Botswana 2023 IFRC network country plan (MAABW003)

Business & Finance

Botswana is located in the centre of Southern Africa between South Africa, Namibia, Zambia and Zimbabwe.

When it gained independence in 1966, it was one of the world’s poorest countries, but it rapidly became a development success story. Botswana is now an upper-middle-income country with a transformation agenda of becoming a high-income country by 2036. This is due to its relatively small population of slightly more than two million, good governance, prudent economic management, and significant natural mineral resources, especially diamonds.

Botswana has a stable political environment and a multi-party democratic tradition, and it holds general elections every five years. The ruling Botswana Democratic Party (BDP) has been in power since 1966.

The 11th general election took place in October 2019, and His Excellency President Dr. Mokgweetsi Eric Masisi was re-elected as President.

Botswana’s macroeconomic framework is based on prudent policies and good governance. Although there have been political and economic transformations over the years, there are still ongoing challenges.

The country’s economic transformation has been slow because of declining revenues from minerals – diamonds in particular – and insufficient economic diversification. When the COVID-19 pandemic began in 2020, it exposed existing structural limitations: for example, Botswana’s economic dependence on a single commodity (diamonds) makes it vulnerable to external shocks and various challenges associated with mineral-led economic growth.

Job creation is slow and the level of unemployment is high at 26 per cent by the end of 2021 (an increase from 24.5 per cent in 2020).

Economic growth rebounded in 2021 to approximately 12.1 per cent, and the World Bank has projected moderate growth of about 4.1 per cent in 2022. This is being driven by a reduction in the adverse effects of the pandemic, a stronger global demand for diamonds, the easing of COVID-19 travel restrictions, and the extensive rollout of COVID-19 vaccines. The Government maintains an accommodative monetary policy and continues to monitor the effects of supply shocks, price increases and rising inflation.

Persistent fiscal deficits have elevated public debt, which is estimated to be 25.5 per cent in 2022. The cost of extra spending during the pandemic continues to put pressure on the budget, although the overall fiscal deficit is likely to go down in the medium term. To create fiscal space and lower the deficit, the Government has introduced structural measures in the areas of revenue mobilization, managing fiscal expenditure and building back monetary buffers.

Living conditions have improved for the people in Botswana and poverty has fallen significantly. The proportion of the population living on less than US$1.90 a day at the 2011 Purchasing Power Parity declined steadily from 29.8 to 18.2 per cent between 2002 and 2010, and it dropped again to 16.1 per cent by 2016.

This rapid reduction in poverty is mainly attributed to growing agricultural incomes (including subsidies) and demographic changes. Between 2009 and 2016, the consumption growth rate was 0.42 per cent per year for the bottom 40 percentile of the population in Botswana, and this rate was higher than for the top 60 percentile. This indicates an improvement in the level of shared prosperity distribution; however, this performance was only about average worldwide. Botswana remains one of the world’s most economically unequal countries, although inequality has fallen. According to the Gini Index, income inequality fell from 60.5 to 53.3 per cent between 2010 and 2015, largely due to regional convergence resulting from fast growth in rural areas and demographic changes.

The recent Botswana Multi-Topic Survey: Labour Force Module Report indicates that the unemployment rate has gone up from 17.6 to 20.7 per cent, with youth unemployment posing a particular challenge. In order to address this issue, Botswana needs to improve the quality of its infrastructure, such as water and electricity supply. It also needs to focus on essential basic services including education, health and social safety nets, accelerate reforms to the business environment and effectively support entrepreneurship.

Botswana scores 0.42 on the World Bank’s Human Capital Index. This suggests that a baby born in Botswana will grow up to be only 42 per cent as productive as they would have been if they had benefitted from a complete education and good quality health care. The purpose of the Human Capital Index is to encourage governments to invest in child health, nutrition and education, because these services are strongly linked to labour productivity and economic competitiveness.

Education expenditure is among the highest in the world in Botswana, and includes the provision of nearly universal free primary education, but this has not created a skilled workforce.

Botswana, through its Vision 2036 Transformational Agenda, recognizes that climate change increases the risk of disasters such as fires, floods and droughts. The country plans to include climate-related vulnerability assessments, adaptations and mitigation in its development planning. It also intends to strengthen its work on disaster risk management and early warning systems, as well as public education and awareness.

Source: International Federation of Red Cross And Red Crescent Societies