The World Bank in Botswana

Botswana is a landlocked country at the heart of Southern Africa. Once among the world’s poorest nations, well-managed diamond wealth has improved its economy and people’s living conditions. With a population of 2.5 million (2022), it is now an upper-middle-income country (UMIC). However, poverty and inequality persist at levels higher than in comparable middle-income countries. In 2023, extreme poverty stood at 13.5%, four times higher than peers at similar GDP levels, and unemployment at 27.6%.

Living conditions have steadily improved since independence as the wealth from diamond discoveries has helped lay the foundations for growth and development and fund major advances in social service delivery, expanding broad access to clean water, electricity, and sanitation. Basic education and health outcomes have also steadily improved. However, the extractives-driven growth model is reaching its limits and ability to further sustain poverty reduction and inclusive growth.

The government has invested significant resources in human capital development through education, health, and social protection. Government spending as share of GDP on health is 4.8%, education 7.1%, and social protection 2.6%, very high compared to neighbors in the region. Nevertheless, human capital outcomes are not consistent with spending levels. Botswana currently scores only 0.41 on the WB’s Human Capital Index (HCI). Critical indicators such as stunting, child mortality rates, learning outcomes, and adolescent fertility rates are below what is expected of a UMIC.

Politically, Botswana is known for its stability and democratic traditions, with elections held every five years. Elections on October 30, 2024, led to a change, when the ruling Botswana Democratic Party lost power for the first time since independence in 1966. The Umbrella for Democratic Change, a four-party coalition, led by President Duma Boko, assumed office in November 2024.

ECONOMY
Botswana's economy, historically anchored in prudent fiscal management and robust institutions, has sustained growth for nearly four decades since its independence in 1966. However, the growth model, overly dependent on diamonds (over 90% of exports) and led by the public sector, has reached its limits, exacerbated further by external shocks.

Botswana’s economy faced significant challenges in 2024, contracting by 3%, due to a slump in the diamond sector, which dominates export earnings and government revenue. Growth forecasts for 2025 remain subdued, with expectations of negative growth as diamond demand stays low. A modest recovery may be possible from 2026 if market conditions improve.

Public debt rose to an estimated 30% of GDP in 2024, reflecting fiscal pressures from reduced mineral revenues and increased spending, causing the fiscal deficit to widen close to 8% of GDP. Maintaining fiscal sustainability requires expenditure rationalization and improved revenue mobilization. Inflation eased to about 2.1% in 2025, helped by lower demand and global commodity price stability, but inflation risks remain from energy prices and external shocks.

Employment remains skewed toward low-productivity sectors, with unemployment at 27.6% reflecting structural labor market issues and limited private sector opportunities and extreme inequality (Gini index: 53.3). Inequality is persistent, and human capital outcomes require enhancement through better education, healthcare, and social protection reforms.

Last Updated: Oct 02, 2025

The structural constraints in Botswana's economy are becoming evident in several interlinked areas, including private sector development, human capital accumulation, infrastructure investments, as well as public sector effectiveness.  

Improving the business environment for the private sector remains critical to drive foreign and domestic investment and support for entrepreneurship, business development, and the diversification of the private sector. The latest Business Ready Indicators reveal inadequacies of public services that promote market competition, and inefficiency in implementing the regulatory framework. This hampers productive private sector investment and job creation.

Human capital outcomes in Botswana are not consistent with its spending levels. Botswana invests significant public resources in human capital through education, health, and social protection. Government spending as share of GDP on health is 4.8%, education 7.1%, and social protection 2.6%, very high compared to neighbors in the region. However, Botswana currently scores only 0.41 on the WB’s Human Capital Index (HCI). This implies that a child born in 2020 will only be 41% as productive when he/she grows up, as could be if he/she had enjoyed complete education and full health. This is on par with average Sub-Sahara Africa.  Critical indicators such as stunting, child mortality rates, learning outcomes, and adolescent fertility rates are below what is expected of a UMIC.

Botswana is highly vulnerable to the impacts of climate change, particularly drought and flooding, which are becoming more frequent and severe. Botswana experiences climate change-related shocks, with floods making up 55.6%, droughts 22.2%, epidemics 16.7%, and storms 5.6%. Botswana faces challenges in water security, climate resilience, and water and sanitation services. The agriculture sector has significantly declined in its contribution to GDP, with cattle rearing representing two-thirds of agricultural output.

Last Updated: Oct 02, 2025

A new World Bank Group Country Partnership Framework (CPF) for Botswana for the period of FY26–FY30 is under preparation. The next CPF will be designed to support the next National Development Plan 12 and the Botswana Economic Transformation Program that was launched in August 2025. The Botswana Systematic Country Diagnostic (SCD) Update was completed in 2023. As of September 2025, the portfolio includes two IBRD lending operations on water and energy with a total commitment of $233.5 million. A health project is under preparation. Lending is complemented by trust funds (both recipient and bank-executed) of about $3.8 million for health and energy. In addition, there is an Reimbursable Advisory Service Program for $157,000 to support developing the national gender policy.

The International Finance Corporation (IFC) has invested in the 120 MW Mmadinare solar complex, constructed by the renewable developer Scatec. The project is the country’s first utility-scale Independent Power Producer project, and IFC’s first infrastructure investment in Botswana. The first phase of 60MW was commissioned in February 2025, and the second phase of 60MW is to be commissioned by November 2025.

The Multilateral Investment Guarantee Agency (MIGA), as of August 31, 2025, is actively engaged in Botswana with a total gross exposure of $147.98 million, covering two projects in the financial sector. MIGA has also supported the Trade and Development Bank, of which Botswana is a member, mobilizing $747 million in commercial financing to expand its trade finance activities with clients in member countries, including COVID-19 related trade finance transactions.

Last Updated: Oct 02, 2025

Water Security and Efficiency Project ($145.5 million): The World Bank supports Botswana in its efforts to increase the availability of water in drought-vulnerable areas, develop wastewater management in selected systems, and strengthen capacity in drought risk management and resilience. The water supply component is focused on three water supply sub-projects: North-East, Tutume Sub-District Scheme, and the Selebi-Phikwe Serule Water Transfer Schemes that have been delivering access to improved water services to 121,647 beneficiaries since their completion in February 2022 and May 2023 respectively, of which 62,443 are women. The Boteti Cluster Water Supply Scheme was commissioned in 2024 and is supplying 22,000 beneficiaries.

Some key deliverables were the Botswana Water Resources and Irrigation Sector Assessment; the development of the Drought Management and Preparedness Plan and establishment of a Drought Management Center; the National Sanitation Management Strategy was completed, and technical workshops were held on wastewater reuse, resource recovery and Circular Economy.

The Botswana Programmatic Economic Resilience and Green Recovery Development Policy Loan II, supported the government’s response to multiple shocks, helped strengthen private sector development, and has assisted in promoting a resilient, low-carbon recovery.

KNOWLEDGE PRODUCTS

 The Gender Assessment-Trends and Opportunities to Advance Gender Equality Report  analyzed Botswana’s major gender equality challenges, including low women's political representation, a large gender gap in labor participation, and high gender-based violence (GBV) rates. It provided recommendations to address these challenges.

The Country Economic Memorandum: Drivers of Inclusive Growth analyzed Botswana’s growth performance over the past decades and highlighted the critical need for productivity-led inclusive growth to get out of the “Middle-Income Trap” and achieve Botswana’s ambition of being a high-income country.  

Partners

The World Bank works closely with partners across the society in Botswana. It enjoys close ties with the private sector to facilitate a more friendly business environment and promote private investment. It has also intensified engagement with civil society organizations, academia, and think tanks such as the Botswana Institute for Development Policy Analysis.

With other development partners, the World Bank is part of the United Nations Country Team and interacts regularly with other international partners such as the African Development Bank, the International Monetary Fund, and bilateral partners and agencies.

Last Updated: Oct 02, 2025