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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. 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 with a transformation agenda of becoming a high-income country by 2036.

    Political Context

    Botswana’s stable political environment includes a multi-party democratic tradition, with general elections held every five years. The ruling Botswana Democratic Party has been in power since 1966. In October 23, 2019 Botswana held its 11th general elections, with His Excellency President Dr. Mokgweetsi Eric Masisi assuming the presidency.

    Economic Overview

    Botswana has historically enjoyed strong and stable growth since independence, with sizable fiscal buffers and prudent policies playing a key role in shielding the economy. More recently, however, the limitations of Botswana’s diamond-led development model have become more apparent: growth is slower, inequality remains high and job creation is limited. At the same time, increased diamond market volatility—including growing competition from synthetic diamonds, reduced Southern African Customs Union transfers and fiscal expansion have resulted in eroded fiscal buffers. 

    COVID-19 (coronavirus) has exacerbated existing growth challenges, leading to an estimated real gross domestic product (GDP) contraction of 7.9% in 2020 (the largest on record). The contraction reflects the impact that reduced global demand, travel restrictions and social distancing measures have had on output in key production and export sectors, including the diamond industry and tourism. Botswana’s fiscal deficit is set to widen to 11.3% of GDP in FY2020/21, from 5.6% in FY2019/20, reflecting a sharp decline in mineral revenues, a sticky public sector wage-bill, and the impact of the COVID-19 spending. Similarly, the current account deficit is estimated to have widened to 8 percent of GDP in 2020 following the sharp decline in diamond exports.

    Developments in the global diamond industry will have a telling impact on the short-term recovery, given Botswana’s dependence on the commodity. While a recovery is expected in 2021 due to a favorable outlook for the diamond industry, the economic impact of COVID-19 is likely to be deep and long-lasting.

    Social Context

    Living conditions have improved for the Botswana people, and poverty has fallen significantly. The share of the population living on less than $1.90 a day at the 2011 Purchasing Power Parity declined steadily from 29.8% to 18.2% between 2002–03 and 2009–10, and to 16.1% in 2015-16. This rapid poverty reduction can be attributed mainly to a combination of increasing agricultural incomes, including subsidies, and demographic changes. 

    Progress in reducing poverty has been accompanied by improvements in shared prosperity. The growth rate of consumption per capita between 2009–10 and 2015-16 for the bottom 40 percentile of the population was 0.42% annually, higher than the growth rate of the top 60 percentile. However, Botswana's performance was only in the middle of the worldwide shared-prosperity distribution.

    Inequality has fallen as well, albeit still being high. Between 2010 and 2015, inequality, measured by the Gini index, fell from 60.5% to 53.3%. Among factors associated with Botswana's declining income inequality, the key one is regional convergence due to fast growth in rural areas and demographic changes.

    The recent Botswana Multi-Topic Survey: Labour Force Module Report indicates that the unemployment rate has gone up to 24.5% with youth unemployment (32.4%) 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. 

    Last Updated: Apr 01, 2021

  • The World Bank’s engagement in Botswana is focused on helping the country consolidate its progress while addressing a range of emerging challenges and notable declines in some key areas. 

    The World Bank’s Country Partnership Framework (CPF) for the period of FY16–FY21  is closely aligned with the government’s National Development Plan 11 (NDP 11) and Botswana’s Vision 2036 goals. The CPF was informed by the Systematic Country Diagnostic endorsed in March 2015 and developed in consultation with the Botswana government. 

    The CPF is supporting Botswana’s development goals by focusing on the three pillars: (i) promoting private sector-led, jobs intensive growth; (ii) strengthening human and physical assets; and (iii) supporting effective resource management. The Country Partnership Framework was updated through the Performance and Learning Review (PLR) approved in March 2019. 

    Last Updated: Apr 01, 2021

    • Integrated Transport Project ($186 million): The World Bank Group (WBG) is supporting the government in its efforts to improve transport infrastructure development by introducing methodologies on Output-and Performance-Based Road Contracting , at an estimated 335km road network. Also, the project aims to improve urban infrastructure investments in Greater Gaborone, as well as supporting technical studies on urban planning. More than 320km out of the planned 335km have been rehabilitated and are in use, and seven out of the 10 sector studies to improve policy within transport sector have been completed. As of 2018, there has been 59.7% decrease in annual road accidents related to road conditions.
    • Morupule B Generation and Transmission Project ($66 million): The project aims to support Botswana in developing reliable and affordable supply of electricity for energy security, promote alternative energy resources for low-caron growth and build its institutional capacity in the energy sector. The project supported the development of a 600MW 4-unit power plant. Currently the power plant contributes to the national supply demands. The WBG has also provided a partial credit guarantee of $242 million under the project to extend the maturity of the commercial loan to the government to 20-year period until 2030.
    • The Economic Diversification and Competitiveness Reimbursable Advisory Service Program ($3.6 million): The WBG provides support to encourage economic diversification through doing business reforms, entrepreneurship, secured transaction reform and analysis of labor market skills gap.
    • Social Protection Modernization: Since 2013 the WBG has been supporting the government through trust funded technical assistance to develop a national social protection framework, design poverty-based targeting methodology, design and pilot a social registry and develop a generic management system customized to an ongoing government program. The trust fund support ended in October 2020.
    • Renewable Energy: WBG assisted with developing the Renewable and Energy Efficiency Strategies with an Off-Grid action Plan, which were completed in 2016. An activity on Energy Efficiency investments options followed through the Energy Efficiency Investment Opportunities in Africa program, funded through the Energy Sector Management Assistance Program (ESMAP). Currently the WBG is supporting the development of the Renewable Energy Roadmap.
    • The WBG’s private sector arm, the International Finance Corporation (IFC), has scaled up its support to Botswana.
    • IFC Kgalagadi Bond ($25 million): In late 2017, IFCbecame 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).
    • 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 Wastewater Treatment Plant. The project is expected to mobilize nearly $50 million in private financing and allow the utility to sell more water to meet the demand deficit.
    • In addition, past projects have contributed to Botswana’s development in the following areas:
    • The Botswana National HIV/AIDS Prevention Project ($50 million): 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 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. Lessons from the project were adapted to include prevention of non-communicable diseases namely HPV vaccinations in schools. The project closed in March 2015.
    • Economic Diversification and Competitiveness: The WBG supported Botswana’s economic diversification and competitiveness agenda through the first reimbursable advisory services (RAS) program, which began in 2013 and ended 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.

    Last Updated: Apr 01, 2021

  • Botswana joined the IBRD and IDA in 1968, 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 and 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: Apr 01, 2021

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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 Moilwa
External Affairs Associate
+267-310-5465
omatebejane@worldbank.org
For project-related issues and complaints
botswanaalert@worldbank.org