Investing in Human Capital in Botswana

Botswana has sprinted to become an upper-middle income (UMIC) economy largely thanks to strong institutions and mineral resource revenue. Living conditions have steadily improved since independence as the wealth from diamond discoveries has helped lay the foundations for growth and development together with investments in infrastructure and human development and the building of strong government institutions. Social public service delivery has expanded to provide large parts of the vast country with clean water, electricity, and sanitation; and basic education and health outcomes have steadily improved thereby strengthening the wellbeing of most Botswana. But this extractives-driven growth model is reaching its limits to further sustain poverty reduction and inclusive growth. The average economic growth has been declining since 2010 and has further decelerated and turned more volatile since 2016. Poverty and inequality rates also remain inordinately high for a country of its income level. Botswana’s projected extreme poverty rate for 2019 (13.5 percent) is more than four times higher than comparators of similar Gross Domestic Product (GDP) levels and is further expected to stagnate. Inequality is amongst the highest in the world. With decelerating growth, an undiversified economy, low human capital outcomes, and higher-than-expected poverty, Botswana’s high-income country (HIC) goal appears distant. The government has demonstrated a strong commitment to human capital development with high levels of investments in education, health and social protection Botswana spends significant government resources as a share of GDP on health (4.8 percent), education (7.1 percent) and social protection (2.6 percent) compared to many of its UMIC neighbors in the region that also have high levels of poverty, and inequality and high burdens of disease. Human Development is also centrally placed in the most recent National Development Plan (number 11, 2017-2023).