Wednesday, November 29, 2023

Botswana has failed diversify – ACET

Botswana has become significantly less diversified since the year 2000, and has had its diversification score drop 7 points since 2010. This was revealed in a report prepared by the African Center for Economic Transformation (ACET) titled: African Transformation Index 2023 Tracking Africa’s economic successes and setbacks.

According to the Index, which assesses 30 countries’ progress along five crucial dimensions—diversification, export competitiveness, productivity increases, technology upgrading, and human well-being—Botswana has been doing worse and worse in the diversification category.

The report notes that Botswana, just as other African economies “rely on the exports of a small number of primary products”. According to the Index, the level of a country’s diversity score is especially related to its ability to resist and endure commodity price drops. “Acquiring the capability to produce a widening array of goods and services is essential for economic transformation. However, today most African economies are confined to a narrow range of commodity production,” states the Index.

Out of 30 countries evaluated in the diversification category, Botswana ranked 24th with a score of 24.0. In comparison to Botswana, the following other nations performed worse: Algeria 8.2, Niger 11.6, Gabon 12.6, Nigeria 16.4, and the Republic of Congo 19.1. Overall, Botswana scored 34.3 on the overall score, with 0 being the (least transformed) while 100 is the (most transformed). Furthermore, Botswana recorded an increase of +6.6 points since 2000 on all dimensions.

Botswana’s economy is overly dependent on the diamond industry. Despite the country spending a lot of money trying to diversify its economy over the years, its efforts have not been successful.

Among other things, the Index notes that exporting more products can help Africa cope with shocks, compete better, and change the structure of its economy. “In contrast with early transformers, Africa has also failed to grow its manufacturing sector, which can create jobs, boost productivity, and foster innovation,” states the Index.

On the pathways that countries can take to improve diversification, the Index states that there is need to reorient “production and export structures and strengthening technological and industrial capabilities towards higher value-added products,” adding that these “have been successful pathways to diversified economies for early transformers in Asia.”

Unlike in his 2022 State of the Nation Address (SONA), where he uttered the phrase diversification six times, President Dr. Mokgweetsi Masisi mentioned it only once this year. “Mister Speaker, as part of a deliberate and intentional economic diversification strategy, Botswana is on an over-drive mode to establish herself as the destination of choice for hosting Meetings, Incentives, Conferencing and Exhibitions (MICE),” said the president in his 2023 SONA.

Among other things, the Index states that Botswana was among the three most improved countries (2000-2020) in terms of productivity increases. “Mauritius, Botswana, and Nigeria have increased their productivity in the agriculture, industry, and services sectors,” states the ACET Index.

African Center for Economic Transformation (ACET) is a pan-African economic policy institute supporting Africa’s long-term growth through transformation. They also produce research, offer policy advice, and convene key stakeholders so that African countries are better positioned for smart, inclusive, and sustainable development.


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