Botswana has always stood out as the bastion of macroeconomic stability and financial prudence, but the latest Africa Country Instability Risk Index, released by SBM Intelligence in November 2024 shows that the country is losing its top spot.
The Southern African nation, which recently elected a new government, recorded a significant score decline of -15, highlighting mounting challenges to its economic stability, according to the report.
The report paints a worrying picture for Botswana, which leads a list of struggling economies that include Seychelles (-8), Nigeria (-6), Namibia (-6), and Zimbabwe (-6). The sharp decline in Botswana’s ranking reflects increasing instability in a country once celebrated for its prudent economic management and consistent growth.
Economic analysts attribute Botswana’s poor performance to several factors, including the global economic downturn and reduced diamond revenues. Political uncertainties and policy inefficiencies have further exacerbated the situation.
“Botswana is a democratic country surrounded by relatively stable nations, but it is facing challenging economic headwinds,” the report states. It adds, “The economy contracted by 1.9 percent in Q1 2024 due to fluctuations in diamond prices.”
These fluctuations, the report notes, also affected the Botswana currency, given diamonds’ significant contribution to the country’s GDP.
Neighbouring Namibia’s inclusion on the list highlights shared regional challenges, while Seychelles, another southern African nation, also recorded a notable decline. Meanwhile, Nigeria and Zimbabwe continue to grapple with long-standing economic and political crises.
The report observes, “Botswana, Seychelles, Nigeria, Namibia, and Zimbabwe were the biggest losers.” It further highlights that “Botswana experienced a GDP decline of nearly 2 percent in the first quarter of 2024, while Zimbabwe struggled with debt and currency crises.”
Nigeria, Africa’s fourth-largest economy, ended the year with a score decline of -6, driven by the exit of foreign businesses, a weakening currency, rising inflation, and other economic difficulties.
The Africa Country Instability Risk Index assesses economic, social, and political indicators to evaluate the vulnerability of African nations to instability. Botswana’s dramatic fall calls for urgent measures to address systemic weaknesses and restore investor confidence.
Out of the 48 countries assessed, 31 reported improved performance, while the remainder showed declines. The biggest gainers were Angola, Burundi, Chad, Togo, and Madagascar. Angola’s improvement was attributed to cost reductions in governance, while Madagascar saw its GDP growth increase to 4.4 percent in 2023 from 4.3 percent in 2022.
On a regional level, Central Africa had the highest representation among the top 10 gainers, with about 40 percent of the group, including countries like Angola, Central African Republic, Chad, and Gabon. West Africa followed with 30 percent, led by Guinea, while East Africa contributed 20 percent with countries like Burundi and Madagascar. Southern Africa accounted for 10 percent, represented solely by Eswatini.
Conversely, the poorest-performing countries were concentrated in Eastern and Southern Africa, each making up 40 percent of the worst list. Eastern Africa was represented by Seychelles, Kenya, Mauritius, and Comoros, while Southern Africa included Botswana, Namibia, Zimbabwe, and Zambia.
For the second consecutive year, Southern Africa retained its position as the most stable region, with a slight score decline of -1.3. Central Africa, on the other hand, was the least stable, ending the year with a score increase of 6.78, performing worse than East Africa (1.07) and West Africa (2.47). This performance was bolstered by improvements in South Africa’s economy, which grew by 0.4 percent in Q2 2024 compared to 0.1 percent in Q1 2024.
The report also highlights that the M23 crisis between Rwanda and the Democratic Republic of Congo contributed to Central and East Africa’s relatively poor performance. In West Africa, attempted coups and Islamist insurgencies were key drivers of instability.
