Overview

  • Botswana is located at the center of southern Africa, positioned between South Africa, Namibia, Angola, 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 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 and will stand for the Presidency in the next general elections.

    Economic Overview

    Since gaining independence from Britain, Botswana has been one of the world’s fastest growing economies, averaging 5% per annum over the past decade. Its reliance on commodities renders it vulnerable to international market fluctuations.  Economic activity is expected to intensify to 4.5% in 2017, up to 4.8% by 2019.  Economic growth will be driven by the mining activity, construction, services sector and intensified public investments.

    The National Budget for 2018/19 was passed. Presented to Parliament on February 5, 2018, the new budget puts total expenditure and net lending at P67.87 billion (33.4% of gross domestic product (GDP)), an increase of P8.3 billion (1.3%) compared to the previous fiscal year. The (capital) budget is P19.31 billion, up by P2.4 billion (16.6%) over the previous fiscal year. A budget deficit of P3.59 billion (1.8% 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

    Despite Botswana’s economic growth, the country faces high levels of poverty and inequality, especially in rural areas and the southern part of the country. It is expected to make slow progress on poverty reduction over the medium-term, with poverty falling to approximately 16% according to the 2015/16 Multi-Topic Household Survey. Accelerating poverty reduction will require bold decisions that encourage greater private sector job creation, higher value-added agricultural production and services, credit expansion, and lower household debt. While Botswana’s social sector expenditures have been generous, they have not yielded the impact one might expect. 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 Botswana’s income inequality is one of the highest in the world.

    Key Development Challenges

    Botswana’s extraordinarily high inequality is holding the country back, making it difficult for sustained growth to lead to rapid poverty reduction.

    The current economic model has delivered important results, but it has also generated strong state-dependence (as both the main investor and employer) and little in the way of innovative value-added manufacturing or services in the economy. More importantly, the model has not facilitated private sector-led job creation, which in turn has exacerbated national inequality. Policies designed to support improvements to the national investment climate, more efficient social sector spending, and stronger human and physical assets are essential if Botswana’s future development is to be more inclusive and avoid the “upper middle-income trap.”  

    Last Updated: Apr 19, 2018

  • 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 planned date of the next Country Partnership Framework is 2020.

    As of March 2017, the WBG’s portfolio has two projects:

    In addition to its lending program, the World Bank is supporting Botswana through analytical work and investments. 

    • 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 RAS ($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 World Bank Group 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.
    • 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 was over-subscribed leveraging approximately BWP 258 million to promote financial inclusion through the Botswana Building Society. The Bond’s long-term financing will also support the transformation of the Society into a full-service, commercial bank, financing underserved clients, including small and medium enterprises.

    Last Updated: Apr 19, 2018

  • In addition to past projects, the current Integrated Transport Project ($186 million), and the Emergency Water Security and Efficiency project ($145.5), the 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: Apr 19, 2018

  • 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: Apr 19, 2018

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LENDING

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

*Amounts include IBRD and IDA commitments

MULTIMEDIA



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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