Economic Development

At political independence in 1966, the Botswana's population was just over half a million and per capita income was about 80 US dollars. The main economic activity was pastoral farming whose performance was adversely affected by frequent droughts. Agriculture accounted for 39% of GDP. Life expectancy at birth was 48 years, only half the children of primary school age were at school and the country had about 100 secondary school and 40 university graduates. Health and nutrition indicators were low and physical infrastructure was poorly developed.

The Government was totally dependent on external aid for capital expenditure, and the British Government provided grants-in-aid to partially finance recurrent expenditure until 1972. Thus, Botswana was poor by whatever yardstick, and the country was one of the 25 least developed countries in the world.

The political and economic policies pursued by Botswana attracted significant levels of private foreign investment. Some of the major development projects, such as copper-nickel, diamonds, and coal mining were undertaken by the Government in partnership with private foreign investors. Debswana, the diamond mining company is a 50:50 partnership between the Government and De Beers. It is mainly the development of diamonds that provided impetus to the growth of the economy. Real GDP growth has averaged 7% over the past three decades making the Botswana economy one of the fastest growing in the world, albeit from a small base.

The Government approach to development has been fairly simple - to utilise the economic rents accruing from diamonds to develop social, economic and physical infrastructure; develop human capital, and create productive capacity in the economy. As a result, by the end of 2000, after only 34 years of independence, the GDP per capita had risen to 3000 US Dollars, access to clean water, sanitation, education, health and development of infrastructure had expanded considerably. Botswana graduated from the group of 25 Least Developed Countries in 1991 and is now a lower middle-income country.

However, notwithstanding the progress made so far, economic diversification will remain the overriding objective of the Government's planning and policy formulation for the foreseeable future. The production of diamonds has reached a plateau, following the completion of the Orapa mine expansion in 2000, and no significant growth impetus is expected to originate from this sector in the near future. The international market for diamonds has also become weak and uncertain in the recent months, due mainly to the slowdown in the economic growth worldwide. These poor prospects on the diamond front, together with problems of unemployment, poverty and HIV/AIDS, underline the need for continued thrust on economic diversification as a strategy for development.