GUIDE - Go Botswanas... · 2020. 5. 17. · plan period is to pursue export – led growth. The Botswana Export’s Guide therefore comes at a time when the national plan is geared

EXPORTER’SGUIDE

BOTSWANA INVESTMENT & TRADE CENTRE INVITING OPPORTUNITY. ENABLING INNOVATION.

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CONTENTSFOREWORD 4

1. INTRODUCTION 1.1 Background 6 1.2Botswana’sTradeStructure 7 1.3BenefitsofExporting 8 1.4ChallengesofExporting 9

2. EXPORT READINESS 12

3. HOW TO EXPORT 3.1RegisteringasanExporter 16 3.2MarketResearch 17 3.3.1MarketAnalysis–TheProcess 17 3.3.2ResearchTechniques 19

4. EXPORT PLAN 4.1Marketselection 24 4.2Product/ServicesSelection 25 4.3PricingStrategy 26 4.3.1HowtoCalculateExportPrices 27 4.3.2Exportelementsnevertooverlook 28 4.4MarketEntryStrategies 28 4.5PromotionalStrategy 30

5. BOTSWANA’S MARKET ACCESS TRADE ARRANGEMENTS 5.1Botswana’sStrategyforDiversification 32

6. PAYMENT METHODS 6.1CashinAdvance 38 6.2DocumentLetterofCredit 38 6.3DocumentarySiteCollections 39 6.4DocumetaryTermCollection 39 6.5ShipmentonOpenAccount 40 6.6Summary 41

BOTSWANA INVESTMENT & TRADE CENTREINVITING OPPORTUNITY. ENABLING INNOVATION. INVITING OPPORTUNITY. ENABLING INNOVATION.

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CONTENTS7. EXPORT FINANCE 7.1FactorstoConsiderinChoosingExportFinance 44 7.2ExportFinancialPlan 45 7.3ExportInsurance 45

8. FREIGHT AND LOGISTICS 48

9. INTERNATIONAL COMMERCIAL TERMS (INCOTERMS) 50 9.1DepartureGroup(E) 50 9.2MainCarriageNotPaidBySeller(GroupF) 50 9.3MainCarriagePaidBySeller(GroupC) 51 9.4Arrival(GroupD) 52

10. EXPORT SUPPORT SERVICES 10.1BotswanaExporterDevelopmentProgramme(BEDP) 54 10.2ExportPromotion 55 10.2.1BITCExportPromotionServices 55 10.2.2BITCIncentivestoExporters 55


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Economic diversification has been centralto Botswana’s developmental agenda overthe years, however the desired level ofdiversification has not been achieved thusfar.Todate,thecountryhasremainedhighlydependentontheminingsector,inparticulardiamonds. This has exposed the countryto external economic shocks as a resultof being a single commodity dependenteconomy.Theneedtodiversifythecountry’seconomy remainsapriority forgovernmentas reflected in the National DevelopmentPlan11 (NDP11), and thegoal during theplanperiodistopursueexport–ledgrowth.The Botswana Export’s Guide thereforecomes at a timewhen the national plan isgearedatpromotingexportgrowth.

The need for an export focused economyemanatesfromasmallmarketwithanarrowproduct and export base that does notsupportlocalindustriestoachieveeconomiesof scale and become competitive globally.Theexportsectorplaysanimportantroleinthe economy of Botswana, influencing thelevel of economic growth, socio-economicdevelopment, employment creation andbalance of payments. Mineral products,especially diamonds, continue to be the

FOREWORDmain drivers of export performance. Thereisnodoubtthatfutureeconomicprogressionrequires a vibrant diversified export sectorwith an increased role for non-traditionalexports. To generate more employmentopportunities thecountryhas tobuildmorecompaniesofinternationalscale.

The Exporter’s Guide is therefore meantto serve as a reference for all companiesthat are interested in pursuing the exportmarkets. It provides discussions aboutthe benefits of exporting for both companyand the country, how to conduct exportmarket research, various preferentialmarket access instruments that Botswanahas signedwith other countries, and someguidelinesthatcompaniesneedtofollowtobecomeexporters.Thisguidemustbeusedalongside other information resources asthe information provided is not exhaustive.Other useful contacts and links have beenprovided to enable readers to accessadditionalinformation.

IhopethatyoufindtheGuideausefultoolinyourbusinessandfutureendeavours.

------------------------------------------------Hon. Vincent Seretse

MinisterofInvestment,TradeandIndustry

INVITING OPPORTUNITY. ENABLING INNOVATION.

1. INTRODUCTION

1.1 Background

1.2 Botswana’s Trade Structure

1.3BenefitsofExporting

1.4ChallengesofExporting

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1. INTRODUCTION

1.1 Background

With a population of around 2 million people, exporting is probably more important toBotswanathanitistolargereconomieslikeChinaandUSA.Botswana’spost-independencemacro-economic success is largelyattributable to strongperformance inmineral exportsespecially diamonds. Botswana’s export portfolio is highly undiversified, with diamondsaccounting for over 80% of the country’s export earnings. In 2013 export of goods andservicesaccounted for 50.2%ofBotswana’sGrossDomesticProduct (GDP).Thedollarvalueofworldmerchandiseexportsin2014wereestimatedat$19trillion,0.6%higherthanin2013.WorldserviceexportswereestimatedatP4.9trilliondollars,up4.2%from2013level.

Exporting is very important toBotswana as it is amain contributor to economic growth,competitiveness,andoverallprosperity.Exportsuccesscontributestojobcreation,globallycompetitive and highly productive enterprises, and diversifies national income therebyreducingvulnerabilitytoglobaleconomicshocks.

Theterm‘Export’canbedefinedasthesaleofgoodsorservicestoforeignconsumersorother countries in exchange for foreignexchange.Companies canexport their goodsorservicesdirectly to theirclientsor indirectly throughan intermediarysuchascommissionagents,buyinghousesanddistributors.Theexportstrategytouseinanyparticularmarketdependsupon several factors suchasexport expertisewithin the company, theeaseofdoingbusiness in the targetedexportmarket,andavailabilityofnecessary infrastructurewithinthecompanyortheeaseofaccessingthesame.


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1.2 Botswana’s Trade Structure

Botswana’s international trade structure is characterized by amongst others; a heavyreliance on imports, mineral dominated export products, limited export markets, limitedexportcapacity,lackofproximitytonichemarkets,underdevelopedlogisticnetworkleadingto excessive transport costs, limited information about how to export, locate, or analyzeinternationalmarketsandshortageofworkingcapitaltofinanceexports.

CopperNickel Diamonds Gold

Hides&

Skins

IronSteel&RelatedProducts

Machin-ery&

ElectricalEquipment

Meat&MeatProd-ucts

Plastic&PlasticProducts

Salt&SodaAsh

Textiles

Vehicles&Trans-port

Equip-ment

OtherGoods Total

2012 3551.0 36143.0 641.8 63.0 339.2 1034.0 511.0 246.6 451.6 617.4 992.4 1224.5 45815.5

2013 4746.9 55367.2 471.1 90.4 467.2 1188.7 1040.8 242.0 499.2 365.9 660.0 1262.3 66401.7

2014 4391.7 65328.2 373.3 85.7 356.6 1442.7 1046.6 290.8 595.3 375.4 599.9 1 322.1 76208.3

2015 3769.1 52662.4 267.6 88.6 242.1 2003.1 1164.2 292.0 593.7 372.5 700.4 1187.5 63343.2

CopperNickel Diamonds Gold

Hides&

Skins

IronSteel&RelatedProducts

Machin-ery&

ElectricalEquipment

Meat&MeatProd-ucts

Plastic&PlasticProducts

Salt&SodaAsh

Textiles

Vehicles&Trans-port

Equip-ment

OtherGoods Total

2012 8% 79% 1% 0% 1% 2% 1% 1% 1% 1% 2% 3% 100%

2013 7% 83% 1% 0% 1% 2% 2% 0% 1% 1% 1% 2% 100%

2014 6% 86% 0% 0% 0% 2% 1% 0% 1% 0% 1% 2% 100%

2015 6% 83% 0% 0% 0% 3% 2% 0% 1% 1% 1% 2% 100%

Table 2: Botswana’s Major Export Products (%)

Table 1: Botswana’s Major Export Products (P million)

Figure 1: Botswana’s Major Export Markets

Botswana’scurrentkeypartnersareEU,ASIA,andSADC.EUandASIAarekeymarkets fordiamonds while SADC and COMESA absorb mostly non-diamond products. EU’s relativeimportanceasanexportmarkethasdeclinedsincetherelocationofDiamondTradingCompanyfromLondontoBotswana.ASIAhasincreasedinrelativeimportanceinrecentyearswhilstSADCremainsanimportantmarketforBotswanaproducts.

Source:StatisticsBotswana



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1.3 Benefits of Exporting

Therearemanybenefitsthatthecompaniescanderivefromexporting.Theseincludethefollowing:

• Gaining economies of scale through growth and expansion into new markets. Exporting provides companieswith an option to accelerate production to levels thathelpittoachieveeconomiesofscale.Achievinggreatereconomiesofscalewillallowabusinesstobecomemorecostcompetitive.

• Increasing profits-Exportscancontributetoincreasedprofits,althoughthisdependson the export market and the unique attributes of each market. Some products –especiallythosethatareuniqueorveryinnovativeinnature–maycommandgreaterprofitmarginsabroadthaninyourlocalmarket.However,itisalsonotuncommonthatyoumayreceivesmallerprofitmarginsfromyourexportsalescomparedwiththelocalmarket,duetothehighlycompetitivenatureofglobalmarketsthatforceexporterstolowerpricesandsqueezeprofits.

• Extending the sale of products or services that have lost demand in the domestic market but may still be in demand in foreign markets.

• Exposure to new ideas, technologies and business processes - this providesopportunitiesforcompaniestoimproveknowledgeandincreasecompetitiveness.

• Improved return on investment (ROI) in the longer term -Astheresultofcompetinginworldmarkets,oftencompaniesimproveefficiencyandperformancewhichtranslatestotheirbottomline.


-

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

70,000,000

2009 2010 2011 2012 2013 2014 2015

Botswana's Exports by Region (BWP million)

SADC COMESA EU ASIA USA


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• Enhanced credibility–sellingtoexportmarketscanincreasecompanycredibilityinbothdomesticandexportmarket.Usuallyexportingcompaniesareviewedasbeingsophisticatedandoftenassociatedwithqualityproducts.Havingreferencesinforeignmarketsenhancesthecompany’sprospectsofenteringmoreexportmarkets.

1.4 Challenges of Exporting

Aswithallbusinessactivities,exportationhasitsownchallenges.Challengesmayincludeamongothers:

• Political instability in internationalmarketswhichmay pose new challenges to yourbusiness.

• Legal systems more than likely will vary from that of Botswana. It is important tounderstandwhatyouneedtodotocomplywithlegalrequirementsinallelementsoftheexportprocess.

• Communicationissuesneedtobeconsideredcarefullyasyouarelikelytobeoperatingremotelyfromyourexportmarketsandcustomers.

• Differentculturesmayinfluencebusinessdecisionsandprocessesindifferentways.• Protectingintellectualpropertyinexportmarketscanbedifficultandcomplex.• Exportingplacesextrapressureonbusinessresources.• Additionalfundingrequiredforexport,tradingtermsanddealinginforeigncurrenciesmayplacepressureonyourcashflowandfinancialsituation.

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2. EXPORT READINESS

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2. EXPORT READINESS

Anexportreadyfirmisonethathas,ataminimum,thedrive,experience,financialresources,and capacity to successfullymeet demand for its product in a foreignmarket.The tablebelowoutlines the factors to consider to gauge the level of company readiness to enterexportmarkets.

Area Issues to Consider

1 Preparatorywork/scopingParticipationinexport-relatedworkshops,trainingprograms,or conferences. Participation international trade shows orscopingmissions

2 Provenbusinessmodel Is the company successfully operating its business in itshomemarket?

3 Exportexperience Does the company have, at least, some experience inexecutingordersoutsideofitsown?

4 HealthofcompanyNumber of full time employees, number of part-time/seasonal staff, total number of years in business – maygaugereliability

5 Exportbudget Doesthecompanyhaveaseparateorlineitembudgetforexporting?

6 Strategicvision/exportstrategy Doesthecompanyhaveastrategicvisionforexporting?Areexportobjectivesclearlystated?

7 Humanresources Doesthecompanyhaveacontactpersonorteamdedicatedtoexporting?


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8 CompetitiveedgeDoes the company produce a unique product or service?Doesithavecapacitytomodifytheproducttomeetmarketrequirementor/anddemand?

9 Productcapacity Does the company have sufficient production capacitycurrently?Caniteasilyexpandthiscapacity?

10 CertificationsDoes the company possess relevant certification to meetcountryregulations/industryrequirements?E.g.InternationalStandardsOrganization,FairTrade,orapplicablecertification

11 ProductqualityDoes the company have quality products – packaging,labelling, etc? Are quality control processes in place toensureconsistency?

12 Communications-IT/Email Are relevant staff proficient to communicate with buyers/companiesinthetargetmarkets?

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3. HOW TO EXPORT

3.1RegisteringasanExporter

3.2 Market Research

3.3.1MarketAnalysis–TheProcess

3.3.2ResearchTechniques

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3. HOW TO EXPORT

Anenterprisethatisconsideringtoexportisconfrontedwithseveralstepsthatitneedstofollowinordertobesuccessful.Thesestepshelpthecompanyamongstotherstogathercritical informationaboutmarketsof interest,conductfeasibilityanalysisofenteringthosemarkets,considertherisks,understandforeignbusinesspractices,formulateexportplans,andformulatemarketentrystrategies.Someofthestepstoconsiderinclude:

• Exporterregistrationprocedures• Marketresearch• Productandmarketselection• Exportplanning• Logisticsplanning• Marketentrystrategies• Exportfinancing• Paymentoptions• Customerserviceandretentionstrategies• Marketaccessinstrumentssuchastradeagreements• Usefulcontacts

3.1 Registering as an Exporter

AnytraderthatisconsideringtoexportfromBotswanaisrequiredtofirstregisteracompanyinBotswana.Thecompany thenhas to registerwithBotswanaUnifiedRevenueService(BURS)inordertobeissuedwithaTradeIdentificationNumber(TIN).

Certain goods require export licenses while others can be exported without restrictions.ClarificationcanbesoughtfromBURSaboutthelistofproductsthatrequireexportlicenses.

AnytraderwishingtoexportundertradeagreementsmustregisterwithBURS.Thefollowinginformationshouldbeincludedintheapplicationletter.

• Thetradeagreementyouwishtoexportunder• Countryofimportation• Nameoftheexportingcompany• Physicaladdressoftheexportingcompany• Contact details: production manager’s telephone number, fax number and emailaddress.

• Namesofdirectorsandtheirnationalities• Listofproductsintendedforexport,undertheagreement,includingtariffcodes• Listofrawmaterialsusedandtheirtariffcodes• Statetheorigincriteriaofyourproducts


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Attachments to the letter

• SketchPlanshowingthefactorylayoutandmachineryused• Certificateofincorporation• Adetailedstepbystepmanufacturingprocessofthegoodsintendedforexport

3.2 Market Research

Marketresearchdoesnotnecessarilyinvolvehighlytechnicalskillsthatcanonlybedonebylargeexportersorcorporations.Marketresearchmeansfindingoutasmuchaspossiblebusiness informationabout theexportmarketof interest tofacilitatedecisionmakingandexportplanning.

Thebusinessinformationgatheredhelpsthecompanytodetermineifitcanpenetrateandcompeteinthemarketwhileatthesametimegaugingtime,requirements,risksandcostsinvolved indoingbusinessaheadofactuallyoperatingor sendinggoods to thatmarket.Otherinformationtogatherbymarketresearchincludesmarketsizeandgrowth,competitionpricing,regulations,duties/tariffsandproductstandards.

Caution:

1. Donot“jumpintoamarket”withoutpriorresearch-yourcompetitorswillknowwhatyouaredoingandcounteryourefforts,planagainstyouandblockyouoffbeforeyouknowhowtheirmarketworks.

2. Neverignoretheimportanceofmarketresearch

3.2.1 Market Analysis – The Process

Thisinteractiveprocessrequiresyoutoplanandunderstandyouraims,product,strengthandweaknesses.Whendoingthemarketanalysis,beforeactuallychoosingyournextexportdestination,youwilluncovernichemarkets,possiblemarketsandalsounderstandhowyoustand to compete andbenefit in themarkets.Basedonbest practices, the InternationalTradeCentrehasdevelopedatableofmarketanalysisprocessoutlinedbelow:

Process Key elements and toolsDesignyourplan • Deviseaplanupfrontaccordingtoaprocess

• Outlinecontentforyourguidance• Usearangeofresearchtechniques• Result:aresearchplan


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Knowyourowncompany • Startbyoutliningyourexportplanorstrategy• Do a SWOT (strength, weakness, opportunity

andthreat)analysis• IfSWOTanalysisindicatesthreatsorlimitations

ofyourcompanyinthenewmarket,considernotexportingnow,delayuntilconditionsimprove

• Discussyouruniquesellingproposition(USP)• Result: a research plan based on company

needs

Conductinitialresearchfromhome-deskresearch

• Analyzetradeflowstovariousmarketstoscreenthemarkets

• Collect data on barriers to entry, regulations,competition, distribution, business culture, andkeyrelevantaspects

• Cross-checkyourdatawithkeyinstitutionslikeBITC

• Results:youhavedata tocompareaseriesofmarkets

Selecttargetmarkets • Doamodeltorankmarketsbasedonresearchorcriteriathatworksforyou

• Align thesemarketswith your export strategy/plan

• Understand implications of your findings andhowyouplantoenterthemarket

• Result: you have selected markets for youractualfieldresearchorbuyers’contacts

Dofieldresearchorbuyers’contacts • Developplanstovisitthetargetmarket• Researchandorattendtradeexhibitionsthere.• Implement findings gained from the visits/

buyers’contacts• Combinefindingsfromdeskandfieldresearch

intoanexportmarketingplan

Connectresearchtostrategy • ReviseyourSWOTanalysis• Developtheexportplan• Developtheexportpricing

Findbusinesspartners • Outlinethevisittoestablishrepresentation• Meetingpotentialrepresentatives• Cross-checkingandvalidatingopinionand

advice

Sustainexports • Cultivateandexportcultureinyourorganization• Continue market research to stay on top of

competition

Source:InternationalTradeCentre(ITC)


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Onceyouhavefinishedyourresearch,establishthemarketanalysisinthefollowingmanner:

Outline of the market analysis:

• Productdescriptionanduniquesellingpoints• Marketvolumesandgrowthprospects• Market access conditions tariff and para-tariff measures, rules of origin, quantityrestrictions,taxes,charges,pricecontrolmeasuresetc

• Regulatory environment: target market (technical standards, quality, conformityassessment, pre-shipment inspection, packaging and labelling, procedural andadministrativematters

• Marketstructure:distributionchannels,intermediaryroles,stockingpolicies• Competition:includingpricingandmark-ups,distributionrestrictions,restrictiveimportchannelsorpostsalesservices,domesticsubsidies,SWOT

• Transportation:akeyfactorinaccessingpotentialnewmarkets,themode,andcosts,insurancerequiredtogettheproducttothemarket

• Businessculture:language,understandinghowtransactionsarenegotiated• Intellectual Property rights: patents, trademarks, industrial designs, copyright,geographicalindicationsandtradesecrets

• Geography:easeoftravelandtimezones(visas,internaltraveletc.)• Financialconsiderations:bankingsystems,regulationsonforeignexchange,advancepaymentsetc.

• Legalandcontractissues:recourseavailablefordisputesettlement

The above are normally governed through the specific conditions specified in the tradeagreementsbetweenexportingcountryand thatof thepotentialmarket.Apropermarketresearchwillgoalongwayinhelpingtheexportertomakecorrectchoicesofmarketsandminimizeentryrisksandimprovechancestosustainexportsintothemarket.

3.2.2 Research Techniques

Toundertakeresearchyoucanconsiderthefollowing:

i. Consult existing market research: it is imperative toestablish if researchabout aparticularmarketalreadyexists.ForexamplefromBITC,BIDPA,Ministriesandotherbodiesathomeandabroad.Websiteslikewww.marketresearch.com,www.euromonitor.comandothersoffermarketsurveyresultsfordifferentmarkets.

ii. Take advantage of face-to face and phone contacts: LearnfromsourcesinBotswanasuch as BITC, the Botswana Trade Portal, MITI, BEMA, BOCCIM and visit buyingagents,tradefairslikeBITC’sGlobalExpo,competitorsandEmbassies.

iii. Plan in-market visits carefully: before leveraging on BITC’s promotional visits topotentialmarkets,becarefullyshrewdtoensurethemarketwillyieldsomethingpositive.


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iv. Make market analysis a norm in your daily business operations: Successfulexporterscontinuouslyask themselves “Ismyproductcompetitive?”Asmarketsandconditionsevolveatpacewithmoderninternationaltradelandscape,exporterstoomustbe flexible and responsive to changing conditions and update theirmarket analysisbyconsultingreliablesourcesandtheirlocaltradesupportorganizationslikeBITCtoupdatecompetition,relationshipswithbuyersetc.

v. Criteria to Score and Rank Markets. The Simple Approach to creating an index:

Market Analysis Variable Score (1-5, 5 is best)

Marketvolume Verylarge(5),large(4),medium(3),small(2),verysmall(1).Relativesizedeter-minedbyworldrankings

Marketgrowth Veryfast(5),fast(4),medium(3),slow(2),veryslow(1),Growthisbasedonexpectedworldimportgrowth.Itcanbenegative

Marketaccess-tariff Veryfavourable(5),favourable(4),neutral(3),unfavourable(3),veryunfavourable(1),looksatthetariffprevailinginthemarket

Marketstructure-distributionchannelsetc Veryfavourable(5),favourable(4),neutral(3),unfavourable(3),veryunfavourable(1)

Competition-includinganalysisofmarketpricingandmark-ups

Veryfavourable(5),favourable(4),sameashomemarket(3),highlycompetitive(1).ThisismostlyderivedfromyourSWOTanalysis

Language,cultureandbusinessculture Veryeasy(5),Easy(4),neutral(3),difficult(2),verydifficult(1)

Legalandcontractissues Veryfavourable(5),favourable(4),neutral(3),unfavourable(3),veryunfavourable(1),looksespeciallyatenforceabilityofcontracts

Geography-proximity,easeoftravel Veryeasy(5),Easy(4),neutral(3),difficult(2),verydifficult(1).Thisisakeyindicatorforsuccessespeciallyfornewexporters


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Afterassigningscoresinthemarketanalysis,anexportermustthenassignweightsdependingonhowimportantthevariablesareintheirdecisions.Forexample,inexperiencedexportersmayassignmoreweighttolanguage,culture,proximityandmarketgrowth.Similarlyotherexportersmaywanttoassignmoreweighttosomeotherfactorskeytothem.Itisimportantthatyourweightsumsupto100%.Forexampleseethetablebelow:

vi. Ranking Sheets: Market A

Regulatoryenvironment-targetmarket’sNTMs,technicalstandards,packagingandlabellingetc.

Veryfavourable(5),favourable(4),neutral(3),unfavourable(3),veryunfavourable(1),basedonspecialaspectsofyourproduct

Financialsecurity-bankingsystem,foreignexchange,financialinformationetc.

Veryfavourable(5),favourable(4),neutral(3),unfavourable(3),veryunfavourable(1)

Score Weight (%)

Weighted score Interpretation

Marketvolume 3 5 (5/100)*3=0.15 Mediummarket,butintop20

Marketgrowth 5 10 0.5 Market is growing 10 pointsfaster than world market, isalsoincreasing

Marketaccess-tariffs

3 10 0.3 We are on equal footingwith competitors, tariffs arereasonable

Marketstructure 1 10 0.1 Expensivedistribution

Competition 2 20 0.4 Highcompetitionfromdomesticandforeignfirms

Language,cultureandbusinessculture

5 5 0.25 We understand the marketwell

Legalandcontractissues

5 10 0.5 Strongcontractenforcements

Geography 5 5 0.25 This market is closer, in thesame time zone, ease oftransport

Financialsecurity 3 5 0.15 Similarorcomparablefinancialsystemwith an advantage ordisadvantage


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Notehowever,thatthisisnotascientificmodelbutprovidesagoodguidancetohelpyouhaveanideaonhowyoucanrankthemarkets.

Itiskeytomatchtheoutcomeofthisexercisewithyourinitialexportstrategyasanexporter.Hereareillustrationstoguideyoutoaskimportantquestionsinlinkingyourcompanygoalswiththeresearchfromthemarkets.

1. Ifyouseek initialsalesofBWP1millionperannum,aswellasachance toestablishwithoutanytakeovers,butyourtargetmarketdominatedbylocalcompaniesgeneratesBWP5-10millionequivalentwithfewcompaniesyoursize,thisisNOmatchforyou.

2. Toestablishalocaldistributionandthemarketisdominatedbyonemajorretailerandentryistough,NO.

3. Ifyouaimtoestablishsalestoindustrialend-usersandyoudiscoverpotentialbuyersinthemarketarekeentodealdirectwithyouormaybelocaldistributorsdonotservicethemarketwell,YES.

Noticehoweverthatentrystrategiesdependonmarket types.Forexample ifamarket islarge,readilyaccessible,lesscomplex,hasintensecompetitionwithfirmshavingtheirrootsdeeplydug,itmeansthatthemarkethashighentrycostsandproductpromotion.Ifontheother hand you have amedium-market with strong competition from importers not localmanufacturers,accesstobuyersbeinggoodwithtraderslookingfornewproducts,brandsandoffering,thenitisanopportunityforsmallexporterswithathoroughmarketresearch.

vii. Some important links:

a. BotswanaInvestment&TradeCentre:www.gobotswana.comb. ITCMarketAnalysisTools:www.intracen.org/marketanalysisc. AustralianGovernment:MarketResearchandStatisticsd. Canada’s Step-by-Step Guide to Exporting: www.infoexport.gv.ca/eng/StepENGPDF.

pdfe. EnterpriseIreland:www.enterprise-ireland.com/Export/Export+advice)f. USSmallBusinessAdministrationg. TheNetherlandsCentreforthePromotionofExportsfromDevelopingCountries

Regulatoryenvironment

4 20 0.6 Doing business is straightforwardforourproduct,qualitymeetsstandardsinthismarket


4. EXPORT PLAN

4.1MarketSelection

4.2Product/ServicesSelection

4.3PricingStrategy

4.3.1HowtoCalculateExportPrices

4.3.2ExportElementsNevertoOverlook

4.4MarketEntryStrategies

4.5PromotionalStrategy

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4. EXPORT PLAN

Anexportplanisabusinessplanthatfocussesoninternationalmarkets.Anexportplan:

• Iscentraltoanyexportstrategy,• Identifieswhatyouwanttoachievefromexporting,• Listsactivitiesthatneedtobeundertakentoachievethesetexportobjectives,• Helpscompaniestoremainfocusedontheirgoals.

Acrucialfirststepinplanningistodevelopbroadconsensusamongkeymanagementonthecompany’sgoals,objectives,capabilitiesandconstraints.Thoroughplanningenhancesthechancesofsuccessinexportmarkets.Badplanning(ornoplanningatall)canleadtomajorfailureabroadandcouldseverelydamagecompany’sdomesticoperationsaswell.

Buy in from personnel involved in the export process is also crucial since they are theultimate implementersoftheplan.Financial institutions, lendinginstitutions,andpotentialinvestorswillusuallynotprovidefundsorexportfinancingintheabsenceofwell-developedexportplans.Anexportplanshouldnotbeastaticdocumentbutratheritmustbeusedasamanagementtoolthatevolves.Thecompanyshouldbereadytomodifytheplanasandwhennewinformationbecomesavailableandnewlearningsareacquiredthroughpracticalexperience.

4.1 Market Selection

Selectionofexportmarketstosell toprovidesoneofthemostchallengingdecisionsthatcompanies have to make. It is advisable for first time exporters to select markets withpredictable business environment and less trade barriers. Different markets presentsdifferentmarketentrychallenges.

Gatheringandanalyzinginformationonthefollowingfactorscanassistthecompanyinitsmarketselectiondecisionmaking:

i. Review of economic performance, key indicators and political stability

Companiesmuststudythedemand,productionandtradestatisticsfortheproductofinterest.Howmuchoftheproductisproduceddomestically,levelofimportsandlevelofexports.Itisalsoimportanttoestablishthehistoricalandprojectedgrowthrateinthedemandfortheconcernedproduct.

Are theyanyenvisageddomestic investmentprojects fromcompetitors that are likely toincreasesupplyandenhanceaccessibilityoftheproduct?Studytheexchangerateregimeandestablishtherisksofexchangeratelossesthatmightaffectprofitability.Assessifthereareanypoliticalrisksthatmightresultsinbusinessdisruptionsorpermanentlossofmarket.

ii. Competition, trade barriers and cultural differences


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Reviewthelevelofcompetitionthatyourproductislikelytofaceinthemarket.Doesyourproductandyourcompanyhaveuniquesellingpropositionsthatcanhelpyoupenetratethemarket?Ifchancesofsuccessarelimitedbyintensecompetition,thenconsiderationsmustbemadetotargetotherlesscompetitivemarkets.

Tradebarrierscaneithermakeitdifficultforyourproducttoaccessexportmarketsortheymightmakeyourproductstobemoreexpensive.Studythebarriersthatyourproductsface.These might be import tariffs, SPS requirements, labelling requirements, taxes, quotasandbureaucraticredtape.Besensitivetoculturaldifferencesandadaptyourproductsorbusinesspracticesaccordingly.

iii. Trade support infrastructure

Establishifthesupportinginfrastructureisavailableinthetargetedmarket.Forexampleifyouaresellingcoldchainproducts,aretherecoldstoragessupportedbyreliableelectricitysuppliers? Is the port or border infrastructure supportive of quick turnaround times thatreducedemurragecostsandfacilitatejustintimedeliveries?

iv. Respect for rule of law, enforceability of contracts and protection of intellectual property rights

Itisimportanttounderstandbothlegalandcommercialpracticesinthemarketsofinterest.Incertainmarketsifthecompanygetsembroiledinlegaldisputes,itcouldtakeforevertoresolve themandevenso theassociatedcostsmightbe insurmountable. Investigate themarkettoestablishtheextentofprotectionforinvestorsandpropertyrights.Avoidmarketswherepiracyisrampantandprotectionseemtobelessofapriority.

4.2 Product/ Service Selection

CanyourproductorservicefindaworthwhilemarketoutsideBotswana?Selectionoftherightproductorserviceisessentialforsuccessinexternalmarkets.Thereareseveralwaystoevaluatetheexportpotentialforyourproductsorservicesinexportmarkets.Someofthefactorstoconsiderareasfollows:

i. Product performance in the domestic market

Iftheproductorserviceisperformingwellinthedomesticmarket,chancesarethatitwillsucceedintheexportmarkets,especiallytoconsumersorcustomerswithsimilartastesandpreferences.

ii. Unique selling propositions (USPs)

Iftheproducthasuniquefeaturesthataredifficulttoreplicateinexportmarkets,chancesarethat itwilldowell.Usuallythistypeofproductsorservicesfacelesscompetitionandcommandhighpricesinthemarketduetolimitedsupply. iii. Trends in export markets


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Ananalysisofperformancetrendsinglobalmarketswillassistcompaniestopickproductsthatarelikelytodowell.Theanalysisshouldbedonebothbyproductandcountry.Howhasthedemandforaparticularproductorservicebeenperformingover thepastfiveyears?Whatistheforecastgrowthordecline?Whichcountriesaretheleadingimporters/exportersofaparticularproductorservice?

iv. Production capacity

• Willyoubeabletoservebothyourexistingdomesticcustomersandyournewforeignclients?

• If your domestic demand increases, will you still be able to look after your exportcustomersandviceversa?

v. Product adaptability

Sometimestheproductorservicemighthavetobemodifiedtosuitthetastesandpreferencesofaforeignconsumer.Fortheproducttobesuccessfulinforeignmarketsitmustbecapableofthesuitablechangesinitsdesign,colour,size,taste,packagingetc.

4.3 Pricing Strategy

An export market will always have additional things to consider when setting the pricecomparedtothedomesticmarket.Yourknowledgeoftheseiskeyandappliestovariousmarketsandmostlywillbedevelopedthroughpracticalexperience.Youmustanticipatethesefactorsandaccountforthemalwayssuchasfreightandlogistics,marketresearch,travel,logistics, communication, packaging and labelling, compliance to standards, insurance,credit,exportfinancingandchargesamongothers.

Properproductpricingisoneofthecriticaldriversoffinancialsuccessinexportventures.Thekeyquestionfacingthecompanyis:atwhatpriceshouldIsellmyproductsorservicesin order to sell targeted volumes and achieve the targeted profit margins? The priceconsiderationslistedbelowcanguidethecompanytoestablishtherightpriceforitsproductsorservices:

• What type of market positioning (customer perception) does the company want toconveyfromitspricingstructure?

• Doestheexportpricereflecttheproduct’squality?• Isthepricecompetitive?• Should the firm pursue market penetration or market-skimming pricing objectivesabroad?

• Whattypeofdiscount(trade,cash,quantity)andallowances(advertising,swell,andrebates)shouldthefirmofferitsforeigncustomers?

• Shouldpricesdifferbymarketsegment?• Whatpricingoptionsareavailableifthefirm’scostsincreaseordecrease?• Isthedemandintheforeignmarketelasticorinelastic?


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• Are the prices going to be viewed by the foreign government as reasonable orexploitative?

• Dotheforeigncountry’santi-dumpinglawsposeaproblem?

Itisimperativethatasanexporteryoucheckmultiplesourcesforpriceinformation.Youwillneedatruepictureabouttherealpricelevelprevailinginthemarketofinterest.Inadditionto‘topdownanalysis’youneedtoconsiderthefollowinginformationsources:

• Check supermarkets and convenience stores in the target market to know retailconsumergoodsprices.

• Checkonlinemarketplaces• Checkgovernmentfundedandprivateagriculturalmarketinformationorrelated• SimilarlyITCmarketnewsservicecanbereachedatwww.intracen.org/mns

4.3.1 How to Calculate Export Prices

Armed with prevailing prices in the target market, your next move is to calculate yourinternational price to see if you canoperate in themarket.The traditional approachhasbeencalculationsusingthe“costplus”methodwhile thenewmethodcalled“marginalordifferentialcosting”iscommonamongtoday’sexportersandisknowntoachievecompetitivepricesnecessarytofosterentryintotargetmarkets.Anotherapproachwillbetosetanexportpricethatisbelowthecostofproductionsoyougainaccesstothemarketordumpintothemarketatyourownriskthoughthismightresultinstrongcompetitorresponseorevenanti-dumpinginvestigations.

Cost-pluspricinginvolvesaseriesofscenariosstartingwithex-worksorwholesalepricestaking into account transport, clearance, marine insurance and others. This approachincludes the domestic price component but additional thingsmaking up the export pricemaydriveitratherhighmakingyourgoodsuncompetitive,hencemostexportersuseitasareferencepriceonly.

Marginal costing takes into account variable costs like direct labour, directmaterial, andvariable overheads for manufacturing. It is important in instances where the firm seeksexport competitivenessbysetting lowprices to takeadvantageof itsexcessproduction.Usingdirectcostsofproductionandsalesaheadofyourfixedcosts,hereyousetthebasepriceofyourproduct/servicesuchthatthesemorethanpayforyourdirectcosts.Throughthemarginalcostyoucandeterminetheleastabsolutepriceyoucanchargeinyourtargetmarket.

Caution:

Entrypriceswillhavetobesustainableinthetargetmarket.Ifyouusethemarginalcost,ensureyoucanrecoveryourfixedcostsinyourlocalmarket.Alsobeawarethat your entry price is your indicative base level and themarket expects futurediscountingonit.


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4.3.2 Export elements never to overlook

Donotunderestimatecostsandcontingencies.This iswhymarketresearchis important.Aproperresearchunderliesyourpricesandreturnsaswellastheunderstandingbetweenyouandyourbuyer.Neverunderestimatefreightandhandlingcharges,avoidlastminuteproduct modifications and ensure proper packaging and labelling as required, the rightdocumentationanddelaysatportsofclearanceanddischarge.

4.4 Market Entry Strategies

Marketentrystrategiesoutlinetheoptionsavailableforthecompanytodeliveranddistributeproductsorservicesintheexportmarkets.Thefourcommonmarketentrymethodsavailabletocompaniesinclude:

• DirectExports• IndirectExports• Partnershipsand,• Acquisitions/Investments.

i. Direct Exports

This involvesmarketing and selling the products directly to clients.Theadvantagesanddisadvantagesofdirectexportingarecapturedinthefollowingtable:

ii. Indrect Exports

Thisinvolvessellingproductsorservicestoexportmarketsthroughanintermediarysuchasanagentordistributor.Theadvantagesanddisadvantagesofindirectexportingarecapturedinthefollowingtable:

Advantages Disadvantages

• Thecompanyhascompletecontroloverexportingprocess

• Costsofrunningexportofficemaybehigherthanthebenefitsofexporting

• Enhanceprofitmarginsduetosavingsmadeonsalescommissions

• Exposuretodirectrisk

• Closerrelationshipswiththeforeigncustomers


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iii. Partnerships

Itmightbeadvantageousfortheexportingfirmtopartnerwithalocalcompanyforstrategicreasons.Forexample,apartnershipcancomplementtheexporter’scapabilitiesandprovidelocalexpertise, insights,andcontacts.The followingaresomeof thepartnershipoptionsavailabletocompanies:

• Licensing

A licence is the grant of rights to another business so that it can legally use yourproprietary technology and/or intellectual property. This usually does not involvegrantingalltherightstotheproperty.

• Franchising

Arrangementwheretheexporter(thefranchiser)grantsthelocalbusinesspartner(thefranchisee)therighttouseitstrademarkortrade-nameaswellascertainbusinesssystemsandprocesses,toproduceandmarketagoodorserviceaccordingtocertainspecifications.

• Joint Venture (JV)

New firm formed to achieve specific objectives of a partnership like temporaryarrangementbetween twoormorefirms.JVsareadvantageousasa risk reducingmechanisminnew-marketpenetration,and inpoolingof resources.They,however,presentuniqueproblemsinequityownership,operationalcontrol,anddistributionofprofits(orlosses).

iv. Acquisitions/ Investments

Acompanycanchoosetopurchasepartorallsharesofaforeignfirminordertoexpandits business interests in export markets. On the other hand the firm can choose to setup an entirely new subsidiary company to handle all its business interests in the exportmarket.Usuallythedynamicsandlegalrequirementswillguidethecompanyintakingthesedecisions.

Advantages Disadvantages

• Nostrainonthefirmasitdoesn’thavetosetupexportfunction

• Agentcansometimesmisrepresentfirms

• Thefirmcanchoosethebestexpertiseavailabletorepresentitsexportinterests

• Theexporterandtheintermediarymaynotsharecommonobjectives


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4.7 Management Review and Follow-up

ThecompanyshouldcontinuouslyreviewexportperformanceagainstthetargetsoutlinedintheExportPlan.Managementcommitmentandoversightisacriticalcomponentofensuringsuccess of the Export Plan. Constant review of export performance enables the firm toadjustexportplansasnewinformationandexperiencesbecomeavailable.

Task By Whom By When

4.5 Promotional Strategy

PromotionalStrategyoutlineshowtheexporterintendstosupporthis/herforeigncustomers,partners,agentsordistributors. It includesschedules formarketvisits,advertisingplans,designandproductionofrelevantmarketingcollateralandproducttrainingforpartners.

4.6 Action Plan

TheActionPlanoutlinestaskstobeachieved in theExportPlan,with timingandhumanresourcesresponsibleforthosetasks.BelowisasampleoftheActionPlan:


5. BOTSWANA’S MARKET ACCESS TRADE ARRANGEMENTS

5.1Botswana’sTradeArrangements

31


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5. BOTSWANA’S MARKETS ACCESS TRADE ARRANGEMENTS

5.1 Botswana’s Trade Arrangements

Botswana has a number of trade agreements/arrangements which could be used bythe industry to source rawmaterials as well as to export the processed goods.All theagreements are based on theWorldTradeOrganization (WTO) principles,which is aimatpromotingeconomicgrowthanddevelopmentthroughraisinglivingstandards,ensuringfullemployment,ensuringanincreaseinreal incomeandeffectivedemand.Thismaybeachievedamongothersthroughthefollowing;

Trade Facilitation

Thisisanagreementthatlooksathowproceduresandcontrolsgoverningthemovementofgoodsacrossnationalborderscanbeimprovedtoreduceassociatedcostburdensandmaximizeefficiencywhilesafeguardinglegitimateregulatoryobjectives.

Customs Cooperation

Customs cooperation is an aspect of Trade Facilitation whereMember States’ customsauthoritiescooperatetodevelopwaysofeasingimportorexportmarketborderchallengessuchascustomscomplianceissuesandvaluationrelateddata.

Reduction of Tariffs

Thisiswheretariffsorcustomsdutiesaresignificantlyreducedtoeaseproductentryintotheexportmarket.Tariffreductionsmaymeanthecompleteeliminationoftariffs,oreliminationinpart.OtherAgreementsnegotiatedmaybefullyliberalisedofferingdutyfree–quotafreemarketaccess.

Elimination of Non-Tariff Barriers

Otherimpedimentstotrademaynotbetariffbased,andareknownasNon-TariffBarriers.Theseareoftenencounteredwithinthebordersoftheexportmarket.RegionalEconomicCommunitiessuchasSADCareworkingtowardsimprovingwaysofreportingandaddressingNon-TariffBarriers. TheAgreementsthatBotswanahasenteredintohavesoughttoachievethebestenvironmentfordoingbusiness throughachieving theaforementionedaspectsofeasingcrossbordertrade.TheAgreementsaresummarizedinTable4.

Theexportermayberequiredtofulfilcertainrequirementstoexportintoaforeignmarket.Theymayberequiredtopossessrelevantcertificationtomeettheexportmarket’sdemandandthecountry’slegislation.Thesemaybe;


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SADC SACU SACU - EFTA SACU - MER-COSUR

AGOA BOTSWANA - ZIMBABWE

EU-SADC EPA

A GENERALINFORMATION

1. WHERE TO ACCESS THE TRADE AGREEMENTS.

www.sadc.int www.sacu.int www.sacu.int www.miti.gov.bw www.agoa.info www.miti.gov.bw www.miti.gov.bw

2. YEAR OF SIGNATURE

TheSADCProtocolonTrade,whichisthebasisforSADCFreeTradeArea(FTA)wassignedin1996andcameintoeffectin2000.

TheSACUAgreementwassignedin1910andlastreviewwasin2002.

TheSACU-EFTAAgreementwassignedinJuly2006.

TheSACU-MERCOSURwassignedinDecember2004butnegotiationswereconcludedinApril2008.

AGOAwasenactedon18May2000andwillexpireon30September2025.

Botswana/ZimbabweTradeAgreementwassignedin1988asanamendmentofthe1956AgreementwhichhadotherMembersthanthetwocountries.

TheAgreementinitialledinJuly2014.TobesignedinJune2016.



EU-SADC EPA

Product quality

Thismay be in the form of the required product standards in linewith the Internationalstandards Organization or the exporting country’s standards. It may include packaging,labellingandmanyothers.

Origin Certificate

Thisisacertificatethatexplainstheoriginofaproduct.Itisimportantfortraderstohaveknowledgeoftherulesoforiginthatareapplicableundereachofthesetradearrangementsforonetobeabletoexportormanufactureforexport.RulesofOrigin(RoO)arethefineprintofTradeAgreements,and theyset theconditions forpreferentialexports.Theyaretherequirementswhichsetouttheworkingandprocessingthatmustbeundertakenlocallyinorderforaproducttobeconsideredthe“economicorigin”oftheexportingcountry.Thisdistinction becomes necessary and important where some of the materials used in theproductionormanufactureofagoodareimportedfromothercountries.

The purpose of RoO is to prevent trade deflection and transshipment, whereby goodsmade elsewhere aremerely routed through a beneficiary country (of trade preferences)withnoorinsufficientlocalvalue-addingactivitieshavingtakenplace.WithoutRoO,tradepreferenceswouldbeexploitedandseverelyunderminedbynon-beneficiarycountries.Thestringencyof therelevantRoOimpactsontheabilityofproducersandexporterstomeettheirrequirementsandcanhaveasignificantimpactontrade.Rulescantherefore,makeorbreakexports,dependingontherequirements,hencetheimportanceofunderstandingwhatisrequired.Thetradearrangementsandtherulesapplicablearealldiscussedbelow.Morefocusisgiventotherulesoforiginthatapplyunderthedifferentagreements.

Table 4


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3. MEMBERSHIP

Angola,Botswana,DemocraticRepublicofCongo,Lesotho,Madagascar,Malawi,Mauritius,Mozambique,Namibia,Seychelles,SouthAfrica,Swaziland,Tanzania,Zambia,andZimbabwe

Botswana,Lesotho,Namibia,SouthAfrica,andSwaziland.

AllSACUMemberStatesplusEFTAStateswhichincludetheRepublicofIceland,thePrincipalityofLiechtenstein,theKingdomofNorwayandtheSwissConfederation

AllSACUMemberStatesplusMERCOSURStatescomprisingofArgentina,Brazil,Paraguay,andUruguay

UnitedStatesandeligibleSub-SaharanAfricancountries.

ZimbabweandBotswana,

AllmembersoftheEUplus6SADCmembershaveinreferredtoasSADCEPAGroupbeingEPAgroupwhichincludesBotswana,Lesotho,Mozambique,Swaziland,NamibiaandSouthAfrica.



EU-SADC EPA

4. PRODUCT COVERAGE

TheagreementcoversallgoodsexceptforafewthathavebeenexcludedduetotheirsensitivitysuchasAutosforSACU.ItalsocoversserviceswhicharestillcurrentlyundernegotiationsbytheSADCMemberStates.

TheSACUAgreementcoversallgoodsbutdoesnotincludeservices.

TheagreementcoversproductsofChapter25to98.

MERCOSURhasofferedSACUfulldutyandquotafreeaccessforindustrialproducts,aswellaswithlimitedbutenhancedaccesstotheiragriculturalmarkets

AGOApreferencesapplytomorethan4600productscurrentlycoveredbytheUnitedStates’GeneralisedSystemofPreferences(GSP)plusafurther1,800tarifflines,whichareAGOAeligibletextileandapparelproductsaddedbytheAGOAlegislationwhichincludefootwear,luggage,handbags,watches,certainautomotivecomponentsetc.

Theagreementcoversalltheproducts.

TheagreementcoversalltheproductsexceptforEUproductsthatdonotenterSouthAfrica(RSA)dutyfreeduetothepre-existingTrade,DevelopmentandCooperationAgreement(TDCA)betweenSAandEU,thatcurrentlygovernsitstraderelationwiththeEU.



EU-SADC EPA

B RULES OF ORIGIN

1 WHERE TO FIND THE RULES OF ORIGIN ON THE AGREEMENTS

Article12,Annex1,Rule2ofthemainAgreement

NotprovidedNorulesforSACU

Article6,Article7oftheAgreement,AnnexVI,Article14,Para(1)a-boftheAgreement

Article10oftheAgreementAnnexIIIoftheAgreement

www.agoa.infoAmendmentsonTitleI,Section104,Para(b)(3)ofthenewAGOALegislation

Article3&4,Para(4)oftheAgreement

Protocol1oftheMainText

2 BASIC PRINCIPLE: WHOLLy PRODUCED

ProvidedforinRule2&4ofAnnex1oftheSADCAgreement

Notprovided(NorulesforSACU)

DefinedinArticle4ofAnnexV,oftheSACUEFTAAgreement

DefinedinArticle4oftheAgreement

AsfurtherdefinedinArticle7oftheAgreement

AsfurtherdefinedinPara4ofArt3oftheAgreement

Article7ofProtocol1oftheMainText



EU-SADC EPA


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3 CRITERIA FOR DETERMINING ‘SUBSTANTIAL TRANSFORMATION

CTH,PercentagetestorSpecificProcess(ordualrequirement)

Notprovided CTH,percentagetestorspecificprocess(ordualrequirement)

CTH,percentagetestorspecificprocess(ordualrequirement)

Percentagetest(valueadded)andtextilerules

Percentagetest(llocalcontentrule)

CTH,percentagetestorspecificprocess

4 Cost basis for percentage test

Ex-worksprice(EWP)

Notprovided Ex-worksprice(EWC)ortotalmaterialcost(localplusimported)

Ex-worksprice(EWP)

Likely:ex-worksprice(EWP)

Ex-worksprice(EWP)

Ex-worksprice(EWP)



EU-SADC EPA

5 PERCENTAGE THRESHOLDS USED

maximumvalueofnon-originatingIS60%EX-WORKSPRICE

Notprovided maximumvalueofnon-originating50%EX-WORKSPRICE

maximumvalueofnon-originating50%non-originatingmaterial/EWP)

ATLEAST35%VALUEADDED

ATLEAST25%LOCALCONTENT

maximumvalueofnon-originating50%EX-WORKSPRICE



EU-SADC EPA

6 CUMULATION

Full Full Full Full;ShouldhaveundergoneworkingorprocessinginMERCOSURorinSACU.

Full,MaterialsmustbeimporteddirectlyfromtheAGOA-beneficiarycountry.

Full Bilateralordiagonalcumulation,withotherACPthirdcountriesthatEUhasFTAwith(subjecttoconditions)andwithproductsthathaveDFQFaccesstoEU(subjecttoconditions).Onlywherethevalueaddedisgreaterthanthevalueofthematerialsusedoriginatinginanyoneoftheothercountriesorterritories



EU-SADC EPA

7 DE MINIMIS (VALUE TOLERANCE)

15%byvalue;excludesChapter50-63,87,98

Notprovided Notprovided 15%weight(agriculture),15%value(others)exceptChapter50-63

Atotalofupto15%ofthe35%localcontentvalue

Valuetoleranceisnotprovidedforintheagreement.

15%weight(agriculture),15%value(others)exceptChapter50-63



EU-SADC EPA

8 PROOF OF ORIGINAll Certificates on Proof of Origin are obtained at BURS


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SADCCertificateoforigin.

Notprovided MovementcertificateofOrigin(EUR1)orinvoicedeclaration.

CertificateofOrigin(paperorelectronic)byBURS;Declaration(nocertificationrequiredforlow-valuegoodsandbyregisteredexporters.

Fornon-textilegoodstogainpreferentialtreatment,theymustbeaccompaniedbyacertificateoforigin(FormA)authorisedbyadesignatedCustomsofficial.Fortextileandapparels,aVisastampmustbeendorsed.

Form61isforexportofgoodsoriginatinginBotswana.CE59isforexportofgoodsoriginatingfromZimbabwe.

MovementcertificateofOrigin(EUR1).



EU-SADC EPA

9 VALIDITy OF THE CERTIFICATE

NoProvision NoRulesOfOrigin

4 Months 6Months NoProvision NoProvision 10Months


6. PAYMENT METHODS

6.1CashinAdvance

6.2DocumentLetterofCredit

6.3DocumentarySiteCollections

6.4DocumetaryTermCollection

6.5ShipmentonOpenAccount

6.6Summary

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6. PAYMENT METHODS

Thetermsoftradeandpaymentmethodsofferedtotheimportercangivetheexportingfirmcompetitiveadvantageover foreign competition.Thepaymentmethodschosendependsontheexporter’sknowledgeabout thebuyer, thesizeandfrequencyof thetransactions.Because getting paid in full and on time is the ultimate goal for each export sale, anappropriatepaymentmethodmustbechosencarefullytominimizethepaymentriskwhilealsoaccommodatingtheneedsofthebuyer.Theexportermustdecideinadvanceorduringthecontractnegotiationswhichpaymentmethodswillworkoutbestforboththebuyerandtheseller.Differentpaymentoptionsarediscussedbelow:

6.1 Cash in Advance

Theimporterpaystheexporterusingtelegraphictransferorinternationalchequebeforetheexportershipsthegoods.

Risklevel:

• For importers—thisisthehighestlevelofriskasyoupayforyourgoodsbeforeyourexportershipsthem.

• For exporters —thisisthelowestlevelofriskasyougetpaidbeforeyoushipthegoods.

6.2 Documentary Letter of Credit

Theimporterpaystheexporterusingaletterofcreditaftertheexportershipsthegoods.Aletterofcreditisanundertakinggivenbyabanktopaytheexporterprovidedtheyfulfilitstermsandconditions.Paymentcanbedueimmediately(“atsight”)oratalaterdate(“term”)thatboththeimporterandexporteragreeto.

Risklevel:


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• For importers – this isamedium levelof riskas there’ssomeassurance that theexporterhasshippedthegoodsbeforeyouhavetopay.Youneedtoorganizealetterofcreditfacilitybeforealetterofcreditcanbeissued.

• For exporters –thisisalowtomediumlevelofriskastheissuingbankwillpayforthegoodsyoushipaslongasyoufulfilallthetermsandconditionsoftheletterofcredit.

It’simportanttounderstandthecreditrisksoftheissuingbankandtheircountrybeforeyouagreetothisarrangement.

6.3 Documentary Site Collections

The importer pays the exporter after the exporter ships the goods. The importer needsthe shipping documents to clear goods on arrival. The bank holds the documents untilthe importer pays for the goods.This is called a “sight” payment, sometimes known as“DocumentsagainstPayment”or“D/P”.

Risklevel:

• For importers – this isamedium levelof riskas there’ssomeassurance that theexporterhasshippedthegoodsbeforeyouhavetopay.

• For exporters –thisisamediumlevelofriskasthegoodsyou’veshippedusuallygetreleasedtotheimporteraftertheypay.

Shippinggoodsbyair isahigherrisk.Airfreightcompaniesusuallyreleasegoodstotheimporterimmediately,eventhoughtheymaynothavepaid.

6.4 Documentary Term Collection

Theimporterpaystheexporteraftertheexportershipsthegoods.Theimporterneedstheshipping documents to clear goods on arrival. The bank holds the documents until theimporterundertakestopayforthegoodsatalaterdate.

This iscalleda“term”payment,sometimesknowna“DocumentsagainstAcceptance”or“D/A”.

Risklevel:

• For importers –thisisamediumtolowlevelofriskasyouwillbeabletoreceiveandinspectthegoodsbeforeyouhavetopay.

• For exporters – thisisamediumtohighlevelofriskasthegoodsyouhaveshippedwillbereleasedtotheimporterwhentheyundertaketopayatalaterdate.Theimportermaynothonourthisundertakingifthereisadisputeoriftheyareexperiencingpaymentdifficulties.


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6.5 Shipment on Open Account

Theimporterpaystheexporterbytelegraphictransferorinternationalchequeafterthedeliveryofgoods.

Risklevel:

• For importers – thisisthelowestlevelofriskasyoupayafteryouhavereceivedthegoods.

• For exporters – this isthehighest levelofriskasyouhavereleasedcontrolofthegoodstotheimporterbeforetheyhavepaid.


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Payment Risk Diagram:

Most Secure

Most Secure

OpenAccount CashInAdvance

LettersofCredit

LettersofCredit

DocumentaryCollections

ImporterExporter

DocumentaryCollections

CashInAdvanceOpenAccount

6.6 Summary

Tosucceedintoday’sglobalmarketplaceandwinsalesagainstforeigncompetitors,tradepresentsaspectrumofrisk,whichcausesuncertaintyoverthetimingofpaymentsbetweentheexporter(seller)andimporter(foreignbuyer):

• Forexporters,anysaleisagiftuntilpaymentisreceived.Therefore,exporterswanttoreceivepaymentassoonaspossible,preferablyassoonasanorderisplacedorbeforethegoodsaresenttotheimporter.

• For importers, any payment is a donation until the goods are received. Therefore,importerswanttoreceivethegoodsassoonaspossiblebuttodelaypaymentaslongaspossible,preferablyuntilafterthegoodsareresoldtogenerateenoughincometopaytheexporter.

Thepaymentriskdiagramillustratesdifferingperspectivesbetweenimportersandexporterswith regards to different payment arrangements at their disposal.Whilst some paymentmethodsarethemostsecureintheviewsofexporterstheymaybetheleastpreferredbyimporters.

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7. EXPORT FINANCE

7.1FactorstoConsiderinChoosingExportFinance

7.2ExportFinancialPlan

7.3ExportInsurance

43


44

7. EXPORT FINANCEAvailabilityofexportfinancingisoneofthecriticalfactorsnecessaryforfirmstocompleteexport transactions. Finance is commonly sourced from commercial banks and lendinginstitutionsthatmayofferexportfinancingadviceandsolutionstoqualifyingclients.Manybankshavespecialistinternationalbusinessdepartmentsthatcanadviseonallaspectsofraisingcapitaltofundoverseasbusinessactivities.LocalCommercialBanksandBotswanaExportCreditInsurance(BECI)offertradefinanceandinsurance.

7.1 Factors to Consider in Choosing Export Finance

• Terms of Sale

Meetingyourbuyer’sexpectationsregardingtermsofsalemayhelptomakeyourproductorservicemorecompetitive,butthetermsofsaleshouldnotbedetrimentaltoyourbusiness.Donotplaceunduefinancialpressureonyourselftosecureanorder.Considerthenegotiatedlengthofdeliveryandsaletimewhenchoosingyourfinance.

• Working Capital

Mostbusinessesrequireaccesstofinanceforday-to-dayoperationssuchaslabourcosts,equipmentmaintenanceandoverheads. Inadequateworkingcapitalwill inevitablyrestrictyourcapacity toexpandand fulfilyourexportpotential.Youwillneedadditional funds tocoverexport-relatedcostssuchasmarketresearch,visits,communicationandpromotionalactivities

• Pre-shipment Finance

Fundsmayberequiredtopurchaserawmaterials,componentsandparts ifanunusuallylargeexportorderorordersarereceived.Pre-shipmentfinancehelpstoalleviateunexpectedstrainsonworkingcapital.

• Post-shipment Finance

Additional finance may be required to fund your ongoing operations during the periodbetweentheproductionanddispatchofyourgoodsandreceiptofpayment.

• Cost of Finance

Interestratesandfeesmayvarywidelyandyouwillbeexpectedtoassumesomeorallofthefinancingcosts.Takeearlyadvicefromyourbankorfinancierandunderstandhowthecostsoffinancewillaffectyourpricingandprofitprojections.Factorssuchasthepoliticalandeconomicstabilityofthebuyer’scountryneedtobeconsidered.Riskytransactionsareharder,andmorecostly,tofinance.Lendersmayrequiresecuremethodsofpaymentsuchaslettersofcredit,exportcreditinsuranceorcreditguarantees.


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• Exchange Rate Risk

Ifyourgoodsandservicesaretobepricedinanothercurrency,youmaybeexposedtoexchangerateriskifthereisanunfavourablemovementagainstthePula.Yourbank,canadviseonwaysofminimisingoroffsettingexchangeraterisks.

7.2 Export Financial Plan

Anexportfinancialplanissimilartoanyotherfinancialplan.Itisadocumentthatdescribesyourcurrentfinancialstatus,yourfinancialgoalsandwhenyouwanttoachievethem,aswellasstrategies tomeet thosegoals.Yourexportfinancialplanshould forman integralpartofyourexportstrategydocumentandshouldrepresentarealisticassessmentofyourfundingsourcesandrequirements.Itshouldincludeelementssuchas:

• Marketdevelopmentcosts(visits,communication,publicity)• Costsofmodifyingyourproductsandservicesforexport• Costofinvestmenttoincreaseproductivecapacity• Freightandlogisticscosts• Requirementsforpreandpost-shipmentcosts• Anticipatedcostsofcreditinsurance,currencyhedgingorperformancebonds(aformofinsuranceusedtoguaranteeprojectcompletionintheserviceindustries).

Yourfinancialmodelshouldcoverbestandworst-casescenariosandaboveall,berealistic.Youshouldinitiallyadoptaconservativeapproachandnotover-estimateexportrevenues.

Takedetailedfinancialadvicefromawiderangeofreputablesourcesandactonthatadvice.Aboveall,donotover-extendyourselffinanciallyinchasingexportorders,asthismayputyourdomesticoperationsinjeopardy.Proceedwithfinancialcaution.

7.3 Export Insurance

Therearesomeinherentrisksassociatedwiththebusinessofexporting:

• Goodscangetlostordamagedbeforereachingtheimporter• Theimportermaydefaultorrefusetopayforgoods• Theexportermayfailtosupplythegoodstotheimporter.

The export insurance cover depends on the nature of contract negotiated between theexporter and the importer. The terms of trade outlines both the seller and the buyer’sresponsibilityandprovidesthebasisoftheexportcoverthatthesellerwillpurchase.

Export credit insurance protects the buyer against failure to receive payment from aninsureddebt.Thisisverycriticalfortransactionswherepaymenthasnotbeenreceivedinadvance.Thecredit insurancewillusuallycover for insolvencyof importer,political risks,


46

andprotracteddefaultbytheimporterwhofailstopaytheundisputeddebtwithintheagreedtimeframe.

Cargo insurance isusually takenasaprotection for loss,delayordamageof thegoodsin transit.The seller is often required to obtain a performance bond to cover for certaincaseswherethesellerisunabletofulfilltheexportcontract.Failurebythebusinesstotakeadequateexportcovercanhavenegativefarreachingconsequencesonthebusiness.


8. FREIGHT AND LOGISTICS

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48

8. FREIGHT AND LOGISTICS

Oneofthekeyissuestoaddresswhenconsideringexportingishowyourproductswillbetransportedtotheexportmarkets.Thecompanyhasachoicetoeitherselectroad,rail,air,seaoracombinationofthesetransportmodesinthecaseofBotswana.Thetransportmodechosenusuallydependsonavailability,cost,valueofthegoods,deliverymethod(e.g.JustinTime), perishability, andproduct size. It is also important tounderstandhow transportandfreightforwardingcompaniesoperateandtheirglobalcoverageorassociatedpartners.Seaandrailfreightareusuallycheaperthanroadandairfreight,howevertheformerareoftenslowerthanthelatter.Productswithhighvaluetodensityratioareusuallycheapertotransportbyairwhilethosewithlowvaluetodensityratioarecheapertotransportbysea.


9. INTERNATIONAL COMMERCIAL TERMS (INCOTERMS)

9.1DepartureGroup(E)

9.2MainCarriageNotPaidBySeller(GroupF)

9.3MainCarriagePaidBySeller(GroupC)

9.4Arrival(GroupD)

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9. INTERNATIONAL COMMERCIAL TERMS (INCOTERMS)

InternationalCommercialTermsorINCOTERMSareaseriesofsalestermsthatareusedbybusinessesthroughouttheworld.INCOTERMSareusedtomakeinternationaltradeeasier.Theyareusedtodividetransactioncostsandresponsibilitiesbetweenbuyerandseller.

9.1 Departure Group (E)

• EXW – Ex Works

EXWmeansExWorksandisfollowedbyanamedplace,forexampleEXWGaborone.EXWmeanstheseller’sresponsibilityistomakethegoodsavailableattheseller’spremises.Theseller isnot responsible for loading thegoodsonthevehicleprovidedby thebuyer,whothenbearsthefullcostinvolvedinbringingthegoodsfromtheretothedesireddestination.

9.2 Main Carriage Not Paid By Seller (Group F)

• FCA – Free Carrier

FCAmeansFreeCarrierandisfollowedbyanamedplace, forexampleFCAGaborone.FCAmeans theseller fulfills itsobligation todeliverwhen ithashandedover thegoods,clearedforexport,intothechargeofthecarriernamedbythebuyeratthenamedplace.Ifnoprecisepointisindicatedbythebuyer,thesellermaychoosewithintheplaceorrangestipulatedwherethecarriershalltakethegoodsintoitscharge.

• FAS – Free Alongside Ship

FASmeansFreeAlongsideShipandisfollowedbyanamedportofshipment,forexampleFASDurban.FASmeansthesellerisresponsibleforthecostoftransportinganddeliveringgoodsalongsideavesselinaportinhiscountry.Asthebuyerhasresponsibilityforexportclearance,itisnotapracticalincotermforBotswanaexports.FASshouldbeusedonlyforoceanshipmentssinceriskandresponsibilityshiftfromsellertobuyerwhenthegoodsareplacedwithinthereachoftheship’scrane.

• FOB – Free On Board

FOBmeansFreeOnBoardand is followedby thenamedportofshipment, forexampleFOBCapeTown.WithFOBthegoodsareplacedonboardtheshipbythesellerataportofshipmentnamedinthesalesagreement.Theriskoflossofordamagetothegoodsistransferredtothebuyerwhenthegoodspasstheship’srail,i.e.offthedockandplacedontheship.Thesellerpaysthecostofloadingthegoods.


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9.3 Main Carriage Paid By Seller (Group C)

• CFR - Cost and Freight

CFRmeansCostandFreightandisfollowedbyanamedportofdestination,forexampleCFRLuanda.CFRrequirestheseller topaythecostsandfreightnecessarytobringthegoodstothenameddestination,buttheriskoflossordamagetothegoods,aswellasanycostincreases,aretransferredfromthesellertothebuyerwhenthegoodspasstheship’srailintheportofshipment.Insuranceisthebuyer’sresponsibility.

• CIF - Cost, Insurance and Freight

CIFmeansCost,InsuranceandFreightandisfollowedbyanamedportofdestination,forexampleCIFMombasa.CIFissimilartoCFRwiththeadditionalrequirementthatthesellerpurchasesinsuranceagainsttheriskoflossordamagetogoods.Thesellermustpaythepremium. • CPT – Carriage Paid To

CPTmeansCarriagePaidToandisfollowedbyanamedplaceofdestination,forexampleCPTMaputo.CPTmeansthatthesellermustpaythefreightforthecarriageofthegoodstothenameddestination.Theriskoflossordamagetothegoodsandanycostincreasestransfersfromthesellertothebuyerwhenthegoodshavebeendeliveredtothecustodyofthefirstcarrierandnotattheship’srail.

• CIP - Carriage And Insurance Paid To

CIPmeansCarriageAndInsurancePaidToandisfollowedbyanamedplaceofdestination,forexampleCIPCapeTown.CIPhasthesameincotermmeaningasCPT,butinadditionthesellerpaysfortheinsuranceagainstlossordamage.


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9.4 Arrival (Group D)

• DAF – Delivered At Frontier

DAFmeans DeliveredAt Frontier and is followed by a named place, for example DAFLuanda.DAFmeansthattheseller’sresponsibilityiscompletewhenthegoodshavearrivedatthefrontierbutbeforethecustomsborderofthecountrynamedinthesalescontract.Thisbuyerisresponsibleforthecostofthegoodstoclearcustoms.

• DES - Delivered Ex Ship

DESmeansDeliveredExShipandisfollowedbyanamedportofdestination,forexampleDESCapeTown.DESmeans thesellershallmake thegoodsavailable to thebuyeronboardtheshipattheplacenamedinthesalescontract.Thecostofunloadingthegoodsandassociatedcustomsdutiesarepaidbythebuyer.

• DEQ - Delivered Ex Quay

DEQmeansDeliveredExQuayandisfollowedbyanamedportofdestination,forexampleDEQLosDurban.DEQmeansthesellerhasagreedtomakethegoodsavailable to thebuyeronthequayattheplacenamedinthesalescontract.

• DDU – Delivered Duty Unpaid

DDUmeansDeliveredDutyUnpaidand is followedbyanamedplaceofdestination, forexampleDDUKinshasa.Thesellerhastobearthecostsinvolvedinshippingthegoodsaswellasthecostsandrisksofcarryingoutcustomsformalities.Thebuyerpaysthedutyandhastopayanyadditionalcostscausedbyitsfailuretoclearthegoodsforimportintime.

• DDP - Delivered Duty Paid

DDPmeans Delivered Duty Paid and is followed by a named place of destination, forexampleDDPDaresSalam.Thesellerhastopaythecostsinvolvedinshippingthegoodsaswellasthecostsandrisksofcarryingoutcustomsformalities.Thesellerpaysthedutyandthebuyerhastopayanyadditionalcostscausedbyitsfailuretoclearthegoodsforimportintime.DDPshouldnotbeusedifthesellerisunabletoobtainanimportlicense.


10. EXPORT SUPPORT SERVICES

10.1BotswanaExporterDevelopmentProgramme(BEDP)

10.2ExportPromotion

10.2.1BITCExportPromotionServices

10.2.2BITCIncentivestoExporters

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10. EXPORT SUPPORT SERVICES

TheBotswanaInvestmentandTradeCentre(BITC)isanintegratedInvestmentandTradePromotionAgencywithanencompassingmandateofinvestmentpromotionandattraction,exportdevelopmentandpromotionincludingmanagementoftheNationBrand.

The organization plays a critical role of driving Botswana’s economic growth throughattractionofForeignDirectInvestment(FDI),domesticinvestment,facilitationofexpansions,andfurtherspearheadsthegrowthofexportsbypromotinglocallymanufacturedgoodsandservicestoregionalandinternationalmarkets.

BITCdriveswealthcreationforBotswanabycreatingplatformsthatwillinstigateandensureincreasedcitizenparticipationintheeconomyandcreatesustainablejobopportunities. TheBITC’sExportDevelopmentandPromotionsectionshave themandate tomake theexportsectoramajorengineofgrowthbymaximizingthegrowthofthesectorsandcontributetooveralleconomicgrowthaswellasdiversifyingtheexportbase.

10. 1 Botswana Exporter Development Programme (BEDP)

BotswanaExporterDevelopmentProgramme(BEDP)aimstoincreaseexportsingeneral,but mostly the non-traditional ones. The target group is the Small, Micro andMediumEnterprises(SMMEs)aswellasthelargerpotentialandestablishedexporters.BEDPfurtherseekstodevelopapoolofexportreadycompanies,developnewproductsandnewmarkets,ensurethatthereareeffectiveresourcesavailableforexporterdevelopment,andprovideleadershiptothevariousstakeholdersinvolvedinexporting.

BEDPcarriesoutdiagnosticassessmentstoascertainlevelofexportreadinessofBotswanabased manufacturers and service providers. The diagnostic exercise provides completecompanyevaluationagainstindustrybestpractice.Itassiststoidentifycompanystrengthsandweaknessesandfocusesonimprovementopportunities.Onthebasisofthediagnosticresults BITC recommends interventions that companies can adopt in order to improvebusinessperformancewithspecialemphasisonexportreadiness.Thequalifyingcompaniesthenreceivespecificinterventionsaimedathelpingthemtoattainexportreadiness.


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10.2 Export Promotion

BITC assists exporters to develop and implement their export marketing plans. This isachievedthroughidentificationofpotentialexportmarketoutletsforproductsandservicesproducedinBotswana,marketsurveys,andorganizationofexporttrademissions.

10.2.1 BITC Export Promotion Services:

BITCidentifiesandconductsmarketresearchonnewexportmarketstofacilitatetargetedexportpromotion.TheprioritymarketsareusuallythosethathavetradeagreementswithBotswanaastheyofferpreferentialaccesstoBotswanaproductsandservices.

The functions of Export Promotion are:

• PromotingBotswanaproductsininternationalmarketsbyparticipatinginoutwardandreversetrademissions.Theoutwardtrademissionsincludegeneraltradefairs,sectorspecific trade fairs and contact promotionmissions, reverse trademissions refer toinwardbuyermissions.

• Timelyandefficientservicestooverseasbuyersinsupplieridentification,match-makingofbuyersandsellers,andothersupportservices.

• AssistingBotswanacompaniesinproductdevelopmentandadaptationtomeetbuyer’srequirements.

• Organizingseminars/conferences/workshopsontraderelatedsubjects.• ConductingmarketreviewsonregionalandinternationalmarketsincollaborationwithResearchDepartment.

• Disseminationofexportmarketinformationtopotentialexporters.

10.2.2 BITC Incentives to Exporters

• Freeexhibitionboothsatinternationaltradefairs• Freetransportationofsamplestobeusedintradefairs• Freeexportmarketsurveys• Freeinterpretationservicesinnon-Englishspeakingcountriesduringtrademissions• Freearrangementandfacilitationofmeetingswithpotentialbuyers


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USEFUL LINKS AND CONTACTS

Ministry of Investment, Trade and IndustryPrivate Bag 004Gaborone,Central Business District (CBD)Gaborone,Botswana

T +267 360 1200F +267 397 1539Email: [email protected]

Botswana Investment & TradeCentre (BITC) Head OfficePrivate Bag 00445Plot 54351, off PG Matante RoadExponential BuildingCentral Business District (CBD)Gaborone, Botswana

T +267 363 3300F +267 317 0452Email: [email protected]

Botswana Investment and Trade Centre

@Go_Botswana

www.gobotswana.com

Botswana Trade Portalwww.botswanatradeportal.org.bw

Global Expo Botswanawww.globalexpo.co.bw