The report compares the performance of countries across four factors being economic performance, market accessibility, social and human development and economic stability, producing one metric that gives investors a sense of how each of the 31 countries analysed rank. The report revealed that Botswana’s trade was dominated by SA especially in commodities such as petroleum and electricity. The report noted that South Africa’s economic challenges post COVID have had knock-on effects on the local economy, especially in the prices of electricity and fuel, which have been a major driver of inflation in the past years for Botswana. “The landlocked nation has a small domestic market and relies on its southern neighbour, South Africa, for imports of electricity and petroleum. This has not been a problem during spells where South Africa has been stable and growing.
“However, South Africa has entered a period of deep structural challenges, including an inability to produce sufficient electricity for its own needs, stagnant growth, deteriorating infrastructure and political schism,” the report noted. Chief Economist at RMB, Isaah Mhlanga, said while the country performed fairly well in the economic stability and performance indicators, there was an inherent risk in attracting investment for countries whose economies are pegged against a major regional economy. According to the economist, the over-reliance on SA threatens the stability of investments due to the risk of commodities being anchored against a singular supplier. “There is a need to develop relationships with other regional partners such as Namibia and Mozambique to de-risk the concentration of imports on South Africa,” he said.
