The African Development Bank (AfDB) has approved a $76.2-million (P850-million) loan to help Botswana fund new investment in agri-business, clean energy, services, infrastructure and manufacturing as part of efforts to broaden the country’s narrow economic base and reduce heavy dependence on mining.
In a statement released on April 28, the AfBD said the line of credit, was guaranteed by the government and would be administered by the Botswana Development Corporation (BDC).
“Botswana’s economic base is narrow, dominated by mining and public sectors. Real GDP grew on average by 6.6% during 2010-2014. In 2014, growth slowed down to 3.2% and further to 1.2% in 2015 due to weak demand for diamonds, as well as electricity and water shortages. The downturn in the global diamond market and its impact on the economy prompted the Government to adopt the Economic Stimulus Programme (ESP) as a strategy to boost growth, promote economic diversification, and create jobs.
“In line with the government’s ambitions, the LOC will support entrepreneurship, economic diversification and avail scarce long-term funding to critical sectors in Botswana, as well as enable jobs and wealth creation and tax-revenue generation.
“Botswana is at a critical development juncture given its vulnerability to external shocks due to reliance on diamond resources that are liable to depletion in the medium term. There is a need to accelerate economic transformation to advanced manufacturing and services, which requires significant, long-term financing whose availability is limited in the market,” the AfDB said.
The BDC is a government agency which was established in 1970 to promote and facilitate the development of industrial, commercial and agricultural enterprises which fall within the government’s plan for economic development. Since 2000, the government of Botswana has rolled out several programmes aimed at reducing the country’s dependence on diamond exports.
In 2003, the government launched the National Master Plan for Arable Agriculture and Dairy Farming (NAMPAAD) which sought to develop and promote crop and livestock farming among other agro-businesses. However, the program has met with very little success, especially in crop farming as the country remains heavily dependent on South Africa for farm products and supplies.