Botswana: Africa’s Economic Wonder and Incoming Challenges

15 09 2021

Botswana or the Republic of Botswana is a landlocked country in southern Africa. Its capital is Gaborone. Botswana is well-known for its diamond mining industry and eco-tourism as it is home to several wild animals, including African elephants. In the past, Botswana was a British protectorate under the name of Bechuanaland and became an independent state in 1966. After its independence, Botswana became one of the poorest countries in the world with a GDP of 518 US dollars per capita. In 2018, the GDP increased to 8,031 US dollars per capita, an increase of 1,450 per cent, which was more than the world growth average at 136 per cent. The country’s GNP increased from 51,464,435 US dollars in 1966 to 18.663 billion US dollars in 2018. With these statistics, Botswana has the fastest economic growth in the world. Thanks to these successes, Botswana is called an “African success story”. Here are essential factors to the country’s success:

First, Botswana has large resources of precious stones with enormous economic value. The country’s important gemstone resources were discovered back in 1970s and have provided a significant amount of revenue to the government who own 50% of the mining operations. In 2020, Botswana was Africa’s number one gemstones exporter, and the 7th in the world. The exported gemstones were worth 3.8 billion US dollars, 5.1% of the world’s total exported gemstones.

The second factor to the country’s success is the prioritisation of the country’s development. Many countries in Africa face poverty and internal and external conflicts despite the abounding in resources with high economic values such as oil, gold, and diamonds. Botswana, however, is different. The country implemented the government’s policies cautiously. The government, who owns more than half of the diamond mines in the country, uses income from diamond trade for social, public health, and education development. As a result, the poverty rate has decreased, while the literacy and health rates have increased.

The third factor was the stability of the democratic political institution and economic freedom. Unlike other countries in Africa, Botswana has never been challenged by coups d’état and violent racial conflicts compared to its neighbour countries. After the independence, the government under the first president, Seretse Khama, prioritised the execution of sustainable policies in social, hygiene, and education development. Together with a state governed by law, and support towards democratic freedom, the result was that Botswana was ranked second in Africa, after Seychelles, in the Corruption Perceptions Index in 2020, and won the world’s 35 place along with Brunei, Israel, Lithuania, and Slovenia. The Economist’s Democracy Index also ranked Botswana 29, meaning it was placed under the Flawed Democracy category. In the past the country would score around 7.5 out of 10, which was higher than Italy, South Africa, and Taiwan, making it one of the most democratic countries in Africa. The country’s democratic foundation was laid with market-friendly economic policies, economic freedom, and protection of personal assets, resulting in a stable economic growth. As for other freedoms, Botswana was ranked 58 in the world and the third in Africa with the score of 7.35 and scored 7.60 in economic freedom. All of these play a part in strengthening Botswana’s economics and political institution.

However, Botswana is currently facing economic instability due to the rises in unemployment rate of 24.5%, in cost of living, in high HIV/AIDS infection rate, and immigration of Zimbabweans due to domestic economic issues. Meanwhile, the Botswana Democratic Party (BDP), which holds most of the important political positions, is losing its popularity and is being accused of being a dictatorship. Freedom of the press is being controlled tightly. The country’s economy, 90% of which depends on diamonds exportation, is facing instability due to price fluctuations and the exhaustion of the country’s diamonds reserves which are estimated to run out in 25 years. Although the government has been trying to promote economic diversity, the effort remains fruitless. Moreover, Botswana is a landlocked country, so it must depend on goods importations from South Africa and Namibia. In 2019, 66.22% of its importations were coming from those two countries, making expenses on importations and exportation much higher than the region’s average.

Although the government has been trying to promote economic diversity, its efforts so far remain fruitless. Despite the openness of the economic foundation and the stability of the political institution, Botswana still has lower investments from overseas than its neighbours Mozambique and Namibia. The World Economic Forum’s Global Competitiveness Index stated that Botswana and many African countries’ ability to compete had decreased because of the intensity of the competition in the world economy. Furthermore, although the government was able to decrease the inequality from 60.5% to 53.3% from 2010 to 2015, the level of domestic inequality is still high.
To prevent more issues arising in the future, Botswana’s government must work towards building sustainable economic and political developments.

Written by Ms Krittiwan Pratum


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