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DOUGLAS RASBASH
Africa-Press – Botswana. As it became crystal clear at this year’s Future of Mining Summit in Gaborone this week, industry must pay for the infrastructure it needs because the idea that the state can continue to act as a universal infrastructure benefactor is increasingly untenable.
As Botswana hosts the high-profile Future of Mining Summit 2025 at Boipuso Hall on 16 and 17 June, a quietly radical shift in national development thinking is being publicly declared: no more subsidies for infrastructure. No more speculative mega-projects. And no more mining without logistics.
The message is clear – mining companies in Botswana must pay their way, and the state will no longer bankroll rail, road and port infrastructure that fails to deliver measurable returns to the economy. The age of infrastructure as a political trophy is over. From now on, value must be added. Or value won’t be funded.
Transport: Mining’s Unsung Hero
“Transport doesn’t mine the minerals,” said the Minister of Transport and Infrastructure, Noah Salakae, in his keynote address to the summit, “but it moves them, exports them, and delivers their value to the people.” That quiet logistics hero – often sidelined in policy debates – has finally taken centre stage. The mining industry may get the headlines and foreign investment, but without reliable logistics, the minerals stay in the ground or rot in the yard.
This is a truth often overlooked: mining and transport are not parallel sectors – they are Siamese twins. One cannot thrive without the other. And yet, as the minister noted, “The greatest bottleneck to scaling up Botswana’s mining exports is not under the ground – it is above it.” The failure to modernise and expand logistics infrastructure has become a national brake on growth.
The Infrastructure Reckoning
Historically, Botswana’s government funded mining-related infrastructure – from rail lines and highways to electricity and dry ports – on the assumption that mining’s fiscal returns would justify the cost. That worked well in the heyday of diamond-driven surpluses. But that era has come to a sobering end. Diamond revenues have fallen sharply: production is down 27% since 2022, sales have plummeted by 46%, and the national growth rate dipped by 3% in 2024 alone.
Botswana’s fiscal house – heavily reliant on diamond rents – is now under pressure to diversify or shrink. The idea that the state can continue to act as a universal infrastructure benefactor is increasingly untenable. Enter a new doctrine: value-driven infrastructure. Projects must now pass a simple test – do they deliver economic returns commensurate with their cost? If not, they won’t be built.
Smart Partnerships, Real Money
Instead of cutting back on infrastructure, the government is embracing smart financing. As Minister Salakae made clear, Botswana is “actively exploring infrastructure bonds, including green and sustainability-linked bonds” to unlock private capital. These instruments – backed by Botswana’s still-strong creditworthiness – are designed to fund specific projects that generate long-term revenue, whether from tolls, port fees, or lease payments.
This move is part of a broader strategy to shift infrastructure development from a public expense to a private-sector-driven investment opportunity. Sovereign guarantees, blended finance, and public-private partnerships (PPPs) will feature prominently in the funding mix. Critically, so will user-pays mechanisms. “We are establishing modalities such as shadow tolling, cost-sharing arrangements, and user-pays principles,” said the minister, drawing from global examples such as Chile’s mining royalty infrastructure funds, India’s viability gap corridors, and Australia’s mine-to-port user models. In simple terms, if a mining company benefits from a new rail line, it will help pay for it, either upfront or over time. The government will no longer write blank cheques.
The End of Free Rides
The implications for mining firms are profound. In the past, it was enough to secure a concession, develop a mine, and expect the government to lay down the roads and the rails. No more. The new expectation is for co-financing. Botswana is not alone in this shift. Across the continent and beyond, governments are growing weary of subsidising high-profit extractive industries. Infrastructure, particularly in the transport and energy sectors, is increasingly being treated as a commercial asset, not a public good.
This shift also responds to a growing sense of national interest. With diamond earnings falling, the government needs new ways to mobilise resources. A recent position paper estimates that to replace just P23 billion in lost diamond revenues, the private sector must double profits, triple exports, and create at least 200,000 new jobs. This won’t happen without leveraging the infrastructure sector.
From Landlocked to Land-Linked
To that end, Botswana is aggressively pursuing regional connectivity. New and revitalised rail links to Namibia, Mozambique and South Africa are on the table, as is the strategic vision of acquiring equity in coastal ports. The long-discussed Trans-Kalahari Railway is no longer just an engineering blueprint; it is a logistics imperative.
“We must stop seeing ourselves as landlocked,” said Salakae. “We are land-linked. Our infrastructure must reflect that.” But the regional dream comes with a bill. Without industry backing and innovative funding – bonds, shadow tolls, planning gain, and co-investments – the vision will remain just that: a vision.
Green Corridors, Digital Freight
Notably, this is not just a money story. Sustainability and digitalisation feature prominently in Botswana’s logistics overhaul. Efforts are underway to shift bulk cargo from road to rail to cut emissions, reduce road maintenance costs and enhance road safety. Intermodal logistics – combining trucks, trains, and ports – are being promoted as the new standard.
Smart permits, real-time cargo tracking, and digital customs are on the government’s radar, forming part of what the minister called “a smart mining economy with smart logistics”. This approach dovetails with emerging infrastructure funding options. For instance, green bonds could fund electrified rail or solar-powered dry ports, with repayments linked to user fees or carbon levies.
A Philosophical Pivot
Perhaps the most significant change is conceptual. Infrastructure is no longer viewed as a sunk cost. It is now a productive asset – a generator of jobs, exports, efficiency, and, importantly, tax revenues. This philosophical pivot aligns with Botswana’s broader agenda: to transition from a diamond-dependent economy to one powered by private enterprise, trade and innovation. And infrastructure – especially transport logistics – is the bridge to that future.
As the summit’s theme, “New Opportunities, Smart Partnerships,” suggests, this is no longer about what the government can do for industry but about what the government and industry must now do together.
Innovative Funding: Beyond Budgets and Bailouts
To deliver the next generation of infrastructure, Botswana is reaching beyond the tired toolbox of state budgets and foreign aid. The focus now is on innovative financing mechanisms that align risk, reward and responsibility.
Infrastructure Bonds: Chief among these is infrastructure bonds, especially green and sustainability-linked bonds. These instruments attract private capital by tying returns to measurable outcomes – such as emissions reductions, logistics efficiency, or regional trade facilitation. For example, a bond might fund a new railway electrification project, with investor returns linked to carbon savings or rail freight volumes.
Shadow Tolling: This is also gaining traction. Instead of charging users directly, infrastructure providers are compensated based on actual usage – vehicle counts, tonnage moved, or reliability metrics. This makes logistics upgrades viable even in politically-sensitive or low-income areas where tolls may be unpopular.
Planning Gain: Another tool in the funding mix is Planning Gain or Land Value Capture. Here, the increase in land value caused by new infrastructure – say, a transport hub or new rail spur – is partially recouped from developers. A mining company setting up near a new logistics corridor, for instance, may be required to contribute to feeder roads or digital systems that enhance export readiness.
Blended Finance: Additionally, Botswana is exploring blended finance in which concessional funds from development banks de-risk private capital. This lowers the cost of borrowing and crowds in commercial investors who would otherwise hesitate.
Together, these mechanisms signal a dramatic shift. Infrastructure is no longer a government handout but an investable asset class – one that demands clear returns, responsible usage, and co-investment from its primary beneficiaries.
Minister Salakae ended his speech with a challenge to the mining industry: “Help us design and pay for the logistics of tomorrow,” he said. “The days of subsidised infrastructure are over. Work with us – or watch the opportunity pass you by.”
This isn’t just rhetoric. It is a policy shift and is happening now. For Botswana’s mining sector, the message is unequivocal: Without transport, there is no mining. And without shared investment, there will be no infrastructure. Industry must step up to the mark because the free ride is over.
Source: Botswana Gazette
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