While the euphoria of political change was well-earned, the people will not be fooled by chatting about hemp for long, especially that consolidation of power under the President has already started without explanation or any signalling in the UDC manifesto. Being rational beings, we can only surmise that social unrest is anticipated in response to austerity measures that are yet to be revealed
DOUGLAS RASBASH
Special Correspondent
Botswana has just experienced an election that will be remembered as a turning point in its political history. The nation’s long-standing compliance with the status quo gave way to a collective realisation: the power to change a regime lies in the people’s hands. But as the euphoria of this momentous shift fades, the harsh realities of economic austerity will inevitably take centre-stage.
The fragility of stability
Botswana’s political stability, once a cornerstone of its reputation, is now on tenuous ground. The government, perhaps sensing the undercurrents of discontent, has centralised control over the security apparatus. This is a clear signal that it anticipates unrest when manifesto promises of jobs and economic relief fail to materialise. Decades of patience and compliance can quickly flip when people feel betrayed.
The irony is stark: a nation often praised for its peace and stability is bracing itself for the possibility of upheaval. The populace has awakened to its power, and this new awareness is as much a threat to the ruling elite as it is a potential force for constructive change.
The Economic Abyss
At the heart of Botswana’s challenges lies an economic crisis brewing for years. The diamond income that once buttressed the nation’s economy is in decline, and there are no equivalent exports on the horizon to fill the gap. Botswana’s trade deficit is widening; public debt of increasing, inflation increasing, economic growth slowing. The Pula – once relatively stable – has been in a steady decline against hard currencies for over five years.
This erosion of purchasing power will only exacerbate the struggles of an economy heavily reliant on imports. The Botswana Federation of Trade Unions (BFTU) highlights that the current minimum wage of P 7.34 per hour is insufficient to meet living expenses. This concern is underscored by significant living challenges: 42.2% of Batswana experience multidimensional poverty, and food insecurity affects 40.2% of rural and 66.3% of urban populations. The average monthly salary ranges between P 6,000 and P 8,000, yet the cost of living is far higher – estimated at P 6,743 for individuals and P 23,545 for families.
These figures reflect growing economic strain, with many workers struggling to afford basic necessities despite formal employment. For many, economic austerity will push many more into the abyss. Innocent Molalapata, director of the research and financial stability department at the Bank of Botswana, the country’s central bank, told reporters at a media briefing held by the Monetary Policy Committee in Francistown last week: “We are basically in a technical recession. When we have two consecutive quarters of contraction, that is classified as technical recession,” he said.
Botswana’s economy contracted by 0.5 percent year-on-year in the second quarter of this year, following a 5.3 percent decline recorded in the previous quarter, according to the latest figures from Statistics Botswana. Interestingly, the SONA made no mention of recession or austerity in its 6,000 words.
What does austerity mean?
Economic austerity, while a familiar term in global economics, is new territory for Botswana. It involves reducing government spending, increasing taxes, and implementing policies to stabilise the economy. But in a country with rising unemployment, growing inequality, and a nascent change in the political climate, austerity is more than an economic strategy – it is a political and social powder keg.
Here’s what austerity could mean for Botswana:
- Cuts to public spending:
Government debt has been increasing (as shown in the figure) while reserves have been reducing. Education, healthcare and social welfare – critical pillars of Botswana’s social fabric – will face budget reductions. The poor will bear the brunt, widening inequality and fostering resentment.
- Higher taxes:
To avert increasing government debt and with a dwindling revenue base, the government may be forced to increase taxes. This will hit businesses and individuals alike, reducing disposable incomes and investment. - Job losses:
Central and local government and state-owned enterprises accounted for 54% of formal employment. Public sector downsizing is a hallmark of austerity. In a country where government employment accounts for a significant portion of jobs, this could be catastrophic. - Social unrest:
As living standards fall and promises of economic relief fail, disillusionment will grow. Protests, strikes and civil unrest could become common, threatening the fragile peace that Botswana has long enjoyed.
Investment
Investing in infrastructure is often seen as a catalyst for economic growth, creating jobs and improving productivity. However, Botswana’s ability to finance such projects is increasingly constrained by fiscal limitations, including a reliance on diamond revenues, which are declining due to market shifts and resource depletion. While Public-Private Partnerships (PPPs) are a potential solution, they face significant hurdles and have never been successfully applied in Botswana.
A further issue is that the Government of Botswana has never taken project economics seriously, frequently implementing projects proven to be unfeasible. Moreover, non-mining Foreign Direct Investment (FDI) is difficult to attract in Botswana due to its small population which limits consumer demand and spending power. Private investors typically prioritise high returns, making many infrastructure projects, such as rural roads or public utilities, unattractive due to their low or delayed profitability.
This dynamic leaves Botswana in a challenging position. While infrastructure development is crucial for diversifying the economy and improving competitiveness, securing sustainable financing will require innovative approaches, such as leveraging regional markets or offering incentives to attract private-sector participation.
Navigating the crisis
Austerity is not inevitable, but avoiding it requires bold, decisive action and, true to form, The Botswana Gazette proposes 10 steps to be taken by a radical government committed to change.
- Economic Diversification: Botswana must accelerate its efforts to diversify beyond diamonds. Investments in sectors like renewable energy, technology and agriculture are crucial.
- Investment: Invest public money only in projects that have positive rates of return and are green and shelve all others. Do not promote high risk megaprojects.
- Trade Policy Reform: Addressing the trade deficit requires policies that eliminate non-tariff barriers, promote exports and reduce reliance on imports, especially fuel imports (7% of GDP)
- Efficiency: Noting the public expenditure accounts of 29% of GDP a more efficacious and efficient government could reduce that to 20% of GDP by 2030 by eGov, merging ministries and privatising SOEs.
- Health wellness and safety: Improvement in health service delivery, improve workplace conditions and practices to improve productivity, drastically reduce road accidents (cost 3% of GDP)
- Immigration: Relax immigration rules and encourage relocation to Botswana or economically active people and businesses to increase skills innovation and demand. Implement digital nomad visas for high earning professionals.
- Equity: Apply living wage standards, raise pensions, subsidise mass transportation and the internet, all leading to economic empowerment and bigger markets.
- Monetary Stability: Strengthening the Pula through sound fiscal policies and reducing inflationary pressures is essential to restoring confidence.
- Security: Reduce the size of the military and merge with the police to form a single service that will meet the future needs of national security.
- Transparent Communication: The government must engage with citizens honestly about the challenges ahead and involve them in shaping solutions.
A time for leadership
The acid test of this new administration will not be in the rousing words of our new leader in the SONA but in sober statements made by the Minister of Finance in his February 25 budget. The choices made in the coming months will determine whether the nation can emerge stronger from this economic crisis or succumb to the unrest and instability that austerity often brings.
This is a time for visionary leadership – a time to prioritise long-term solutions over short-term gains, honesty over populism, and inclusivity over centralisation. The people will not be fooled by hemp chat for long. The consolidation of power under the President has already started without explanation or any signalling in the UDC manifesto. Being rational beings, we can only surmise that social unrest is anticipated in response to austerity measures yet revealed. The euphoria of political change was well-earned, but the hard work of social and economic transformation lies ahead. Botswana’s resilience and unity will be tested as never before. The question is whether it can rise to the challenge.