Overview

  • 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 emerging challenges and notable declines in some key areas.

    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 23, 2019.

    Economic Overview

    Botswana has enjoyed strong and stable growth since independence, with sizable fiscal buffers and prudent policies playing a key role in shielding the economy despite diamond market weakness and volatility. Despite this, more recently, the limitations of Botswana’s diamond-led development model have become more apparent: growth is slower, inequality remains high and job creation is limited.

    After achieving strong growth of 4.5% in 2018, growth is expected to slow to 4% in 2019 reflecting muted trends in global diamond mining and a less buoyant private sector. Economic growth is expected to remain stable in the medium-term, with the authorities’ ability to implement a new growth model focusing on export diversification strategy as outlined in the National Development Plan 11 (NPD 11) and much needed doing business reforms will play a key role in economic performance.

    Botswana’s fiscal position has been under pressure in recent years and is likely to remain strained in the short-term as downward revisions in mining production lead to lower than expected mineral revenues. Along with feeble growth in Southern African Customs Union receipts and much needed spending in the priority areas outlined under the NDP 11, this is expected to push the fiscal deficit up towards 4% of GDP in 2019/2020. Financing needs are likely to be covered through the domestic markets, although overall debt levels are expected to remain adequate at less than 20% of GDP.

    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: Oct 13, 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.

    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 was circulated to the WBG Board in March 2019 and through which it was agreed to extend the CPF to FY21.

    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 support to 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.
    • PPP support in the water sector ($1.55 million): In early 2019, Botswana’s Water Utilities Corporation (WUC) contracted IFC to provide PPP advisory support to the Glen Valley Waste Water Treatment Plant.

    Last Updated: Oct 13, 2019

  • In addition to past projects such as 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.
    • Economic Diversification and Competitiveness: The WBG supported Botswana’s economic diversification and competitiveness agenda through a reimbursable advisory services (RAS) program completed in February 2016. The first assignment under the program covered five pillars, including doing business, industrial and trade policies, infrastructure, access to finance, and skills development. The second follow-on assignment assisted in developing the Long-Term Vision for Botswana, establishing a national Performance Monitoring and Evaluation Framework, introducing the continuous Multi Topic Household Survey, and building the capacity of the  Public Procurement and Asset Disposal Board. A third RAS program is now underway, providing support to Botswana’s doing business reform agenda and helping to develop the country’s first secured collateral registry.

    Last Updated: Oct 13, 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: Oct 13, 2019

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LENDING

Botswana: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments

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Additional Resources

Country Office Contacts

Main Office Contact
Time Square
134 Independence Avenue
Gaborone, Botswana
+267-310-5465
For general information and inquiries
Oarabile Minky Matebejane
Communications Associate
+267-310-5465
omatebejane@worldbank.org
For project-related issues and complaints
botswanaalert@worldbank.org