A recent report by Fitch Solutions’ research arm, Business Monitor International (BMI), highlights the formidable challenges facing Botswana’s new government in its bid to diversify the economy beyond its heavy reliance on diamonds. The report warns that unemployment may persist at high levels for an extended period.
Following the Umbrella for Democratic Change’s (UDC) victory in the October general elections, the administration inherited an economy from the Botswana Democratic Party (BDP) that is largely undiversified and grappling with significant structural issues. These challenges have led to persistently high unemployment, particularly among the youth.
Recent statistics reveal a troubling trend: the number of unemployed individuals in Botswana increased during the first quarter of 2024, despite previous governmental efforts to stimulate job creation. Unemployment figures rose by 11,900 (or 4.3 percent), climbing from 275,160 in the third quarter of 2023 to 287,060 in the first quarter of 2024. The overall number of unemployed in Botswana reached 363,478, with 79.0 percent actively seeking employment and 21.0 percent classified as discouraged job seekers. Consequently, the unemployment rate surged to 27.6 percent in Q1 2024, up from 25.9 percent in Q3 2023, marking a significant increase from 20.7 percent in Q3 2019.
BMI’s economic analysts attribute a major portion of the high unemployment rate to a decline in diamond exports, driven by a downturn in global demand. “Between 2021 and 2023, the decrease in diamond exports led to a rise in the average annual unemployment rate from 24.7% to 25.9%, while the rate for Sub-Saharan Africa fell from 18.4% to 16.1% during the same period,” the analysts noted. The UDC government is committed to accelerating economic diversification and expanding the economy to generate more jobs and reduce unemployment. However, analysts caution that the current low levels of advanced education could hinder these efforts, suggesting that unemployment will remain a challenge. They emphasize that the structural obstacles to diversification will be tough for Botswana’s new government to overcome. The analysts also point out that a lack of a skilled workforce, due to inadequate levels of advanced education and vocational training, hampered the previous government’s diversification efforts.
The tourism sector, which holds potential for diversifying Botswana’s economy, also faces hurdles. BMI anticipates that tourism will be a key focus of the UDC’s diversification strategy. Botswana has become an increasingly attractive destination for wildlife tourism, with forecasts predicting the arrival of 1.8 million tourists by 2028, growing at an average annual rate of 11.9% from 2024 to 2028. However, the BMI report indicates that challenges persist, particularly due to international backlash against trophy hunting. This practice, aimed at controlling wildlife populations, has gained momentum in Botswana since the lifting of restrictions in 2019. The decision followed local community pressure over elephant-related damages and was also seen as a way to bolster tourism revenue. “Demand for trophy hunting from Western markets is, however, at risk from negative international sentiment,” the analysts stated. In the UK, a bill to ban the import of hunting trophies is progressing through parliament, while tensions with Germany have risen amid fears of stricter regulations on trophy imports. In 2024, Belgium also enacted a ban on importing hunting trophies from endangered species, including elephants, further complicating Botswana’s tourism outlook, according to BMI.
