Wednesday, May 29, 2024

High unemployment in Botswana despite economic growth

Although Botswana has successfully maintained a robust macro-economic environment, lack of connection between economic growth and employment creation remains a concern. The positive macro-economic environment, which earned Botswana favourable credit ratings from international institutions, has failed to reflect on employment creation.

This is according to the 2015 Botswana Human Development Report (BHDR) draft report by researchers from the University of Botswana with the support of the UNDP Country Office. The report ‘The Role of Development Partners in Upper Middle Income Countries ÔÇô the Case of Botswana’ largely attributes the discrepancy to the highly capital intensive mining industry.

“Diamond production in Botswana is highly capital intensive and therefore generates less employment, contributing less than five percent of total employment,” the report says. “Modest employment of about 3,000 have however been created from current efforts to further processing of diamonds in the country in terms of cutting and polishing. This however is still not adequate to deal with the current employment challenges especially among the youth.”

The report emphasises the need to intensify efforts towards economic diversification away from mining, particularly diamonds. The mining industry currently contributes the largest share of 20 percent to Botswana’s GDP. In contrast the agricultural sector, which is among the lowest contributors to the country’s GDP at less than five percent, is the biggest employer with a 30 percent contribution.

“However, this sector is dominated by subsistence farming and pays the lowest in terms of average wages. The sector also has problems of low productivity,” read the report.

It also highlighted the need to shift employment from the low productivity low pay subsistence agriculture to other high productivity high pay sectors. With the inadequate link between economic growth and employment growth, says the report, the result has been a high unemployment rate that official statistics have indicated hovers around 20 percent. According to the report, unemployment in Botswana is higher than most comparable countries that are also classified as upper middle class incomes.

“It is however lower than some comparable countries in the region, in particular South Africa and Namibia which recorded 24 percent and 27 percent unemployment rates in the current period respectively. Botswana’s unemployment is however at quite a level that is worrisome for policy makers and requires urgent attention,” read the report.

With a population of roughly two million people, the report says, 20 percent represents 180, 000 people which reflects a big challenge for job creation.

“Added to these are those discouraged who may have stopped looking for a job due to unavailability of new jobs and also those who are underemployed who were estimated at 5 percent in the 2005/06 Labour Force Survey.”

Employment creation to absorb youth and also make the youth employable from an appropriate training are key challenges to the current Botswana economy, the report says, adding that this is an area that requires efforts in many forms from ‘development partners’. “Despite the country being classified as upper middle income, this challenge seems to be one that is elusive in terms of solutions and clearly requires appropriate policies and programmes that can be developed by government and other stakeholders with the assistance of development partners.”


Read this week's paper