Since independence, Botswana has had one of the fastest growth rates in per capita income in the world. Botswana has transformed itself from one of the poorest countries in the world to a middle-income country. By one estimate, it has the fourth highest gross national income at purchasing power parity in Africa, giving it a standard of living around that of Mexico and Turkey.
According to the International Monetary Fund, economic growth averaged over 9% per year from 1966 to 1999. Botswana has a high level of economic freedom compared to other African countries. The government has maintained a sound fiscal policy, despite consecutive budget deficits in 2002 and 2003, and a negligible level of foreign debt. It earned the highest sovereign credit rating in Africa and has stockpiled foreign exchange reserves (over $7 billion in 2005/2006) amounting to almost two and a half years of current imports.
Debswana, the largest diamond mining company operating in Botswana, is 50% owned by the government. The mineral industry provides about 40% of all government revenues. In 2007, significant quantities of uranium were discovered, and mining was projected to begin by 2010. Several international mining corporations have established regional headquarters in Botswana, and prospected for diamonds, gold, uranium, copper, and even oil, many coming back with positive results. Government announced in early 2009 that they would try and shift their economic dependence on diamonds, over serious concern that diamonds are predicted to dry out in Botswana over the next twenty years.
An array of financial institutions populates the country’s financial system, with pension funds and commercial banks being the two most important segments by asset size. Banks remain profitable, well-capitalized, and liquid, as a result of growing national resources and high interest rates.
Botswana’s competitive banking system is one of Africa’s most advanced