Overview

«

»

Context
Strategy
Results
Partners

Botswana is located at the center of Southern Africa, positioned between South Africa, Namibia, Zambia, and Zimbabwe. One of the world’s poorest countries at independence in 1966, it rapidly became one of the world’s development success stories. Significant mineral (diamond) wealth, good governance, prudent economic management and a relatively small population of slightly more than two million, have made it an upper middle-income country. The World Bank’s engagement is focused on helping it consolidate its progress while addressing a range of persistent and emerging challenges.
Political Context
Botswana has a stable political environment with a multi-party democratic tradition. General elections are held every five years. The ruling Botswana Democratic Party (BDP) has been in power since 1966. With the end of his second five-year term, President Ian Khama stepped down and, as per convention, the Vice-President, Mokgweetsi Eric Masisi, assumed the Presidency on April 1, 2018 and will stand in the next general elections scheduled for October 2019.
Economic Overview
Since gaining independence from the United Kingdom, Botswana has been one of the world’s fastest growing economies, averaging 5% per annum over the past decade. However, its reliance on commodities renders it vulnerable to international market fluctuations. Real economic growth accelerated to 4.4% in 2018 (the fastest growth rate in the last five years) and will remain at around 4% up to 2021. Economic growth will be driven by mining activity, construction, services sector and intensified public investments.
The National Budget was presented to Parliament on February 4, 2019, the new budget puts total expenditure and net lending at P67.54 billion, 32.7% of the country’s gross domestic product (GDP), an increase of P2.4 billion (3.6%) compared to the previous fiscal year. The capital budget is P17.03 billion, up by P0.4 billion (2.3%) over the previous fiscal year. A budget deficit of P7.3 billion (3.5% of GDP) is expected despite the positive domestic economic outlook.
Fiscal spending will continue to advance at today’s more-rapid pace, with priority for areas identified in the National Development Plan 11 (NDP11) that focuses in three key areas:(i) tackling poverty, (ii) inclusive growth, and (iii) job creation
Social Context
While the economic model has delivered important results, the 2015/16 Multi-Topic Household Survey (MTHS) indicates that poverty and high levels of income inequality persist. Poverty has come down to approximately 16%, but some 30% of the population remains just above the poverty line and thus vulnerable to a range of shocks. Botswana’s level of income inequality, while declining, remains one of the world’s highest. With a Gini coefficient of 0.52, greater focus must be given to the inclusiveness of Botswana’s economic model while improving how public institutions manage the fiscal space. Because the model has generated strong state-dependence and limited private sector job creation, unemployment remains high (approximately 18%) with youth unemployment posing a critical challenge. Addressing these challenges will require improving the quality of infrastructure (water and electricity), essential basic services (education, health, and social safety nets), as well as accelerating reforms to the business environment and effective support for entrepreneurship.
While Botswana’s social sector expenditures have been generous, they have not yielded the impact one might expect. The World Bank’s Human Capital Index (HCI), launched at the 2018 Annual Meetings, scores Botswana at 0.42. The purpose of the HCI is to promote attention and action to improving the level and quality of government investments in child health, nutrition, and education given their strong links to labor productivity and economic competitiveness. Botswana’s HCI score suggests that a Motswana child born today will only be 42% as productive when she grows up as she could have been if she had enjoyed complete education and health. Education expenditure is among the highest in the world —about 9% of GDP — and includes the provision of nearly universal free primary education but has not created a skilled workforce. Unemployment has remained stubbornly high at 17.7% and, with a Gini coefficient of 0.52, Botswana’s income inequality is one of the highest in the world.

Last Updated: Mar 25, 2019
Botswana’s Country Partnership Framework (CPF) for the period of FY16–FY20 was presented to the World Bank Group’s (WBG) Board of Executive Directors in November 2015. The CPF was informed by the Systematic Country Diagnostic endorsed in March 2015 and developed in consultation with the Botswana government. It endeavors to support the country to eradicate abject poverty, reduce inequality, and promote job creation.
The main areas of the CPF are: (i) promoting private sector-led, jobs intensive growth; (ii) strengthening human and physical assets; and (iii) supporting effective resource management. The Country Partnership Framework supports the Government’s National Development Plan 11 (NDP 11) and Botswana’s Vision 2036 goals. The CPF is being updated through the Performance and Learning Review (PLR) that will be circulated to the WBG Board on March 26.
As of March 2017, the WBG’s portfolio has two projects:
Integrated Transport Project ($186 million): The objective of the Botswana Integrated Transport Project is to enhance the efficiency of the transport system by building modern business management capacity and improving the strategic planning aspects of inter-regional transport and critical transport infrastructure. The project has three components: the first is capacity building, institutional strengthening, and training; the second is road sector investment (including piloting performance-based contracting methods); while the third component is focused on urban roads, including the implementation of an urban traffic improvement program in Greater Gaborone as well as technical advisory services to supervise construction of the improvement works.
Emergency Water Security and Efficiency Project ($145.5 million): The WBG is supporting Botswana in its efforts to improve the availability of water in drought vulnerable areas, increase the efficiency of the Water Utilities Corporation (WUC), and strengthen wastewater management in selected systems. The Project comprises three components: the first is to improve water supply and the efficiency of services to mitigate the impact of droughts; the second aims to improve wastewater and sludge management; while the third component focuses on sector reform and institutional strengthening to support reforms under Botswana’s Water Sector Reform Program (WSRP).
In addition to its lending program, the World Bank supports Botswana through analytical and advisory support.
Morupule B Electricity Generation and Transmission Project: The WBG arranged a partial credit guarantee under the Morupule B Electricity Generation and Transmission project to extend the maturity of a $825 million commercial loan to Botswana from 15 years to 20 years.
The Economic Diversification and Competitiveness Reimbursable Advisory Service Program ($3.6 million): The WBG provides support to improve the business environment for accelerated economic diversification and private sector job creation. This initiative also builds capacity for making regular projections of skills/jobs in priority sectors, as well as improves the country’s institutional capacity to develop economic clusters for beef, financial services, and tourism. Most recently, this RAS program was expanded to include support for a national collateral registry.
Strengthening Public Sector Performance RAS ($5.05 million): Botswana is supported by WBG in the implementation of a national performance monitoring and evaluation system linked to NDP 11 as well as related activities to strengthen the design of large infrastructure projects as well as public procurement.
The WBG’s private sector arm – the International Finance Corporation (IFC) – is also scaling up its level of support in Botswana.
IFC Kgalagadi Bond ($25 million): In late 2017, IFC became the first non-resident entity to issue AAA-rated local currency debt in Botswana. The Bond met with strong demand leveraging approximately 258 million Pula to promote financial inclusion through the Botswana Building Society (BBS). The Bond’s long-term financing will also support the transformation of BBS into a full-service, commercial bank financing underserved market segments including SMEs.

Last Updated: Mar 25, 2019
In addition to past projects, the current Integrated Transport Project ($186 million), and the Emergency Water Security and Efficiency project ($145.5), the World Bank Group (WBG) has contributed to Botswana’s development in the following areas:
The Botswana National HIV/AIDS Prevention Project: The WBG brought global and regional experience to increase the efficiency of the national HIV/AIDS program by supporting the government to transition from an “emergency” response to a broader, more strategic and sustainable approach. The Botswana National HIV/AIDS Prevention Project closed in March 2015. The WBG leveraged a contribution of $20 million from the European Commission using an innovative, performance-based “buy-down” structure to improve the performance of the National AIDS Coordinating Agency.
The Northern Botswana Human Wildlife Coexistence Project: The WBG assisted with mitigating human–wildlife conflict through proactive, prevention interventions in selected rural communities in Northern Botswana, and supported employment options for local people in wildlife-based tourism to help them benefit directly from the presence of wildlife. The project closed in January 2016.

Last Updated: Mar 25, 2019
Botswana joined the International Finance Corporation (IFC) in 1979 and the Multilateral Investment Guarantee Agency (MIGA) in 1990. The International Finance Corporation (IFC) supports the competitiveness agenda through selective investment technical assistance interventions. MIGA also supports the country’s competitiveness agenda through the provision of political risk insurance, when it is needed by foreign investors active in the country.

Last Updated: Mar 25, 2019