BDC scores P736m loan for climate funding
Lewanika Timothy | Monday September 11, 2023 06:00
The loan will help the BDC support local investment in green technologies and industries as well as other funding needs in key sectors of the economy.
BDC officials said the funding would enhance the organisation’s ability to stimulate local spending and improve access to credit for many enterprises in Botswana.
“Furthermore, the project effects include improvement in market competitiveness and improvements in sustainability, by increasing financing to consumers and by demonstrating the viability of financing climate-focused projects, respectively,” officials said.
BDC has secured an international guarantee covering up to 95% of the loan and interest payments, from the Multilateral Investment Guarantee Agency (MIGA) a subsidiary of the World Bank Group.
The guarantee is up to an amount of €57 million or P822 million, which includes principal and interest, with a tenure of up to 10 years.
“For this project, the MIGA guarantee will support climate finance and lending to the key sectors such as manufacturing, agriculture, trade, hospitality and tourism, real estate, fintech and healthcare,” MIGA officials stated.
MIGA’s provision of a guarantee helps the BDC sidestep a thorny issue that has slowed down its funding pipeline in previous years. In the past, the BDC and its parent ministry have run into delays in Parliament when trying to secure the approval of a sovereign guarantee for external funding.
Sovereign guarantees are given by host governments to assure project lenders that the government will take certain actions to mitigate defaults on loans. With the MIGA guarantee, BDC appears to have found a faster route to funding, without the frequent bipartisan haggling that accompanies parliamentary debates.
In 2020, the BDC scored P1 billion from the AfDB, which officials this week said was to stimulate the creation of over 4,000 jobs in 12 local private sector investments.
“BDC has proudly funded 14 projects through the $80 million AfDB facility, comprising 12 local deals and two regional deals,” officials told BusinessWeek. “These projects have not only contributed to the creation of value but have also sustained 4,273 jobs.”
The officials added: “The execution of these projects has contributed toward efforts to promote an export-led economy, place Botswana as an attractive Meetings, Incentives, Conferences and Events and tourism destination, contributed to food security as well as strengthening of the country’s healthcare system, to mention but a few.”