How is Botswana’s Economy

An economy is an area of the production, distribution, and trade, as well as consumption of goods and services. In general, it is defined as a social domain that emphasizes the practices, discourses, and material expressions associated with the production, use, and management of scarce resources.

The economy of Botswana is currently one of the world’s fastest-growing economies, averaging about 5% per annum over the past decade.
The economy of Botswana.

GDP rank114th (nominal, 2019) 113th (PPP, 2019)
GDP growth14.5% (2018) 3.0% (2019e) −5.4% (2020e) 6.8% (2021e)

The main export of Botswana is diamonds. As of 2017, it is the world’s second-largest producer of diamonds after Russia. Due to Botswana’s heavy reliance on diamonds, strong global demand is vital to the health of the economy. Diamond exports provide Botswana’s economy with strong supplies of foreign exchange and have offered a basis for industrial development and stimulated improvements in Botswana’s infrastructure. However, despite their preeminent role in Botswana’s economy, there are concerns that diamond mines are not labor-intensive enough to provide sufficient employment for Botswana’s workforce, and this mismatch has been cited as a factor in the country’s structurally high unemployment rate.

Two large mining companies, Debswana (formed by the government and South Africa’s De Beers in equal partnership) and Bamangwato Concessions, Ltd. (BCL, also with substantial government equity participation) operate in the country. BCL was placed in provisional liquidation in late 2016, following years of loss-making operations, and was placed into final liquidation by the High Court in June 2017.

Tourism is an increasingly important industry in Botswana, accounting for almost 12% of GDP. One of the world’s unique ecosystems, the Okavango Delta, is located in Botswana. The country offers excellent game viewing and birding both in the Delta and in the Chobe National Park—home to one of the largest herds of free-ranging elephants in the world. Botswana’s Central Kalahari Game Reserve also offers good game viewing and some of the remotest and most unspoiled wilderness in southern Africa.

A number of national parks and game reserves, with their abundant wildlife and wetlands, are major tourist attractions.

The national herd was about 2.5 million in the mid-1990s, though the government-ordered slaughter of the entire herd in Botswana’s north-west Ngamiland District in 1995 has reduced the number by at least 200,000. The slaughter was ordered to prevent the spread of “cattle lung disease” to other parts of the country.

Botswana produced, in 2018:

  • 102 thousand tons of root and tubers;
  • 46 thousand tons of vegetables;
  • 17 thousand tons of sorghum;
  • 13 thousand tons of maize;
  • 8 thousand tons of cabbage;
  • 6 thousand tons of onion;
  • 5 thousand tons of tomato;

In addition to smaller productions of other agricultural products

Manufacturing industries in Botswana include food processing, predominantly beef processing, diamond processing, textile and garment manufacturing, beverage making, jewelry making, metals and metal products, soap making, construction materials manufacturing, and glass production.

There is a growing science sector in Botswana. The number of publications by Botswanan scientists cataloged in international databases increased from 133 in 2009 to 210 in 2014. In 2018, Botswana produced 281 scientific and technical journal articles. The country has one of the highest levels of scientific productivity in Sub-Saharan Africa. The country also has a high-tech industry, being home to a number of information technology companies. In 2020, Botswana’s high-tech exports were worth about $16.2 million.

Botswana seeks to diversify its economy away from minerals, the earnings from which have leveled off. In 1998–99, non-mineral sectors of the economy grew at 8.9%, partially offsetting a slight 4.4% decline in the minerals sector. Foreign investment and management have been welcomed in Botswana.

External investment in Botswana has grown fitfully. In the early 1990s, two American companies, Owens Corning and H.J. Heinz, made major investments in production facilities in Botswana. In 1997, the St. Paul Group purchased Botswana Insurance, one of the country’s leading short-term insurance providers. An American Business Council (ABC), with over 30 member companies, was inaugurated in 1995.

Hyundai operated a car assembly plant in Botswana from 1994 to 2000.

Tourist resort at Kasane

Botswana seeks to further diversify its economy away from minerals, which account for a quarter of GDP,[57] down from nearly half of GDP in the early 1990s. Foreign investment and management are welcomed in Botswana and, as a result, the financial and services sectors have increased at an exponential rate in the 2000s to replace mining as the leading industry. Botswana abolished foreign exchange controls in 1999, has a low corporate tax rate (15%), no prohibitions on foreign ownership of companies, and as of 2001 had a moderate inflation rate (6.6%).

Botswana has a growing financial sector, and the country’s national stock market, the Botswana Stock Exchange (BSE), based in Gaborone, is given the responsibility to operate and regulate the equities and fixed-interest securities market. Formally established in 1989, the BSE continues to be pivotal to Botswana’s financial system, and in particular the capital market, as an avenue on which government, quasi-government, and the private sector can raise debt and equity capital. Although the BSE has just under 40 companies listed, it plays host to the most pre-eminent companies doing business in Botswana. These companies represent a spectrum of industries and commerce, from Banking and financial services to Wholesaling and Retailing, Tourism, and Information Technology.

To date, the BSE is one of Africa’s best-performing stock exchanges, averaging 24% aggregate return in the past decade. This has allowed the BSE to be the third-largest stock exchange, in terms of market capitalization, in Southern Africa.

Given Botswana’s lack of exchange controls, stable currency, and exceptionally performing stock market, the financial sector has attracted a host of global investors seeking better returns.

How is Botswana doing economically?

According to the 2021 SDG Index, Botswana has achieved 61.9% of the 17 SDGs and is ranked 115 out of 165 countries.

Is Botswana the poorest country in Africa?

Botswana’s economic freedom score is 64.8, making its economy the 61st freest in the 2022 Index. Botswana is ranked 3rd among 47 countries in the Sub-Saharan Africa region, and its overall score is above the regional and world averages.

Is Botswana a good place to live?

Expatriates living in Botswana enjoy a low crime rate in comparison to other African and even some Western countries. There is some theft and petty crime, however, and expats should exercise a normal amount of caution when going about their daily lives.