AfDB Lends Botswana US$300M Amid Diamond Slump

Oscar J Jeke- Zim Now Reporter

The African Development Bank has approved a US$304 million loan to Botswana to help the country navigate widening fiscal imbalances stemming from a global slump in diamond prices and to support long-term structural reforms.

The funding, part of a broader US$1 billion support package unveiled in April, is set to provide urgent fiscal relief for Botswana, whose economy contracted by 3.1% in 2024, according to government estimates.

“This operation comes at a critical time for Botswana,” said Moono Mupotola, AfDB Deputy Director General for Southern Africa and Country Manager. “We will work with the new administration to implement reforms that will deepen fiscal sustainability, strengthen transparency, and create a more business-friendly environment for economic diversification.”

The loan aims to plug budget shortfalls while preserving priority spending on development. It also backs reforms to reduce Botswana’s reliance on mineral exports and encourage private sector-led growth.

Botswana, often praised for its sound management of diamond revenues, is now at a crossroads. A sharp drop in global diamond demand has laid bare the risks of a commodity-dependent economy. President Duma Boko, who took office in November 2024, has pledged to shift the country toward a more diversified and inclusive economic model.

“We are committed to building new drivers of growth,” President Boko said, highlighting tourism, green energy, and agriculture as priority sectors for investment.

The World Bank also urged Botswana to accelerate reform, warning in its April report that stagnation is likely unless new economic drivers are developed. “Since transformative growth is unlikely to come from the diamond sector alone, policymakers must identify new drivers of inclusive growth,” the Bank noted.

The new loan follows earlier AfDB support, including a US$200 million Economic Recovery Support Programme co-financed with the OPEC Fund for International Development in 2021–2022. While the new facility will ease short-term pressure, the AfDB emphasized that it is a transitional tool meant to support deeper structural reforms.

The loan will be disbursed in tranches, tied to conditions such as fiscal discipline, governance improvements, and measures to attract private investment. The AfDB also confirmed it will assist Botswana in shaping new development strategies aligned with Vision 2036, which aspires to transform the country into a high-income, export-driven economy.