Botswana: Economic and Political Overview
Botswana has one of the strongest economies in Africa and its economic success has stemmed from strong governance, sound policies, and effective diamond wealth management. However, limited economic diversification and heavy reliance on diamonds have made the economy vulnerable to price shocks. A dominant public sector continues to hinder private investment, export growth, job creation, and productivity. The country’s economic growth slowed from 5.5% in 2022 to 2.7% in 2023, falling below the long-term potential of 4%. The main driver of the slowdown was a sharp drop in diamond trading and mining due to weaker global demand for rough diamonds, which was exacerbated in 2024, resulting in a GDP contraction of 3.1% (official governmental data). Botswana's economy is projected to grow by 3.3% in 2025, supported by an anticipated recovery in the global diamond market, according to the projections of the Ministry of Finance.
Botswana has always maintained a conservative fiscal policy and low levels of foreign debt, and although general government debt increased to an estimated 22.6% in 2024 (from 20.1% one year earlier), by 2026, the debt-to-GDP ratio is expected to decrease to around 20.7%, as per the IMF projections. The fiscal deficit was expected to widen to 6% of GDP in FY2024, driven by lower mineral revenues and increased capital spending. The government aims for significant fiscal adjustment over the next two years to achieve a surplus. Externally, the position is set to weaken, with foreign exchange reserves projected to fall to five months of imports amid sluggish customs revenue growth and rising external debt repayments. Meanwhile, inflation has dropped significantly since its mid-2022 peak, returning to the central bank’s target range of 3–6%, where it is expected to stay over the medium term. According to the IMF, to accelerate growth and job creation, Botswana must shift towards greater private sector involvement, a diversified export base, and a more efficient public sector. Key priorities should include modernizing state-owned enterprises (SOEs), improving business infrastructure (such as internet, energy, and logistics), enhancing trade facilitation, streamlining social protection, and promoting financial inclusion for small entrepreneurs. These objectives could be incorporated into the new National Development Plan (NDP), with clear, time-bound action plans.
Botswana is regularly ranked first among African countries regarding governance and transparency. Its primary assets are its robust regulatory framework and facilitated procedures for property registration. However, despite its relative prosperity, Botswana still has one of the highest levels of inequality in the world (Gini index of 53.3) and suffers from a high unemployment rate and a lack of skilled labour. The unemployment rate remains elevated at around 27.6% and is especially high among young people. The country’s GDP per capita (PPP), estimated at USD 19,723 in 2024 by the IMF, is considered high by regional standards.
| Main Indicators | 2023 (E) | 2024 (E) | 2025 (E) | 2026 (E) | 2027 (E) |
| GDP (billions USD) | 19.40 | 19.97 | 22.12 | 24.14 | 26.06 |
| GDP (Constant Prices, Annual % Change) | 2.7 | 1.0 | 5.2 | 4.8 | 4.0 |
| GDP per Capita (USD) | 7,250 | 7,341 | 8,003 | 8,602 | 9,146 |
| General Government Balance (in % of GDP) | -4.0 | -4.0 | -0.8 | 0.1 | 1.0 |
| General Government Gross Debt (in % of GDP) | 20.1 | 22.6 | 22.1 | 20.7 | 20.1 |
| Inflation Rate (%) | 5.1 | 3.8 | 4.5 | 4.5 | 4.5 |
| Current Account (billions USD) | -0.12 | -0.39 | 0.32 | 0.29 | 0.33 |
| Current Account (in % of GDP) | -0.6 | -2.0 | 1.5 | 1.2 | 1.2 |
Source: IMF – World Economic Outlook Database, October 2021
Botswana is the world's second-largest diamond producer, and it possesses one of the largest coal reserves in Africa (an estimated 212 billion tonnes). Uranium, copper, and shale gas are also abundant in the country. Agriculture contributes to only 1.6% of GDP and employs 18% of the population, according to the World Bank, and is an important source of income for many Batswana who live in rural areas. Cattle raising dominates the sector and contributes 80% to the agricultural GDP. The cattle population nearly equals the human population, and most livestock production is export-oriented (towards the European Union and other destinations). As desert and poor soils cover more than 70% of the country, arable land is very scarce. Crop production is not too dynamic, mainly due to traditional farming methods, erratic rainfall, recurrent droughts, and erosion. Local cereal production is primarily composed of sorghum, maize, and millet. Maize output, averaging around 10,000 metric tonnes annually, falls significantly short of the national demand, which is approximately 100,000 metric tonnes per year. Horticultural production is mainly concentrated in the southeastern region and is relatively limited, meeting just above half of national demand. Key crops include potatoes, tomatoes, cabbage, and oranges.
The industrial sector contributes to 34.3% of GDP and employs 15.8%, which is dominated by diamond processing, food processing (mostly beef), textiles, and mining. Botswana ranks as the second-highest diamond producer globally in terms of value and volume. The country also mines various other minerals, including nickel, copper, coal, soda ash, gold, silver, semiprecious stones, and granite. Recent exploration efforts have expanded to include minerals like uranium, graphite, and lithium. The mining sector contributes about one-third of total revenues and about 80% of foreign exchange earnings. The manufacturing sector is still underdeveloped and only accounts for 6% of GDP (World Bank).
The service sector is by far the largest component of GDP: it accounts for 59.4% of the economy and employs two-thirds of the active population. The expanding sectors are tourism (notably ecotourism) and transportation (which contributed 2.23% of GDP at current prices in 2022). The country has some of the most unique ecosystems in the world and is a major safari destination. Moreover, Botswana has a growing financial sector, and the Botswana Stock Exchange (BSE) is among the best-performing stock exchanges in Africa. As per the banking sector, all commercial banks are either majority or wholly foreign-owned.
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
| Employment By Sector (in % of Total Employment) | 18.0 | 15.8 | 66.2 |
| Value Added (in % of GDP) | 1.6 | 34.3 | 59.4 |
| Value Added (Annual % Change) | 1.3 | 2.3 | 3.0 |
Source: World Bank, Latest Available Data. Because of rounding, the sum of the percentages may be smaller/greater than 100%.
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The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.}}
Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation
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Latest Update: May 2025
