The African Development Bank (AfDB) has raised questions about Botswana’s ability to translate improvements in budget transparency into credible and reliable fiscal management. It warns that persistent gaps between approved budgets and actual outcomes are weakening public investment, increasing fiscal risks and potentially raising borrowing costs.
This comes at a time when Botswana is negotiating a multi-billion Pula loan from the continental bank. AfDB. Unlike traditional development loans where money is released upfront, the proposed funding adopts the AfDB’s results-based financing model, meaning Botswana would have to demonstrate measurable progress before portions of the loan are disbursed.
The query against Botswana’s budget credibility is contained in the AfDB’s country focus report, ‘Mobilising Botswana’s Development Financing at Scale in a Fragmented World.’ The Bank acknowledges that Botswana has relatively strong fiscal institutions but says weaknesses in forecasting, budget execution, cash management and administrative capacity continue to undermine the effectiveness of public finances.
The report asks: ‘Has Budget Transparency Translated into Credibility?’ Its answer points to a significant gap between transparency on paper and the actual reliability of government budgeting.
‘Despite relatively strong fiscal institutions, low budget credibility and administrative capacity challenges in compliance monitoring and enforcement undermine collection efficiency in Botswana,’ the AfDB says.
The bank notes that deviations between approved budgets and actual outcomes remain persistent. It attributes some of these deviations to the volatility of mineral revenues, Southern African Customs Union (SACU) transfers and difficulties in accurately forecasting revenue and planning expenditure.
The problem, according to the AfDB, is compounded by external shocks.
‘External shocks, such as commodity price fluctuations and geopolitical crises can further widen these gaps, and disrupt fiscal discipline,’ the report warns.
The AfDB warns that weak budget credibility is not simply an accounting problem.
‘Weak budget credibility reduces the efficiency of public investment, raises fiscal risks, undermines investor confidence and increases borrowing costs,’ it says.
The bank recommends that Botswana strengthen its forecasting capacity, commitment controls, treasury operations and cash management systems.
‘These will be essential to enhance budget reliability, support fiscal sustainability, and mobilize capital more effectively,’ the AfDB says.
Despite its concerns, the AfDB recognises that Botswana has made progress in fiscal transparency and accountability.
The report says improvements in budget reporting, disclosure and public access to information have strengthened fiscal transparency.
Parliament and the Auditor General are identified as important institutions in overseeing the use of public resources, while internal audit systems have increasingly adopted risk-based approaches.
However, the bank says Botswana still has work to do in ensuring transparency across the entire budget cycle.
‘Challenges remain in ensuring full transparency across the budget cycle, including timely reporting and broader public participation,’ the report says.
The AfDB also warns that Botswana’s relatively strong oversight institutions do not automatically guarantee effective accountability.
‘While Botswana has relatively robust institutions, gaps remain in timely audits, follow-up on findings, and oversight of SOEs,’ the report says.
State-owned enterprises remain a particular area of concern because weak oversight can expose government to financial risks and undermine the effectiveness of public spending.
The bank calls for stronger transparency, improved digital reporting and greater public participation in the budget process.
It says resilient public financial management systems will be crucial for Botswana as the country attempts to absorb economic shocks while maintaining fiscal discipline.
The AfDB’s assessment goes beyond revenue collection and focuses on how effectively government converts approved budgets into actual development.
It says Botswana’s public financial management system has strengthened over time, particularly in fiscal planning, transparency and audit practices.
These improvements have supported macroeconomic stability and policy credibility. But significant institutional gaps remain.
‘Gaps persist in budget execution, cash management, procurement discipline, and project implementation,’ the report says.
The AfDB points to deviations between planned and actual spending, forecasting weaknesses and inadequate commitment controls as factors that can reduce efficiency.
Fragmented reporting systems and capacity constraints also affect coordination and oversight.
The bank identifies weaknesses in public investment management as a source of delays and cost overruns in infrastructure projects.
‘Weaknesses in public investment management (PIM) contribute to delays and cost overruns in infrastructure projects, limiting growth impact,’ it says.
The recommendation is for Botswana to strengthen digital integration, treasury systems and procurement practices while improving the preparation of public projects before they enter the budget.
The AfDB argues that Botswana does not necessarily have to borrow more to achieve better development outcomes.
Instead, the country could create additional fiscal space by improving the efficiency of existing public spending.
‘Improving efficiency would generate significant fiscal savings, expand fiscal space, and support growth without increasing debt,’ the report says.