An Independence to remember

Mbongeni Mguni | Friday September 26, 2025 08:24

Ahead of its 60th birthday next year, ironically known as the Diamond Jubilee, the country is experiencing the birth pains of an economic transformation whose urgency has grown over the decades.

After a short-lived honeymoon period, the new government has spent most of the first year of its tenure battling to steer the country away from a fiscal cliff and lay the tent pegs of economic transformation.

Thanks to a confluence of adverse factors, President Duma Boko and his Cabinet are finding themselves dealing with budget and economic urgencies that have essentially pulled the rug from under their feet as the new administration.

The young government is being asked to solve crises that have simmered under for decades, namely the slow pace of diversification from diamond dependence and the associated need for reforms that place the private sector — and not the government — at the steering wheel of the economy.

This Independence, Batswana confront the “chickens coming home to roost” ghosts of yesteryear’s missed opportunities and cans kicked down the road in diversification and transformation.

The challenge

Whilst the upcoming inaugural mid-term budget review will carry the latest budget figures, estimates and projections, by June, the Finance ministry expected the deficit to widen beyond P22 billion, whilst growth was seen dropping to minus 0.4 percent from an initial expectation of 3.3 percent.

The main driver of this performance is the prolonged downturn in diamonds, a crisis stretching back to 2023 and which is, according to De Beers’ executives, amongst the worst seen on record.

Government coffers have been running on fumes this year, affecting suppliers and vendors, whilst causing a liquidity crunch in the financial sector, as the state has dug deeper into debt in the local market.

The country’s official foreign exchange reserves, as managed by the Bank of Botswana, were measured at P47.8 billion in July, down from about P65 billion a year earlier. At the same time, the Government Investment Account, an overflow fund that represents national savings, was measured at P2.1 billion, down from P6.5 billion a year prior, with both levels representing decades-long lows.

The ongoing situation is not about the current financial year. The fiscal crisis can be seen as far back as a decade ago, when mineral revenues entered a downward slide.

On the other hand, the economic crisis goes even further back in time to the decade after commercial diamond operations began, when prudent policymakers began advocating for greater economic diversification.

In fact, some scholars argue that diversification as a concept predates the diamond boom of the 1970s, as post-Independence policymakers always targeted a broad, deep economy as seen through legislation such as the Industrial Development Act of 1968.

The economic and fiscal crisis has been worsened by long-running challenges such as poor implementation and the menace of corruption and wastage over the years, whilst crises as COVID-19 have drained the reserves established to provide a cushion for the difficult times.

The response

The government’s response to the crisis has been about arresting the situation, putting in place an action plan and boosting transparency through both citizen engagement and greater awareness activities.

According to the preliminary figures released recently by the central bank, the 2024–2025 financial year incurred a P7.85 billion deficit, significantly below the P24.73 billion shortfall projected in the February budget speech.

The first quarter of the 2025–2026 financial year, according to the same preliminary figures, incurred a P1.1 billion deficit, the third-best quarterly performance since the 2023–2024 financial year. The feat was achieved despite faster declining mineral revenues and the fact that the first quarter of any financial year is associated with sharper spending, particularly after a general election.

Ndaba Gaolathe, the Vice President and Finance Minister, has said there would be primary, secondary and tertiary levels to the spending cuts — starting with slowing recurrent spending, then moving to more serious measures. An audit of civil salaries is ongoing as part of secondary spending measures, whilst tertiary interventions could involve cutbacks on projects.

President Duma Boko, meanwhile, has roped in Malaysian brains trust, Pemandu, to handhold the Finance ministry and broader stakeholders for the Botswana Economic Transformation Programme (BETP), a results-based transformation programme that will feed into the upcoming National Development Plan 12.

The BETP, whose public feed-in phase ran for 12 weeks, involves a rigorous review of the country’s economic baseline, policy gaps, and execution bottlenecks, then identifying sectors with the greatest catalytic potential. The programme has already undergone intense cross-sector engagement, and ideas have been converted into execution-ready, investment-grade projects.

The final stage of the BETP will be execution, which involves a clear roadmap, performance indicators, escalation protocols, and real-time government delivery mechanisms.

The projects selected have been impact-tested, feasibility-checked and costed, and were recently presented before private sector investors who include commercial banks, pension and insurance funds, as well as asset managers.

“We are replacing traditional process-heavy planning with a bold implementation-based model, one that begins with action, assigns responsibility and ends with results,” Boko said.

The President is also relying on investor engagement to hammer down the tent pegs of economic transformation, having pledged to bring in $600 million in a year through his engagements. Thus far, he has interacted with the super-wealthy Gulf Sovereign Wealth Funds whilst also engaging the local private sector on the reforms required to improve the ease of doing business and government relations.

A Dour Independence

For many, the celebrations this year are muted by the steady spike in prices, particularly food, as well as the tightening opportunities in the economy. The reactions by policymakers to the fiscal and economic crises are proving to be bitter pills, and the birth pangs of transformation are difficult for many, a fact acknowledged by Boko recently.

“Our economy is experiencing challenges which have resulted in despair on the part of many, even leaders,” he said a fortnight ago. “The people want solutions not tomorrow but yesterday, and it’s our responsibility to provide answers to these problems.”

Happy Independence!