Botswana can transform its economy, create jobs, reduce inequality and achieve a resilient recovery from Covid-19 by increasing private sector participation and investment in its energy, water and sanitation, tourism and other sectors, according to a new report published on July 6 by finance organisations the International Finance Corporation (IFC) and the World Bank.
The ‘Botswana Country Private Sector Diagnostic (CPSD)’ report highlights opportunities for investment and growth in Botswana and ways the country can achieve a more resilient, green and sustainable economic future, including through regulatory improvements and diversification.
The CPSD outlines regulatory gaps that hamper competition and productivity and suggests boosting access to finance for smaller businesses and increasing investment in skills development suited to the needs of the job market.
The CPSD also recommends increasing investments in transport and digital infrastructure, which lag other countries in the region.
The CPSD notes the impact of Botswana’s State footprint on competition in key sectors and its diamond-reliant growth model as challenges to growth.
Botswana is the world’s second-largest diamond producer, but the Covid-19 pandemic slashed revenues from the diamond and tourism sectors which, combined, account for 30% of gross domestic product.
Diamonds alone comprise about 90% of Botswana’s exports, the report outlines.
“The Covid-19 pandemic disrupted economic activity in Botswana and sharply reduced revenues from the diamond and tourism sectors.
“The World Bank is committed to supporting the government to enact reforms aimed at attracting private investment to diversify the economy and create jobs,” says World Bank Botswana, eSwatini, Lesotho, Namibia and South Africa country director Marie Francoise Marie-Nelly.
The report states that Botswana stands out among countries in Africa for its successful development policy, economic performance and long record of macroeconomic stability.
It notes that the country has implemented many favourable investment policy measures that have contributed to significant investments in infrastructure, education, health and social protection.
However, it says there is still room for improvement to boost human capital indicators, create jobs and reduce inequality, which remains among the highest globally.
The CPSD suggests specific interventions that Botswana can take to accelerate economic diversification and private sector participation, including by developing a dedicated investment policy and investment law, strengthening formal mechanisms to address investor grievances, addressing corruption and enhancing government effectiveness.
The report is in line with commitments made under Botswana’s Economic Recovery and Transformation Plan and Vision 2036 to expand the domestic economy by diversifying away from diamonds and refocusing on an export-oriented, labour-intensive and private sector-driven model.