Botswana has benefited from a stable social structure and a wealth of natural mineral resources; it has an unbroken record of parliamentary democracy and one of Africa’s highest sustained records of economic growth since independence. However, the economy is dependent on mining and agriculture, and has had to cope with the vagaries of the diamond market and frequent droughts. During 1999–2003, only the year 2000 was free of drought. It is also strongly influenced by economic trends in South Africa, the economic giant of the region. Moreover, the country has one of the world’s highest HIV infection rates, which has an effect on productivity.
Minerals have provided the financial base for welfare projects and the development of manufacturing. Since the 1990s the government has encouraged foreign investment in export-oriented industries, especially in manufacturing, and notably car assembly (which started in 1994, boosted exports for the rest of the decade and then ceased production in 2000 when the South African investor company went into liquidation); textiles; and diamond jewellery (the first jewellery factory was established with Indian investment in 2010).
The economy generally grew well in the 2000s, but in the face of the global downturn, world demand for diamonds and eco-tourism slumped, and the Botswana economy moved sharply into recession, shrinking by 7.8 per cent in 2009, but recovering very strongly in 2010 with rises in world commodity prices, recording growth of 8.6 per cent in 2010 and 6.2 per cent in 2011, and continuing at more than four per cent p.a. in 2012–15.
Mining started near Orapa in 1967 only a year after independence. The country is among the world’s largest producers of diamonds. Minerals – notably diamonds, copper and nickel – generate most of the government’s revenue.