Botswana faces economic recovery and calls for tax reform

Botswana is facing economic shifts as businesses anticipate a modest recovery in 2026. According to the Bank of Botswana’s June 2026 Quarterly Business Expectations Survey, firms expect overall output to expand by 2.1% in 2026, following a 0.7% contraction in 2025. While the long-term outlook through June 2027 appears more positive, near-term sentiment remains subdued due to concerns regarding weak government spending, high financing costs, and unfavorable exchange rates.

Simultaneously, the African Development Bank (AfDB) has advised Botswana to implement tax reforms to combat declining diamond revenues and rising expenditure pressures. The AfDB’s 2026 Country Focus Report notes that total domestic fiscal revenue fell from US$6.2 billion in 2021 to US$5.0 billion, with the revenue-to-GDP ratio dropping from 31.4% to 24.9%.

To stabilize financing, the AfDB recommends diversifying domestic revenue through improved tax administration, digital systems, and broader tax bases. Key suggestions include strengthening the Botswana Unified Revenue Service (BURS), implementing interoperable digital platforms, and utilizing real-time VAT reporting to increase collections without necessarily raising tax rates.