AfDB approves $304m loan to Botswana
Pauline Dikuelo | Monday May 26, 2025 13:02
Announced on Wednesday, the funding will support the Governance and Economic Resilience Support Programme (GERSP), a one-year general budget support operation for the 2025–2026 fiscal year. The initiative comes at a time when Botswana faces significant economic challenges, including declining diamond revenues and widening budget deficits.
Botswana’s economy contracted by 1.7 percent in 2024, largely due to weak global demand for diamonds, which make up around 80% of its export earnings. Consequently, the country’s fiscal position has deteriorated sharply, moving from a balanced budget in 2022–2023 to a 4.7 percent deficit in 2023–2024, with projections indicating a 6.7 percent deficit in the current financial year.
AfDB Deputy Director General for Southern Africa and Country Manager Moono Mupotola said this operation comes at a critical time for Botswana.
“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 GERSP focuses on two strategic pillars: strengthening fiscal sustainability and transparency, and stimulating inclusive economic growth. It proposes reforms to boost domestic revenue collection, curb illicit financial flows, and enhance efficiency and accountability in public spending.
The programme also emphasises support for micro, small, and medium enterprises, particularly those owned by women and youth, in a bid to create employment and reduce social inequality.
The African Development Bank views this operation as a transitional measure to ease short-term fiscal pressures whilst collaborating with Botswana’s recently elected government voted into office in November 2024 on long-term development priorities.
Abdoulaye Coulibaly, AfDB Director of Governance and Economic Reforms, reaffirmed the institution's commitment to Botswana, saying, “The African Development Bank is committed to supporting Botswana’s ambitious socioeconomic development agenda through credible and transformational reforms, project and programme financing, and continuous policy dialogue.”
This latest loan builds on the bank’s previous support, including the Economic Recovery Support Programme implemented in 2021–2022, which featured $200 million in co-financing from the OPEC Fund for International Development.
The GERSP aligns with the bank’s current Country Strategy Paper for Botswana (2022–2026), which prioritises economic resilience, sound governance, and private sector development.