Friday, February 7, 2025

The tide is turning as Botswana turns to Chinese for soft loans

In a sign that Botswana is climbing down on its earlier official position not to accept soft loans from the Chinese Government, the government this week agreed to sign an agreement on free interest soft loans from the latter.

This is revealed in an agreement or protocol that was signed by the Ministry of Finance and Economic Development and the Embassy of China  on the 22nd August 2018.

According to the agreement,  the Chinese Government exempted Botswana Government from payment of three interest free loans amounting to a total of RMB ┬Ñ52.9934,00 approximately P80,404, 058. The Protocol was signed by the Honourable Minister of Finance and Economic Development Kenneth O. Matambo and the Ambassador of the People’s Republic of China, His Excellency Zhao Yanbo. The exemption is in line with the undertaking during the Forum on China-Africa Cooperation (FOCAC) Summit held in Johannesburg in December 2015. This amount covers loans that were extended to Botswana to finance the Railway Rehabilitation Project and two loans which financed the Multi – Purpose Youth Center. 

Speaking at the signing ceremony, Minister Matambo said the exemption from payment will lessen Botswana’s debt burden and allow the Government to undertake other priority development projects in the National Development Plan.

Matambo noted that Botswana Government appreciates the long-standing cooperation with the Chinese Government through the extension of both grants and concessional loans. He said the continued cooperation is demonstrated further by the submission by Government of Botswana of projects in the Transport Sector, the proposed signing of a Letter of Exchange for the construction of the Kazungula Primary School and also an Agreement on Economic and Technical Cooperation for a Grant amounting to RMB ¥200 million which will be signed during the upcoming FOCAC Summit in September 2018 in China.

Reports indicate that during former President Ian Khama’s administration the Chinese government made offers of soft loans to Botswana in the form of interest-free or low-interest concessional loans but were declined by the Southern African country. It is reported the Botswana government had shown little interest in taking up the offer to develop the country’s infrastructure.

Instead, Botswana reportedly turned to her foreign reserves to finance infrustructure development. Sources at the embassy claimed that the alleged sour relationship between China and the Khama administration contributed to the decision by Botswana to decline the offer by China.  But now it appears the new administration under President Mokgweetsi Masisi is warming up to the Chinese offer.

Speaking at a kgotla meeting in Thamaga village recently Masisi revealed that Botswana will use the upcoming Forum on China-Africa Cooperation (FOCAC) summit to request for funding for infrastructure development.

Masisi reportedly said that Botswana nation is currently facing challenges emanating from limited government revenue streams against increasing expenditure.

He said he would request a concessional loan or grant funding from China to develop Botswana’s road network, among others.

Masisi is expected to lead a Botswana delegation to the FOCAC summit set for the Chinese capital Beijing in September.

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