VIII. Trade and Project Financing

  There are five commercial banks operating in
Botswana:  Barclays Bank of Botswana, First National
Bank, Standard Chartered Bank, Union Bank, and
Zimbank.  The Bank of Botswana was established in 1975
and is responsible for management of Botswana's
substantial foreign exchange reserves.  The Bank of
Botswana also administers exchange controls and
regulates financial institutions operating in
Botswana.

  Short-term finance, including pre-and post-shipment
credit, is readily available through the commercial
banking system at market rates of interest.  Export
credit insurance is available through local insurance
companies.

  The credit environment in Botswana is more favorable
to investors than in most of sub-Saharan Africa.
Provisions for U.S. and other foreign firms borrowing
in Botswana are liberal, local banks are highly
liquid, and interest rates are presently negative in
real terms.

   However, Botswana's commercial banks have been
hampered from making long-term credit available by the
short maturity nature of their deposits, and their
small capital base.  At present, commercial banks
finance only about USD 18.5 million of the total USD
55.5 million invested each year in industrial
development projects.  A Government parastatal, the
Botswana Development Corporation (BDC), contributes a
similar amount, leaving two-thirds of the total
capital invested in industrial development to come
from private sector funds, reinvested profits, and
foreign capital.

   The availability of foreign aid and Botswana's
favorable balance of payments situation has meant the
country -- with one or two exceptions -- has not been
forced to borrow externally on commercial terms.  The
World Bank and the African Development Bank have,
however, provided several long-term loans to the
government and various parastatals, often at near
commercial rates.  These loans have typically been for
financing major infrastructure projects.  Total public
external debt increased from USD 155.6 million to USD
565.5 million during 1980 - 1990, and the debt service
ratio increased from 1.9 percent to 5.3 percent.

   Eximbank programs are available to exporters to
finance exports to Botswana.  Eximbank has not,
however, been active in Botswana in recent years.

   All five commercial banks operating in Botswana
have correspondent relationships with U.S. banks.