Africa-Press – Botswana. The Ministry of Finance has warned that the current slump in the diamond sector is likely to exacerbate unemployment.
A continued slump in diamond revenues could exacerbate joblessness across the country, the Ministry of Finance (MoF) has warned.
In its latest economic brief, the MoF notes that unemployment trends closely mirror the country’s economic performance, echoing the principles of Okun’s Law that link unemployment with economic output.
The report outlines a troubling trajectory: in 2020, unemployment surged to 23.3% as economic growth plunged by -8.7% due to the devastating impact of the COVID-19 pandemic.
Deceleration in economic activity
Although 2021 saw a rebound in growth by 11.9%, unemployment continued to rise, reaching 25.8%, driven largely by base effects rather than sustained job creation.
From 2022 onwards, the pace of unemployment increase slowed but took a sharp turn in 2024, with the jobless rate climbing to 27.9%.
MoF attributes this rise to a deceleration in economic activity and the failure of growth to translate into adequate employment opportunities.
Capital intensive
A critical factor underlying these trends is Botswana’s heavy reliance on the mining sector, particularly diamonds, which is capital intensive and generates limited direct employment.
The Ministry of Finance notes that this dependence constrains the economy’s capacity to absorb a growing labour force.
“The persistent increase in unemployment despite periods of economic growth highlights structural challenges,” it states. “Growth driven by capital-intensive sectors like mining does not sufficiently create jobs for the population.”
Looking ahead, MoF warns that the ongoing slump in diamond revenues, a key pillar of Botswana’s economy, poses a serious risk to job creation and calls for urgent and targeted interventions.
Broad-based growth
“There is an urgent need to prioritise strategies aimed at boosting growth in the non-mining sectors, including manufacturing, services, and agriculture, to stimulate sustainable employment and inclusive economic development,” says the report.
It is understood that experts and policymakers alike are now pushing for a comprehensive review of current economic policies to focus on broad-based growth and job creation.
“There is need to accelerate the diversification drive and prioritise strategies aimed at improving growth in the non-mining sector in order to stimulate growth and employment,” says the report.
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