Why Botswana Must Abandon an Outdated Development Model
By Douglas Rasbash
As Botswana prepares its 2026 budget, familiar development thinking continues to dominate policy. Economist Douglas Rasbash argues that the country’s long standing resource led model is no longer fit for purpose and that a fundamental shift in economic thinking is now unavoidable.
Botswana’s so called Second Republic budget for 2026 is due within weeks. It is almost certain to follow a familiar script. Incremental spending adjustments, reassurances about fiscal discipline, renewed commitments to infrastructure, and another round of development projects intended to stimulate growth. Yet beneath this ritual lies a deeper problem. Botswana is attempting to confront 21st century economic challenges using a 20th century development model whose limits are now increasingly visible.
For decades, Botswana’s economic strategy worked remarkably well. A small, landlocked country leveraged diamond revenues, sound governance, and disciplined planning to lift itself from poverty to middle income status. That success, however, has bred inertia. The very model that once delivered growth is now associated with stagnation, unemployment, rising inequality, and growing social strain. Traditional development, in its familiar form, is no longer generating sufficient jobs, diversification, or sustained GDP growth. What Botswana needs now is not more development spending, but a different economic paradigm.
THE LIMITS OF DEVELOPMENT
Traditional development economics rests on a simple logic. Extract resources, build infrastructure, expand the state, and growth will follow. This approach assumes abundant land, labour, and fiscal space. When problems arise, the response is more roads, more projects, more public investment. This logic remains clearly visible in NDP12.
It worked when Botswana was capital scarce and infrastructure poor. Today, the context has changed. Unemployment exceeds 25 percent, with youth unemployment estimated above 40 percent. GDP growth has averaged below four percent over the past decade, including several years of contraction. The non mining private sector remains weak despite decades of incentives. Public expenditure already exceeds 30 percent of GDP, narrowing fiscal room for manoeuvre. Diamond dependence persists, accounting for roughly 80 percent of export earnings and around 30 percent of government revenue in good years.
These are not symptoms of underdevelopment. They reflect a mature but misaligned economy. Botswana’s constraints are no longer physical. They are structural, behavioural, and institutional.
FROM COWBOYS TO SPACEMEN
Economist Kenneth Boulding distinguished between what he called the cowboy economy and the spaceman economy. The cowboy economy treats resources as abundant, waste as external, and growth as limitless. The spaceman economy recognises that resources are finite, systems are closed, and efficiency rather than expansion is the key to prosperity.
Botswana continues to budget like a cowboy in a world that now demands spacemen. The funding requirements of NDP12 amount to P388 billion over five years, roughly 30 percent of GDP, a historically unprecedented scale. Alongside this sits the Botswana Economic Transformation Programme, which may require a further P430 billion. This reflects an enduring faith in the development model despite mounting evidence of its diminishing returns.
In a spaceman economy, value is created through knowledge, efficiency, services, and institutions rather than extraction and infrastructure. Growth is decoupled from resource use and environmental pressure. Employment emerges from distributed and flexible activity rather than large capital projects. This shift is empirical rather than ideological.
THE FAILURE OF RESOURCE LED GROWTH
Botswana’s resource led model now faces three hard constraints. The first is volatility. Diamond revenues fluctuate with global demand, exposing the fiscal position to sharp shocks. International institutions have repeatedly warned that Botswana remains highly vulnerable to diamond cycles, with limited buffers as reserves decline.
The second constraint is employment. Mining is capital intensive and employs less than three percent of the workforce even at peak production. Infrastructure projects absorb labour temporarily but do not create lasting employment.
The third constraint is finiteness. Diamonds are exhaustible. By the 2030s, output is expected to decline structurally. Building a long term growth strategy on a shrinking asset base is not strategic planning. It is denial.
WHERE BOTSWANA IS STUCK
Three structural traps underpin the current stagnation. The first is over investment in enablers. Botswana excels at building roads, offices, and plans but struggles to create productive ecosystems. Infrastructure without producers becomes sunk cost.
The second is public sector dominance. Government remains the employer of last resort, crowding out private initiative and locking talent into low productivity roles. When parastatals are included, public employment far exceeds levels seen in advanced economies.
The third is policy without incentives. Botswana produces strong policy documents but weak incentive alignment. Entrepreneurs face high transaction costs, regulatory uncertainty, and limited market access. The result is compliance without creativity.
A DIFFERENT ECONOMIC MODEL
A post development, spaceman economy for Botswana would rest on five pillars. Digital and services exports would allow Botswana to export skills, services, and trust rather than physical goods. Energy and mobility decoupling through solar power and electric transport would reduce fuel imports and strengthen the trade balance. Institutional productivity gains through digitised government systems could deliver efficiency savings comparable to several percentage points of GDP.
Capital market reform is also essential. Pension assets exceed P120 billion, yet only a small share is channelled into productive domestic investment. Redirecting even a modest portion could transform the economy. Finally, labour market flexibility must replace the narrow focus on formal job creation with a broader emphasis on income generation.
WHY THE BUDGET MATTERS
Budgets signal belief. A budget that repeats the development template signals faith in spending more and building bigger. A reoriented budget would shift emphasis from physical capital to human, digital, and institutional capital. It would measure success by productivity rather than expenditure.
If Botswana remains on its current path, the risks are already visible. Rising unemployment, deepening youth disaffection, increasing fiscal stress, and missed opportunities in the global digital and green transition.
CHOOSING THE FUTURE
Botswana does not lack resources, intelligence, or stability. What it lacks is conceptual courage. The development model that delivered the past cannot deliver the future. The choice is stark. Remain a cowboy economy managing decline, or become a spaceman economy designing resilience. The 2026 budget can either rehearse old answers or mark the moment Botswana accepts that growth must now be earned differently.