Botswana Economic Woes Could Derail UDC Govt Campaign Promises – BMI

Botswana’s newly elected government under President Duma Boko faces a turbulent start, as mounting economic headwinds threaten to derail key campaign promises, according to a new analysis by Business Monitor International (BMI).

In its latest country risk report, the research firm warns that Botswana’s economic outlook remains fragile, weighed down by weakening global demand for diamonds and rising trade tensions with the United States. These pressures, it says, could strain the new administration and elevate political risk.

“We expect that rising trade tensions with the US will place further pressure on Botswana’s already challenging economic outlook, putting strain on President Duma Boko’s newly elected administration and elevating political risks,” BMI states.

While Boko enjoys a strong parliamentary and popular mandate after unseating the Botswana Democratic Party in the October 2024 elections, BMI notes that his administration has inherited deep-rooted economic problems and will “almost completely forgo a governance ‘honeymoon period.’”

The report cautions that macroeconomic pressures will likely force the government to adopt austerity measures, despite the Umbrella for Democratic Change (UDC)’s campaign platform, which focused on expanding social welfare programs.

“As outlined in our Economic Outlook, we expect the government to follow through with its 2025/26 fiscal year budget, reining in current expenditure to narrow the wide budget deficit,” BMI says. “Although Boko’s administration will have little choice but to exercise austerity to maintain fiscal and external sustainability, it will be at odds with the UDC’s political platform.”

The party campaigned on “fixing” Botswana’s economic model, which remains heavily dependent on diamonds for growth and public revenue, while expanding welfare programs such as healthcare, education, and the minimum wage. However, BMI forecasts that only modest expenditure growth will be possible, limiting any meaningful expansion of the social safety net.

“As a result, we expect social risks to rise in 2025, as grievances over slow economic activity mount,” the firm warns. “When the UDC was elected in 2024, the unemployment rate was officially estimated at 27.0 percent, a historical record. We do not expect that employment rates will drop significantly in 2025, as economic activity will remain tepid and growth will be driven largely by strong statistical base effects following a full-year contraction in 2024.”

BMI says this sluggish recovery could fuel public frustration over the UDC’s handling of the economy. However, the government's transparent communication about the economic climate and the party’s strong electoral mandate may offer some temporary political cover before socio-economic pressures begin to take a toll.

On policy, BMI expects the government to prioritise economic diversification as a way to reduce the risk of a prolonged downturn. This would include shifting investment toward the non-mining economy, particularly in light of growing global uncertainty around natural diamond demand and the rise of lab-grown alternatives.

“While we expect the government to execute a more conservative spending plan, we believe it will look to protect the capital expenditure budget in order to prioritise investments aimed at economic diversification,” the report says.

BMI notes that at the World Economic Forum in January, President Boko highlighted renewable energy, eco-tourism, the digital economy, and climate-smart agriculture as key policy areas for his administration. Still, BMI cautions that limited fiscal space will constrain progress in 2025, with most diversification efforts likely to bear fruit only in the long term.