*Cash crunch hits Botswana’s economy as GPOs collapse 75%
*Economists warn currency could tumble as cash dries up
Government spending cuts have dramatically slashed purchase orders, triggering a liquidity crisis and exposing the private sector’s overreliance on state contracts.
Botswana’s private sector is reeling as Government Purchase Orders (GPOs) plummetted from P1.6 billion in May to just P400 million by October 2025, in what economists warn could mark a turning point for the country’s economic transformation agenda.
The sharp decline in the government’s fiscal tightening to curb overspending has slowed cash circulation across the economy, leaving small and medium enterprises (SMEs) gasping for liquidity and battling to stay afloat.
Speaking at Bank Gaborone’s Insights & Impact Roundtable, held under the theme “Navigating Botswana’s Economic Shifts: Building Resilience Together,” Naledi Madala, Senior Policy Advisor to the Vice President, confirmed the drastic cuts, describing them as part of efforts to restore financial discipline and curb inefficiencies.
“We had to cut deep. The numbers were unsustainable, and for years inefficiencies went unchecked. Every thebe now counts,” Madala said.
For Botswana’s small businesses, the effects of the spending squeeze are immediate and painful. Entrepreneur and strategist Buca Matenge described how SMEs- many reliant on government contracts, are now struggling to survive amid delayed payments and shrinking demand.
“Payments that used to take 30 days now take months, if they come at all,” he said. “Businesses are collapsing because money isn’t circulating. We’ve built an economy too dependent on the government, and that dependence is now stifling us.”
Matenge called for faster payment systems, reduced red tape, and more flexible funding mechanisms to help SMEs weather the storm.
“Failure shouldn’t be a death sentence for entrepreneurs it should be part of learning and recovery,” he added.
Economist Dr. Keith Jefferies cautioned that while fiscal consolidation is necessary, it exposes the fragility of Botswana’s economic model, one still anchored on diamonds and state expenditure.
“This isn’t just a slowdown; it’s a structural adjustment,” he said. “The economy must learn to stand without the government propping it up.”
He further warned that the Pula’s current value is not sustainable, citing declining foreign exchange reserves and growing imbalances between inflows and outflows.
“Without decisive reform, the Pula will have to drop further,” Jefferies said, urging stronger policy alignment to safeguard reserves and long-term stability.
Bank Gaborone Head of Treasury, Reetsang Taudi, added that recent spikes in lending and deposit rates have increased pressure on businesses, urging the financial sector to explore non-traditional funding models and regional market linkages to ease liquidity challenges.
Looking ahead, Madala noted that the government is shifting focus to high-impact investments under the Botswana Economic Transformation Programme (BETP).
Already approved by Cabinet and before Parliament, the BETP will serve as the anchor strategy for NDP. The programme identifies 6,925 projects, including 186 investment-ready “pathfinder” projects , with 60 already under implementation, supported by legislative reforms to unlock private sector participation.
“Our approach is laser-focused on implementation,” Madala said. “We are intentional about creating a private sector–led economy and ensuring that our policies support that goal.”
As the roundtable concluded, participants agreed that Botswana’s transformation agenda hinges on striking a delicate balance maintaining fiscal discipline without suffocating private enterprise.
There was consensus that the path forward requires policy consistency,legislative reforms, and innovative financial solutions to sustain growth through turbulent times.
