91813 the world bank HELPING BOTSWANA CONFRONT A CHALLENGING FUTURE IBRD Results Synopsis Four decades of strong economic growth have lifted Botswana into the ranks of upper middle-income countries, but the country is still fighting to address poverty, inequality, and the world’s second-most severe HIV/AIDS epidemic. In addition to providing innovative financing in its fight against HIV/AIDS, IBRD is also helping Botswana address its needs in the transport and energy sectors, which are also key to better lives for all in Botswana Challenge Through a country partnership strategy covering 2009– 2013, IBRD will help the authorities in Botswana pursue improvements in each of the health, energy, and transport Botswana is an upper middle-income country with a strong sectors. As this is a new initiative, all projects are still within economic track record shadowed by high inequality and their first year of operations and results will take some time. poor human development indicators, compounded by the world’s second most severe HIV/AIDS pandemic. The As part of this approach, the IBRD has arranged a partial country’s impressive economic growth over the past four credit guarantee under its Morupule B Generation and decades has largely been based on its mineral wealth, dia- Transmission Project to extend the maturity of an US$825 monds in particular. In view of the depletion of diamond million commercial loan to Botswana from 15 years to 20 reserves, Botswana faces a tremendous challenge to diver- years, which will reduce consumer tariffs by up to 0.5 US sify its economy. However, Botswana’s diversification strat- cents per kilowatt hour. Also, IBRD supports accelerated egy is threatened by an energy crisis, as it stands to lose over development of low carbon energy alternatives such as 70 percent of its current electricity supply when South Af- coal bed methane and renewable energy including concen- rica halts exports to Botswana in 2013. Accordingly, energy trated solar power. The specific targets of the project at the security has rapidly emerged as an urgent national priority. end of implementation are as follows: Combined with the collapse of diamond exports due to the global financial crisis, the sustainability of Botswana’s ÔÔ Improved domestic generation and transmission capac- successful development outcomes has come under serious ity threat. ÔÔ Improved prospect for low-carbon growth strategy ÔÔ Improved regulatory capacity Results Through its program in Botswana, IBRD has started con- IBRD support to Botswana will help shield the country tributing to the increased efficiency of the national HIV/ from simultaneous effects of the regional energy crisis and AIDS program. Despite the government’s aggressive in- the global financial crisis, and improve the efficiency and terventions, the national program has not been effective effectiveness of its response to the HIV/AIDS pandemic. in reducing prevalence rates. The previous preference for a March 2010 2 HELPING BOTSWANA CONFRONT A CHALLENGING FUTURE treatment-oriented national program has resulted in some- what of a lesser focus on prevention priorities and outcomes. IBRD is helping to address this gap, bringing global and re- gional experience to bear. IBRD engagement has been key to 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 US$20 million from the European Commission using an innovative, performance-based “buy-down” structure. The specific targets of the project at the end of implementation are as follows: ÔÔ Improved performance of the National Aids Coordi- nating Agency ÔÔ Reduction in proportion of sexually active males and —for example on HIV/AIDS which is a major concern in females who report having had sex with more than one the sub-Region. A mix of instruments is used to implement partner in the past 12 months by age group the program including loans, analytical work and technical ÔÔ Increase in proportion of youths aged 15-to 19-years assistance (including reimbursable Technical Assistance). and 20-to-24 years who both correctly identify ways To support government of Botswana’s top three priori- of preventing the sexual transmission of HIV and who ties—the health, energy, and transport sectors—the three reject major misconceptions about HIV transmission flagship IBRD projects include the Botswana HIV/AIDS ÔÔ Increase in proportion of youth aged 15-to-19 years Prevention Support Project, an Integrated Transport Proj- and 20-to-24 years reporting either (a) no sexual activ- ect, and the Morupule B Electricity Generation and Trans- ity; or (b) condom use during the last sexual encounter mission Project. with a non-regular partner in the past 12 months ÔÔ Reduction of proportion of people 15-to-19 years and 20-to-24 years who report a sexual partner with more IBRD Contribution than 10 years age difference during the last 12 months. ÔÔ IBRD net commitments: US$372.4 million; Partial credit guarantee US$242.7m Approach IBRD provides loan financing and an innovative partial credit guarantee as part of a US$379 million financing pack- Due to its strong fiscal position, Botswana has had very lim- age to enable Botswana to move forward with an urgently ited demand for IBRD services in the past two decades, but needed electricity generation and transmission project recently has renewed its partnership with the institution to (Morupule B). This will prevent the economy from com- benefit from the IBRD’s global knowledge and expertise, ing to a standstill when South Africa halts power exports to and, increasingly, IBRD lending. The World Bank—within Botswana in 2013. IBRD financing also helps Botswana in the framework of its first-ever Country Partnership Strat- preparing a robust low-carbon growth strategy, in strength- egy (FY09–13)—seeks to provide Botswana with world ening management skills in the power sector, and in estab- class expertise and financing to help the country address lishing a new independent electricity regulator. Botswana key developmental issues including HIV/AIDS, public sec- has no prior experience in financing and managing a project tor effectiveness, and competitiveness. The IBRD program of this scale and technical and financial complexity and so seeks to leverage funds from other development partners has tapped the Bank’s expertise. The project also supports and has significant regional and public goods dimensions environmental and social safeguards for the investment. IBRD RESULTS 3 Bank engagement in the energy sector has also resulted in that the proposed operation be financed utilizing the IBRD the government examining options for lifeline block tariffs “buy-down” facility. ie. providing electricity for free or for a nominal price to the poorest as the current electricity tariff policy does not The African Development Bank and the OPEC Fund for include measures to protect poor households. International Development (OFID) also support Botswa- na’s road sector, and the Morupule B Project has seen ex- In the area of HIV/AIDS, IBRD is providing a loan of tensive cooperation between IBRD, Industrial Commercial US$50 million to the Botswana National HIV/AIDS Pre- Bank of China Ltd., and SINOSURE. vention Support (BNAPS) project which has been designed to address the strategic and implementation gaps identified in the government’s response to HIV/AIDS, including its Next Steps focus on prevention as a national “survival strategy”. The BNAPS project additionally has been developed to support The World Bank and the government are pursuing the three and catalyze the implementation of the new National Op- current projects in Botswana as a matter of the highest pri- erational Plan for Scaling Up HIV Prevention in Botswana. ority. The Bank’s engagement in long-term reform efforts The plan focuses on the prioritization of targeted activities aimed at increasing the efficiency of public spending and to help the most-at-risk-populations with the greatest po- improving service delivery is also increasing in Botswana. tential impact for preventing new HIV infections, and also A review of public expenditures is nearly complete, with enables a corresponding prioritization regarding national follow-up work planned to reform the budget process. Fee- resource allocation. based technical assistance to implement far reaching re- forms in the water sector is well advanced, and the Bank is IBRD is also providing US$186 million in financing for an also helping advance policy work in agriculture and climate integrated transport project that aims to enhance the effi- vulnerability. ciency of the transport system by building modern business capacity in the public administration, and improve plan- ning aspects of inter-regional and critical transport infra- Contacts: structure. World Bank Office in Gaborone, Botswana Country Manager Partners Timothy Gilbo E-Mail: tgilbo@worldbank.org The European Commission is supporting the Bank’s HIV/ AIDS project through a US$20 million “buy down” grant. World Bank Office in Washington, DC, USA The IBRD loan buy-down mechanism was developed to Country Program Coordinator increase the flexibility and cost-effectiveness of funding for Lilia Burunciuc projects where people are most at risk. To date, the buy- Office Phone: (202) 473-8865 down mechanism has been piloted on one IBRD project E-mail: Lburunciuc@worldbank.org to support tuberculosis control in China. This instrument relies on donor resources to lower the cost of an IBRD Country Officer loan targeted at priority health activities. The release of Ana van der Wouden the donor funds are dependent on project performance, as Office Phone (202) 458-2976 measured against jointly agreed indicators, within a speci- E-mail: avanderwouden@worldbank.org fied 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 4 HELPING BOTSWANA CONFRONT A CHALLENGING FUTURE learn more World Bank in Botswana: http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/AFRICAEXT/BOTSWANAEXTN/0,,menu PK:322817~pagePK:141159~piPK:141110~theSitePK:322804,00.html Projects and Programs: http://web.worldbank.org/external/default/main?menuPK=322843&pagePK=141155&piPK=141124&theSite PK=322804 Data and Statistics: http://web.worldbank.org/WBSITE/EXTERNAL/DATASTATISTICS/0,,contentMDK:20535285~menuPK:11 92694~pagePK:64133150~piPK:64133175~theSitePK:239419,00.html European Commission in Botswana: http://www.delbwa.ec.europa.eu/