“Don’t be like Zambia”, IMF Warns
Botswana risks falling into the same economic traps that crippled Zambia and Nigeria if it fails to reduce its dependence on diamonds, the International Monetary Fund (IMF) has warned.
Speaking at the Bank of Botswana’s 50th Anniversary Symposium in Gaborone, Abebe Aemro Selassie, Director of the IMF’s African Department, said history provides “sobering reminders” of how over-reliance on a single commodity can lead to economic collapse.
“The key lesson is simple but critical: commodity dependence without adequate buffers is dangerous,” Selassie told delegates. “When prices fall, the absence of fiscal and external cushions can turn a terms-of-trade shock into a full-blown crisis.”
He cited Zambia’s copper-driven crisis in the 2010s, when a plunge in global prices left the country saddled with unsustainable debt and forced into an IMF adjustment program.
Nigeria, long dependent on oil, has endured repeated fiscal and currency crises when oil prices crashed. Venezuela, Selassie said, offers “the starkest cautionary tale,” where collapsing oil revenues and governance failures unleashed hyperinflation and economic collapse.
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In Africa, IMF digs your grave and observes how you struggle to come out of those graves, when they see you succeeding, they will give you encouraging statistics of your progress and then tell you that you now qualify for another grave which they will dig for you, as long as you do not get away from them, this cycle of grave digging and you struggling to come out will continue from generation to generation