Botswana has valued good governance as much as diamonds
The country’s trajectory shows that natural endowments are neither destiny nor curse; governance determines the outcome.
Published on 18 September 2025 in
ISS Today
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The ‘resource curse’ or ‘paradox of plenty’ affects many resource-rich African countries. In many cases, natural resources fuel corruption, conflicts, economic stagnation and institutional weakness. Botswana stands out as a remarkable counter-example.
At independence in 1966, Botswana was one of the world’s poorest countries, with limited infrastructure, a weak health system, and a poorly educated population. Nevertheless, the country harnessed its diamond wealth to achieve upper-middle-income status, which it has maintained for nearly two decades.
This success stemmed from deliberate policy decisions, grounded in institutional reforms, transparent resource management, and long-term planning. Botswana’s experience shows that natural resources can drive broad-based economic development, but this is only possible with effective governance.
When diamonds were discovered in the late 1960s, Botswana faced risks similar to those that plague other African resource-rich countries: capture by political elites, misallocation of revenues and overdependence on volatile global markets. Instead of succumbing, Botswana established a governance framework that ensured diamond wealth would serve national priorities.
When diamonds were discovered, Botswana faced risks similar to other African resource-rich countries
The country has a solid history of fiscal stewardship designed with transparency at its core. Diamond revenues were channelled into sustainable development-oriented public investment through the ‘sustainable budgeting principle’, limiting off-book budget spending. Diamond mining became the economy’s backbone, contributing over a third of fiscal revenue, approximately a quarter of gross domestic product, and about 80% of exports.
Education became a cornerstone of development, with universal primary education and significant investments in secondary and tertiary training equipping Batswana for the modern economy. Health systems expanded rapidly, as diamond revenues financed hospitals, clinics and public health campaigns that established a healthier workforce. Infrastructure investment also accelerated, with roads, telecommunications and electricity networks linking communities and improving productivity.
By directing diamond wealth into these sectors, Botswana avoided the so-called white elephant projects that have weakened many resource-dependent African countries. Instead, it built human capital and productive infrastructure, multiplying the impact of its natural endowments.
The country also established a robust legal framework that safeguarded property rights and reassured investors. Democratic institutions, supported by parliamentary oversight, provided checks on executive authority, while an independent judiciary reinforced the rule of law.
Most importantly, successive National Development Plans ensured that diamond revenues were invested strategically, with discipline and predictability. This approach attracted transparent and development-oriented foreign investment and amplified its positive impact on the country’s growth and development.
Botswana built human capital and infrastructure, multiplying the impact of its natural endowments
However, Botswana’s development path was neither inevitable nor without challenges. Heavy reliance on diamond exports has exposed the economy to global price shocks. At the same time, poverty, measured at the US$6.85-per-day threshold for upper-middle-income countries, and persistent income inequality, remain significant concerns.
As the World Bank’s Naoko Kojo aptly argued in 2010, ‘diamonds are not forever’ – a reminder that the country’s revenues will decline as deposits deplete.
Botswana’s next challenge is to channel its remaining diamond wealth into diversifying the economy, fostering private-sector growth and safeguarding social cohesion. This ambition is anchored in Vision 2036, which aims to attain high-income status for the country by 2036, driven by sustainable diversification and inclusive growth.
Recent research by the African Futures and Innovation team at the Institute for Security Studies indicates that while diversification is essential for economic transformation, Botswana’s inclusive development still depends on good governance. Among all the scenarios analysed, the Governance scenario yields the most significant poverty reduction, lowering the rate to 41.9% by 2043. This is approximately 2.5 percentage points lower than the Current Path forecast.
Four key lessons are relevant for resource-rich African countries. First, authorities should strengthen governance systems before resource windfalls arrive. Legal frameworks, fiscal rules and parliamentary oversight should not be an afterthought once revenues are flowing. Botswana’s government recognised this early, investing in rule-based systems and resisting the temptations of short-term populism.
Second, revenues should be directed towards public development priorities rather than serving the interests of political elites. By prioritising education, health and infrastructure, Botswana laid the groundwork for broad-based and sustainable prosperity. This will benefit current citizens and future generations.
Third, openness sustains legitimacy. Independent courts, an active civil society and transparency in contracts and budgets are essential to guard against elite capture. By managing diamond wealth through the national budget instead of hidden accounts, Botswana’s government fostered public trust in how resources were used.
Independent courts and transparency in contracts and budgets are essential guards against elite capture
Finally, Botswana’s current challenge underscores the urgency for resource-dependent states to diversify their economies well before commodity decline kicks in. These countries must act now to invest in new sectors, foster private enterprise and prepare for a future where resources alone cannot sustain growth.
Botswana has demonstrated that diamonds, often symbols of luxury and inequality, can become engines of inclusive growth and development when managed wisely. The country’s trajectory shows that natural endowments are neither destiny nor curse; governance determines the outcome.
Africa’s next resource boom is already underway, from gas in Mozambique to critical minerals in the Democratic Republic of the Congo, Zimbabwe and Guinea. The lesson from Botswana’s development story is stark but hopeful: resource-rich states need transparency, strong institutional quality, prudent investment and political will.
If leaders apply these lessons with urgency, today’s windfalls can finance tomorrow’s prosperity. If not, the continent risks repeating a cycle of corruption and wasted wealth.
This article was first published in Africa Tomorrow, the ISS’s African Futures and Innovation programme blog.
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