Andre Klynsmith

Business Insights

Botswana Keeps Its Investment Grade - and a Warning Attached to Every Diamond

S&P Global Ratings affirmed Botswana's long- and short-term sovereign credit ratings at BBB-/A-3 in a research update dated 11 September, but held the outlook at negative, warning that continued weakness in global diamond demand could put further pressure on the country's fiscal and external position - with the general government deficit forecast to widen to 8.9% of GDP this year.

Business Insights

15 September 2026 • 4 min read

Botswana is the SADC economy most transport operators pass through rather than stop in. It also sits at the junction of the Trans-Kalahari and North-South corridors. A sovereign under fiscal strain is not an abstraction to a haulier - it is a road budget, a border post staffing decision and a levy schedule.

What S&P said

The agency kept Botswana at BBB-/A-3 with a negative outlook, and affirmed the Bank of Botswana's long-term issuer credit rating at BBB- on the same basis. Its central concern is concentration: the diamond sector has historically accounted for roughly 70% of Botswana's exports, one-third of government fiscal receipts and one-quarter of GDP. The prolonged downturn - driven by weaker Chinese demand, shifting US consumer preference and competition from lab-grown stones - has weighed on growth, exports and revenue at once.

The fiscal picture is the sharper end of it. S&P estimates the general government deficit narrowed to 6.2% of GDP in fiscal 2025, better than the 9.5% originally budgeted, helped by higher-than-expected diamond revenue and a substantial cut in development expenditure. It now forecasts the deficit widening to 8.9% of GDP in 2026 and staying elevated at 6.7% in 2027, before averaging 4.3% across 2028 and 2029. Net general government debt is projected to reach 34.2% of GDP by 2029, against a net asset position worth 6.3% of GDP as recently as 2023.

The currency mechanics deserve attention

S&P credited changes to the Bank of Botswana's exchange-rate policy parameters with encouraging market trading and stabilising official reserves. Under the crawling peg framework, the Bank increased the annual rate of crawl to 2.76% from 1.51% in 2025 and widened the trading bands from about 0.5% to 7.5%.

That is a technical change with a practical consequence for cross-border operators. A faster crawl and a wider band mean the pula can move further against the rand within a quoting period than it could a year ago. Rates quoted in pula for work costed in rand - or the reverse - now carry visibly more currency risk than the old parameters implied, particularly on contracts running beyond a month.

Growth is returning, but from a low base

After contracting 2.8% in 2024 and 0.7% in 2025, S&P forecasts real GDP growth of 3.0% in 2026 and an average of 3.4% between 2027 and 2029. First-quarter 2026 GDP expanded 3.5% year-on-year, supported by diamond mining and trading, copper exports and strong SACU receipts. Debswana has lifted its 2026 production target to 18 million carats from 15 million, with output expected to reach around 20 million carats a year between 2027 and 2029.

Two lines in that paragraph matter more to freight than the diamond figure. Copper exports now appear in S&P's growth attribution for Botswana, and the Botswana Economic Transformation Programme is targeting agribusiness, healthcare, renewable energy and technology alongside a regional services hub ambition - though the agency expects the early impact on growth and revenue to be modest. Both point the same direction: a slow shift in what crosses Botswana's borders, away from a single high-value, low-volume commodity toward freight that actually fills trucks.

About the Author
	Andre Klynsmith Entrepreneur & Technology Enthusiast Andre's expertise spans technology, blockchain, transport, and logistics - with a passion for innovation and driving positive change across industries. info@laaimylorrie.com | laaimylorrie.com