Botswana bets on P25.5 billion ‘new city’ to drive diversification

Botswana has embarked on a significant economic diversification initiative with the launch of the P25.5 billion ‘New Botswana City’ mixed-use development near Sir Seretse Khama International Airport. This ambitious project, a collaboration between the state-owned Botswana Development Corporation (BDC) and UAE-based ALBADDAD Holding, represents one of the country’s largest private-sector-led investments. The development aligns with Botswana’s long-term strategy to reduce its reliance on diamond mining by fostering growth in non-mineral sectors, particularly through leveraging frameworks such as Public-Private Partnerships (PPPs) and Special Economic Zones (SEZs). Legal practitioners should note the intricate regulatory landscape governing such large-scale developments, including land use planning, environmental assessments, and foreign investment regulations, all critical for successful project execution and compliance.

Botswana is charting a new course for its economic future, moving beyond its traditional dependence on diamond revenues with the launch of the P25.5 billion ‘New Botswana City’ project. This monumental mixed-use development, strategically located near Sir Seretse Khama International Airport, signifies a pivotal step in the nation’s Economic Diversification Drive (EDD) and its broader strategy for sustainable growth. The project is a collaborative effort between the Botswana Development Corporation (BDC), a government-owned entity, and UAE-based ALBADDAD Holding, underscoring a commitment to attracting foreign direct investment and fostering public-private partnerships.

This ambitious undertaking is not merely a construction project; it is a testament to Botswana's resolve to create new engines of growth, employment opportunities, and a more resilient economy. For legal professionals, the ‘New Botswana City’ project presents a complex interplay of corporate law, land use planning, environmental regulations, public procurement, and foreign investment frameworks. Understanding these legal dimensions is crucial for advising stakeholders involved in this and similar large-scale infrastructure and development initiatives within Botswana.

This article will delve into the legal and regulatory landscape underpinning such a significant development, examining the roles of key institutions, relevant statutes, and the implications for practitioners navigating Botswana’s evolving investment climate. It will highlight the legal mechanisms facilitating economic diversification and the challenges and opportunities inherent in projects of this magnitude.

The 'New Botswana City' project is situated within Botswana's broader strategic vision for economic diversification, articulated in documents such as the 'Botswana Excellence – A Strategy for Economic Diversification and Sustainable Growth,' approved in 2008. This strategy aims to reduce the country's high dependence on the mineral sector by promoting growth in other areas, including manufacturing, agribusiness, and services. The Botswana Development Corporation (BDC), established in 1970 under the Companies Act, serves as the government's primary investment arm, mandated to drive industrialization and provide financial assistance to commercially viable projects that pioneer new industries, stimulate private sector growth, and create employment.

Large-scale developments in Botswana are subject to a robust regulatory framework. The Town and Country Planning Act (Cap. 32:09) governs land use and development, requiring all projects to undergo a planning permission process and receive approval from local planning authorities. Crucially, projects of this scale, defined as those involving more than 20 dwelling units, a commercial enterprise over 500m², industrial development over 1000m², or a single land use greater than 10 hectares, necessitate specific planning permission. Furthermore, the Environmental Assessment Act, 2011 (No. 10 of 2011), mandates Environmental Impact Assessments (EIAs) for major development activities to identify, evaluate, and mitigate potential environmental effects, with the Department of Environmental Affairs (DEA) overseeing this process.

The project's nature as a public-private partnership (PPP) between BDC and ALBADDAD Holding brings it under the purview of Botswana's Public-Private Partnership Policy and Implementation Framework 2009. While Botswana currently lacks a specific PPP law, this policy provides guidance for the development and implementation of such projects. The Public Procurement Act 2021 further clarifies that it applies to all procurement activities, including PPPs, and outlines institutional frameworks for these arrangements. The Botswana Investment and Trade Centre (BITC), established by the Botswana Investment and Trade Centre Act, 2011, plays a vital role in promoting and facilitating both local and foreign investment, ensuring compliance with the Companies Act, 2003, and other relevant legislation for foreign entities.

The 'New Botswana City' project, given its scale and strategic location near the Sir Seretse Khama International Airport, is highly likely to fall within the ambit of Botswana's Special Economic Zones (SEZs) framework. The Special Economic Zones Act, 2015, which became operational in 2018, established the Special Economic Zones Authority (SEZA) to develop and manage SEZs across the country. The Airport City SEZ, specifically, is designated for activities such as diamond beneficiation, logistics, and pharmaceuticals, making it a fitting location for a mixed-use development aimed at diversification. Operating within an SEZ offers significant incentives, including a reduced corporate tax rate of 5% for the first 10 years (rising to 10% thereafter), VAT exemptions on raw materials, duty-free imports of specialized machinery, and exemptions from withholding taxes on dividends for foreign shareholders. These incentives are critical for attracting and retaining the substantial foreign investment required for a P25.5 billion project.

The legal structure of the partnership between BDC and ALBADDAD Holding will be governed by the Companies Act, 2003 (Cap. 42:01), which provides the framework for company incorporation, management, and dissolution. Recent amendments, such as the Companies (Amendment) Act, 2025, have introduced stricter requirements for transparency and corporate governance, including the disclosure of beneficial ownership, which will be pertinent for both the local and foreign partners. Furthermore, the land tenure system in Botswana, comprising tribal, state, and freehold land, dictates the legal basis for land acquisition and use. Given the project's scale and location, it is probable that the land is state-owned, allocated through Fixed Period State Grants (FPSGs) which provide long-term leases, typically up to 99 years, facilitating significant urban development while maintaining government control over land use.

Navigating the environmental and planning regulatory landscape will be paramount. The Environmental Assessment Act, 2011, requires a comprehensive EIA for projects with potential significant adverse environmental impacts. The EIA process involves several stages, including project registration, scoping, impact assessment, mitigation planning, and public and technical review, administered by the Department of Environmental Affairs. Failure to comply can lead to significant delays and penalties. Similarly, the Town and Country Planning Act mandates planning permission for all land development, with local planning authorities reviewing applications and potentially consulting other agencies like the Water Utilities Corporation or Botswana Power Corporation. The integration of these various regulatory requirements necessitates a coordinated legal and project management approach.

The absence of a dedicated PPP law, while a draft bill is anticipated, means that PPPs in Botswana are primarily guided by policy and the Public Procurement Act 2021. This reliance on policy rather than specific legislation can introduce a degree of ambiguity, particularly concerning the definition of a PPP and the precise authority of public entities to enter into such contracts, as highlighted by discrepancies between the PPP Policy and the Public Finance Management Act. Practitioners must carefully scrutinize the contractual arrangements to ensure alignment with both the policy framework and the broader procurement legislation, mitigating potential conflicts of interest within the PPP Unit's advisory and approval roles.

Moreover, the project's emphasis on diversification and job creation aligns with the objectives of the Botswana Investment and Trade Centre (BITC), which assists foreign investors in projects that diversify export revenue, create employment, and facilitate skills transfer to Batswana. While there are no explicit ownership transference requirements, government initiatives aim to secure citizen involvement in the private sector, which may influence local content and employment strategies within the project. The successful execution of 'New Botswana City' will therefore depend on meticulous adherence to these diverse legal and policy requirements, ensuring both commercial viability and national developmental objectives are met.

The 'New Botswana City' project represents a critical juncture for Botswana's economic trajectory, embodying the nation's strategic pivot towards diversification and sustainable growth. For legal practitioners, this P25.5 billion development underscores the increasing complexity of large-scale infrastructure and urban development projects in emerging African economies. Success hinges on a comprehensive understanding and diligent navigation of Botswana's multi-layered legal framework, encompassing corporate governance, public-private partnership policies, special economic zone incentives, stringent land use planning, and environmental compliance.

Practitioners advising on similar ventures must prioritize early engagement with regulatory bodies such as the Special Economic Zones Authority, the Department of Environmental Affairs, and local planning authorities. Careful attention to the evolving PPP framework, particularly as a dedicated PPP law is anticipated, will be crucial for structuring robust and enforceable agreements. Furthermore, ensuring compliance with foreign investment regulations and local content requirements, while leveraging available incentives, will be key to mitigating risks and optimizing project outcomes. The 'New Botswana City' serves as a blueprint for future diversification efforts, highlighting the indispensable role of sound legal counsel in transforming national economic aspirations into tangible realities.