The diamond industry is inextricably linked to other industries, both upstream and downstream, that together provide much of the government’s revenue. But these reserves are likely to decline in the near future.
Future economic growth, and by implication political stability, therefore depend on a reliable replacement for diamond revenues.
Arguably, the income from the diamond industry has not been optimally used to date. Despite a stable democracy and growing economy, not enough has been invested in human and physical capital to ensure the creation of alternative industries beyond diamonds.
A new SAIIA policy briefing considers Botswana’s options for strategic diversification of its economy. It argues that human and physical capital investments to support tourism – as a future economic anchor – will probably yield the highest, most sustainable returns in the long run. Interim options require a strategy to process iron ore for the domestic regional market using locally available coal.