Housing Finance in Botswana
Overview
This profile is also available in French here.
To download a pdf version of the full 2022 Botswana country profile, click here.
Botswana’s population will be 2,346.179 in 2022. Some citizens still can’t afford housing despite the government’s efforts through BHC. Lack of policy, affordable housing, and serviced land causes inadequate housing. Costs exceed earnings. Housing statistics hinder planning, targeting, and monitoring.
Following a decline of 8.8% in 2021, Botswana’s GDP grew 13% between March 2021 and March 2022. The World Economic Outlook Update forecasts growth of 6.1% in 2021, 3.2% in 2022, and 2.9% in 2023. From 11.4% in 2021, Botswana’s GDP growth should moderate in 2022 and 2023. The inflation rate in June 2022 reached its highest level since January 2009. In addition, food and energy prices increased in the second quarter of 2022.
The majority of Botswana’s families cannot afford the cheapest home due to the country’s economic situation. At 30% affordability, a household would need a monthly income of P14,000 to purchase this home. Numerous families finance the construction of their homes with personal funds and unsecured loans. Flexible, longer-term, and low-interest housing financing is necessary for the quick construction of high-quality homes. There are low-income housing programmes available.
In March 2022, home loans represented 26.6% of household credit and 18.1% of total credit. In March 2022, residential mortgage loans decreased from $11.2 billion in March 2021 to P13.8 billion. The recommendation is to switch from mortgages to personal loans. 45 to 105 percent LTV for commercial banks Pension funds are fiscally sound. 50% of the GDP is invested in pension funds. Members are not eligible for housing or third-party loans.
The 2013 revision of Botswana’s Building Code establishes parameters for building dimensions, placement, and construction. By increasing adaptability, diversity, and sustainability, the code enables developers to reduce costs.
Find out more information on the housing finance sector of Botswana, including key stakeholders, important policies, and housing affordability:
- Overview
- Access to Finance
- Affordability
- Housing Supply
- Property Markets
- Policy and Legislation
- Opportunities
- Availability of Data on Housing Finance
- Green Applications for Affordable Housing
- Websites
Each year, CAHF publishes its Housing Finance in Africa Yearbook. The profile above is from the 2022 edition, which has up-to-date profiles for 55 African countries.
Download yearbookBotswana
Overview
Botswana is a sparsely populated, landlocked country with an estimated population of 2 346 179 in 2022 compared to 2 024 904 enumerated in the 2011 Population and Housing Census.[1] While efforts have been made by the government through its various agencies, such as the Botswana Housing Corporation (BHC), to ensure housing can become affordable to most citizens, there are still those who fail to access existing housing because of financial and other constraints. Factors contributing to inadequate housing include a weak policy framework, unaffordability of housing and the shortage of serviced land. This means housing is expensive relative to the financial capacity of households. In addition, inadequate housing statistics constrain effective planning, targeting, and monitoring of the impact of housing programmes.[2]
The 1981 National Policy on Housing laid the foundation for the Department of Housing. This was revised in 1997 to form the basis for the National Policy on Housing of 2000, and may not adequately reflect the social and economic developments that have taken place over the past two decades. Approximately 24.5% of Batswana are unemployed and the poverty headcount is 16.3% of the.[3] In most urban areas, 49% of the households have only one income earner; 28% of households are two income earners; and 15% of the households have three or more income earners.[4] The percentage of households living in inadequate conditions has increased to 39.7%, up from 25% estimated by the 2011 Housing and Population Census. This means that the number of households with access to habitable basic shelter has decreased from 75% to 60.3%.[5] While the development of pronounced slums has been kept at bay, some households live in slum conditions within planned and serviced settlements. This is compounded by inadequacy of other housing prerequisites such as finance and serviced land.[6]
Botswana’s real gross domestic product (GDP) grew by 13% in the year to March 2022, compared to a contraction of 8.8% in the corresponding period in 2021[7]. According to the July 2022 World Economic Outlook Update, global output growth was 6.1% in 2021 and is forecast to decrease to 3.2% and 2.9% in 2022 and 2023, respectively. For Botswana, GDP growth is expected to moderate to 4.2 % in 2022 and 4.1 % in 2023, from 11.4% in 2021.[8] The annual headline inflation rate reached 12.7% in June 2022, its highest level since January 2009. This has been driven by an increase in global food and energy prices during the second quarter of 2022[9]. Rising inflation is leading central banks to tighten monetary policies through higher policy interest rates. The Bank of Botswana increased interest rates three times in 2022. The Monetary Policy Rate increased from 2.15% to 2.65% in August,[10] increasing the Prime Lending Rate to 6.26%.
Drought is a recurrent phenomenon as most rivers are seasonal thus making water a scarce resource, which is worsened by the effects of global warming as seen in rising temperatures and the arid climate.[11] The climate plays an important role in the productivity of the agricultural sector, which most Batswana are involved in to some degree and is threatening food security for Botswana. Statistics on land degradation in Botswana are complicated and hard to come by, however, evaluations show that 91 000km2 of Botswana’s total land area, which is equivalent to 15.5% of the country, is affected by land degradation or desertification.[12] Botswana could lose between 0.13% and 0.30% of its per capita income between 2030 and 2050 if the 2015 Paris Agreement on curbing global warming is not adhered to.[13] Botswana has achieved 61.9% of the 17 Sustainable Development Goals (SDGs), according to the 2021 SDG Index, and is rated 115 out of 165 nations. However, progress on SDG 13 on climate action has stalled. In response to this, the 2021 National Climate Change Response Policy focuses on climate change governance, technological change, and related investment. Botswana has strengthened climate finance resource mobilisation through mechanisms such as the 2021 Green Climate Fund programme on renewable energy, clean technology, and natural capital (stocks of natural assets which include geology, soil, air, water and all living things).[14] Solar energy contributes insignificantly to electricity generation despite the abundance of the resource. There is also wind and coal bed methane potential that has not been fully explored. The Botswana Climate Change Response Policy 2021 has set strategies for adoption that will enhance water and nutrient conservation technologies and create an enabling environment for investments in renewable energy for commercial activities.[15]
[1] Statistics Botswana (2022). 2022 Population and Housing Census Preliminary Results. https://www.statsbots.org.bw/sites/default/files/2022%20Population%20and%20Housing%20Census%20Preliminary%20Results.pdf (Accessed 12 August 2022). Pg. 2.
[2] Ministry of Infrastructure and Housing Development (2017). Botswana Housing Needs Assessment Study 2017. Pg. 52.
[3] Statistics Botswana, (2018). Botswana MutiTopic Household Survey 2015/16. Poverty Stats Brief. https://www.statsbots.org.bw/sites/default/files/publications/BMTHS%20POVERTY%20STATS%20BRIEF%202018.pdf (Accessed 14 August 2022) Pg. 2.
[4] Ministry of Infrastructure and Housing Development (2017). Botswana Housing Needs Assessment Study 2017. Pg. 50.
[5] Republic of Botswana (2020). Mid-term Review of National Development Plan 11. July 2020. https://www.gobotswana.com/sites/default/files/ndp_11_mtr_draft_final_july_ndp_11_draft_mfed_31_july_2020.pdf (Accessed 22 August 2022). Pg. 93.
[6]Statistics Botswana (2018). Botswana Demographic Survey Report 2017. https://www.statsbots.org.bw/sites/default/files/publications/Botswana%20Demographic%20Survey%20Report%202017.pdf (Accessed 24 August 2022).
[7] Bank of Botswana (2022). Monetary Policy Rate Increased. Press Release. 25 August 2022 https://www.bankofbotswana.bw/sites/default/files/press-release-files/Monetary%20Policy%20Committee%20Decision-August%202022.pdf (Accessed 22 August 2022). Pg. 1.
[8] Ibid
[9] Bank of Botswana (2022). Inflation increases to 12.7 percent in June. 20 July 2022. https://www.bankofbotswana.bw/news/inflation-increases-127-percent-june (Accessed 30 August 2022).
[10] Bank of Botswana (2022). Monetary Policy Committee Decision – August 2022. https://www.bankofbotswana.bw/news/monetary-policy-committee-decision-august-2022#:~:text=At%20the%20meeting%20held%20on,2.15%20percent%20to%202.65%20percent (Accessed 30 August 2022).
[11] FinMark Trust (2015). Botswana Country Diagnostic Report 2015. https://finmark.org.za/system/documents/files/000/000/471/original/Botswana_Diagnostic_May-2016.pdf?1615195204 (Accessed 15 August 2022). Pg. 6.
[12] Land Portal (2020). Botswana embarks on land degradation neutrality. 30 September 2020. https://landportal.org/node/100417 (Accessed 28 September 2022)
[13] African Development Bank Group. Botswana Economic Outlook. https://www.afdb.org/en/countries/southern-africa/botswana/botswana-economic-outlook (Accessed 1 September 2022).
[14] Botswana Climate Change Policy. https://info.undp.org/pdc/Documents/BWA (Accessed 2 September 2022).
[15] Government of Botswana (2021). National Energy Policy. April 2021 https://www.bera.co.bw/downloads/National%20Energy%20Policy%20Final%20April%202021.pdf (Accessed 27 September 2022). Pg. 7.
Access to Finance
Botswana has a relatively efficient and stable banking sector and capital market, and its central bank is functional and efficient. Botswana has 11 banks – eight commercial banks and three statutory banks.[1] Four of the banks are listed on the Botswana Stock Exchange.[2] Commercial banks are well capitalised and liquid. Non-performing loans have decreased, and provisioning has improved. In the residential real estate sector, primarily owner-occupied mortgage loans decreased slightly to P13.8 billion (US$1.109 billion) in March 2022 from P14.2 billion (US$11.4 billion) in March 2021.[3]
Residential property loans constituted 26.6% of total household credit and 18.1% of total credit in March 2022.[4] This implies that the level of housing finance shifted to unsecured personal loans. This is not in line with the necessary growth and development route to meet the perceived housing requirement and close the financing gap. However, challenges in obtaining mortgages, such as land ownership, relatively low average wages, and stringent funding criteria have transferred house finance to unsecured personal loans. The mortgages loan-to-value (LTV) for banks ranged between 45% and 105%.[5] The higher LTV ratios exposes banks to financial losses when the proceeds from the sale of repossessed property (foreclosures) are not adequate to expunge the outstanding loan balance from the books of the lender; particularly in the context of subdued economic activity.
The Government of Botswana also owns several development financial institutions, including the National Development Bank; Botswana Savings Bank; Botswana Development Corporation; Citizen Entrepreneurial Development Agency and the Botswana Building Society, which offer property loans.
Corporate finance institutions are growing, including microlenders, pawnshops, and finance and leasing companies. At the end of 2020, there were 583 286 household borrowers, comprising 370 122 (63.5 %) males and 213 164 (36.5%) females, at banks and non-mortgage institutions including microfinance and Savings and Credit Cooperative Societies (SACCOS).[6] Banks have acknowledged they lack financing solutions aimed at increasing women’s financial inclusion.[7] The Women’s Finance House Botswana, a deposit-taking microfinance institution, is not allowed to lend deposits.
Access to finance stands at 68%, with the lower income, rural and remote populations having broad access to financial services – 46% of adults use more than one product category (i.e., savings, credit, insurance and payments). However, access is still a challenge in certain segments, and 24% are completely excluded, mainly in the lower income, rural and remote populations. Men have a slightly higher level of formal access, at 71% compared to 65% for women.[8]
Botswana has 315 registered cooperatives with more than 200 000 members. Out of these, 83 are Financial Cooperatives; SACCOS, registered under the Cooperative Societies Act of 1989. These cooperatives promote savings among members by pooling savings and creating a source of funds for lending with between 17% and 24% interest.[9] A key aspect of these finance instruments is that they are designed for short-term projects and are thus not ideal for housing finance because of their relatively high interest rates and limited repayment periods. These tend to be more expensive, and are not adequate for construction or purchase of good quality housing; however, they do play a role in incremental construction of housing and housing assets, such as fencing and home improvements.[10]
Pension funds play a vital role in the financial system. The pension fund sector has an asset base estimated at 50% of the country’s GDP.[11] However, these are mostly invested in offshore funds, with no third-party loans or housing loans to their members.
Capital markets have played a vital role in enhancing both financial inclusion and housing finance initiatives in Botswana. The BHC, the main affordable housing developer, has previously enlisted the help of capital markets by listing bonds to access cheaper finance instead of borrowing from commercial banks. This reduces the cost of housing provision and is therefore a supply-side subsidy. The securities issued by BHC bear interest at the Botswana bank lending rate plus 2.9% per annum and interest is paid quarterly. The corporation also finances its operations through rolling back sales proceeds. In 2017, another supply-side investor, the International Finance Corporation, a sister organisation of the World Bank and a member of the World Bank Group, made a P311 million (US$25 million) bond investment in the Botswana Building Society. This resulted in an average annual growth in residential mortgage loans of 14.2% in 2018 compared to 21.8 % for commercial banks.[12]
[1] Ministry of Finance. Background. https://www.finance.gov.bw/ (Accessed 5 August 2022).
[2] Bank of Botswana. Banks. https://www.bankofbotswana.bw/content/banks-0 (Accessed 5 August 2022).
[3] Bank of Botswana (2022). Financial Stability Report. May 2022. https://www.bankofbotswana.bw/sites/default/files/publications/Financial%20Stability%20Report%20May%202022.pdf (Accessed 4 August 2022).
[4] Bank of Botswana (2022). Financial Stability Report. June 2022. https://www.bankofbotswana.bw/sites/default/files/publications/Financial%20Stability%20Report%20-%20June%202022.pdf (Accessed 25 August 2022). Pg. 14.
[5] Bank of Botswana (2022). Financial Stability Report. June 2022. https://www.bankofbotswana.bw/sites/default/files/publications/Financial%20Stability%20Report%20May%202022.pdf (Accessed 25 August 2022). Pg. 23.
[6] Bank of Botswana (2021). Household Indebtedness Survey Report. December 2021. https://www.bankofbotswana.bw/sites/default/files/news-files/Household%20Indebtedness%20Survey%20Report%20-%202021.pdf (Accessed 27 August 2022). Pg. 4.
[7] Telephone interview with Lerato Motlhabane, Absa Botswana. 25 July 2022
[8] Finmark Trust. Botswana Financial Inclusion Roadmap 2015 – 2020. https://www.finance.gov.bw/images/publications/fin/2BotsMAPRMPFinal.pdf (Accessed 25 August 2022). Pg. 8.
[9] Government of Botswana (2019). Highlights for Botswana Cooperative Movement 2019/2020 https://icaafrica.coop/sites/default/files/basic-page-attachments/botswana-cooperative-movement-highlights-2019-520904475.pdf (Accessed 20 August 2022). Pg. 2.
[10] Mosha, A,C. (2010). Making Land and Housing Accessible to the Urban Low Income in Botswana. Paper presented at regional symposium. February 2010. http://www.urbanlandmark.org.za/conference/2010_papers/03.pdf (Accessed 27 July 2022).
[11] Bank of Botswana (2020). 2020 Statistical Bulletin. Non-Bank Financial Institutions Regulatory Authority (NBFIRA). https://www.nbfira.org.bw/sites/default/files/STATISTICAL%20BULLETIN%20final%2016042021.pdf (Accessed 25 August 2022). Pg. 17.
[12] Pelaelo. M.D. (2018). Speech by Bank of Botswana Governor 2018 November 26, 2018. https://www.bis.org/review/r181220e.pdf (Accessed 28 August 2022).
Affordability
Most Botswana households cannot afford to purchase the least expensive home, given the country’s income levels. Average earnings were estimated at P6 219 (US$500) for citizens, P9 275 (US$745) for non-citizens and P6 299 (US$506) for all employees (citizens and non-citizens) in the fourth quarter of 2021.[1] A housing unit in an urban area of an average of 54m² on a 400m² plot sells for around P550 000 (US$44 183) from BHC, with a minimum monthly payment of P4 500 (US$361) a month. At a 30% affordability level, a household must earn more than P14 000 (US$1 125) a month to pay for such a house. Given low household incomes, most households would not afford the cost of a conventional mortgage. As a result, rather than obtaining a mortgage, a significant number of households construct their dwellings using personal resources and unsecured loans. While most households acquire their dwelling units through incremental construction using personal savings and other formal and informal sources of financing, these products are typically more expensive, have shorter repayment terms, and are not optimal for providing high-quality, affordable housing. Thus, there is a desire for housing finance instruments that are flexible, have longer periods and lower interest rates than traditional personal loans, and that will enable the rapid construction of high-quality dwellings.[2]
The Botswana government has specific programmes aimed at providing housing finance to low income groups, such as the Self Help Housing Agency (SHHA) Low Income Housing Programme, which was established to assist low and middle lower income households to access housing in urban areas. The SHHA Home Improvement scheme provides funding for extension or renovation of an existing house and/ or completion of an existing house and/ or completion of an unfinished structure. The SHHA Turnkey Programme involves the design and construction of basic core houses for eligible low income households. The turnkey loan amount is P90 000 (US$7 230). Habitable basic shelter is provided to low income households and unemployed people through programmes such as the Integrated Poverty Alleviation and Housing Scheme and the President’s Housing Appeal. The targeted households for these programmes are those with an annual income of between P4 400 (US$353) and P52 000 (US$4 177).[3]
The BHC is the government’s Single Housing Authority (SiHA) and provides the supply-side subsidies in the form of SHHA turnkey projects., The Public Officers Housing Initiative is a project where the BHC builds housing units in different parts of the country at a capped cost of just under P153 000 US$12 290). The houses are bought by citizens and rented out to government to house civil servants. The rental amount serves as repayment or mortgage for the house in each case. The BHC initiated the Tsholofelo 372 and 264 Housing Development as part of the initial 750 housing project under the Instalment Purchase Scheme, a housing initiative for all citizens aged between 18 and 65 years with a monthly income between P5 325 (US$428) and P14 000 (US$1 125).[4]
The Government Employee Motor Vehicle Advance Scheme is available for government employees for the development and purchase of property and motor vehicles. Government assists all its employees to purchase/develop properties by guaranteeing 25% of loans secured through the Botswana Building Society for one loan.[5]
Botswana’s housing rental market has been on a road to stabilisation after the COVID-19 pandemic and housing stock challenges. In July 2022, the BHC indicated that it does not intend to increase rents again in response to the worsening global economic conditions. As of July 2022, a BHC medium sized house rental averaged P4 500 (US$361) in Gaborone with construction costs of a similar house around P6 000/m² (US$482). The absence of timely official house price statistics in Botswana makes it difficult to analyse the rental market.
[1]Statistics Botswana (2012) Quarterly Multi-Topic Survey (QMTS). Quarter 4, 2021. https://www.statsbots.org.bw/sites/default/files/Quarterly%20Multi-Topic%20Survey%20Report%20Q4%2C%202021.pdf (Accessed 26 August 2022). Pg. 36.
[2] Bank of Botswana. Financial Stability Report. May 2022. https://www.bankofbotswana.bw/sites/default/files/publications/Financial%20Stability%20Report%20May%202022.pdf (Accessed 1 September 2022).
[3] BHC. Government Housing Initiatives. Botswana Housing Corporation. https://www.bhc.bw/government-housing-initiatives (Accessed 4 August 2022).
[4] Ibid.
[5] Government of Botswana. Application for Residential Property Advance Scheme. https://www.gov.bw/schemes/application-residential-property-advance-scheme (Accessed 28 August 2022).
Housing Supply
New housing deliveries by the main housing developer, the BHC, serve as a proxy for new housing construction, and include houses that were built by private developers contracted by the corporationThe BHC delivered 1 026 housing units between 2020 and 2021.[1] The BHC’s strategic plan set a target for the construction of 12 300 housing units from 2016 to 2023,and adopted alternative methods of construction to make housing more affordable. Since its establishment in 1970, the BHC has delivered almost 25 000 houses.[2]
In Botswana, the construction sector has played a significant role in economic growth. This sector is comprised of small, medium, large, and foreign construction companies. There are no market access restrictions in the construction sector. However, both local and foreign construction firms must register with the Registrar of Companies to operate in the country. Foreign firms are required to produce a certificate of registration when they apply for use of tribal or state land.[3] There were 1 000 operating construction firms in March 2021. Out of these, 211 companies were not registered with the Registrar of Companies as operating establishments but may have registered with other authorities such as local authorities and the Registrar of Societies.[4]
The construction sector’s share of GDP ranged from 10.7% in 2020 to 11.6% 2021.[5] These figures compare favourably with industrialised countries, whose share of construction as a share of total GDP ranges between 5% and 8%.
Acquisition of land is subject to approval by the Minister of Land Management, Water and Sanitation Services.[6] In view of the growing land shortage in Gaborone, delays in land allocation are experienced by both foreign and local firms. Both local and foreign firms are subject to planning and building requirements if they plan to put up physical developments (housing).
Data collected in 2022 on private property developers showed that they are profit-motivated institutions and their housing prices are targeted at the upper middle and high income households with a two-bedroom of 45m2 selling for P650 000 (US$52 216).[7]
Botswana is highly dependent on imported building material products from the neighbouring countries of South Africa, Namibia, Zimbabwe and Zambia and as far afield as China. The import bill for cement for April 2022 showed that the country imported between P52.6 million (US$4.2million) monthly.[8] The price of a 50kg of cement was an average of P67 (US$5).[9] The price of building materials coupled with exorbitant labour results in a cost of P25 000 (US$2 000) for a two-and-a-half room apartment.[10] This prohibits the construction of a typical SHHA core “2 and 1/2” house of two bedrooms, kitchen and bathroom. The development planning application process in Botswana is six to eight weeks depending on the town council. Most finance authorities require the approval of the planning authority before development, which curbs illegal developments.
[1] BHC (2021). Annual Report. Botswana Housing Corporation. https://www.bhc.bw/sites/default/files/BHC%20Annual%20Report%202021.%20Final.pdf (Accessed 25 August 2022) Pg. 26.
[2] BHC The BHC Business Case. Botswana Housing Corporation. https://www.bhc.bw/bhc-business-case (Accessed 25 August 2022).
[3] BIDPA (2003). SATRN Working Paper No. 4 Botswana Institute for Development Policy Analysis.
Policy Analysis. Pg. 3.
[4] VYMaps.com. Construction Company at Gaborone, Botswana. https://vymaps.com/BW/Gaborone/construction-company/5/
[5] Statistics Botswana. Gross Domestic Product: First Quarter 2022. June 2022. https://www.statsbots.org.bw/sites/default/files/Gross%20Domestic%20Product%20%20Q1%202022.pdf (Accessed 28 August 2022) Pg. 20.
[6] Government of Botswana. Ministry of Land Management, Water and Sanitation Services. https://www.gov.bw/ministries/ministry-land-management-water-and-sanitation-services (Accessed 1 September 2022)
[7] LouieVille. Brochure. http://www.louieville-horizons.com/pdf/louieville_forest_hill_brochure.pdf (Accessed 2 August 2022)
[8]Statistics Botswana (2022). International Merchandise Trade Statistics. Monthly Digest – April 2022. https://www.statsbots.org.bw/sites/default/files/International%20Merchandise%20Trade%20Statistics%20%20April%202022.pdf (Accessed 28 August 2022).
[9] Builders Warehouse Gaborone. Cement. https://www.builders.co.bw/Building-Materials/Cement/c/Cement (Accessed 30 July 2022).
[10] Telephone interview with private developer Trust Ndlovu, F.G Building company.
Property Markets
The Ministry of Land Management, Water and Sanitation Services has undertaken to register all land parcels, including customary land grants, at the Deeds Registry. This will enhance security of tenure and improve house ownership. Gaborone and Francistown are Botswana’s real estate centre pieces and considered prime locations by both local and international businesses. Tribal land on the periphery of Gaborone is in high demand, with an increased demand for plots that are over 800m2.[1] Women and men have equal rights to own land. Data from the BHC shows that between 2015 and 2019, the majority of urban dwellings, primarily in the cities of Gaborone and Francistown, were purchased by men (51.73%), followed by women at 48.67%.[2]
There was an increase in sale transactions of low to medium residential properties with a limited supply for medium to upper end houses in 2021. The average price of residential property in urban areas decreased by 2% to P771 000 (US$62 000) in the fourth quarter of 2021 from P788 000 (US$63 000) in the third quarter of 2021.[3] The Botswana real estate market was hard hit by the general economic slowdown during the COVID-19 pandemic, with most real estate investors struggling with unsold inventory.[4] Current land prices are unsustainable. In cities and towns, serviced land averages P1 320 (US$106) per m2. Serviced land in rural villages within a 40-60km range of Gaborone is priced at P230 (US$18) per m2 while serviced land in urban villages averages P260 (US$21) per m2.[5] Rental for high value houses ranges between P7 500 (US$ 602) and P8 700 (US$ 699) a month. Rentals for one-bedroom, two-bedroom and three-bedroom flats are P3 000 (US$241), P3 700 (US$297) and P4 500 (US$362), respectively. The demand for residential accommodation to rent has increased in urban areas because of the increasing cost of living and the natural propensity for tenants to relocate to cheaper house when incomes stagnate and the cost of living increases, as it has over the past four years.[6]
To ensure the smooth implementation of property transactions, the law requires that all transactions be undertaken by registered property valuers and estate agents in terms of the Real Estate Professional Act, 2003. There are 286 registered property valuers and estate agents in Botswana.[7]
[1] Telephone interview with estate agent Lesedi Lethogile, Fuego Properties
[2] Government of Botswana (2019). Botswana – National Review for Implementation of the Beijing Platform for Action-Beijing+25. June 2019 https://www.unwomen.org/sites/default/files/Headquarters/Attachments/Sections/CSW/64/National-reviews/Botswana.pdf (Accessed 29 August 2022). Pg. 10.
[3] Ribbery Property (2021). Market Report, 2021 Third Quarter.
[4] Telephone interview with estate agent Lesedi Lethogile, Fuego Properties
[5] Telephone interview with estate agent Lesedi Lethogile, Fuego Properties
[6] Fuego Properties (2022). Botswana Property Market 2022. Pg. 12.
[7] REAC. Membership. Real Estate Advisory Council. https://www.reac.co.bw/reac-content/id/6/memberships/ (Accessed 27 August 2022).
Policy and Legislation
In April 2022 the Ministry of Land Management, Water and Sanitation Services operationalised the re-enacted Tribal Land Act, 2018, the Deeds Registry (Amendment) Act, 2017 and the issuance of secure land titles. The Tribal Land Act compels Land Boards to register tribal land grants (Customary Grants and Common Law Leases) at the Deeds Registry. Applicants may apply to a Land Board for registration of their customary land grants or leases. The re-enacted Tribal Land Act of 2018 brings major changes in the land delivery process, mainly digitisation and title issuance for tribal land. The Electronic Communication and Transaction (Amendment) Act, 2017 allows electronic conveyancing of immovable property and recognises electronic signatures. This boosts the conveyancing system which was usually paper based and taking longer than the prescribed period.
In 2018, the president of Botswana announced measures to economically empower citizens through the optimal use of land they possess. One of these measures proposes an amendment to the Botswana Land Policy, 2015, which would differentiate the permissible amounts of ancillary usages for ploughing fields. and Natural Agricultural Production Zones.[1]
To manage the increased demand of housing, the government implemented the National Policy on Housing in 2000, to provide decent and affordable housing for all within a safe and sanitary environment. The policy addresses key elements of the housing sector including institutional capacity building, land, finance, subsidies, rentals, housing standards, building materials, housing legislation, and involvement of SHHA, BHC and the private sector in housing delivery, but there is currently no legal framework to direct such participation.[2]
[1] NELGA (2019). Botswana Land Governance Country Assessment for NAIP. October 2019. Network of Excellence on Land Governance in Africa. October 2019. https://nelga.org/wp-content/uploads/2020/04/Policy-Brief-NAIP-Botswana.pdf (Accessed 27 July 2022). Pg. 3.
[2] Republic of Botswana (2014). Botswana Habitat III Report. Ministry of Lands and Housing. 23 December 2014. https://habitat3.org/wp-content/uploads/Botswana-National-Report.pdf (Accessed 20 August 2022)
Opportunities
Botswana real estate investment and lending has been stable over the years. Liquidity remains available as conservative financing continues, and private equities hold abundant unallocated capital for private investment firms. The growth of the property market is generally favoured by ratings. In the international property market, Botswana is ranked second to South Africa in Sub-Saharan Africa in the JLL Real Estate Transparency Index 2022. Out of the 94 most developed real estate markets in the world, Botswana is ranked 54th in Africa. Consequently, it is relatively easy for real estate investors to access the relevant information and property rights are well protected.[1]
Despite the broader macroeconomic challenges, the real estate sector is projected to grow by 2.6%[2] if the government can improve the process of obtaining building permits, provide affordable land for housing mobilise affordable lines of credit to the construction industry and supporting infrastructure development in freehold land.[3]
The Botswana Development Control Code of 2013 is a set of planning regulations devised to guide placement, construction, and size of buildings to achieve a healthy, safe, socially harmonious, useable and pleasant environment for owners, occupiers and neighbours. It also ensures compliance with the provisions of the area’s spatial development plan..[4] The code enhances the provision of affordable infrastructural services because of its flexibility and inclusivity and sustainable measures. The concept of green buildings in the Botswana built environment operations has not been fully recognised. The first Botswana Green Star-certified structure is in the office sector in the upcoming Gaborone central business district.
[1] JLL and LaSalle (2022). Global Real Estate Transparency Index, 2022. https://www.us.jll.com/content/dam/jll-com/documents/pdf/research/global/jll-global-real-estate-transparency-index-2022.pdf (Accessed 20 August 2022). Pg 4.
[2] Statistics Botswana (2022) Gross Domestic Product. First Quarter 2022. June 2022. https://www.statsbots.org.bw/sites/default/files/Gross%20Domestic%20Product%20%20Q1%202022.pdf (Accessed 26 August 2022). Pg. 10.
[3] Bank of Botswana (2021). Annual Report 2021. https://www.bankofbotswana.bw/sites/default/files/publications/Annual%20Report%202021.pdf (Accessed 28 August 2022).
[4] Department of Town and Country Planning (2013). Development Control Code of 2013. https://books.google.co.bw/books/about/Development_Control_Code_of_2013.html?id=bCm9oAEACAAJ&redir_esc=y (Accessed 25 August 2022).
Availability of Data on Housing Finance
Real estate data is not readily available in Botswana. Most information comes from public organisations and government departments, but is either outdated, subjective, or it is incomplete. Private organisation data is usually available on subscription or by purchasing various reports, particularly as many tend to be secretive about their information, and who they choose to disclose it to.
The Bank of Botswana provides financial information such as interest rates, mortgage uptake, exchange rates and inflation rates on a quarterly basis.
Statistics Botswana collects demographic information and conducts multiple surveys on business, household incomes and expenditure. Very little information has been collected on the real estate sector.
Botswana Housing Corporation keeps information on property listings, and developments in the sector. It is, however, not possible to find any price catalogues and property information from private developers.
Much of the information kept by most organisations is disaggregated by sex, even though the aim is not to highlight gender issues, but an administrative requirement.
The concept of green buildings in Botswana has not been fully recognised, thus limiting available data sources.
Green Applications for Affordable Housing
The Green Building Council South Africa is currently licensed by the Green Building Council of Australia to allow certification using the Green Star SA rating tools (Office v1.1, Retail Centre v1, Multi Unit Residential v1 and Public & Education Building v1) in Botswana. In 2016, the Botswana Green Building Council was launched as an industry association established for driving the development, growth, and facilitation of a green built environment, and which will also be responsible for producing localised building performance rating tools in Botswana. The green construction industry is managed by a number of Acts, including the Environmental Impact Assessment Act, 2010; the Atmospheric Pollution (Prevention) Act 38 of 1971; the Botswana Development Control Code and the Town and Country Planning Act.
The Ministry of Land Management, Water and Sanitation Services is responsible for management of land and related functions. It also coordinates the development and operational activities in the water and sanitation sector. Land, water and sanitation programmes and projects are carried out by the Ministry’s departments (Lands, Town and Regional Planning and Survey and Mapping), a parastatal (Water Utilities Corporation), and an autonomous government agency (Land Boards). Various government departments and parastatal corporations have a responsibility to ensure that households have access to potable water, sanitation, refuse/garbage disposal, electricity, and refuse/garbage collection facilities. The mandate of the Ministry of Mineral Resources, Green Technology and Energy Security is to ensure sustainable distribution of energy sources such as solar power and electricity grid to households. Specific programmes and projects are carried out through the Ministry’s departments and a parastatal, the Botswana Power Corporation. The main source of electrical power in Botswana is coal and thermal power. Ninety percent of the population in Botswana have access to clean, piped water and 77.2% have access to sanitation.
Websites
Government of Botswana portal www.gov.bw
Bank of Botswana https://www.bankofbotswana.bw
World Bank http://www.doingbusiness.org
Botswana Housing Corporation www.bhc.bw
