A country that is supposed to be “the Switzerland of Africa” has non-Swiss unemployment poverty rates and is one of three SADC countries with the highest income and wealth inequality in the world. The Southern Africa Economic Outlook 2023 from the African Development Bank (AfDB) shows that far from being “the Switzerland of Africa”, Botswana faces economic challenges that render such description a joke without a punchline.
“By and large, high poverty and inequality remain endemic across the Southern Africa region. Madagascar and Zimbabwe have the highest poverty level within their income group. Poverty rate is hovering beyond 60 percent in South Africa and Botswana. Within their sub-group and within the region, Mauritius has the lowest rate of poverty incidence. South Africa, Botswana and Namibia figure among the countries most unequal in the world,” the AfDB report says.
The source for “beyond 60 percent” is the World Development Indicators, a World Bank-maintained website that contains internationally comparable statistics about global development and the fight against poverty. AfDB did something that the Botswana government doesn’t ever do: rather than use the international poverty rate of US$2.15 day – which yields 15.4 as the percentage of Batswana living in poverty, the Bank used “the relevant poverty threshold” for Botswana’s income group, which is upper middle income. That threshold is US$6.85 – which yields 63.5 as the percentage of Batswana living in poverty. For South Africa, the threshold yields 61.6 percent as the percentage of people living in poverty. AfDB says that per capita income growth for most countries in the Southern Africa region is short of the growth rate needed to reverse the increase in poverty induced by the pandemic and to put the region on track to meet the Sustainable Development Goal 1.
Everything being equal, employment is the vehicle that most use to get out of poverty but Botswana and South Africa don’t fare well in that regard.
“Sluggish growth performances have also weighed on employment. According to ILO statistics, South Africa had the highest rate of unemployment in the world with a rate of 28.8 percent, (in 2021) while Botswana also figured on the list of countries recording very high unemployment rate of 25.4 percent during the fourth quarter of 2022. In particular, unemployment among the youth remains the biggest problem in the region with countries such as South Africa having youth unemployment rate of about 63 percent in 2023.”
Higher food and energy prices combined with the weakening of global demand drove more people into poverty. For the most part, this adverse situation is a result of Russia’s invasion of Ukraine.
The situation bodes ill not just for President Mokgweetsi Masisi’s re-election chances but for national security as well. Persistent complaints about poverty and unemployment – especially among the youth – are the main reason why the ruling Botswana Democratic Party has lost practically all by-elections. The next general election is just 15 months away and the BDP will have to do something uncommonly big in terms of citizen (especially voter) economic empowerment in order to retain official power. The renegotiated diamond sales agreement with De Beers might be it but voters would want to see meaningful improvement in their personal lives for the agreement to matter to them in terms of making electoral choice. For the most obvious reasons, the opposition will, like the AfDB, prefer to use the “the relevant poverty threshold” for Botswana’s income group than the international one. In the past, the Bank has warned that Botswana’s income and wealth inequality poses a national security threat.
For its part, the World Inequality Report, a French think tank, has warned that “if top wealth holders were to grow on a permanent basis at a speed that is three to four times faster than average wealth in the world, then billionaires would ultimately come to own 100 percent of the world’s wealth.”