This is according to a new report published TODAY??? by the International Finance Corporation and the World Bank.
The Botswana Country Private Sector Diagnostic (CPSD) highlights opportunities for investment and growth in Botswana and ways the country can achieve a more resilient, green, and sustainable economic future, including through regulatory improvements and diversification.
The CPSD outlines regulatory gaps that hamper competition and productivity and suggests boosting access to finance for smaller businesses and increasing investment in skills development suited to the job market's needs.
The CPSD also suggests increasing investments in transport and digital infrastructure, which lag behind other countries in the region. The CPSD notes the impact of Botswana’s state footprint on competition in key sectors and its diamond-reliant growth model as challenges to growth.
Botswana is the world’s second-largest diamond producer, but the COVID-19 pandemic slashed revenues from the diamond and tourism sectors, which combined account for 30% of GDP.
Diamonds alone comprise about 90% of Botswana’s exports. “The COVID-19 pandemic disrupted economic activity in Botswana and sharply reduced revenues from the diamond and tourism sectors,” said World Bank country director for Botswana, Eswatini, Lesotho, Namibia, and South Africa, Marie Francoise Marie-Nelly. “The World Bank is committed to supporting the government to enact reforms aimed at attracting private investment to diversify the economy and create jobs.
“Botswana’s economy recorded rapid growth in the decades after independence, largely driven by diamond and mineral wealth, but the country experienced limited gains in employment and income equality,” said Carlos Katsuya, IFC’s senior country manager for Botswana. “Increasing private sector participation can help to unlock the investment needed to support the country’s economic diversification agenda, create jobs, reduce income inequality, and bolster economic growth.” Botswana stands out among countries in Africa for its successful development policy, economic performance, and long track record of macro-economic stability. The country has implemented many favourable investment policy measures that have contributed to significant investments in infrastructure, education, health, and social protection. However, there is still room for improvement to boost human capital indicators, create jobs, and reduce inequality, which remains among the highest globally.
The CPSD suggests specific interventions that Botswana can take to accelerate economic diversification and private sector participation, including developing a dedicated investment policy and investment law, strengthening formal mechanisms to address investor grievances, addressing corruption, and enhancing government effectiveness.
The report aligns with commitments made under Botswana’s Economic Recovery and Transformation Plan (ERTP) and Vision 2036 to expand the domestic economy by diversifying away from diamonds and refocusing on an export-oriented, labour-intensive, and private sector-driven model.
