Botswana was one of the poorest countries when she attained her political independence in 1966 with a per capita income of about P60 (equivalent then to roughly US$80). The poverty situation was accentuated by several years of drought, which coincided, with the achievement of independence. One third of the national cattle herd died, while one fifth of the population received famine relief from the International community.
Gross Domestic Product (GDP) in current prices was estimated at P36.9 million in the 1966/67 fiscal year. During the same year, the total government budget (both recurrent and development) stood at P17.9 million and Government relied heavily on the British grants-in-aid to balance both budgets. However, self-sufficiency in the recurrent budget was achieved during the 1972/73 fiscal year.
By the beginning of the 1980s, diamonds had well overtaken beef as the country’s leading foreign exchange earner and in 1982, diamond exports accounted for 40% of total exports and rose rapidly thereafter to reach approximately 80% of total foreign exchange earnings by 1989. Furthermore, Botswana has been able to diversify her trading partners. In 1974, about 40% of her exports were to South Africa while the remaining percentage went to Europe, the USA and other parts of the world.
Diamonds continued to dominate the exports trade even in the 1990s. However, following the establishment of several assembly plants in the country, exports of vehicles surpassed copper/nickel and beef in 1994 to become the second largest export commodity after diamonds. This has, however, been reversed by the closure of the Hyundai Motor Vehicle Assembly Plant in 2000.
By the year 1999/2000, real GDP in constant 1993/94 prices, is estimated to have increased to P15.4 billion, representing a growth rate of 7.7% in 1999/2000 compared to 4.1% in 1998/99. This growth was due mainly to the significant increase in mining sector output, following the expansion of the Orapa diamond mine. The mining sector GDP grew by 11.9% in 1999/2000 compared to a decline of 2.8% in the previous year. This increased the share of mining in total GDP by 1.3 percentage points from 32.1% to 33.4% in 1999/2000. At the same time, growth in non-mining GDP declined from 7.8% in 1998/99 to 5.7% in 1999/2000. This was due mainly to the relatively sluggish performance of the manufacturing, construction and transport sectors as a result of problems confronting some textile companies, completion of major construction projects, including the Orapa expansion project, and problems affecting rail transport.
During 1999, exports rose sharply, to reach P12.227 billion, representing a 40.7% increase over 1998, as a result of a rise in sales of diamonds, copper/nickel, and hides and skins. The growth in exports would have been higher if it were not for the reduction in exports of vehicles and spare parts, following the closure of the Hyundai motor vehicle manufacturing plant. The shares of diamonds and in total exports rose to 79.4% in 1999 from 69.5% in 1998 while that of copper/nickel declined slightly from 5.0% to 4.6% during the same period. Correspondingly, the share of other export categories declined, with a substantial fall in vehicle and spare parts from 11.1% in 1998 to only 5.5% in 1999.
The diversification in exports markets has continued over the years. There has been a shift in the relative importance of export markets away from Other Europe and the Common Customs Area (CCA) to United Kingdom (UK) and Zimbabwe. The share of Other Europe export market fell, from 19.1% in 1999 to 14.2% in 2000, while that of the CCA declined from 10.7% to 6.2%. The decline in the share of the CCA export market is a reflection of the substantial fall in motor vehicle exports, which were mostly destined to South Africa. United Kingdom and Zimbabwe increased their export market shares from 65.0% and 2.6%, to 73.1% and 4.5%, respectively. US, the rest of Africa and the world recorded smaller reductions in their export market shares.
The performance of the economy has enabled Government to increase resources for its development budget. During 1999/2000, the total development budget was P3.450 billion. The bulk of the budget went to Social Services which include Education, Health, Food and Social Welfare Programmes and Housing. The second largest share went to Economic Services. This category comprises sectors such as Agriculture, Forestry and Fishing, Electricity and Water Supply, Roads and Others. This is aimed at achieving the objective of improving the national road network and access to schools and health facilities so as to improve the standard of living of Batswana.
Over the past 35 years, the economy has experienced one of the most rapid economic growth in the region. This has been translated into development in the form of infrastructure as well as improvement in the standard of living of Batswana. This resulted in Botswana graduating from a low income country to a middle income country with a per capita income of P9 359. Furthermore, Botswana has been awarded the highest sovereign ratings in Africa by both Standard and Poor’s (S&) and Moody’s Investors Service (Moody’s). S&P assigned Botswana a rating of "A" for long-term debt and Prime-1 (P1) for short term debt. These ratings reflect Botswana’s long record of political and social stability, rapid economic growth and prudent economic management. In this regard, as an investment destination, Botswana is one of the best-rated countries in the developing world.
For detailed economic indicators, please refer to Central Statistics Office Home Page