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Botswana - Growth and Development

AQA, Edexcel, OCR, IB

Last updated 22 Mar 2021

Botswana is a natural resource-rich country that borders Namibia, South Africa and Zimbabwe

  • Botswana joined the World Trade Organisation in 1995, 61% of exports go to the EU, 13% to South Africa
  • It is world's largest producer of diamonds and is Africa's longest continuing multi-party democracy
  • GDP per capita in PPP terms = $12,154, this is 5 times the average for Sub-Saharan Africa
  • Urban population = 62% of total population (and rising)
  • Government's main economic priorities are an emphasis on poverty eradication, reducing rates of HIV infection, promoting inclusive growth, tackling a high level of unemployment and diversifying the economy away from dependence on mining and diamonds in particular
  • Reliance on diamond exports has made the Botswana economy vulnerable to external shocks
  • Botswana is an upper-middle income country but many of her critical development indicators are much lower than the average for other nations in the upper-middle income category.

The Diversification Challenge facing Botswana

In 2010, less than 3% of Botswana's GDP came from agriculture and 45% came from industry, but of this figure, only 3% was from manufacturing industries. The reliance on the diamond industry is clear to see. Of the total value of exports in 2010 of $4,593 million, $3,206 million (or 70 per cent) came from diamonds and 13% came from copper and nickel.

Botswana has a very high level of export concentration in just a small number of sectors. The economy is highly sensitive to fluctuations in global demand for and prices of these natural resources. When prices and production levels are high, the value of exports soars and tax revenues flow into the government. In contrast, as was seen in 2009 Botswana suffered from a steep fall in exports (-28%) that contributed to a deep recession (-5%). For many countries having such a rich resource can end up being a curse but Botswana is highly regarded internationally for the way in which the country has managed to climb to middle income status although unemployment and income inequality remains high. Crucially, the government estimates that the main diamond deposits will be exhausted between 2025 and 2030. Diversification and sustainability are two huge issues for Botswana. She does have opportunities to invest in zinc and farm exports such as beef. Tourism is also an important part of the diversification agenda.

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