Navigating the Covid-19 Hailstorm: Botswana’s Economic Growth Trajectory

In a bid to reboot the economy and support it from the shock brought on by the pandemic, the government is in the process of rolling out its Economic Recovery and Transformation Plan – currently estimated at P14.5bn.

Navigating the Covid-19 Hailstorm: Botswana’s Economic Growth Trajectory
Figure: Botswana’s GDP growth Source: Statistics Botswana, data as at March 2021

Global economic activity appears to be steadily recovering from the Covid-19 economic shock, although by all accounts, the strength of the recovery is expected to be low by historical standards due to the persistent risk of further rounds of infection.  The base case is for growth to remain steady but precarious, against a backdrop of the possibility of further waves of infection.  Repeated waves, and associated containment measures, are likely to weigh down on growth prospects in the near term, but by less than what was experienced in 2020, with the rollout of a vaccines providing meaningful support in the latter part of the year.  As the virus is playing out differently in various economies, some countries may continue to gradually reopen while others are expected to implement further social distancing and lockdown measures.  Although global evidence suggests that most countries have improved their ability to manage subsequent rounds of new infection, economic growth and inflation are expected to remain weak until the pandemic fades significantly.  Estimates suggest that economic recovery should only happen in earnest over the second half of 2021.

In the context of Botswana, GDP data released by Statistics Botswana highlight the severe impact of the pandemic on domestic economic activity.  Botswana has experienced sharp contractions over the second and third quarters of 2020 across almost all its sector.


Ann GDP Growth rate


Interest Rates


-6.0% (Sep-20)

2.3% (Jan-21)

3.75% (Feb-21)


-2.5% (Dec-20)

1.7% (Feb-21)

0.25% (Jan-21)


-5.1% (Dec-20)

0.9% (Feb-21)

0.0% (Jan-21)


-7.8% (Dec-20)

0.6% (Dec-20)

0.1% (Feb-21)


6.5% (Dec-20)

-0.2% (Feb-21)

3.85% (Jan-21)

Given the disruption experienced, Botswana’s GDP growth is expected to show between 7.5% and 10.1% loss in total output in 2020 before recovering to positive territory growth in 2021 as economic activity slowly recovers.  While the arrival and commencement of vaccines has boosted sentiment for growth, a spike in new cases (and deaths) observed since January 2021 has increased the possibility of further containment measures being applied which might dampen economic activity for this year – thus limiting robust growth prospects beyond historical averages.

In a bid to reboot the economy and support it from the shock brought on by the pandemic, the government is in the process of rolling out its Economic Recovery and Transformation Plan – currently estimated at P14.5bn.  The Plan aims to safeguard existing businesses from the disruption caused in 2020, as well as spur growth in sectors that have traditionally had a low contribution to GDP. In doing so, the government has identified key sectors with the potential to advance its diversification agenda and propel economic growth, which sectors include agriculture, manufacturing and tourism.  Businesses operating within these sectors are eligible to receive low-interest loans through the Industry Support Facility, where P1.3bn has been earmarked to help local businesses meet their working capital requirements against a backdrop of reduced demand for their goods and services).

Further expansion of the economy will be supported by a recovery in global diamond demand in the medium term, leading to higher production levels than those of 2020.  Given that diamonds account for over 30% of fiscal revenue, increased mining production will allow Botswana to ramp up its development expenditure to meet its infrastructural needs, in line with the NDP 11.  This, in turn, will have a positive spill-over into other economic sectors that require properly functioning infrastructure for growth.

The recovery of the economy will require efficiencies in implementation of mega projects as well project efficiencies for a sustainable growth model.  By Moatlhodi Sebabole

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