Economic Analysis


Population 2.3 million
GDP per capita 7,584 US$
Country risk assessment
Business Climate
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major macro economic indicators


  2016 2017 2018 (e) 2019 (f)
GDP growth (%) 4.3 2.4 4.5 4.2
Inflation (yearly average, %) 2.8 3.3 3.8 4.0
Budget balance (% GDP)* 0.7 0.2 -3.7 -3.0
Current account balance (% GDP) 13.7 12.3 8.7 7.7
Public debt (% GDP) 15.6 14.0 13.2 13.5


(e): Estimate. (f): Forecast. *Last fiscal year from April 2019 to March 2020.


  • Abundant natural resources (especially diamonds)
  • Low public and external debt
  • Substantial currency reserves
  • Political stability and level of governance put the country in the top tier of sub-Saharan African countries in international business environment rankings
  • Member of the Southern Africa Custom Union (SACU)



  • Dependent on the diamond sector (more than 80% of exports)
  • Insufficient infrastructure (production and distribution of water and electricity)
  • Inequality and high unemployment. Poverty stuck at a relatively high level

Risk assessment

Growth driven by the mining industry and public investment

Although set to slow, growth will reach a comfortable level in 2019, mainly driven by the extractive industries (20% of GDP), which are expected to perform well thanks to new initiatives. In this regard, Canadian company Lucara Diamond (which operates the Karowe diamond mine), and the state-owned Morupule coal mine have announced production increases. Conversely, agriculture, could have a dampening effect on economic activity, after the severe drought of 2018. Other sectors of activity, including infrastructure construction, will be supported by public investment, the second largest driver of the economy.

The government aims to pursue its policy of economic diversification and will continue to spend on education, health and the construction of roads and electricity infrastructure. As part of this, Botswana Railways (BR), a state-owned company, is to build an additional 520 km of rail network in the country (to improve connections with South Africa and Zambia), while the Botswana Power Corporation (BPC), which is also state-owned, will extend its power lines to the northeast of the country.

Private investment will continue to be supported by an accommodative monetary policy, including a borrowing rate that has been at a record low 5% since 2017. Household purchasing power, however, could be affected by the uptick in inflation on higher commodity prices, but especially by substantial unemployment (18% in 2017), which will impact private consumption.

Fiscal imbalance and current account surplus

The public accounts will still show a deficit in 2019, owing to the continuation of an expansionary fiscal policy. However, mining-related revenues (about one third of total revenues) will increase with production and exceed the decline in customs revenues paid by the SACU (also equivalent to one third of the total), resulting in a lower government deficit than in the previous year. Rather than raise tax collection to balance the budget, the government will allow its deficit to persist until the 2019 general elections, so as not to lose popularity.

Turning to the external accounts, the structural current account surplus is expected to decline due to a larger trade deficit. Diamond exports are set to increase at a slower pace (due to cooler US demand) than capital goods imports. The trade deficit is the only negative contribution to the current account and will be largely offset by the surplus in the balance of tourism-related services (4.5% of GDP in 2017) and SACU transfers (6.3% of GDP). Because of this favourable situation, Botswana boasts substantial foreign exchange reserves (more than ten months of imports in 2017). The remaining reserve surplus, after the central bank has withdrawn what it needs for its activity, is transferred to the Pula Fund, a sovereign wealth fund created in 1994. The Pula Fund is used to finance a large part of the budget deficit. As a result, Botswana will continue to make limited use of domestic and foreign debt: the country’s debt – and its external portion (15% in 2017) – should therefore remain low.

Awaiting the October 2019 general elections

President Mokgweetsi Masisi, who came to power in April 2018 following the resignation of Ian Khama, will represent the Botswana Democratic Party (BDP) in the general elections scheduled for October 2019. Although the BDP has been in power since the country's independence in 1966, support for the government seems to have been waning for several years. This trend has become more pronounced since the 2016 closure of the state-owned company Bamangwato Concessions Limited (BCL), which employed a significant proportion of the local population. In a context of high poverty and persistent unemployment, this move revived criticism of the government for making insufficient headway in economic diversification, which was supposed to address these two chronic problems. However, the opposition, represented by the Collective for Democratic Change (UDC), a coalition of four parties (BNF, BCP, BPP and BMD), is plagued by internal conflicts and struggles to offer a credible alternative to the BDP. The disorganisation of the opposition, the increase in pre-election budget spending and President Masisi's stated resolve to boost job creation could favour the BDP and offset the ruling party’s declining popularity.

Botswana is consistently well placed among its sub-Saharan African peers in international rankings (86th out of 190 countries in the World Bank's Doing Business ranking). However, progress still needs to be made in terms of improving the business environment and supporting private sector development.


Last update : February 2019

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