Programme aims to ease energy costs, increase private investment and expand support for micro, small and medium-sized enterprises and job creation
The Board of Directors of the African Development Bank Group (AfDB) has approved a US$503.75 million (6.62 billion Botswana pula) loan to enable Botswana to cushion the impact of the global energy shock and support structural reforms for private sector-led economic growth and job creation, particularly for women and youth. One of the Bank’s largest operations in the country, the financing is designed to deliver tangible benefits to households.
Through the Economic Competitiveness and Transformation Support Program (ECTSP), the loan will fund fiscal and private sector reforms, aiming to lift non-mining tax value to 11.8 per cent of GDP for 2027/28, raise private investment to 30 per cent by 2028, and expand support for micro, small and medium-sized enterprises (MSMEs) and job creation.
Precision work in Botswana on a wire harness, a component exported to South Africa’s automotive assembly plants
The approval supports the government’s ongoing efforts to mitigate the impact of the Middle East conflict on the cost of living across Botswana. A prolonged downturn in the natural diamond market—which accounts for about 30 per cent of GDP and nearly 80 per cent of exports—contributed to economic contractions of 2.8 per cent in 2024 and 0.7 per cent in 2025. The Middle East crisis has increased the energy bill and contributed to economic contraction.
“Botswana has clearly defined its priorities in National Development Plan 12 and Botswana’s Transformation Programme. Our role is to help finance the adjustment, while protecting those least able to bear its costs,” said Moono Mupotola, the AfDB’s Deputy Director General for Southern Africa and Country Manager.
In August 2025, payment arrears to suppliers of medicines and medical equipment contributed to a public health emergency. Unemployment stands at 21 per cent overall and 28.9 per cent among young people, 37 per cent of whom are not in education, employment or training.
“These are time-bound, measurable reforms, each supported by technical assistance to ensure delivery. Adoption alone is not our goal; implementation is,” said Abdoulaye Coulibaly, the AfDB’s Director for Governance and Economic Reforms.
What the operation will change and who will benefit
The programme supports a directive the President of Botswana issued on 6 April 2026, suspending fuel, road, and security-of-supply levies for six months. This measure limits the increase for motorists to about P0.58 per litre and is expected to reduce inflation by 1.6 percentage points, easing pressure on transport fares and household food costs nationwide.
In parallel, supplementary monthly payments are being provided for three months to old-age pensioners, disability grant recipients, destitute cash beneficiaries, and home-based care patients. The support will reach an estimated 279,000 older and other vulnerable people, including households least able to absorb a sudden rise in prices.
Over the medium term, the reforms aim to expand access to energy, assets, and economic opportunities. A fully costed National Electrification Action Plan will advance implementation of Mission 300’s National Energy Compact for Botswana, which seeks to lift household electricity access from 79.5 per cent in 2025/26 to universal access by 2030. Connecting more homes requires additional power supply. The country will therefore hold at least one competitive renewable energy auction, inviting private developers to build new solar and wind capacity.
Separately, expanding the Francistown fuel depot from 38 million to 98 million litres will strengthen the security of fuel supply.
Land administration reform is expected to give 4,300 more families secure titles within a year, raising the national total from 19,682 to about 24,000 and allowing land to be used as collateral. The programme targets 3,292 active MSMEs and 3,935 direct jobs by 2027/28, with women-owned firms accounting for 93 per cent of supported enterprises and the youth share of jobs created rising from 15 to 20 per cent.
Full implementation of e-procurement is expected to cut procurement costs by 5 to 15 per cent, freeing resources for frontline services. Together, these measures contribute to broader efforts to unlock the Botswana Economic Transformation Programme’s pipeline of 186 projects valued at Botswana pula 514 billion, with a long-term goal of creating 512,000 jobs by 2036.
The operation is the first phase of a two-year programmatic series for 2026/27 and 2027/28. Co-financed by the OPEC Fund with US$170 million, it builds on earlier Bank support to Botswana in 2025, under which VAT collections rose by 15.5 per cent to 14.397 billion pula, and the country’s business regulatory environment score reached 4.8 out of 6, above the 4.7 target.
