The tourism sector's competitiveness is integral to Botswana's growth prospects in the era of diminishing diamond revenue and transitioning to high-income status, as espoused in the nation's Vision 2036. The sector has been identified as a cornerstone for economic diversification and plays a crucial role in rural revitalisation, livelihood upliftment, gender inclusion, improved cultural heritage, and natural resource conservation. Guided by a high-value, low-volume tourism policy to ensure sustainable revenue and conservation of natural resources, the tourism sector contributes approximately 4.9 % to the country's GDP, second after mining. Botswana's tourism centres on protected and conservation areas, wildlife, and wilderness, making it one of the world's best Safari tourism destinations. Therefore, leisure travellers are the primary source of Botswana's tourism, contributing about 96% of total annual tourist arrivals.

Despite the alluded economic potential of inbound leisure tourism as a source of economic growth in Botswana, the sector is characterised by a considerable reverse multiplier. These include economic and financial leakages through foreign-owned tourism business operations and high import bills, casting doubts on whether inbound tourism expansion drives economic growth in Botswana. In addition, tourism competitiveness has been weak despite Botswana Pula devaluation(depreciation) over the years as a competitiveness-enhancing strategy. The country scored 3.5 on a score range of 1 (worst) to 7 (best) in travel and tourism competitiveness in 2019, lags behind South Africa, Kenya, Tanzania, and Mauritius in tourism receipts in Southern and East Africa. Consequently, Botswana suffers from a small market share and low tourism economic yield.

On the other hand, the rate of crawl that has been employed to generally stabilise the real effective exchange rate (REER) to maintain international competitiveness has somewhat failed to fully stabilise the bilateral exchange rates of Botswana's trading partners when their cross-exchange rates have been volatile. Hence, Botswana's tourism sector is susceptible to cross-exchange rate volatility. These challenges mentioned above confronting the tourism sector suggested the reappraisal of Botswana's growth model and related policy mix.

Therefore, this study comprehensively evaluated the impact of exchange rate on inbound leisure tourism demand and tourism-led economic growth to inform future tourism competitiveness policies or marketing strategies in advancing Botswana's high-income economy aspirations. The study specifically (1) analyses the implications of domestic exchange rate policy decisions on Botswana's inbound leisure tourism demand, (2) investigates the impact and role of US dollar exchange rate volatility vis-à-vis Botswana's top tourist market currencies on Botswana's inbound leisure tourism demand/arrival, (3) investigate the impact of South African Rand volatility against Botswana's major long-haul tourist markets on Botswana's inbound leisure tourism demand and, subsequently, (4) examine the relationship between inbound tourism and economic growth.

Given the breadth of the topic of interest, several methods were employed to operationalise the study objectives. These methods and benchmark frameworks include the augmented gravity framework, Pooled Mean Group-ARDL, fixed effect model and Poisson pseudo-maximum likelihood (PPML). The methods selected were based on their merits and effectiveness in handling available data and, at the same time, delivering consistent and efficient results. In addition, the study's supposition was rooted in relevant theoretical paradigms, namely, the Mundell-Fleming framework, dominant currency pricing paradigm and tourism-led growth hypothesis. The study predominately utilised balanced panel data from various sources of Botswana's top leisure tourist origin countries, namely the USA, United Kingdom (UKUK), Canada, Germany, France, Netherlands, Australia and New Zealand, and South Africa, from 1997/2005 to 2018/9 due to data availability problem.

The study made significant scientific contributions to the existing literature in relation to inbound tourism and the exchange rate. This comprehensive study examined all possible exchange rate impact channels on inbound leisure tourism demand consistent with domestic economic dynamics and the country's global interconnectedness. In the process, inter-alia, the study validated and contributed empirical to the newly hatched dominant currency pricing paradigm, particularly from an inbound leisure tourism demand perspective or African context. The study further proposed the inclusion of the impact of the anchor economy's exchange rate volatility, given the regional structural setup in which Botswana is operating. The central claim for the inclusion of the anchor economic exchange rate was that, given the structural setup in the SADC region, the impact of the exchange rate on Botswana's inbound tourism does not only depend on invoicing currency but also the anchor economy exchange rate (ZAR volatility), therefore, augmenting the currency pricing paradigm. Furthermore, the novelty of this study also firmly stands on the utilisation of disaggregated (leisure inbound tourist) data departing from the common trend of aggregated data approach.

Overall, the study findings revealed that exchange rate devaluation (depreciation) moderately affected Botswana's inbound leisure tourism demand in the long and short run. However, individual tourism markets divulged heterogeneous sensitivity to exchange rate devaluation in the short run. On the other hand, switching to a crawling peg exchange rate regime was found to be consistent with export-led economy aspirations as the findings suggested that exchange regime switching from the initial adjustable (conventional) framework to crawling peg was crucial in stimulating Botswana's inbound leisure tourism demand. Moreover, the study rejected the dominant currency pricing paradigm regarding US dollar pricing in the Botswana tourism industry. However, the study established that US dollar appreciation or volatility vis-à-vis Botswana's main tourist market currencies decreases inbound leisure tourist arrival.

Similarly, the findings have revealed that an increased ZAR exchange rate volatility vis-à-vis Botswana's long-haul tourists' market currencies, whether in nominal or real terms, shrinks Botswana's inbound tourists' demand in the short run. The study findings also confirmed and validated a tourism-led growth hypothesis in Botswana. However, the findings generally revealed a modest impact of inbound tourism expansion on the country's economic growth.

These study findings implied some important policy implications for policymakers and other key players, such as academia, for Botswana's case and other developing nations (SADC member states), especially those anchored on nature-based tourism. Firstly, in the case of domestic exchange rate policy as of the current exchange rate regime, the authorities should allow moderate short-term Botswana Pula depreciation to boost leisure tourism demand, particularly for regional markets, and consequently qualify as a long-run policy. Secondly, policymakers and the exchange rate custodians should pay attention to US dollar exchange rates and implement appropriate adjustment measures or counter policies to minimise the US dollar impact. Thirdly, at regional economic planning meetings, Botswana's government should re-emphasise and highlight the importance of South African rand stability on Botswana's economy. Lastly, the government of Botswana should inter-alia enhance tourism competitiveness's effect on the domestic economy through improved tourism sector economic integration for improved inbound tourism economic contribution.

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