Effects of COVID-19 on Botswana’s Economy

effect of covid 19 on botswana's economy

Botswana’s economy relies on three core sectors – each of which is expected to be hard hit by the effects of the COVID-19 pandemic.

Analysts predict a sharp decline in export earnings, a ballooning current account deficit and foreign investment slowing to a trickle.

Travel restrictions hit sectors hard

The knock-on effects of international travel restrictions – and the global slump in demand – are driving business activity in the tourism and hospitality sector and diamond industry to all-time lows.

Micro, small and medium-sized enterprises (MSMEs) are reeling under the pressure of an extended lockdown. They’re ill-equipped to migrate to the online platform.

Expected shrinkage of Botswana’s economy

The slump in demand for diamonds from all major export markets – together with domestic and international tourism arrivals drying up – have scuppered any hope of economic growth this year.

According to a United Nations COVID-19 impact report, the Botswana economy is expected to shrink by 13.1% this year, before rallying to 3.9% in 2021.

The World Bank projects a 1.2% contraction in economic activity this year, followed by more than 4% growth in 2021.

What does this mean for MSMEs?

The impact of COVID-19 on MSMEs, in both the formal and informal economies, has been dire.

Business activity has been curtailed, or stopped altogether, by the lockdown.

The majority of businesses that have closed temporarily are likely to remain that way.

2020 losses by industry in Botswana

What industries are expected to take the biggest hit in the post-COVID-19 slump?

Contraction in the mining sector – which accounts for 80% of export earnings – is pegged at 33.6%.

The travel, hotel and restaurant sector is close behind at 32.2%.

Manufacturing is projected to decline by 10%.

The personal services and the transport and communication sectors are predicted to slow by 4.8% and 4.1% respectively.

Botswana’s current unemployment rate

Botswana, which has a 17.6% unemployment rate, is already in crisis mode.

Break down the statistics according to demographics and it’s the youth that are the hardest hit.

More than a quarter of all young Batswana (25.1%) are unemployed.

Now, with COVID-19 driving down economic activity and forcing business closures, significant job losses are projected across the economy.

Are you personally affected and in need of funds?

The devastating effects of COVID-19 on Botswana’s economy will impact hundreds of thousands of people and their jobs.

Losing a job is a terrifying prospect, especially if you’re the main bread winner.

If your income has dried up and you have a family to feed plus bills to pay, how do you meet your financial obligations?

At lamna Botswana, we offer fast, discreet loans against the value of a wide range of assets, from luxury watches and jewellery to vehicles or valuable works of art.

For more information about using an asset to secure a short-term loan, contact us on 71 388 088 or simply complete and submit our online application form.

Complete our Online Application Form