A government economic review warns that sluggish growth, dwindling diamond revenues and eroding financial buffers are deepening the pressure for diversification.
GAZETTE REPORTER
Botswana’s economic foundations continue to show worrying signs of deterioration. This is according to the Botswana Economic Transformation Programme (BETP) Mid-Year Review which shows how sluggish growth, declining diamond revenues, shrinking financial buffers and mounting structural vulnerabilities are threatening the country’s economic future.
The review paints a picture of an economy struggling to escape its dependence on diamonds, despite years of promises to diversify production, expand exports and create alternative sources of economic growth. The review shows that between 2016 and 2025, Botswana recorded average annual GDP growth of a mere three per cent.
The review shows that the COVID-19 pandemic exposed the dangers of this dependence when disruptions to mining activity sent shockwaves through the economy. The review acknowledges that Botswana’s growth “has remained closely tied to the performance of its mining sector, leaving its GDP exposed to external shocks.” The review also highlights the steady erosion of diamond revenues, which have traditionally financed government expenditure and supported the country’s economic stability.
Diamond Dependence
Between 2007 and 2025, diamond revenues as a share of government revenue fell from 35 per cent to 24 per cent, underscoring the declining contribution of the sector to the national purse. The consequences are already visible in the country’s financial buffers. Between 2007 and 2023, government deposits declined by 63 per cent, while foreign reserves contracted by 25 per cent. The review warns that “declining diamond exports have also weighed on government deposits and foreign reserves, signalling the need to develop new export opportunities and niche value chains.”
The review shows that the country’s economic troubles extend beyond government finances. It says climate change is emerging as another major threat to economic stability, particularly in agriculture, tourism and mining. By 2100, average temperatures are projected to increase by between 3.9 and 7.1 degrees Celsius, while the probability of drought is expected to rise by 50 per cent.
Climate Risks
Agriculture remains largely rain-fed, tourism depends heavily on water-based wildlife endowments, while mining companies could face higher operating costs as they are forced to drill deeper or invest in expensive water-recycling technologies. The review also raises concerns about the country’s ability to attract investment and restore confidence in its economic prospects.
Botswana’s sovereign credit rating from Moody’s stands at Baa1 with a negative outlook, while its BBB rating also carries a negative outlook. On the World Bank Group’s Business Ready Framework, Botswana performs below the global average in two of three pillars: regulatory framework and public services. Its regulatory framework score stands at 64.4 against the global average of 66.3, while public services score 45.4 against 54.0. The BETP acknowledges that reversing the weakening economic outlook requires “deeper, systemic change”. Economic diversification is no longer simply a development ambition, the report says adding that, it is becoming an economic necessity.