Poverty in Botswana has declined significantly between 1985/86 and 2009/2010, mostly on account of robust growth and a strong social safety net regime. Between 2002/03 and 2009/10, rural Botswana experienced the sharpest reduction in the poverty head count ratio, from 44.8% to 24.3%. Over the same period, urban villages experienced a relatively more modest but still significant decline, from 25.4% to 19.9%, whilst the head count ratio actually increased in cities and towns. Two factors-rural to urban migration and the expansion of social safety nets - may explain the superior rates of poverty reduction in rural areas.
By 2004 Botswana had surpassed the World Bank’s upper MIC threshold. Mostly as a results of substantial mineral revenues, especially from diamonds, and competent political and economic governance, reflected most comprehensively in A-grade sovereign credit ratings, the best for an African economy for most of the last decade. The economy only contracted in 2009, as a result of the global economic recession and posted growth rates less than four percent in only two other years (2005 and 2008) in the 11 years to the end 2012.
The management of both fiscal and monetary policy in Botswana has delivered macroeconomic stability, creating a good environment for growth, diversification and economic transformation. Fiscal policy is generally expansionary but it has been restrained successfully through adherence to a strict fiscal rule to ensure budget sustainability and avoid overheating the economy during booms
Botswana has one of the most unequal income distributions in the world. According to the 2009/10 Botswana Core Welfare Indicator Survey (BCWIS), Botswana’s aggregate measure of income inequality, the Gini coefficient, was 0.645. This marked a significant deterioration from 0.573 in 2002/03.