The African Development Bank (AfDB) has approved a $304 million loan to help Botswana manage “mounting fiscal challenges” largely driven by a slump in global diamond prices.
The country’s economy is estimated to have shrunk by 3.1% last year, the Botswana government said earlier this year.
The AfDB loan is part of a broader $1 billion support package announced in April and aims to cushion Botswana against the financial blow from its dependence on diamonds. The AfDB says the funding will also support efforts to promote private sector-led growth and build long-term resilience.
“This operation comes at a critical time for Botswana,” said Moono Mupotola, Deputy Director General for Southern Africa and Country Manager at the African Development Bank Group. “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.”
Botswana has long been hailed for prudent management of its diamond wealth. However, as diamond revenues falter, the limitations of a mineral-dependent economy have become stark. President Duma Boko, who took office in November, says he wants to diversify the Botswana economy and ease its reliance on diamonds.
The World Bank has cautioned that without a strategic shift, Botswana risks stagnation. “Since transformative growth is unlikely to come from the diamond sector alone, policymakers must identify new drivers of inclusive growth,” it said in an April report.
The AfDB says the new loan is a transitional measure to help address short-term budget pressures while the newly elected government pursues broader development goals.
The new financing adds to previous AfDB support, including the Economic Recovery Support Programme of 2021–2022, which was co-financed with $200 million from the OPEC Fund for International Development.
