Botswana is part of Indonesia

Corona crisis increases pressure to diversify

Flat land in southern Africa

With an area of ​​around 582,000 square kilometers, Botswana is about the same size as France, but very sparsely populated with only 2.3 million inhabitants. The economy is largely based on the export of diamonds, which gives the country a per capita income of around 7,000 US dollars (US $), one of the highest values ​​in Africa. The population is concentrated in the southeast, where the capital Gaborone is also located.

SWOT analysis Botswana

Strengths

Weaknesses

Stable political structures

One-sided dependence on the export of raw materials

Good infrastructure

Small market with 2.3 million inhabitants

Low crime

Inland location means high transport costs

No ethnic tension

Exposure to high HIV infection rates

Low international debt

Low productivity

Opportunities

Threats

Regional location for foreign direct investment

Falling prices or decreasing demand for diamonds

Logistics hub for neighboring countries

Climate change is causing increasing drought

Improvement of vocational training

Conflicts over income inequality

Increase in value creation on site

Energy bottlenecks due to the power crisis in South Africa

Energy export to the region

Conflicts in neighboring countries

Pandemic: major sources of income severely affected

The economy of Botswana is largely based on only a few sources of income. The most important are diamond mining and export and tourism. Both industries are severely affected by the corona pandemic, which despite the comparatively low number of infections in 2020 led to a sharp slump in economic output. This large effect of development in individual sectors underlines the need for diversification of the economy.

Raw materials: well managed, but dependent

The largest diamond mining company is Debswana, a joint venture between the Botswana state and Anglo American subsidiary De Beers. With the creation of the Diamond Trading Company Botswana in 2013, part of the processing and trading of diamonds was relocated to Gaborone. This ensures that the Group's most important production country has a higher share of the added value. In principle, the income from mining has been sensibly invested in the last few decades. Botswana has a good road network as well as an almost comprehensive supply of schools and health stations. Nonetheless, there is still a great dependency on a few products and their demand on the world market.

Diversification: search for niches

When looking for alternatives, the focus is also initially on natural resources, such as the extraction of copper and nickel or the immense reserves of coal with an estimated 200 billion tons. Their mining and exploitation could turn Botswana into a regional energy exporter. The use of solar energy would also make this possible. In order to create jobs in particular, however, the expansion of production and services in other sectors would be necessary. Botswana can build on existing structures in neighboring South Africa, for example in the automotive industry, but is also in competition with its larger neighbor. It benefits from its proximity to the industrial center of Johannesburg, but is dependent on transport routes through the surrounding countries due to its inland location.

Knowledge economy: Vocational training is the key

The declared goal of the government in Gaborone is to build a "knowledge-based economy". This includes services that are relatively independent of transport, such as financial services, information and telecommunications services or laboratories and test facilities. In addition, Botswana could also take advantage of its central position in southern Africa by taking on more logistical tasks between the countries. Qualified workers are required for all of these fields of activity. This also applies to the targeted, increased processing of local resources. Targeted vocational training must therefore complement school education more than before. Good approaches to this already exist, also in cooperation with German institutions.

Poverty: participation is limited

A stronger integration of large sections of the population into economic life is also a means of combating the poverty that exists despite the relatively high per capita income. According to the World Bank, 16.1 percent of the population still had to get by on less than US $ 1.90 per day in 2018. Compared to a share of 29.8 percent in 2000, this is a big step forward, but because of the very high income inequality on a global scale, poverty in Botswana persists. The rural-urban difference that used to be pronounced has, however, decreased in recent years. In addition to smallholders in remote rural areas, the poor also increasingly include the urban lower classes.

Climate change: water is becoming scarcer

Southern Africa is predicted to be one of the regions in the world hardest hit by climate change. So far, temperatures have risen more than the global average. The climate tends to be drier. In addition, extreme events such as floods and droughts occur more frequently. The drought of 2018 and 2019 also gave Botswana a foretaste of it. An economical use of the resource water, especially in agriculture, is one of the necessary adjustments. Given its relatively solid economic position, Botswana can set a good example here.