Botswana is facing a massive development financing gap of about P82.5 billion as available financing falls far short of the resources required to fund the country’s development ambitions. This is revealed by the African Development Bank Group’s Country Focus Report 2026-Botswana.
The report estimates that Botswana’s financing needs reached US$6.4 billion (about P85.1 billion) between 2021 and 2025 while financing flows averaged only US$217.2 million (about P2.9 billion) a year over the same period.
This created a cumulative financing gap of approximately US$6.2 billion (about P82.5 billion).
The AfDB says closing the gap will require Botswana to mobilise capital on a much larger scale if it is to sustain economic growth, diversify the economy and create jobs.
‘Mobilizing capital at scale is imperative for the country’s sustained growth, accelerated structural transformation and large-scale job creation,’ the report states.
The report shows that the development financing challenge comes as Botswana faces declining diamond revenues and increasing pressure on public finances.
According to the report, Botswana’s total domestic fiscal revenue declined from US$6.2 billion (about P82.5 billion) in 2021 to US$5.0 billion (about P66.5 billion) as economic growth weakened and global diamond prices fell. At the same time, the revenue-to-GDP ratio dropped from 31.4 percent to 24.9 percent.
The AfDB warns that Botswana’s traditional dependence on mineral revenues is becoming increasingly risky.
‘Declining diamond revenues, rising expenditure pressures, and constrained fiscal space have ramped up the need for more diversified and sustainable financing sources,’ the report says.
The bank argues that Botswana must broaden its tax base, strengthen tax administration and embrace digitalisation to increase domestic revenue.
It also calls for stronger public financial management, better expenditure efficiency and strategic borrowing.
The report raises concerns about weaknesses in public investment management including poor project selection, implementation delays and capacity constraints.
It says such weaknesses can result in delays and cost overruns, reducing the economic impact of government spending.
‘Improving public investment management could raise growth without proportionately increasing spending,’ the AfDB says.
The bank argues that better project preparation, procurement, expenditure tracking and transparency could ensure that public money produces stronger economic and social returns.
The report also says the private sector and domestic capital markets as important sources of long-term development financing.
It says Botswana should strengthen partnerships with development finance institutions and private investors to finance infrastructure, economic diversification and climate-resilient development.
The AfDB also sees Botswana’s diaspora as an underused source of development capital.
Botswana received US$128.3 million (about P1.7 billion) in remittances in 2024, representing a 110 percent increase from 2021.The report says Botswana could channel more diaspora savings into productive investment through instruments such as diaspora bonds and dedicated investment funds.
It argues that the challenge is not simply the size of the diaspora, but the absence of suitable financial instruments and incentives.’Botswana can strengthen its approach by developing a formal diaspora policy, enhancing financial infrastructure, and introducing instruments such as diaspora bonds or dedicated investment funds,’ the report says.