Botswana at structural crossroads: Navigating path to resilient future

PROF DUMISANI J JANTJIES | Monday February 9, 2026 08:50

With a projected real Gross Domestic Product (GDP) contraction of nearly 1% in 2025 and a fiscal deficit widening to over 7.5%, the message is clear: the era of resource-dependency has reached its natural limit.

Amidst these challenges, the government has achieved remarkable milestones that demonstrate a resilient spirit and a clear-eyed vision for the future.

Strategic investments in infrastructure (such as the completion of major water supply and sanitation projects) have begun to tangibly improve the quality of life in underserved areas. Furthermore, the successful launch of BOTSAT-1, the country’s first national satellite, alongside the expansion of 4G coverage to 98.2% of the population, signals Botswana's serious intent to transition into a globally competitive, knowledge-based economy.

The landmark renegotiation with De Beers (increasing the country’ rough diamond allocation to 50%) reflects a government that is proactively capturing more value for its citizens.

These developments foster a sentiment of cautious optimism: the country in not merely managing a crisis but laying the foundational stones for a technology-led diversification that places the ambitions of its youth at the centre of national prosperity.

The 15-Year trajectory: A tale of structural rigidity

A critical analysis of the last 15 years reveals an economy that has struggled to break free from its mineral foundations. While the country was once hailed as a beacon of success, the data now tells a story of lost momentum.

Real mineral GDP is expected to contract by 13.5% in 2025 following a staggering 24.1% drop in 2024, signalling that the rise of lab-grown diamonds is a structural displacement rather than a cyclical dip. Manufacturing remains anchored at a meagre 5.5% of GDP, and agriculture has dwindled to just 1.7%.

Conversely, the finance and business services sector, now nearly 17% of GDP, demonstrates that the country possesses the digital backbone to become a regional hub.

The global context: The state as an economic super actor

The 2026 World Economic Forum in Davos highlighted and noted that globally, governments are reclaiming their roles as Economic Super Actors to navigate geopolitical shifts and technological disruptions. Industrial policy is no longer viewed as an emerging market tool but as a universal necessity to spur productivity and build resilience.

For Botswana, this means the government must move from being a referee to an active player, balancing its role as a major employer with its function as the primary architect of an industrial policy that leads to competitive, export-led private sector.

Ensuring state capacity for transformation

To successfully navigate this structural trap, the country requires more than just high-level policy design; it demands robust state capacity to develop, implement, and monitor these crucial changes.

Strengthening institutional capacity (the ability of public institutions to execute their specific mandates effectively) is the most vital prerequisite for the success of any structural reform. In this New Era, the state must invest in its own organizational and governance dimensions to ensure that strategic initiatives are not only legislated but efficiently administered and adhered to over time. Without this implementation capability, even the best-designed interventions risk being undermined by bureaucratic inertia or a lack of accountability.

The next frontier: Engineering Botswana’s structural shift

The move in the frontier Botswana requires a shift from a reactive triage stance to a proactive developmental state model that synchronizes fiscal and monetary policy toward growth. In the immediate term, this could involve reforming national budget (outcome-based budgeting) to ensure that the fiscal space is utilized for strategic infrastructure through mechanisms like first loss guarantees for example, rather than being absorbed by recurrent consumption only.

By re-aligning the monetary stance to support growth, the State can prevent high interest rates from becoming a straitjacket for the small and medium enterprises (SMEs) essential for economic diversification.

Over the medium to long term, the strategy must pivot toward aggressive structural economic transformation and human capital realignment. This includes leveraging the sovereign balance sheet to crowd-in private capital into high-impact sectors like the 1,300MW+ renewable energy pipeline and positioning the nation as a regional logistics hub via the African Continental Free Trade Area (AfCFTA).

Crucially, resolving the 38.4% youth unemployment crisis necessitates a Human Capital Pivot, redirecting tertiary funding toward vocational excellence and digital skills to bridge the technical labour gap and move the economy into complex, high-value tradable sectors beyond minerals.

The recent 2026/27 Budget Strategy Paper correctly recognizes that the country must shift toward improving private sector participation in the economy. However, the path forward requires more than just defensive budgeting; it necessitates a radical pivot toward use of the budget as an offensive structural economic transformation.

The country must rethink the coordination of its fiscal and monetary instruments through a developmental lens to bridge the gap between current stagnation and the high-income aspirations of Vision 2036 and AU Agenda 2063.

By leveraging the country’s central position in the SADC region and the AfCFTA, Botswana can become a regional land-bridge for logistics and green energy. Botswana’s success has always been rooted in bold, stable governance.

Today, that boldness requires Batswana to dismantle bureaucratic inertia and restore fiscal sustainability by investing in a digitally enabled, diversified future. The time for the next phase of Botswana’s developmental story is not tomorrow, it is now.

*Prof. Dumisani J Jantjies is Professor of Practice, University of Johannesburg & Lead Macroeconomic Advisor and the Chairperson of the African Network of Parliamentary Budget Offices (AN-PBO)