Botswana in the next two years faces state collapse as most Batswana fail to maintain their current lifestyles due to increases in the cost of essential goods which are not matched with a rise in real household income while corporate and public finances struggle to service debt accumulation, resulting in mass bankruptcies or insolvencies, liquidity crises or defaults and sovereign debt crises – The World Economic Forum (WEF) has warned.
In its 2023 Global Risks Report, the Geneva based Non Governmental Organisation identified the threat of“ state collapse” as Botswana’s second biggest risk. According to WEF, the term “ state collapse” means “ collapse of a state with geopolitical significance due to the erosion of institutions and rule of law, internal civil unrest and military coups, or the effects of severe regional or global instability.”
Botswana is one of only seven countries in the world where “ state collapse” was identified as the first of second biggest threat. The only countries where the threat of state collapse is ranked higher than that of Botswana are Bosnia and Herzegovina, which suffered a genocidal war in the 1990s, Peru, where six recent presidents have been jailed, ousted, or committed suicide amid corruption allegations and South Africa. While “ state collapse” was ranked the first biggest threat in those there countries, it was ranked the second biggest threat in Botswana.
WEF identified Botswana’s biggest threat as “ cost-of-living crisis”. This refers to “ inability among broad sections of populations to maintain their current lifestyle due to increases in the cost of essential goods which are not matched with a rise in real household income.”
The impact of the cost-of -living crisis tops the World Economic Forum’s Global Risks Report 2023 list of most severe threats over the coming two years, as governments and central banks seek to contain stubborn inflationary pressure.
“Food price increases are having devastating effects on the poorest and most vulnerable,” said World Bank Group President David Malpass.
Botswana’s third biggest threat was identified as “severe commodity supply crises “and the fourth threat was identified as “failure of cybersecurity measures”. Cyber security threats rank among the top risks facing Botswana with the growing vulnerability of government and businesses to cyber attacks.
The country fifth biggest threat was identified as “debt crises”
The threat of a sovereign debt crisis “has been brewing, with public debt growing as interest rates have fallen. Governments have leveraged cheap money to invest in future growth and help stabilize distressed financial systems, providing massive fiscal support during the pandemic and to shield households and businesses from the current cost[1]of-living crisis. However, high levels of debt may not be sustainable under tighter economic conditions. The rapid and widespread normalization of monetary policies, accompanied by a stronger US dollar and weaker risk sentiment, has already increased debt vulnerabilities that are likely to remain heightened for years”, states the report.
The Global Risks Perception Survey (GRPS) has underpinned the Global Risks Report for nearly two decades and is the World Economic Forum’s premier source of original global risks data. This year’s GRPS has brought together leading insights on the evolving global risks landscape from over 1,200 experts across academia, business, government, the international community and civil society. Responses for the GRPS 2022-2023 were collected from 7 September to 5 October 2022. “Global risk” is defined as the possibility of the occurrence of an event or condition which, if it occurs, would negatively impact a significant proportion of global GDP, population or natural resources.
