10 December 2024
- Botswana’s government is spending wildly above its means, its finance minister told its parliament.
- Diamond revenues have plummeted, while state-owned enterprises are in poor shape.
- Botswana now wants to fix its airline, and export electricity to South Africa.
Botswana’s economy is in bad shape, deputy president and finance minister Ndaba Gaolathe has told its parliament – but with hard work and sometimes uncomfortable measures, the new administration can clean up the “undesirable” mess it inherited.
Under former ruling party the Botswana Democratic Party (BDP), the government had been spending wildly above its means, he said, with expenditure equivalent to around R11 billion per month while receipts were at some R2.65 billion.
Botswana had seen tough times before, Gaolathe said, including during the COVID-19 pandemic, but nothing like the economic risk it now faced.
“In fact, at that kind of rate of financial haemorrhaging, this path leads to a financial implosion of a magnitude such as this country has never experienced,” he said.
During his first address to the public, President Duma Boko highlighted that the country’s books were not in good standing, particularly because the country’s main income earner, the diamond industry, was not performing well.
Reviving the economy
This year, the economy could shrink by 1.7% instead of the 4.2% growth forecast that was expected when the former government presented its budget statement in February.
Gaolathe’s turnaround plan is straightforward: he wants a “modern, deep, diversified, export-focused economy that generates high-paying opportunities”.
One of the key areas the new administration identified is state-owned enterprises, most of which perform badly, plagued with corruption and leakages. He singled out the national flag carrier, Air Botswana, as one institution that needed immediate work.
“It is clear that the morale of our Botswana government system is low,” he said.
South Africa is Botswana’s biggest trade partner in the region. In the past two years, under former President Mokgweetsi Masisi, Botswana banned vegetable imports from South Africa to protect its local industry.
However, the new government will seek to improve relations with South Africa. Botswana wants to be a net electricity exporter, and SA is a potential market.
“We are making admirable progress in repairing our relations with South Africa and hope even to convince them to be a major market for our electricity-power sector,” Gaolathe said.
