Botswana is an upper-middle-income country with a significant diamond wealth, being the first world producer of diamonds in terms of value and the second largest, after Russia, in terms of volume. Although Botswana's economy has performed quite well in recent years, apart from the negative year of the COVID-19 crisis, the country still suffers from high inequalities, high levels of poverty, insufficient infrastructure, and a poorly diversified economy too focused on diamonds. This paper examines the economy of Botswana, its features, economic structure, and evolution, stressing the need for diversification. The paper first suggests the need for the government to actively foster private sector development of the economy and the provision of a business-friendly regulatory environment, as well as an innovation policy that encourages the adoption of digital technologies and the establishment of Industry 4.0, finally, last but not least, skill enhancement. Therefore, innovation, institutions, and education are the key factors for diversification and sustainable development.