Good morning, let’s get into it!
The 2026/2027 national budget of Botswana, presented under the evocative theme "A New Era of Economic Transformation and Fiscal Prudence," represents a definitive departure from the historical reliance on mineral wealth and government-led expansion. For decades, the Botswana economy has been synonymous with natural diamonds, a sector that provided the primary engine for social development and infrastructure. However, the 2026/2027 budget, delivered by the Vice President and Minister of Finance, Ndaba Gaolathe, acknowledges a "new reality" in which the structural integrity of the natural diamond market is under sustained pressure from lab-grown alternatives and a subdued global economic climate. Consequently, the government has inaugurated the implementation of the Twelfth National Development Plan (NDP 12) and the Botswana Economic Transformation Programme (BETP), frameworks designed to transition the nation into a high-income, digitally enabled, and export-driven economy.
This transition is not merely an ideological shift but a fiscal necessity. The domestic economy experienced a contraction of 2.8% in 2024 and is projected to decline by a further 0.4% in 2025. While a rebound to 3.1% growth is anticipated for 2026, the underlying fiscal buffers have been eroded, leading to seven consecutive years of budget deficits. The 2026/2027 budget estimates a deficit of P26.35 billion, roughly 8.9% of GDP, underscoring the urgency of diversifying the revenue base. In this context, tourism has been elevated from a secondary contributor to a primary pillar of the transformation agenda. The BETP recognizes that while Botswana possesses a comparative advantage in its natural resources, the sector’s current contribution to the Gross Domestic Product—estimated at 5.1% in 2023—is insufficient to carry the burden of the national economy in the absence of diamond revenue.
The government's commitment to "pouring billions" into the sector is reflected in the cumulative investment targets of the BETP, which seeks to mobilize approximately BWP 514 billion across high-impact sectors by 2036. For the 2026/2027 period, this involves a multi-pronged approach: the modernization of critical infrastructure, the implementation of aggressive marketing strategies to tap into alternative source markets, and a overhaul of the tax framework to retain more value within the domestic economy.
Macro-Fiscal Foundations and Ministerial Allocations
The efficacy of the tourism pivot depends heavily on the government’s ability to manage its constrained fiscal space while prioritizing developmental expenditure. The 2026/2027 budget projects total revenue of P77.22 billion, a modest 2% increase from the previous year, driven largely by Southern African Customs Union (SACU) receipts and a revitalized non-mineral income tax regime.
Revenue Component | 2026/2027 Estimate (BWP) |
SACU Receipts | 26.79 Billion |
Non-Mineral Income Tax | 19.76 Billion |
Value Added Tax (VAT) | 15.10 Billion |
Mineral Revenue | 12.21 Billion |
Other Revenues & Grants | 3.36 Billion |
Total Revenue | 77.22 Billion |
Despite the decline in mineral revenue, the development budget for 2026/2027 is set at P23.38 billion. While this represents a 1.6% decrease from the 2025/2026 allocation, the strategic focus has shifted toward projects that enable private sector growth. The Ministry of Transport and Infrastructure and the Ministry for State President—under which many tourism-enabling security and logistics initiatives fall—receive significant portions of both the recurrent and development budgets.
The Ministry of Minerals and Energy receives the largest share of development funds (22.4%), which is critical for the hospitality sector’s stability, as the sector requires a resilient national grid and stable energy supply to maintain luxury lodge operations. Furthermore, the Ministry of Transport and Infrastructure has been allocated P3.86 billion (16.5% of the development budget) specifically to support the transformation of Botswana into a regional transport and logistics hub, a prerequisite for increasing international tourist arrivals.
The Aviation Infrastructure Engine: Maun and Kasane as Strategic Hubs
The primary constraint to Botswana’s tourism growth has historically been destination accessibility. The government has identified infrastructure deficiencies—including inadequate road networks, rail, and world-class airports—as significant barriers to private initiative. To address this, the 2025/2026 and 2026/2027 development cycles have prioritized aviation modernization as a "strategic enabler" of the tourism sector.
A total of P351 million was allocated for aviation projects in the 2025/2026 budget to fund airport maintenance, security system upgrades, and terminal expansion. This investment continues into the 2026/2027 period, with a focus on the modernization of Maun and Kasane airports, which serve as the primary gateways to the Okavango Delta and the Chobe National Park. The goal is to sustain Botswana’s high-value, low-volume tourism model by ensuring that luxury travelers can access remote wildlife destinations through reliable and efficient air links.
Aviation Project | Purpose and Outcome | Beneficiaries |
Maun Airport Development | Terminal expansion and ICT upgrades for passenger handling. | Safari operators, international airlines (Ethiopian, Fly Namibia). |
Kasane Airport Modernization | Technical upgrades to meet rising demand for Chobe/Kazungula. | Cross-border tourism, luxury lodge owners. |
Air Botswana Cargo Expansion | Unlock value for high-growth sectors and high-value manufacturing. | Hospitality supply chains, exporters. |
Airspace Surveillance | Improved safety systems for international direct routes. | Global travelers, private air services. |
Airport PPP Frameworks | Leveraging private capital to reduce government fiscal burden. | Infrastructure investors, aviation service providers. |
The ripple effects of these upgrades are significant. Enhanced air connectivity directly supports the "visitor exports" component of the tourism sector. In 2023, Botswana recorded 1.18 million visitors, and with the new international flight routes from Ethiopian Airlines and Fly Namibia, the government targets even higher arrival numbers by 2033. For listed companies, these infrastructure developments reduce the "friction of travel," allowing guests to bypass Gaborone and fly directly to tourism hotspots, thereby increasing the effective time spent at lodges and hotels.
Corporate Analysis: Chobe Holdings Limited (BSE: CHOBE)
Chobe Holdings Limited is the preeminent listed entity in Botswana’s tourism sector, operating a sophisticated portfolio of luxury safari lodges and travel services through its subsidiaries. As the government moves to "pour billions" into infrastructure and site management, Chobe Holdings is uniquely positioned to capture the resulting increase in high-end demand.
Revenue Dynamics and Profitability Pressures
In the 2025 financial year, Chobe Holdings reported total revenue of P638.76 million, a substantial 17.6% increase from the P543.14 million recorded in 2024. This growth was fueled by the robust recovery of international travel and the high-end eco-tourism segment. However, the group’s profitability encountered a modest squeeze. Operating profit declined from P204.9 million in 2024 to P197.6 million in 2025, while net profit for the year fell to P138.32 million from P148.12 million the previous year.
The decline in margins was primarily driven by rising operational costs, including groupwide salary rationalizations to maintain competitiveness and inflationary pressures within the supply chain. Furthermore, the company reported reduced foreign exchange gains and higher depreciation and amortization charges following the reconstruction of its flagship properties, Savute Safari Lodge and Kanana Camp.
Chobe Holdings Financial Data | 2024 (P'000) | 2025 (P'000) | % Change |
Revenue | 543,135 | 638,760 | +17.6% |
Operating Profit | 204,900 | 197,600 | -3.5% |
Profit for the Year | 148,120 | 138,322 | -6.6% |
Value Created | 386,496 | 418,949 | +8.4% |
Dividends Paid | 53,664 | 71,552 | +33.3% |
Despite the short-term profit dip, the company continues to create significant value for its stakeholders. In 2025, 29% of the value distributed went to employees in the form of salaries and benefits, while 28% was remitted to the government through taxation, royalties, and lease rentals. The group’s policy to maintain a dividend at least twice covered by attributable earnings signals confidence in its long-term cash flow generation capacity.
Operational Enablers: Safari Air and Aviation Spend
Chobe Holdings operates an in-house air service provider, Safari Air, which is essential for transporting guests between its remote camps. The 2026/2027 budget’s focus on airport maintenance and the upgrading of Civil Aviation Authority of Botswana (CAAB) ICT equipment will directly benefit Safari Air by improving flight safety and operational efficiency. In 2025, Safari Air’s profitability was hampered by international supply chain challenges that constrained aircraft availability. The government’s move to modernize aviation infrastructure and explore airport PPPs could mitigate these operational bottlenecks by fostering a more resilient aviation ecosystem within the country.
Geographic Diversification: The Zambia Expansion
A key pillar of Chobe’s strategy is regional expansion, which aligns with the government’s goal of creating a "diversified, export-led economy". In June 2024, Chobe incorporated a company in Zambia to operate King Lewanika Lodge in Liuwa Plain National Park. The lodge commenced operations in April 2025. This move reduces the group’s concentration risk within Botswana and positions it to benefit from the growing "KAZA" (Kavango-Zambezi Transfrontier Conservation Area) tourism circuit. The 2026/2027 budget’s emphasis on regional network enhancement and Bilateral Air Services Agreements (BASAs) will facilitate smoother cross-border guest transfers, enhancing the viability of such multi-destination regional products.
Corporate Analysis: Cresta Marakanelo Limited (BSE: CRESTA)
In contrast to the safari-heavy portfolio of Chobe Holdings, Cresta Marakanelo Limited operates a hospitality model concentrated in business and urban hotels, which account for 77% of its room inventory. This segment is more susceptible to fluctuations in the domestic economy, particularly the mining sector.
The Impact of the Diamond Downturn
The prolonged downturn in the diamond market has had a palpable impact on Cresta's performance. The company’s newly launched four-star hotel in Jwaneng, opened in partnership with the Debswana Pension Fund, has suffered from reduced occupancy as Debswana implemented cash-conservation measures. Reduced travel by the diamond miner directly translates to lower room nights and conference revenue for Cresta Jwaneng.
The financial results for the year ended 31 December 2024 reflect these headwinds. Revenue declined from P400.2 million in 2023 to P384.7 million in 2024, while net profit after tax plummeted to P2.4 million from P26.9 million the previous year. The "high operating leverage" of the industry means that fixed costs like salaries and debt servicing remained high even as revenue sources were under pressure.
Cresta Marakanelo Financial Health | 2023 (P'000) | 2024 (P'000) | % Change |
Revenue | 400,204 | 384,694 | -4% |
Operating Profit | 58,359 | 31,224 | -46% |
EBITDA | 106,800 | 90,200 | -15% |
Net Profit After Tax | 26,936 | 2,383 | -91% |
Total Shareholder Equity | 168,948 | 163,329 | -3% |
Strategic Reorientation and MICE Opportunities
Cresta is responding to these challenges by pivoting its cost structure and pursuing market diversification. The 2026/2027 budget’s emphasis on "Product Strengthening and Diversification" and the development of a "Multi-Use Event Centre and Hotel" in Kasane offers Cresta a lifeline. By moving away from a singular reliance on mining-town business travel and toward the Meetings, Incentives, Conferences, and Exhibitions (MICE) sector, Cresta can leverage the government's investment in event infrastructure and connectivity. Furthermore, the establishment of the Kasane-Kazungula Special Economic Zone could provide Cresta with an environment of reduced taxation and improved infrastructure to support its diversification efforts.
Fiscal Reforms and the Taxation of Tourism
The 2026/2027 budget is not solely a document of investment; it is also an instrument of "fiscal prudence" and revenue mobilization. The government is implementing a comprehensive review of the tax system to broaden the tax base and strengthen compliance, a move that will have direct implications for tourism companies' bottom lines.
Income Tax Adjustments
The budget proposes raising the resident corporate income tax rate by 3%, bringing it from 22% to 25%. For non-resident corporations, which include several foreign-owned lodge groups, the tax rate remains at 30%, but a new 10% withholding tax on repatriated branch profits will effectively increase the tax burden. This will likely impact the net earnings and dividend-paying capacity of listed firms as they navigate higher tax liabilities.
Tax Category | Prior Status | 2026/2027 Proposed Change | Impact on Tourism |
Corporate Income Tax | 22% | 25% (Resident) | Higher tax expense for Chobe and Cresta. |
Personal Income Tax | 25% (Max) | 27.5% (for >P400k) | Potential impact on top-tier domestic travelers. |
Branch Profit Tax | 0% | 10% Withholding | Affects foreign-based hotel chains operating in BW. |
Special Economic Zones | N/A | 5% to 10% (Corporate) | Incentive for investment in Kasane/Maun SEZs. |
VAT (Remote Services) | 0% | 14% (Standard Rate) | Targets inbound tourism and digital bookings. |
The Value Added Tax (Amendment) Act, 2025
Perhaps the most significant reform for the tourism sector is the introduction of VAT on remote services, scheduled for implementation in April 2026. This amendment modernizes the VAT system by taxing services supplied by non-resident entities without a local presence, specifically targeting inbound tourism transactions and electronic marketplaces. Non-resident suppliers will be required to register and remit VAT if their annual supplies in Botswana exceed P500,000.
While this reform improves revenue collection efficiency for the state, it introduces a layer of complexity for international travel agents and online booking platforms. For local operators like Chobe Holdings, it potentially levels the playing field against foreign-based competitors who previously avoided local VAT on commissions and service fees. However, the mandatory use of electronic fiscal devices, also introduced in the 2025 amendment, will require hospitality businesses to upgrade their financial systems to ensure real-time reporting to the Botswana Unified Revenue Service (BURS).
Stock Market Impacts and Investor Sentiment
The Botswana Stock Exchange (BSE) serves as a barometer for the nation’s economic transformation. As the 2026/2027 budget shifts the focus from diamonds to enterprise, investor sentiment toward the "Consumer Services" sector, where Chobe and Cresta are listed, is evolving.
As of mid-February 2026, Chobe Holdings is the 18th most valuable stock on the BSE, with a market capitalization of BWP 1.65 billion. The stock has demonstrated remarkable long-term resilience, achieving a compound annual growth rate of 19.37% since late 2003. In the past year (Feb 2025 - Feb 2026), its market capitalization increased by 6.32%.
The stock trades at a price of BWP 18.50 with a P/E ratio of 9.85. The relatively low P/E ratio, despite strong revenue growth, suggests that the market is pricing in the "growth structure" constraints mentioned by the Vice President, where rising operational costs and the transition away from government contracts create a ceiling for immediate profit expansion. However, the high traded volume—1.03 million shares over a three-month period—indicates that Chobe remains a liquid and preferred asset for institutional investors looking to participate in the tourism pivot.
Cresta Marakanelo: Value Under Pressure
Cresta Marakanelo is currently the 34th most valuable stock on the BSE, with a market capitalization of BWP 216 million. The company’s stock performance has been hampered by its "second-rate dividend payer" status and the "unstable dividend track record" noted by analysts. In the past year, the stock returned -7.9%, underperforming the broader Botswana Hospitality industry, which returned 85.4%.
The market’s skepticism toward Cresta stems from its low net profit margin (-3.69% in some reports) and the fact that its interest payments are not well covered by earnings. However, the 2026/2027 budget’s focus on MSME support (P1.31 billion) and the National Fund of Funds could provide the financial tailwinds needed for Cresta to restructure its debt and invest in the MICE infrastructure that would decouple its performance from the diamond mining cycle.
Future Outlook: Tourism as the "New Diamonds"
The medium-term outlook for Botswana's tourism sector is one of "positive growth" and "sustainable expansion," as evidenced by projections from the World Travel & Tourism Council (WTTC) and the Botswana Tourism Industry Outlook 2024-2028.
Projections for Revenue and Arrivals
Tourism revenue is projected to rise to approximately $399 million by 2028, reflecting an average annual growth rate of 2.8%. This growth is supported by a forecasted increase in international tourist arrivals to 2.8 million by 2028, generating an estimated BWP 11.79 billion in visitor expenditure. This trajectory suggests that with "the right regulatory conditions and government support," the sector could support up to 102,000 jobs by 2028, up from 58,000 in 2023.
Tourism Indicator | 2023 Actual | 2028 Forecast | CAGR / Growth |
International Arrivals | 1.18 Million | 2.85 Million | +140% Total. |
Tourism Revenue (USD) | $334 Million | $399 Million | 2.8% PA. |
Employment (Direct) | 58,000 | 42,000* | Historical re-adjustment. |
Employment (Total) | 76,000 (2017) | 102,000 | 2.6% PA. |
Capital Investment (BWP) | 4.60 Billion (2017) | 7.36 Billion | 4.5% PA. |
Note: WTTC forecasts often distinguish between direct and indirect employment differently than national statistics.
Sustainable Growth Through Partnerships
The 2026/2027 budget marks a fundamental shift from the government being the "primary driver of economic activity" to becoming the "architect of an enabling environment". The Botswana Tourism Investment Summit and the engagement of the International Finance Corporation (IFC) signal a move toward attracting private investment into lodges, hotels, and supporting transport infrastructure. The government’s mission to explore "new financial mechanisms for sustainable investments" will be critical for funding the diversification projects in Kasane and Kazungula.
Impact on Sector Revenue and Profits
The multi-billion Pula investment in tourism will likely impact corporate revenue and profits through three primary channels:
The modernization of Maun and Kasane airports and the expansion of the air network will increase the throughput of high-spending international tourists. For Chobe Holdings, this translates directly to higher occupancy rates at its luxury camps and increased utilization of the Safari Air fleet. For Cresta, the development of MICE-related infrastructure in tourism hubs creates new revenue streams from conference groups that were previously deterred by limited access.
The "Integrated Infrastructure Development" priority, including the BWP 1.85 billion earmarked for infrastructure maintenance (roads, wastewater, health), will reduce the long-term cost of operating in remote areas. Better roads and improved waste management reduce the logistics overhead for safari lodges, although these benefits are balanced against the 3% increase in corporate income tax and the costs of compliance with new VAT regulations.
The government's focus on MSME financing and community-based natural resource management (CBNRM) aims to increase the local "multiplier effect". By supporting local suppliers and artisans, tourism companies can deepen their domestic value chains, potentially reducing the cost of imported perishables and décor while enhancing the authentic "Botswana experience" for guests.
Conclusion: The Road to Vision 2036
The 2026/2027 budget represents a bold, if fiscally strained, attempt to reposition Botswana for a post-diamond future. The tourism sector is the centerpiece of this transformation. For companies like Chobe Holdings, the government's investment in aviation and site management provides the infrastructure necessary to scale its luxury model and expand regionally. For Cresta Marakanelo, the budget offers a path to diversification away from the volatile mining-business segment.
However, the "disciplined execution" of these plans remains the critical success factor. The transition from government contracts to "real value creation" requires a cultural shift within the private sector and a relentless focus on global competitiveness. As the Pula is permitted to slide to combat economic pressure, Botswana’s export-oriented tourism sector stands to become even more attractive to international travelers, provided the nation can manage the inflationary impacts on its cost base. If the billions "poured" into the sector are effectively channeled into the priority projects of the BETP and NDP 12, the tourism industry could indeed surpass diamonds as the primary engine of Botswana’s prosperity by 2036.
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