02 Apr 2025

Botswana must achieve a sustained productivity growth rate of 1-2 per cent per year, which is critical for avoiding middle-income trap and the diamond sector alone will not suffice for transformative growth, says Ms Satu Kahkonen, the World Bank division director for Botswana.

In a statement released by World Bank recently on A New Growth Strategy for Botswana, Ms Kahkonen said the economy was facing challenges, including a significant fiscal deficit that reached nearly 10 per cent of GDP in 2024, driven by declining diamond revenues and mismanagement of increased revenues from the Southern African Customs Union.

She said there was urgent need to focus on stabilising the economy and improving public sector performance, citing managing spending within the means, reducing deficits, and enhancing efficiency in governance through transparency and the use of digital tools.

Ms Kahkonen encouraged the growth of productive firms by rethinking state involvement in the economy, learning from successful economies like China and Vietnam, and supporting small enterprises through deregulation and targeted financing.

She said improving the human capital base by investing effectively in education, health, and social protection, ensuring skills were market-responsive, would come in handy for the nation, adding that public-private partnerships could enhance vocational training and resource mobilization.

Addressing challenges of being landlocked by improving connectivity, both physical and digital, she said government should encourage private investment, adding that reducing access costs through competition and regional agreements can stimulate trade and economic opportunities. While these reforms are essential, she said they might create tensions and take time to generate positive outcomes. However, the urgency she said was highlighted by the need not to rely solely on the diamond market’s recovery.

Ms Kahkonen said recent peaceful transition of power, government was viewed as well poised to adopt and implement these strategies for a “New Botswana.”  Therefore, she said World Bank was committing to assist Botswana’s aspirations for inclusive growth and productivity enhancement. ENDS