- Annual GDP growth of 6 % necessary to achieve high-income status
- Structural changes are critical
In order to fulfill its aspirations of moving from upper-middle income to high-income status, Botswana has to achieve an annual real GDP growth of around 6 percent over the next 15 years (from 2022 to 2036), a feat that the Minister of Finance and Economic Development, Peggy Serame, says is realistically achievable.
Answering a question about Botswana’s balance of trade, Serame told Parliament that the required GDP growth is significantly higher than the average annual GDP growth of 4 percent over the decade before the shock caused by the COVID-19 pandemic in 2020, hence structural change in the drivers of growth is required.
She said a high-income economy is achievable but is primarily dependent on raising productivity as a critical component of economic growth and to enable Batswana to become competitive at an international level, as well as diversifying exports.
Minister Serame noted that the government has implemented various policies and measures to encourage local production for import substitution. This includes the Economic Diversification Drive (EDD) introduced in 2011 to address challenges of economic diversification, export development, poverty, inequality, exclusion, unemployment, development of SMMEs, and to improve the regulatory and business environment.
She hailed the passing of the Economic Inclusion Act that aims to promote effective participation of targeted citizens in the economy and the Public Procurement Act to help achieve some level of import substitution in a number of areas.
According to the World Bank, when Botswana gained independence in 1966, it was one of the poorest countries in the world. However, by 1986 Botswana had achieved middle-income status, the World Bank classified it as an upper-middle-income country in 2005. Significant mineral wealth (mainly diamonds), good governance, prudent economic management and a relatively small population of slightly more than two million have made it an upper middle-income country that aims to become a high-income country by 2036 through a transformation agenda that it has adopted.