The International Monetary Fund has given Botswana a resounding thumbs-up in its latest assessment of the country’s economyÔÇöbut warns that growth may be slowing.
In an unusually upbeat assessment of the country’s economic progress, the organization commended the country’s authorities for their “good governance and prudent management of natural resources.”
In the years since independence in 1966, Botswana has consistently attracted international acclaim for successfully avoiding the “resource curse”, a trap into which some other resource-rich African economies have fallen. Botswana achieved this feat by effectively channeling profits from the lucrative diamond-mining sector into public healthcare, education and large-scale national infrastructure projects.
However, the nation’s dependence on diamonds has led to a lack of export diversification, which leaves “Botswana’s economy vulnerable to fluctuations in the international demand for diamonds,” warns the IMF report.
Concern over the country’s heavy reliance on a single export sector has grown in recent years as the Botswana Meat Commission, the organization solely responsible for the slaughter and marketing of all beef exports from Botswana, became unable to export beef to the European Union because of foot-and-mouth disease in the country.
Unease grew in January this year, when a long-anticipated ban on commercial hunting was announced by President Ian Khama. Opponents of the ban say it harms the country’s lucrative tourism industry, which currently accounts for 11% of GDP.
The IMF projects that Botswana’s real GDP growth will slow to 4.4% in 2014 after achieving a “faster-than-expected” 6% increase last year. The organization says Botswana’s growth rate is easing due to a “slowdown in diamond recovery and continued problems in the electricity and water supply, which has affected the non-mineral sector.