Botswana, one of Africa’s most stable and prosperous nations, has unveiled an ambitious budget for the 2024/25 fiscal year, aiming to boost economic growth, create jobs and diversify its diamond-dependent economy.
The landlocked country, which boasts the world’s largest diamond reserves, saw its economy shrink by 7.9% in 2020 due to the impact of the global pandemic on its main export market. However, it bounced back with a 5.8% growth in 2021, thanks to a recovery in diamond demand and a successful vaccination campaign that reached over 70% of its adult population.
Finance Minister Peggy Serame said in a budget speech on Monday that growth was estimated at 3.2% in 2023, lower than a previous forecast of 3.8%, picking up to 4.2% this year and 5.4% in 2025 premised on the world economy recovering.
“The proposed budget will address a wide range of infrastructure gaps,” she said, citing projects planned in the water, transport, and energy sectors. Overall, spending on infrastructure development would rise more than 33% in 2024/25.
The budget deficit was estimated at 8.69 billion pula ($631 million), higher than the current fiscal year’s estimated 7.13 billion pula deficit. Serame said the government would seek to mobilize additional resources by issuing instruments such as inflation-linked bonds and green bonds.
The budget also allocated funds for “game-changing programs and projects of high-value strategic investments” worth 20.82 billion pula, focusing on sectors such as agriculture, tourism, manufacturing, and innovation.
Serame announced several initiatives to support farmers, such as land parcels, access roads, and subsidies for inputs and equipment. She also said new tourism sites would be made available to support tourism land ownership by citizens.
To foster innovation and creativity, Serame said the government would establish an “Intellectual Property Motshelo Scheme” and an “Intellectual Property Ideas Incubation Centre” to empower Batswana to own and protect their intellectual property assets.
She also said the government would review and implement an informal sector strategy, develop a digital labor market information system, and review the general education curriculum to align it with the labor market needs.
The budget was welcomed by analysts and business leaders, who praised its focus on infrastructure and diversification.
“This is a very progressive budget that reflects the government’s vision of transforming Botswana into a high-income country by 2036,” said Keith Jefferis, a former deputy governor of the central bank and managing director of Econsult Botswana, a consultancy firm.
He said the budget was realistic and achievable, given the improved fiscal and economic outlook. He also said the budget addressed some of the key challenges facing the country, such as unemployment, inequality, and climate change.
“The budget has a strong emphasis on infrastructure development, which is critical for enhancing productivity and competitiveness. It also supports the development of new sectors and industries that can reduce the dependence on diamonds and create more jobs and opportunities for the youth,” he said.
Mphoeng Tamasiga, the president of the Botswana Confederation of Commerce, Industry and Manpower, said the budget was “bold and visionary” and would boost business confidence and investment.
He said the budget showed the government’s commitment to supporting the private sector, especially the small and medium enterprises, which have been hit hard by the pandemic.
He also said the budget was aligned with the national development plan and the economic recovery and transformation plan, which aim to accelerate economic growth and diversification.
“We are very optimistic that this budget will stimulate the economy and create a conducive environment for business to thrive. We are also hopeful that the budget will be implemented effectively and efficiently, with proper monitoring and evaluation mechanisms,” he said.
Botswana, which gained independence from Britain in 1966, has been hailed as a success story of democracy and good governance in Africa. It has maintained political stability, sound macroeconomic policies, and prudent management of its natural resources, earning it an investment-grade credit rating and a reputation as one of the least corrupt countries on the continent.
However, the country still faces some challenges, such as high poverty, inequality, and unemployment rates, especially among the youth. It also remains vulnerable to external shocks, such as fluctuations in diamond prices and demand, as well as the effects of climate change, such as droughts and floods.
The government has acknowledged these challenges and has pledged to address them through various reforms and initiatives, such as improving the business environment, enhancing public service delivery, strengthening social protection, and promoting green growth.
With its bold budget, Botswana is betting on its infrastructure and innovation to drive its economic recovery and transformation and to achieve its vision of becoming a high-income country by 2036.
Source: Reuters
