The possible increase in the forecast budget deficit to P11.4 billion, from the original projection of P8.7 billion, as well as the likelihood of the deepest economic contraction since COVID-19, make 2025 a difficult year for Batswana.
Whilst the non-mining sector has proved largely resilient, somewhat ameliorating the prolonged diamond slump, third quarter growth figures showed challenges in sectors such as agriculture and manufacturing. Both are important engines of employment and self-sufficiency.
In the haze of gloom, there are however some potential bright spots ahead for the economy.
Bitter budget
One of these bright spots is not the 2025–2026 budget, however. Finance minister, Ndaba Gaolathe, and his technocrats have the unenviable task of developing a budget that accommodates the new administration’s lofty ambitions and promises at a time when the fiscal space is tighter than ever. Within a few weeks, Batswana who voted in overwhelming numbers for a new government, will want to see how their aspirations have been represented in the Boko administration’s inaugural budget. However, with the deficit from the current financial year now expected to widen by 31% and with the prolonged diamond downturn yet to ease, Gaolathe is in a difficult spot. To prepare the nation, the Finance minister has on more than one occasion, publicly shared how strained the budget is and how there will be a need for difficult spending decisions going forward. Gaolathe, who is also the Vice President, may take a cue from the words of one of his predecessors, Festus Mogae: “Straight talk breaks no friendships.”
Sparkling dealsDe Beers will once again dominate the headlines this year, for several good reasons beyond being the country’s single most important economic partner.
Firstly, De Beers is expected to reach final terms with government on a new agreement to govern the production and sale of diamonds from the country’s mines. In their engagements after the historic October elections, De Beers representatives and President Duma Boko, vowed to finalise the long-drawn out negotiations. In fact, after the first meeting between the two sides on November 14, 2024, De Beers CEO, Al Cook, said a final deal was “days and weeks, not months and years” away. Besides the deal, however, all eyes will also be on whether and how Anglo American disposes of its 85% interest in De Beers. Anglo American has said it expects to finalise its exit by the end of this year and options include a sale to an interested party, or floating of the shares on an exchange for various investors.
Broken wings
Many eyes this year will also be on exactly what government intends to do about revitalising the national airline, Air Botswana. Addressing a Budget Pitso meeting late last year, Vice President Ndaba Gaolathe, said high level discussions were being held over what to do with Air Botswana and an announcement would be made before Christmas. Whilst this did not happen, Batswana eagerly await the government’s direction on Air Botswana, a troubled parastatal that has rarely broken even over the years. The national airline has struggled with an ageing fleet, high maintenance costs, equipment failure, route redundancy, and pressures from competition. However, last year, it took delivery of new aircraft and it is expected that the new government will redouble the long-running efforts to privatise the airline, with the refleeting having improved its allure.
Green dreamsIndustrial hemp is poised to become a major topic in 2025, following its highlighting in President Duma Boko’s 2024 State of the Nation Address. Known for its diverse applications in textiles, medicine, biodegradable plastics, and construction materials, hemp is gaining attention for its potential to drive economic diversification and environmental sustainability. Although Botswana’s legal framework currently focuses on medicinal cannabis, the government’s acknowledgment of hemp’s potential marks a critical step toward establishing supportive policies. As global demand for hemp-based products grows, Botswana is positioning itself to become a regional leader in this emerging industry, making hemp one of the most anticipated projects to watch in 2025. The Local Enterprise Authority (LEA) has already announced plans to establish a hemp production incubator, aiming to equip entrepreneurs with the tools needed to engage in the crop’s value chain. However, all eyes are on when the new government will first move to amend the laws around cannabis and whether funding will be availed for the initiative, given the tight fiscal space.
Minting metalCanadian firm, Giyani Metals, expects to soon produce its first high-purity manganese sulfate monohydrate from a demo plant located in South Africa, but using manganese mined in Botswana. According to officials, the success of the Johannesburg demo plant is crucial as it will identify risks and issues before scaling up to the major facility in Botswana. Last September, Giyani was awarded a 15-year mining licence over the Kgwakgwe Hill manganese project on the outskirts of Kanye. The firm intends to produce high purity manganese sulphate monohydrate, a precursor material used by lithium-ion battery manufacturers for the electric vehicle market. Besides Kgwakgwe Hill (K-Hill) in Kanye, Giyani is also reviewing resources in Otse and Lobatse. All three sites were previously mined in the 1960s and early 1970s using the rudimentary methods and technology available at that time. In Kanye, Giyani estimates that its mining licence covers an area with a net present value of $984 million, as manganese prices and the mineral’s popularity have soared due to its use in the electric vehicle battery industry.
