One year of Ndabanomics
Lewanika Timothy | Monday December 22, 2025 06:00
For years, the hard task of creating meaningful jobs and diversifying the economy was repeatedly kicked down the road by successive fiscal planners. That deferred reckoning has now caught up with the country, leaving the Minister of Finance with little choice but to confront the challenge head-on.
“The new Botswana” as Gaolathe often says, is an epoch of rebuilding the ruins of an economy that has lost its lustre. The term laden in many of Gaolathe’s speeches as a Member of Parliament reveals that he has always been a firm believer in building a diversified economy through expanding value chains while protecting the integrity of the economy through strong independent institutions.
As 2024 drew to a close and the Umbrella for Democratic Change (UDC) ascended to state power, it became clear that driving meaningful change would hinge on placing the country’s best minds in charge of the fiscus. Ndaba Gaolathe’s appointment to the double-barrelled role of Vice President and Minister of Finance became the manifestation of a long-held belief.
Responding to Kenneth Matambo`s 2019 budget speech, Gaolathes shared a word of caution, predicting what the fortunes of the country would turn out to be if the right economic policies were not taken. In his address, Gaolathe spoke of a time when mass spread hopelessness would grip the nation, where unemployment would be at record highs, and the erstwhile economically fortified Botswana would be no more.
“We are in a current economic state of do or die, the likes of which we have never witnessed; and so many of our people the unemployed, retired persons, taxi-men, security guards, artists, performers, artisans domestic workers, nurses, teachers, soldiers, policemen, clerks, small-business owners, graduates, professionals, civil servants, herdsmen and workers in general are in a state of despair and anxiety about their future and that of their children” he said
Stopping the haemorrhaging Gaolathe’s first year in office has been a restless battle to extinguish economic fires flaring up on multiple fronts. In his public addresses, he has repeatedly warned that the country is regressing on multiple fronts, with key sectors of the economy losing momentum. This slowdown has intensified calls for an expansionary budget, at a time when revenues are shrinking, and deficits continue to roll on.
In his inaugural budget speech, Gaolathe shared a 4-pronged approach to rebuilding the fallen walls of Botswana’s economy. First, his priority was halting excess bleeding that the government incurred through wasteful expenditure.
Government expenditure has been a torn tissue bleeding away billions of taxpayers’ money through project cost overruns and wasteful expenditure. The Ministry of Finance announced in August that austerity measures implemented across public sector agencies had curtailed spending by P5 billion, bringing it down from P58.2 billion to P52.7 billion this year up to August.
This slowdown was a reflection of targeted cost-cutting efforts as the country navigates an unprecedented fiscal crunch.
The government has had to apply the brakes on spending due to revenues being on free fall, with the mainstay of the country’s economy, diamonds, selling at a snail’s pace. Further measures to slow down spending were instituted when the government froze the issuance of purchase orders in a bid to slow down spending.
Whether the bleeding was successfully stopped remains to be seen at the end of the financial year, but its implications have already been felt.
On the government side, a mass collapse has been avoided, where the rate at which the coughers were drying up has been slowed down significantly.
On the downside, liquidity in capital markets has dried up. When government spending slows, economic activity slows due to the sheer weight of government expenditure on the country’s GDP formula. Businesses have closed shop due to delayed payment from the government, while many small enterprises have failed to stay afloat.
Job creation
With 1 year in office, more jobs have certainly been lost than created. The undoing of past fiscal administration has been the inability to create jobs for the country’s youthful population, and the challenge remains stern under the Ndaba-led finance ministry.
From a total of around one million Batswana who are eligible and actively seeking employment, almost a quarter of them cannot find a footing in the local labour market, which is bloated and has no room for new entrants. The figures are part of a larger trend which depicts decades-old sting that has been biting away at the success story of Botswana’s diamond-dependent economy. According to figures from Statistics Botswana’s Quarterly Multi-Topic Survey on labour, unemployment has been on an upward trend, quarter on quarter. In 2019, the unemployment figure stood at just a little under 200,000 but climbed up the ladder to the current 287,000.
The only way to create jobs is for the economy to expand its output; in that way, firms can grow and employ more people while supporting value chain growth that ushers in new jobs and new businesses
GDP growth
The Finance ministry now expects the economy to either experience zero growth or contract this year, whilst the forecast P22 billion deficits will widen, as the recovery from a two-year slowdown has grown uncertain due to US trade tariffs.
The latest forecast comes as Finance ministry technocrats prepare the country’s inaugural mid-term budget, which will provide a half-year revision of the estimates provided in the February budget.
Weakness in mining and trading activity has contributed to a broader slowdown, while fiscal and external buffers have softened, with reserve cover and external balances moderating.
The outlook remains cautious, hinging on gradual global demand recovery and credible fiscal consolidation.
Key risks include export concentration, structural shifts in consumer preferences, and reduced resilience due to buffer erosion. Reserve adequacy concerns and sensitivity to fiscal and external pressures further heighten financing risks, reinforcing the need for sustained policy discipline.
Botswana’s investment status
Global credit ratings agency Moody’s downgraded Botswana’s rating to ‘Baa1’ from ‘A3’ this year, citing the government’s challenges in adjusting to a structural downturn in the diamond industry and increasing government debt.
A month before that, peer agency S&Ps cut Botswana’s rating to ‘BBB’ as it expected weak global diamond demand and prices would keep the Southern African country’s external and fiscal flow positions weak.
The agency said the global diamond downturn is unlikely to reverse, while maintaining the country’s outlook at ‘negative’.
Economic Outlook
The economy is expected to bounce back in 2026, with hopes that diamond sales will pick up this festive season. There are also high expectations around the BETP program, which is set to start rolling out fully in the beginning year.
GDP growth is expected to reach 3% in the coming year, with the growth expected to create jobs and stability in the fiscus