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Results Profile: Botswana Growth Strategy                                                           March 10, 2010




 CONFRONTING CHALLENGES

 Botswana invests in health, transport and energy




Overview
Four decades of strong economic growth lifted Botswana into the ranks of upper middle-
income countries, but Botswana is still fighting to address poverty, inequality and the world’s
second-most severe HIV/AIDS epidemic. In addition to providing innovative financing for the
fight against HIV/AIDS, the International Bank for Reconstruction and Development (IBRD) is
helping Botswana address needs in the transport and energy sectors, which are also key to
better lives for all in Botswana.

  Full Brief—4 Pages
Helping Botswana Confront a Challenging Future—PDF, April 2010


Challenge
Botswana’s strong economic track record is shadowed by
                                                                    More Results
high inequality and poor human development indicators,
compounded by the world’s second-most severe HIV/AIDS

                                                                   $20
pandemic. The country’s impressive economic growth has
largely been based on its mineral wealth, diamonds in
particular. In view of the depletion of diamond reserves,

                                                                   million
Botswana faces a tremendous challenge to diversify its
economy. However, Botswana’s diversification strategy is
threatened by an energy crisis. It stands to lose over 70
                                                                   leveraged to lower the cost of
percent of its current electricity supply when South Africa,       achieving HIV/AIDS goals.
recently beset by power shortages, halts energy exports to
Botswana by 2013. Accordingly, energy security has rapidly
emerged as an urgent national priority. Combined with the
collapse of diamond exports due to the global financial crisis,    MORE INFORMATION
the sustainability of Botswana’s successful development             World Bank in Botswana
outcomes has come under serious threat.
                                                                    Projects and Programs

                                                                    Data and Statistics
Approach                                                            European Commission in
IBRD support to Botswana is aimed at shielding the country          Botswana
from simultaneous effects of the regional energy crisis and
the global financial crisis, and at improving the efficiency and
effectiveness of its response to the HIV/AIDS pandemic.            PARTNERS
Botswana’s first-ever Country Partnership Strategy (FY09-           European Commission 
13) seeks to address key developmental issues including
HIV/AIDS, public sector effectiveness and competitiveness.           African Development Bank
IBRD is supporting the government ‘s top three priorities –         OPEC Fund for International
health, transport and energy—through three flagship                 Development (OFID)
projects: the Botswana HIV/AIDS Prevention Support Project          Industrial Commercial Bank of
($50 million), an Integrated Transport Project ($186 million),      China Ltd
and the Morupule B Electricity Generation and Transmission
                                                                     SINOSURE
Project ($379 million financing package).

IBRD financing also is helping Botswana prepare a robust
low-carbon growth strategy, strengthen management skills in
the power sector, and establish a new independent electricity   
regulator. The HIV/AIDS prevention project has been
designed to address strategic and implementation gaps in the government’s response to
HIV/AIDS and catalyze implementation of the new national plan for scaling up prevention.


Results
IBRD arranged a partial credit guarantee under the Morupule project to extend the maturity of
an $825 million commercial loan to Botswana from 15 years to 20 years, which will reduce
consumer tariffs by up to 0.5 US cents per kilowatt hour. Also, IBRD supports accelerated
development of low carbon energy alternatives  such as coal bed methane and renewable
energy including concentrated solar power.

IBRD has started contributing to the increased efficiency of the national HIV/AIDS program by
bringing global and regional experience to bear and enabling a  transition from an “emergency”
response to a broader, more strategic, and more sustainable approach. IBRD has also been
able to leverage a contribution of about $20 million from the European Commission using an
innovative, performance-based “buy-down” structure to improve the performance of the
National AIDS Coordinating Agency, among other goals. This instrument relies on donor
resources to lower the cost of an IBRD loan targeted at priority health activities. The release of
the donor funds is dependent on project performance, as measured against jointly agreed
indicators, within a specified time frame. Given that its upper middle-income status excludes
Botswana from the World Bank’s no-interest or low-interest-rate IDA resources, the
government requested that the proposed operation be financed utilizing the IBRD “buy-down”
facility.


Toward the Future
The Bank’s engagement in long-term reform efforts aimed at increasing the efficiency of public
spending and improving service delivery is also increasing in Botswana. A review of public
expenditures is nearly complete, with follow-up work planned to reform the budget process.
Fee-based technical assistance to implement far reaching reforms in the water sector is well
advanced, and the Bank also is helping advance policy work in agriculture and climate
vulnerability.

 


                                                    Last updated: 2010-03-12