Botswana Economic Update - Seizing the Moment: How Botswana Can Turn Crisis into Opportunity,

Botswana's economy contracted by 2.8% in 2024 and a further 0.7% in 2025, reflecting the combined impact of weaker diamond revenues, widening fiscal pressures, and limited progress in economic diversification. With public debt increasing from 22% of GDP in 2023 to nearly 40% in 2025, the country must accelerate reforms to diversify its economy and create more jobs.

These are the key findings of the first Botswana Economic Update, Seizing the Moment: How Botswana Can Turn Crisis into Opportunity, which emphasizes that stronger skills development, human capital investments, and private sector growth will be critical to building a more resilient and inclusive economy. The Botswana Economic Update is structured in two complementary parts. Part I assesses the state of Botswana's economy, examining recent economic developments, the outlook and risks, and outlining a reform agenda to restore growth and fiscal sustainability. Part II focuses on Skills for Jobs, analyzing the country's skills and employability system and proposing reforms to better align education and training with labor market needs and economic diversification.

Only a sustained fiscal consolidation effort…

…will prevent an explosion of the public debt

Looking ahead, Botswana faces a choice between two paths. The first is to maintain the status quo, with limited reforms and continued reliance on diamonds. While this may provide short-term stability, it risks leaving the economy vulnerable to external shocks, rising debt pressures, weak productivity, and slow job creation. The second is to accelerate economic transformation through a more diversified, private sector-led growth model, as envisioned under the Botswana Economic Transformation Programme (BETP). To support this transition, the Botswana Economic Update identifies four mutually reinforcing priorities:

1. Restore fiscal stability through more efficient public spending, stronger revenue mobilization, and improved SOE oversight.
2. Promote a dynamic private sector by improving the business environment, expanding access to finance, and unlocking new sources of growth.
3. Invest in people and skills by improving outcomes in education, health, and social protection.
4. Harness natural capital through better water management, renewable energy expansion, and climate-smart development.

While all four pathways are essential, the report highlights skills and human capital as the foundation of long-term diversification, productivity growth, and job creation

Botswana's HCI is low relative to its spending on education and health

Recognizing that economic diversification depends on the availability of the right skills, the report recommends a shift from a supply-driven education system to one that is closely aligned with labor market demand, focused on employment outcomes, and responsive to the needs of a transforming economy. To strengthen Botswana's skills system and support productivity, job creation, and inclusive growth, four priority reforms are proposed:

1. Build employer-led sector skills partnerships in priority industries to align training with workforce needs, create clearer pathways into employment, and make TVET and other non-university routes more credible and attractive. These partnerships would bring together employers, training institutions, and government to coordinate skills development around real job opportunities.
2. Expand apprenticeships, internships, and workplace learning through the HRDF, reorienting skills financing toward young people entering the labor market. This would provide practical experience, strengthen school-to-work transitions, and ensure training is linked to actual industry demand.
3. Strengthen the responsiveness of TVET institutions by granting greater operational autonomy while holding them accountable for employment outcomes. This would enable institutions to adapt programs more quickly, deepen industry partnerships, and better equip graduates with relevant, job-ready skills.
4. Reform skills financing to be more equitable, outcomes-driven, and pro-poor, ensuring resources are directed toward disadvantaged learners and programs that demonstrate strong employment results. Funding should increasingly reward quality, completion, and successful transitions into work while improving opportunities for underserved youth

Together, these reforms can help Botswana build a more diversified, resilient, and inclusive economy by restoring fiscal sustainability, enabling private sector-led growth, and strengthening human capital. By placing productive jobs at the center of economic transformation, Botswana can reduce its dependence on diamonds while expanding opportunities for its people.

Jobs must be the true north of Botswana's development agenda. By advancing the four economic pathways and the skills-for-jobs agenda, Botswana can translate reform into higher productivity, stronger employment outcomes, and a more competitive, prosperous, and sustainable future.