The government is looking inward for revenue generation as declining receipts from the Southern African Customs Union (SACU) force government to strengthen domestic tax collection through new legislation and digital reforms.
A June 2026 implementation progress report by the African Development Bank Group on Botswana’s Governance and Economic Resilience Support Programme (GERSP) shows that while SACU revenues declined significantly during the 2025/26 financial year, collections from Value Added Tax (VAT) and Income Tax continued to grow, providing hope for improved fiscal sustainability.
According to the report, SACU receipts fell by P2.573 billion, representing a 9.34 percent decline. As a result, total government revenue collections decreased marginally by 1.15 percent, dropping from P60.920 billion to P60.221 billion.
However, domestic tax revenues showed resilience. Combined VAT and Income Tax collections rose from P33.358 billion in 2024/25 to P35.232 billion in 2025/26, representing growth of 5.6 percent.
“The passage of the new tax legislations (Income Tax, VAT and Tax Administration Acts) by Parliament in April 2026, combined with the wide range of tax administration measures, including digitization efforts currently being implemented by Botswana Unified Revenue Services, are expected to significantly improve revenue collection,” the African Development Bank noted.
The report suggests Botswana is gradually reducing its vulnerability to fluctuations in SACU transfers by expanding its domestic tax base and improving collection efficiency.
A major component of the reforms is the planned rollout of a mandatory electronic billing system for VAT-registered businesses.
The VAT electronic invoicing solution is intended to allow Botswana Unified Revenue Service (BURS) to monitor transactions in real time, replacing traditional manual invoicing systems and reducing opportunities for tax leakage and fraud.
The enabling legislation for the system was passed during the July 2025 Parliamentary session, while procurement of a solution provider is already at an advanced stage.
The stronger domestic revenue performance comes amid a broader economic recovery following turbulence in the global diamond market.Despite diamond market volatility experienced in late 2024, Botswana’s economy rebounded strongly by the end of 2025. Mining growth reached 39.5 percent, helping to restore macroeconomic stability and support government finances.
“The planned key milestones included the design, development, and rollout of the E-Billing System by the third quarter of 2026,” the report states. The African Development Bank believes rapid implementation of the new tax laws and completion of the e-billing project could substantially increase government revenues over the coming years.
“BURS will need to expeditiously implement the provisions of the new tax Bills and quickly finalise the process of rolling out the e-billing system which will positively impact revenue collection and contribute to the achievement of program target,” the report says.
The stronger domestic revenue performance comes amid a broader economic recovery following turbulence in the global diamond market.Despite diamond market volatility experienced in late 2024, Botswana’s economy rebounded strongly by the end of 2025. Mining growth reached 39.5 percent, helping to restore macroeconomic stability and support government finances.
The report credits the Governance and Economic Resilience Support Programme with helping maintain economic stability during a challenging period for the country’s most important export sector.
Beyond revenue mobilisation, Botswana also recorded progress in improving the business environment and supporting private sector development.
The country’s business regulatory score under the Country Policy and Institutional Assessment (CPIA) reached 4.8, surpassing programme targets.
Reforms included progress on the Public-Private Partnership Bill, digitisation of permit systems, implementation of the National Financial Inclusion Strategy and labour market reforms.
Government-backed financing for Micro, Small and Medium Enterprises (MSMEs) also expanded significantly.
The number of businesses accessing finance through government support instruments, particularly those administered by the Citizen Entrepreneurial Development Agency (CEDA), increased from 900 in 2024 to 1,716 by December 2025.
Of these enterprises, 68 percent were women-led while 17 percent were youth-owned highlighting efforts to promote inclusive economic growth.
