Money – Fintech & Payments · Editorial

By Moakanyi Magazine · Global Issue · June 2026

Infrastructure ambition is easy to announce and expensive to finance. The distance between the two is measured in basis points. A power line, a mine shaft or an exploration programme that pencils out at one interest rate quietly stops making sense at a higher one – and the rate is set far from the project site.

Botswana signed energy and mineral exploration deals with Oman in April, a signal of intent to broaden the country's mineral and energy base. But intent meets the same constraint every builder faces in 2026: financing costs have risen, and higher financing costs reshape which parts of an ambitious programme actually get built.

The arithmetic of a dearer rate

Large projects are built on borrowed money repaid over years. When the cost of that money rises, the burden lands hardest on long-dated, capital-heavy work – exactly the kind of exploration and energy infrastructure these deals describe. The further into the future the returns sit, the more a higher rate discounts them, and the thinner the margin for delay or cost overrun becomes.

Exploration carries an added layer of uncertainty. The spending comes first and the discovery, if any, comes later, which means the capital is committed before the return is known. When financing is cheap, that risk is easier to carry across a portfolio of prospects. When it is dear, each unsuccessful programme costs more to have funded, and the appetite for speculative work contracts accordingly.

Higher rates do not cancel ambition; they shorten the list of projects ambition can afford.

What it means for Botswana's pipeline

For Botswana, the exploration and energy partnerships are a route towards diversification beyond diamonds and towards firmer domestic power supply. Both are long-horizon bets. In a dearer-capital environment, the deals that proceed will tend to be those with credible partners, clear phasing and a realistic view of when revenue actually arrives. Structuring matters as much as the headline now.

That places weight on how these arrangements are financed – the blend of partner capital, sovereign exposure and phased commitment. A deal that loads costs early and returns late is more fragile when money is expensive. One built to release capital in stages, against milestones, is more likely to survive a volatile rate environment intact.

In a high-rate cycle, the financing structure is part of the engineering.

Partners share the cost as well as the upside

One reason cross-border arrangements such as the Oman deals matter in a high-rate environment is that they spread the financing burden. A partner bringing its own capital reduces the share Botswana must raise at today's rates, and a phased commitment lets both sides test the work before committing the bulk of the money. That is not just diplomacy; it is a way of managing the cost of capital.

The discipline is to make sure the partnership genuinely shares risk rather than simply deferring it. An arrangement that looks affordable because costs are pushed downstream can become a liability if those costs land in a year when money is dearer still. For Botswana, the value of a partner is measured partly in how much rate exposure it actually absorbs.

A good partner brings capital that Botswana would otherwise borrow at today's rates.

Ambition priced honestly

The risk for a small economy is not that it aims too high but that it prices the cost of capital too low when it plans. Botswana's energy and mineral ambitions are sound on their own terms. The discipline the moment demands is to test each one against today's financing cost, not yesterday's, and to sequence the programme so that dearer money does not quietly hollow it out.

The Oman agreements give the country options. Which of those options become operating assets will depend less on the signing ceremony than on whether the numbers still hold when the financing is drawn down at current rates. An agreement is a possibility; a financed, phased project is a commitment, and the gap between the two is exactly where a high cost of capital does its quiet work.

For Botswana, the most useful habit in this cycle is to test every infrastructure ambition against today's financing cost before it is announced, not after. That discipline does not dampen ambition so much as direct it towards the projects that will still make sense when the money is actually borrowed – which is the only kind of ambition that ends in built assets.

For Botswana, the cost of capital is now a design parameter, not a footnote.

Sources: Reuters