How does an upper-middle income economy go about adopting digital technology? Botswana has a small population (slightly over 2 million) and a successful economy based on diamond mining and tourism. Communication technology in urban areas is well advanced and almost 65 percent of the population live in cities, but rural areas of the country are not serviced nearly as well. The digital cycle, where companies control and profit in digital niches is not yet established in Botswana, but there is an aggressive plan to begin development in that direction.
In 2010 Botswana’s government issued a cabinet directive establishing the Botswana Innovation Hub (BIH). The project is three-pronged in intent – economic diversification for the economy, job creation and moving the country towards a knowledge-based economy. Basically the Hub, when it is completed, will be a research park and technology incubator. The building, which has a unique architectural design, will have 24,000 square feet of office and laboratory spaces that will be available for rent. Companies and individuals who register with BIH will have access to an innovation fund run by BIH, and also a variety of technology transfer and commercialization services.
The Innovation Hub will have four sectors: information and communication technology; energy and environment; mining technologies and biotechnology. There are already a significant number of companies signed on to join the Hub once it is completed. At this point, 2014, the ground breaking is about to happen, so we are probably looking ahead a year or two until there is a working facility. One of the companies that has already signed up is Microsoft Corporation, which is going there to look for start-up ventures. Botswana is offering an attractive tax regimen to induce big players to come join their research and development project.
There is a perception that Botswana is already a tax haven that allows big companies to register within their borders in order to do business elsewhere in Africa with an advantaged tax situation. In defense of their program, the project manager says, “If you look at what other countries are offering to attract the same players we are looking for, you would see that competition is tough. We are even competing with developed countries which offer far higher tax incentives then we do.” It’s difficult to get started in technology and even more difficult to find the cutting edge. Botswana is laying the ground work to encourage digital technology start ups.
So far in Africa, only one company has managed to make a splash in Silicon Valley, California and that’s a small tech start up from Ghana called, Dropifi. They became the first African start up to be invited into the Silicon Valley-based, 500 Startups Program. Dropifi offers a smart customer service widget that helps users better respond to incoming email messages. Botswana is looking to develop their own start ups that can successfully compete at this same level.
There is, however, more to Botswana’s digital development than just the Innovation Hub. Botswana is focused on building infrastructure. At the beginning of 2013 there were almost 300,000 internet users in a national population of over two million people, so 13 or 14 percent internet usage. By the end of 2013 broadband download speed was 2.14 Mega bites per second, which is slow by developed countries standards, but a starting point for a growing system. Regulatory reforms have turned Botswana into one of the most liberalized telecommunications markets in their region, which encourages further development and should bring faster broadband.
Cell phone penetration has happened rapidly and extensively. At over 120 percent, Botswana has one of the highest mobile market penetration rates in Africa. At this point cell phones are the leading edge of digital development and the internet is following. There are three mobile operators, Mascom Wireless (an affiliate of a South African company), Orange Botswana (backed by France Telecom) and BeMobile, which is a subsidiary of the Botswana Telecommunications Company (BTC). Each of these companies has a strategy for offering 3G broadband for mobile internet use. As a landlocked country, Botswana has primarily depended upon satellites for its international bandwidth. It also has depended on links to other countries’ submarine fiber optic cables, but with new international submarine cables coming into place in 2012, Botswana’s access to global broadband internet has improved.
Currently, Botswana’s government is in the midst of adapting national television broadcast from analog to digital in order to meet international standards and deadlines. It looks like the process is moving along to schedule and is well past 75 percent complete.
Power generation is yet another foundational pieces of digital infrastructure, or really for that matter of any infrastructure, and Botswana has a coal-fired power plant that was built in the early 1970s and is run by the government. Fortunately, Botswana has substantial coal reserves and isn’t dependent on imported fossil fuels. There is no petroleum in Botswana although several big oil companies are looking at methane extraction near the coal fields. There are no sustained winds so windmills are not part of the sustainable efforts, but in 2012 the first solar facility came into use and there may be more sustainable solar development.
The last piece of Botswana’s digital development and the part that might lead to a local digital cycle is the development of e-commerce. In the last year and a half e-commerce has grown dramatically in Africa and is going to continue growing. There are e-commerce websites in Botswana but the lack of a large internet community is still a problem. As mobile broadband expands, and it is growing rapidly, so will e-commerce. Part of the infrastructure behind e-commerce is broadband and another important part is payment services. With a well developed mobile phone system in place mobile banking is also growing. The combination of mobile broadband internet access, mobile banking and fulfillment systems that can deliver packages to purchasers are the basics of e-commerce. Botswana is on the way in all three areas. Recently tourism, which is a substantial industry in Botswana, has adapted e-commerce. The company, Simply Botswana, is a one stop portal for tourism bookings of car rentals, accommodation rentals and tour purchases. With no delivery issues, tourism is often where e-commerce begins developing and allows companies to work out e-commerce infrastructure problems so retail can follow.