World Bank avails P3bn envelope of loans to Botswana

Morupule B power plant recently received funding from the World Bank
Morupule B power plant recently received funding from the World Bank

SHENZHEN, CHINA: The World Bank (WB) has pledged almost P3 billion in loans to fund a string of projects in Botswana, headlined by investments in water and renewable energy, private sector support and other socio-economic upliftment initiatives.

Under a 2016-2020 Country Partnership Framework (CPF), the World Bank has proposed a developmental lending pipeline of US$270 million (P2.9 billion) to finance developmental operations in the first two years of the programme, up to 2018.

According to the framework, the World Banks says the funding is driven by the recognition that despite rapidly declining poverty, low job creation keeps inequality extremely high. “With the weakening of traditional growth drivers, a new growth model is needed that is jobs-intensive, export-oriented and private sector-driven,” says the bank. “Despite broad and well-intentioned investment, inclusion barriers remain and sustainability is threatened as resource vulnerability challenges long-term growth and inclusion.” The new P3 billion funding, which the bank says will mostly depend on demand, is an addition to an on-going $191 million (P2 billion), 87 percent of which Botswana has not yet tapped into.

The new lending programme will also be revisited when the government’s new NDP11, expected in June 2017, is launched.

On the backdrop of chronic electricity and water shortages coupled with the slackening of demand for diamonds, government has slashed its 2015 growth forecasts by almost half to 2.6 percent.

In the next two years, the World Bank says it has earmarked more than half of the financial package ($150 million) towards improving water access and sanitation. While more than 95 percent of the population has access to improved drinking water sources, means to a piped water supply is uneven, ranging from 80 percent in Gaborone to 20–30 percent in some other urban centres; and only 42 percent of rural households have access to proper sanitation. In addition, the World Bank says some 33 percent of all water supply in Botswana is lost through the Water Utilities Corporation (WUC) distribution system. “None of Botswana’s growth opportunities will be achieved over the long term if sustainable sources of water are not available, if new technologies are not adopted and if pricing policies are not reformed to ensure efficient use of water,” says the World Bank.

Through its private sector investments arm, the International Finance Corporation (IFC), the World Bank says it will also seek to build private sector capacity to aid efforts of diversifying the economy and create jobs. According to available statistics, the formal private sector created just one job for every six new entrants to the labour market over the past decade.

This has added weight to suggestions that a more outward-oriented private sector, particularly in employment intensive sectors where Botswana can exploit global or regional comparative advantage, would be key to sustaining poverty reduction

“Botswana’s small population limits the market potential for private sector enterprises, thereby limiting opportunities for IFC from the WBG to play a significant role in the country’s private sector. But IFC can still bring both its advisory and investment services to bear while also taking an opportunistic approach,’ added the bank. Projects that have recently received funding from the World Bank include the Morupule B power plant, Gaborone Integrated transport project and Human-wildlife co-existence project.

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