-Pacific? Pt 2
DIPOPEGO JULIAN TSHEKO | Monday October 13, 2025 06:54
China
Africa’s biggest trading partner and a major source of Foreign Direct Investment (FDI) 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 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 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 businesspeople, 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. The year 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 FDI 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.
Botswana's current FDI position and challenges
Current FDI profile
Over the last 10 years, Botswana has received an average of $300–500 million in FDI per year, which is a small portion of all FDI flows to Africa. The mining industry, especially diamond mining, through the Botswana Government–De Beers joint venture (Debswana), accounts for a large portion of the nation’s foreign direct investment. Botswana’s FDI scene is dominated by traditional Western investors, mostly from South Africa, the United Kingdom and other European nations. Botswana’s FDI profile is still limited, with little success in luring investment into the manufacturing, services and technology sectors despite considerable efforts to diversify the economy. With a population of about 2.4 million, the nation’s small domestic market has been cited as a barrier for investors looking to enter the market, and its landlocked (or the more politically correct term of 'land-linked') status supposedly creates logistical challenges for investments focused on exports.
Asia-Pacific Investment in Botswana: Current Status
The Asia-Pacific region's investment in Botswana remains limited, and the country’s economy is largely dominated by China and India. Whilst Indian companies are present in the manufacturing, retail and services sectors, Chinese companies have been involved in infrastructure and construction projects. However, compared to Asia-Pacific investments in other African nations, these investments make up a very small portion of all FDI inflows into Africa. Considering the active investment strategies of Japan, Korea, Singapore, and Australia in other African markets, the lack of substantial investment from these nations is especially both noteworthy and worrisome. This points to potential misalignment between the value proposition of the nation and the priorities of Asia-Pacific investors, as well as structural issues with Botswana’s investment attraction strategy.
Challenges faced by Botswana in trying to attract export-led FDI
Economic Diversification: Diamond mining continues to be a major contributor to Botswana’s economy, providing a sizable amount of both export earnings and government revenue. This concentration reduces the nation’s attractiveness to investors looking for a variety of opportunities and raises perception risks associated with the volatility of commodity prices.
Small Market Size: Compared to other African nations that have been successful in attracting investment from the Asia-Pacific region, Botswana’s domestic market is small, with a population of only 2.4 million people. Investors looking to enter new markets, who give preference to nations with bigger consumer bases, are impacted by this restriction.
Infrastructure Constraints: Despite having superior infrastructure compared to many African nations, Botswana still has shortcomings in the energy, transportation and telecommunications sectors. Because of its land-linked status, the nation needs effective regional connectivity, which is still lacking in some trade corridors.
Investment Promotion: Compared to its emphasis on traditional Western markets, Botswana has not done much to promote investment in Asia-Pacific markets. The nation participates in major Asian investment forums and trade shows sparingly and lacks specialised investment promotion offices in important Asia-Pacific and Gulf region nations. There is currently only one investment promotion office run by a single officer based in New Delhi, India covering the whole of the Asia-Pacific and Middle East (Gulf) regions, including big economies such as China, Japan, Korea, Australia, Singapore, Malaysia, Indonesia, UAE, Qatar, Saudi Arabia, Kuwait, Oman, Bahrain, Israel and many others.
Regulatory and Administrative Barriers: Long approval times, complicated bureaucratic procedures and ambiguous regulatory frameworks have all been found to be deterrents to foreign investment. These difficulties are especially important for Asian investors who might not be as knowledgeable about the Botswana legal system. However, the recent establishment of economic labs as part of the Botswana Economic Transformation Programme (BETP) spearheaded by Pemandu Associates from Malaysia is expected to help deal with some of these contentious issues, break down silos, and ultimately lead to an improvement in the Ease of Doing Business in Botswana. Pemandu Associates' philosophy centres on driving 'Big, Fast Results' through transformational leadership and a systematic approach to problem-solving, emphasising collaboration, mentorship, and data-driven accountability to achieve long-term impact and organisational excellence for their clients in public sector and business transformation.
*Dipopego Julius Tsheko is currently the Regional Director, International Business for India and Asia-Pacific at the Botswana Investment and Trade Centre (BITC) Regional Office based at the Botswana High Commission in New Delhi, India. This is the second part of a series on the subject, and the next excerpt will be published in the upcoming edition of Mmegi