1. Introduction
Botswana has long been recognized for its prudent economic management and political stability. Since independence in 1966, the country has transformed from one of the poorest in the world to an upper-middle-income economy, largely due to its diamond wealth. The current economic challenges being experienced are pointing to a very tough path ahead. The time has come to pivot from mineral dependency and embrace a more diversified, resilient, and inclusive economic model, anchored on services, agriculture, education, and technology. We cannot afford to just talk about it; we must do it. If we fail to act now, we stand to lose from the demographic dividend the country is currently in.
In this article we analyse Botswana’s economic structure and trends. We then draw some insights on where we see the opportunities. We highlight where impact can be most felt. This is our contribution to the debate on how Botswana can navigate the current economic challenges. But most importantly for our clients, where they can explore investment opportunities.
2. The Case for Moving Beyond Diamonds
Diamonds have been the cornerstone of Botswana’s economy, contributing over 80% of export earnings and a significant portion of government revenue. This in turn supports the country’s healthy foreign reserves. The country prudently managed diamond resources and has been one of Africa’s proud story of escaping the resource curse. However, the heavy reliance on diamonds has exposed the country to global market volatility. For instance, in 2024, weak diamond sales led to a 3.3% contraction in GDP according to Ministry of Finance. While a modest recovery is expected in 2025, this has not materialised leading to drastic consequences for the economy and the country’s finances. The need for structural transformation is urgent.
3. The Rise of the Service Sector
Botswana’s service sector has shown consistent growth over the past 15 years, rising from 45.2% of GDP in 2010 to an estimated 56.5% in 2025[1]. This growth has been driven by:
- Tourism: Leveraging natural assets like the Okavango Delta and Chobe National Park.
- Financial Services: Gaborone is emerging as a regional banking and insurance hub.
- ICT and Professional Services: Supported by investments in digital infrastructure and education.
The chart below shows the steady rise of the service sector as a share of GDP, highlighting its growing importance in Botswana’s economy.[2]
This trajectory mirrors successful transitions in countries like Mauritius, Malaysia, and Chile, which diversified from resource-based economies to service-driven models.
4. Reviving Agriculture for Food Security
Much of Botswana is arid. The contribution of agriculture to GDP has declined significantly since the 1970s as diamonds took centre stage. Not only did agriculture contribution declined, but Botswana has also become more food insufficient. The country imports over 70% of its food, making it vulnerable to external shocks[1]. Without interventions, this trend is expected to worsen. That means Botswana will become more reliant on its neighbours for its food, mostly South Africa and Zambia.
Below is a chart showing the composition of Botswana’s food imports, based on the official Statistics Botswana report for May 2025[2], showing the composition of food and beverage imports:
Botswana must reverse the decades-long decline in agriculture. A revitalized agricultural sector can:
- Enhance food security.
- Create rural employment.
- Reduce the trade deficit.
Investments in climate-smart agriculture, irrigation, and agri-tech can unlock this potential.
5. Education: From Spending to Outcomes
Botswana invests heavily in education, among the highest per capita in the world. Yet the outcomes remain modest. This is evidenced by high youth unemployment and skills mismatches. Youth unemployment is estimated at 43.9%[1].
Below is a bar chart showing education spending per capita (USD) using UNESCO-sourced data, sorted from lowest to highest. Botswana is highlighted in orange
Below is a visual comparison of education outcomes across Botswana, Mauritius, Malaysia, Chile, and South Africa, using the most recent data from UNESCO and OECD:
On all 3 scores of Secondary Completion Rate (%), Tertiary Enrolment Rate (%) and PISA Score(2022) (Botswana and Mauritius did not participate), Botswana scores poorly.
The country must now:
- Shift to outcome-based funding.
- Align curricula with market needs.
- Promote vocational and technical training.
This will ensure that education translates into employability and innovation.
6. ICT and AI: Building Homegrown Solutions
Botswana has a unique opportunity to leapfrog into the digital economy. Botswana’s tech startup ecosystem is expanding, but still trails behind regional leaders like Kenya and Rwanda. Below is a graph showing how Botswana fairs against some regional peers[1].
With a young population and growing internet penetration, the country can:
- Develop homegrown tech solutions for local challenges.
- Leverage AI and automation in sectors like health, agriculture, and public services.
- Position itself as a regional innovation hub.
Strategic partnerships, startup incubation, and digital literacy programs will be key enablers.
7. The Path to High-Income Status
Botswana aspires to join the ranks of high-income countries by 2036. This is captured in its Vision 2036 agenda. Below are some suggestions of what Botswana may consider doing based on the analysis above to achieve its lofty goals. These are summarised by pillars and sectors.
1. Government and Policymakers
a. Diversify the Economic Base
- Incentivize service sector growth through tax breaks, grants, and streamlined regulations for tourism, finance, ICT, and logistics.
- Support agro-industrial development to reduce food imports and boost rural employment.
b. Reform Education Funding
- Shift to outcome-based funding models that reward institutions for employability, innovation, and skills alignment.
- Expand technical and vocational education to meet labor market demands.
c. Invest in Innovation and Technology
- Establish national AI and digital innovation hubs.
- Provide seed funding and incubation for homegrown tech startups.
- Promote public-private partnerships in digital infrastructure and R&D.
d. Strengthen Institutional Capacity
- Improve regulatory efficiency and reduce bureaucratic red tape.
- Enhance data collection and policy evaluation mechanisms.
2. Private Sector
a. Expand into High-Growth Services
- Invest in digital services, fintech, and logistics to tap into regional markets.
- Partner with government on skills development programs.
b. Support Local Agriculture
- Collaborate with farmers and agribusinesses to develop value chains.
- Invest in agri-tech solutions to improve productivity and sustainability.
c. Foster Innovation Culture
- Create corporate innovation labs and sponsor hackathons or AI challenges.
- Mentor and fund local startups through venture capital and accelerator programs.
3. Educational Institutions
a. Align Curriculum with Market Needs
- Regularly update programs in consultation with industry.
- Emphasize STEM, entrepreneurship, and digital literacy.
b. Track and Report Outcomes
- Implement systems to measure graduate employment rates and skills utilization.
- Use data to improve teaching methods and resource allocation.
8. Conclusion
Botswana’s journey from mineral wealth to a knowledge-based economy is both necessary and achievable. By leveraging the growing service sector, revitalizing agriculture, reforming education, and embracing technology, the country can build a resilient and inclusive future. The diamond era laid the foundation, now it’s time to build the future. If we do not change course, we stand to lose an opportunity to cash in on the demographic dividend. In every crisis lies an opportunity. Let us not let this crisis go to waste!
[1] World Bank
[2] https://futures.issafrica.org/geographic/countries/botswana/
[3] Ibid
[4] Statistics Botswana, May 2025
[5] World bank