Infrastructure Financing in Botswana: Engagement with Multilateral Development Banks and Recommendations for Improving Lending Processes

The paper explores Botswana’s experience with multilateral development banks (MDBs) in financing infrastructure to identify key challenges and alternative financial mechanisms available to Botswana that may hinder greater lending by MDBs. It also profiles successes in lending by MDBs in Botswana. It uses a mixed methodological approach, comprising desktop research and interviews with relevant stakeholders engaging with MDBs. MDBs lending operations in Botswana, with special focus on AfDB, offer and deliver competitive financial terms, technical assistance/ expertise, useful advice and insightful influence over development. Increasing onward lending from the bank to the local development finance institutions also plays a critical role on the development of private sector and employment creation in Botswana. To improve lending operations in both Botswana and in other middle-income countries (MICs) on the continent, AfDB together with other MDBs – including new entrants such as the New Development Bank – should consider improving or streamlining their processes and reducing response times. They should also further align their financial and procurement processes with country systems – especially in countries with robust accounting, auditing and procurement systems – and practice flexibility and adaptability to constantly changing conditions in MICs. Effective cooperation between MICs and MDBs is also critical for achievement of development results in MICs. Alternative funding choices for infrastructure exist in Botswana, though the uptake is still low due to varied reasons.