Botswana has grown from one of the poorest nations in the world to an upper-middle-income country and is known for its abundant diamond resources, robust economy, and sound macroeconomic position.
Botswana has a relatively small population, estimated at a little over 2.3 million, spread across a land area approximately the size of Texas. This once rural country has experienced rapid urbanization along with soaring economic growth, and these days more than 60 percent of its inhabitants live in cities, towns and urban villages.
The people of Botswana are known as ‘Batswana’ (singular ‘Motswana’), and comprise a number of ethnic groups. There are also citizens of Asian and European descent and those of mixed ancestry. Around 70 percent of the population speak Setswana, which is the national language, although English is the main medium used in government and business.
Botswana has historically boasted Africa’s highest sovereign credit ratings, and this situation continued in 2020, with a BBB+ from Standard & Poor’s and A2 from Moody’s. It also achieves favourable ratings on the World Economic Forum’s Global Competitiveness Index. In 2019, it was ranked fourth in Sub-Saharan Africa, after Mauritius, South Africa and the Seychelles, as well as being rated the best performing nation in the world in respect of its macroeconomic stability (inflation, debt dynamics), financial system credit gap, labour tax rate and low risk for terrorism.
In the World Bank’s ‘Doing Business 2020’ report, Botswana is in 87th position internationally out of 190economies as regards ease of doing business. The Heritage Foundation’s 2020 Index of Economic Freedom rates Botswana’s economy the 40th freest in the world and third in Sub-Saharan Africa, behind Mauritius and Rwanda – well above both regional and world averages.
Furthermore, Botswana is the least corrupt country on the African continent, with a proven record of honest economic governance. In Transparency International’s 2020 Corruption Perceptions Index, it has an enviable global ranking of 35th out of 180 countries.
Botswana has made substantial investments into its people. The positive performance of the domestic economy has seen economic and social infrastructure networks expand, along with improved social indicators and the general standard of living.
The country’s Human Development Index (HDI) value for 2019 was 0.735, which put it in the high human development category, with a rank of 100 out of 189 countries and territories worldwide, as well as being fifth in Africa and first in Sub-Saharan Africa. Between 1990 and 2019, Botswana’s HDI value grew from 0.573 to 0.735, an increase of 28.3 percent. Over the same period, the UNDP reports that life expectancy at birth rose by 10.4 years, meaning years of schooling increased by 4.0 years, and expected years of schooling by 2.9 years. Botswana’s GNI per capita increased by about 85.4 percent between 1990 and 2019.
Furthermore, Botswana is among the most stable and democratic countries on the continent. The 2020 Global Peace Index (GPI) published by the Institute for Economics and Peace rates it the second most peaceful country in Africa after Mauritius, and 33rd out of 163 countries across the globe. The nation also continues to rank above more than half of the European countries surveyed, as well as all five of the Permanent Members of the United Nations Security Council.
Poverty eradication is one of Government’s key policy deliverables. In this context, the scope of measurement of poverty has been broadened to include the Multidimensional Poverty Index (MPI), which measures non-income deprivation levels of the poor in the areas of education, health and living standards. Under the Poverty Eradication Programme, 39 971 projects had been funded as at July 2020. Out of these, 80 percent are operational and employing 34 791 Batswana. Some 5 856 projects are at different stages of implementation.
Botswana has historically enjoyed strong and stable growth since independence from Great Britain, waith sizable fiscal buffers and prudent policies playing a key role in shielding the economy. From 1966 until the beginning of the global recession in 2008, the country boasted one of the highest economic growth rates in the world.
Over the years, Botswana’s economy has changed from one predominantly based on agriculture to one that is largely dependent on mining, with efforts at diversification having favoured the services sector. As a result of its significant reliance on diamond exports, the economy closely follows global price trends for that commodity. Diamond mining fuelled much of Botswana’s past economic expansion, and mineral exports and royalties remain the country’s largest source of revenue, representing 32.1 percent of the total. Tourism is a secondary earner of foreign exchange and many Batswana engage in tourism-related services, subsistence farming, and cattle rearing.
Going forward, it is anticipated that the country’s economic landscape and structure will evolve from a mineral-based to a knowledge economy, as espoused in Botswana’s Vision 2036. As such, Government’s focus for the second half of National Development Plan 11 (NDP11), which runs until 2023, is the further development of diversified sources of growth and revenue.
Botswana experienced a sizably negative economic shock as a result of Covid-19. Besides slower growth, the impact has been manifested in balance of payments and fiscal deficits, and the drawdown of foreign exchange reserves and Government savings. Fortunately, the country’s past record of prudent macroeconomic management meant that it had accumulated financial buffers which enabled Government to quickly respond to and mitigate the economic impact of the pandemic to some extent. However, these reserves have now been depleted and need to be rebuilt so that Botswana is well-placed to deal with potential future shocks.
In recognition of the unprecedented challenges faced by Batswana, Government acted decisively in launching a series of fiscal and financial packages to address health emergency needs, ease liquidity pressures on businesses, and safeguard jobs and household incomes. The comprehensive Economic Recovery and Transformation Plan (ERTP), which is an addendum to the Mid-Term Review (MTR) of NDP 11 and is aligned to the National Vision 2036, was launched during 2020 to fast-track economic recovery and transformation, as well as to enhance medium to long-term resilience.
The Botswana Government has allocated P14.5 billion for the implementation of the ERTP over the remaining years of NDP 11. Furthermore, an Industry Support Fund in the amount of P1.3 billion has been set up to support local businesses, and the National Development Bank has established a P50 million Agri-Business Stimulus Fund to promote smart farming.
The International Monetary Fund (IMF) in its January 2021 World Economic Outlook estimates that global output contracted by 3.5 percent in 2020. The global economy is nonetheless projected to recover and grow by 5.5 percent in 2021, underpinned by a gradual upturn in consumption and investment. Output in advanced economies is expected to have declined by 4.9 percent in 2020, but is now forecast to grow by 4.3 percent in 2021. While emerging markets and developing economies contracted by an estimated 2.4 percent in 2020, they are predicted to recover by 6.3 percent in 2021. In China, growth of 2.3 percent is anticipated in 2020, following the contraction recorded in the first quarter of 2020.
The IMF estimates that output in Sub-Saharan Africa contracted by 2.6 percent in 2020, compared with growth of 3.2 percent in 2019. Many countries have experienced disruptions to consumption, investment and trade. Commodity exporters, in particular, have seen a huge deterioration in their current accounts, arising from weak global demand and lower commodity prices. Moreover, fiscal deficits worsened in 2020. As a result, debt levels for most countries are forecast to increase. In line with these developments, the general standard of living in many countries was expected to deteriorate, with a lower per capita GDP in 2020 than in 2019.
Despite these setbacks, it is anticipated that growth in Sub-Saharan Africa will recover modestly to 3.2 percent in 2021. Key drivers of this growth include an improvement in both exports and commodity prices as the world economy recovers, alongside a recovery in both consumption and investment. Implementation of the African Continental Free Trade Area Agreement (AfCFTA), which became operational in January 2021, could reduce the region’s vulnerability to global disruptions, as well as deepen trade and economic integration, while also boosting competition and productivity.
On the domestic front, economic activity in the second quarter of 2020 was 24.0 percent lower than in the same period in 2019. Most sectors experienced negative growth as a result of the stringent but necessary Covid-19 containment measures implemented during the April/May 2020 lockdown, combined with a sharp fall in international economic activity. Amongst the hardest-hit sectors were Mining, Trade, Hotels & Restaurants, Construction and Manufacturing. On a more positive note, several sectors subsequently experienced a recovery, such that GDP was only 6.0 percent less in the third quarter of 2020 than in the same period in 2019. Overall, the domestic economy is anticipated to have contracted by 7.7 percent in 2020, mainly due to significant contraction in the tourism and mining sectors.
The Mid-Term Review of NDP11 highlights the following
thematic areas for the remainder of the plan period:
economy and employment; social upliftment; sustainable
environment; and governance, peace and security.
While the tourism sector has slowly started to recover, the United Nations World Tourism Organisation Confidence Index is nonetheless reported to have dropped to record lows, with international tourism only expected to pick up substantially by the second half of 2021, dependent on the widespread availability of Covid-19 vaccines. In the meantime, travel and border restrictions still in place in many other countries could delay Botswana’s recovery, reinforcing the need to promote domestic tourism. In the mining sector, trade conditions are showing some improvement, as illustrated by an increase in demand for rough diamonds in the third and fourth quarters of 2020, amid easing of lockdown restrictions and ahead of the holiday season.
The detrimental effects of the pandemic notwithstanding, the outlook for the domestic economy is positive, with a growth rate of 8.8 percent projected for Botswana in 2021. Achieving this will depend, however, on the trajectory of the recovery of the global economy and the successful implementation of policies, programmes and projects outlined in the MTR of NDP 11. Further progress in respect of the ERTP and other Government initiatives should also help to drive a robust recovery in 2021.
The earliest modern inhabitants of southern Africa were the Bushman (San) and the Hottentot (Khoekhoe) peoples. In Botswana, rock art dating to approximately 23 000 BCE provides evidence of their presence in the area, followed by Iron Age settlements and signs of livestock keeping from around 600 CE, with large chiefdoms beginning to emerge in the region between Sowa Pan and the Tswapong Hills from approximately 1 000 CE.
The present-day Batswana and Bakgalagadi can trace their beginnings to around 1 300 CE, when they started to emerge as distinct tribes in the region formerly known as the Northern Transvaal in South Africa. In the 18th Century, further divisions took place, with the Batswana having split into the Tswana tribes which exist today: Bakhurutshe, Bangwato, Bakwena, Bangwaketse, Bakgatla, Batlhokwa, Barolong, Batlhaping and, much later, the Batawana. At the same time, the Bakgalagadi fragmented into several groups, namely the Bakgwateng, Babolaongwe, Bangologa, Baphaleng, Bashaga and others.
By the early 19th Century, the region had become the focus of hunters, traders, gold prospectors and missionaries from Europe, who introduced a variety of western ideas and technologies. Rising militarism among the Zulu chiefdoms under King Shaka, and later the Ndebele under Mzilikazi, coupled with a region-wide drought, ushered in a period of widespread chaos, warfare and upheaval in southern Africa. Known as the ‘Lifaqane’ (‘Great Scattering’), this lasted between 1815 and 1840, and prompted many refugees to resettle in Botswana to escape the conflicts driven by indigenous tribes as well as Boer and British settlers.
The Bechuanaland Protectorate of Great Britain was proclaimed in 1885. Although administered by Britain, the Protectorate managed to maintain a degree of independence, and narrowly escaped being incorporated into Rhodesia by Cecil John Rhodes’ British South Africa Company in 1895, as well as avoiding transfer to the Union of South Africa thereafter. While characterised by relative peace and stability, progress under the colonial administration proved slow, with the exception of the contribution of Sir Charles Rey, who mobilised funds which helped to improve the country’s infrastructure and boost the cattle ranching industry.
Growing dissatisfaction with the British administration and an increasing nationalism among Batswana found expression though tribal leaders, who exercised considerable power at local level. From the 1930s, demands for self-determination were increasingly vocalised through the African Advisory Council, which often found itself in conflict with the colonial administration. In 1950 Seretse Khama, Chief of the Ngwato, was deposed and exiled by the British, with riots following in 1952 to protest his exile.
In 1960 Britain approved a new constitution for Bechuanaland. The Botswana Democratic Party (BDP) – then known as the Bechuanaland Democratic Party – was founded in 1962 by Seretse Khama. After 80 years as a British protectorate, Bechuanaland attained selfgovernance in 1965, becoming the independent Republic of Botswana on 6 September 1966, and maintaining a position of stability and harmony ever since.
Seretse Khama was elected the country’s first president, winning the admiration and respect of his people as well as international leaders through a successful blend of political insight, tolerance, honesty and humour. He served until his death in 1980, and was knighted posthumously in 1991 by Queen Elizabeth II. Sir Seretse Khama was succeeded by Mr Quett Ketumile Masire.
Elections in Botswana are held every five years, with the Independent Electoral Commission (IEC) ensuring that proceedings are efficient, free and fair. The BDP has so far won every election, with five changes of president since independence. Constitutional amendments made in 1997 limited the presidency to two five-year terms and lowered the voting age from 21 to 18.
Sir QKJ Masire voluntarily retired from office in 1998 at the age of 72 and was succeeded by his vice president and former finance minister, Mr Festus Mogae. The BDP swept to victory in both the 1999 and 2004 elections, with President Mogae serving two terms in office before being succeeded by Lieutenant General Seretse Khama Ian Khama, in 2008. The BDP won the 2009 parliamentary elections, with Ian Khama becoming Botswana’s fourth President. As traditional chief of the Bangwato clan and the son of Botswana’s first president, he received strong support from the rural areas. President Khama was reelected to office in the 2014 general elections, and sworn in for a second term in October 2014.
President Khama stepped down from office at the conclusion of two full five-year terms, and in April 2018 former vicepresident and education minister Mokgweetsi Masisi was inaugurated as Botswana’s fifth president. On 23 October 2019 Botswana held its 11th general elections, which were won by the BDP. His Excellency President Dr Mokgweetsi Masisi announced his new cabinet in November 2019, with the Honorable Dr Thapelo Matsheka appointed Minister of Finance and Economic Development.
Positioned between South Africa, Namibia, Zambia and Zimbabwe in the heart of southern Africa, the landlocked nation of Botswana is approximately the size of France, covering an area of about 582 000 square kilometres at a mean altitude of around 1 000 metres above sea level. The country’s topography is generally flat, with gentle undulations and occasional rocky outcrops, and vegetation consists mainly of savannah and indigenous trees such as the mophane, camel thorn and baobab. Botswana is dominated by the vast Kalahari Desert, which occupies about 84 percent of its land area and supports scrub and grass vegetation. One of southern Africa’s longest rivers, the Okavango, flows through north-western Botswana, fanning out into a huge delta some 15 000 square kilometres in extent. The hills and deep valleys of the eastern portion of the country contain its highest and lowest points, ranging from 1 489 metres at the Tsodilo Hills to 513 metres at the junction of the Limpopo and Shashe rivers.
Botswana’s climate is dry and semi-arid. Most rivers flow seasonally, except in the Northwest District, where the major rivers are perennial. The main rainy season occurs between November and April, with significant variations from year to year and periods of severe drought. Despite the fact that the northern two-thirds of the country lie within the tropics, the climate is more temperate than tropical due to land altitude and distance from the oceans. Temperatures are very high in summer, and while winter days are mild, winter nights often see temperatures descending below zero.