Having observed the country’s economy for the past five years, the speech was perhaps one of the more detailed budget speeches delivered. However, the proof will lie in the subsequent actions taken and the results achieved.
Botswana continues to depend on a single natural resource: diamonds. During 2024 the economy contracted by 3.1 percent in large part due to a 22.9% contraction in the diamond sector and a 44.1% decline in diamond-related industries. In 2025, the economy is expected to recover and grow at a modest 3.3 percent. The recovery has been predicated on a potential rebound in the diamond industry. However, a boost in the global demand for diamonds is by no means certain and depends on several external factors. It is, therefore, critical that the country’s policymakers begin to chart clear policy pathways for tapping alternative sources of growth. The new (12th) national development plan will be an important instrument for signalling Botswana’s intentions and policy objectives over the next five years.
The government is cognisant that the non-diamond/mineral sectors need to be developed. In the recent budget speech, four key strategic priorities for the 2025–2026 financial year were identified, aimed at driving economic growth, improving social welfare, and modernising infrastructure.
These priorities are:
Modernising and Transforming Infrastructure (P11.54 billion): The key focus areas under this priority are the expansion, upgrading and maintenance of essential infrastructure including road networks, bus terminals and transport systems, railways, power, airports, and aviation services, such as well as water and sanitation infrastructure.
Improving quality of life: allocations (P9.81 billion) are directed toward education, healthcare, social welfare, and economic empowerment. More specifically, there will be an increase in Old Age Pension Allowance (Tandabala) from P830 to P1,400 per month. A P300 monthly baby allowance for newborns up to one-year-old. Moreover, funds are also directed toward strengthening Technical and Vocational Education and Training (TVET) and healthcare system improvements.
Innovation and Digital Transformation (P1.47 billion) has been allocated to expand internet connectivity, e-governance, and ICT infrastructure. Amongst other initiatives, there is a collaborative initiative with MIT (Massachusetts Institute of Technology) to develop innovation-driven enterprises.
Private Sector Export-led Growth initiatives (P0.93 billion) that promote entrepreneurship, enhance ease of doing business, and attract foreign investment is also a topline priority.
At this point, it would be prudent to take a step back and view the speech against the broader socio-economic milieu. The above-mentioned initiatives are laudable and much-needed to put the economy on a strong and steady footing. In addition, a few points worth mentioning as the government and its various ministries assume responsibility for executing the budget:
It would be good to delineate government (and possibly other development initiatives) by immediate, short-term, medium and longer-term time horizons and their respective return on investment. This would require a clear-eyed approach and putting systems in place that focus on (i) efficiency of spending, (ii) implementation, (iii) monitoring and evaluation of results and (iv) ability to course-correct if a specific initiative is not producing the desired results. This is worth emphasising as there is very little (if any) reflection on past achievements and failures. It would also be useful to benchmark Botswana against similar economies and see how it compares over time against a key set of indicators. For instance, Botswana’s performance in terms of education and health outcomes lags significantly behind the upper-middle income country (UMIC) average even though Botswana’s spending (as percentage of GDP) is higher than the UMIC average. This is not just a case of core development pillars such as education and health, but across several development thematic areas/indicators including poverty, inequality and employment.
Whilst there is a strong focus on attracting foreign and domestic investment, often past government actions are inconsistent with the rhetoric. It is important to come up with a compelling narrative for domestic consumption that supports the intention to bring in foreign investment. There will also be a need to develop an external communications strategy to invite foreign investment and expertise. A narrative for domestic purposes is critical as there is currently a strong belief among the Motswana that foreigners compete for local jobs and therefore there should be restrictions put on foreign worker permits. This is a long-standing belief that has permeated through society and has now become a (false) truism. Latest figures from Stats Botswana show a reduction of one-half in terms of worker permit holders over a 10-year period- from 7,209 in 2013 to 3,850 in 2022.
It is time to correct this gross misconception. First, several countries including Singapore and the Gulf economies have prospered through bringing in foreign expertise, knowledge exchange, know-how and capacity. Second, greater FDI not only allows for greater investments across several sectors but will likely lead to a boost in local employment as well. Anecdotally, several captains of industry have voiced concern that either their visas have not been renewed or not been issued at all. In effect, this has led to the relocation of businesses to other countries including Zimbabwe and/or Namibia. For each foreign worker hired by a business, several Motswana are generally employed and trained as part of the foreign enterprise. There is a marked multiplier effect to drawing in foreign investment and business. If Botswana is to diversify and reduce their dependence on diamonds, it would need to get serious in ensuring a conductive business climate whilst also putting in place measures that help toward ease of doing business.
Finally, policy needs to be driven by evidence and data. The paucity of socio-economic and other relevant data has also rendered monitoring performance ineffective. We seldom hear speeches, including the budget speech touching upon past performance or evaluation of past policy, investments and initiatives based on a given set of performance metrics. The culture of monitoring and evaluating past performance needs to be fostered and encouraged through appropriate training. Timely and relevant data also helps in informing policy and identifying national priorities. Toward this end, it is worth investing in data collection and in ensuring close collaboration between data producers and data users (i.e. policymakers) so that relevant data is fed into policy and planning.
I’m sure the leaders of Botswana will imbibe lessons from the past and build on past successes. The new administration’s overall vision is full of promise and hope, and we all wish they fulfill their vision.
*Talmud Khilji is an economist – UN Resident Coordinator’s Office
