A stronger private sector could boost growth and jobs in Botswana, World Bank Group report
06-07-2022 11:59:00 | by: | hits: 4988 | Tags:

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 today by IFC and the World Bank.

The Botswana Country Private Sector Diagnostic (CPSD) 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 suggests 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 percent of GDP. Diamonds alone comprise about 90 percent of Botswana's exports.

"The COVID-19 pandemic disrupted economic activity in Botswana and sharply reduced revenues from the diamond and tourism sectors," said Marie Francoise Marie-Nelly, World Bank Country Director for Botswana, Eswatini, Lesotho, Namibia and South Africa. "The World Bank is committed to supporting the government to enact reforms aimed at attracting private investment to diversify the economy and create jobs."

"Botswana's economy recorded rapid growth in the decades after independence, largely driven by diamond and mineral wealth, but the country experienced limited gains in employment and income equality," said Carlos Katsuya, IFC's Senior Country Manager for Botswana. "Increasing private sector participation can help to unlock the investment needed to support the country's economic diversification agenda, create jobs, reduce income inequality, and bolster economic growth."

Botswana stands out among countries in Africa for its successful development policy, economic performance, and long track record of macroeconomic stability. The country has implemented many favorable investment policy measures that have contributed to significant investments in infrastructure, education, health, and social protection. However, 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, labor intensive, and private sector-driven model.

About the Country Private Sector Diagnostic (CPSD).
Launched in 2017 as a corporate priority, the World Bank Group's Country Private Sector Diagnostics support the institution's strategic focus on expanding private investment and leveraging private solutions to address development challenges in client countries. The diagnostics assess critical constraints to private sector engagement and identify policy and regulatory reforms needed to unleash private sector growth. They are jointly delivered by the World Bank and IFC. 

www.ifc.org