Botswana Turns to UAE for $1.9 Billion Project as Diamond Revenues Falter

For decades, Botswana’s economic success has been built on diamonds. The precious stones transformed one of the world’s poorest countries into an upper-middle-income economy and funded everything from roads and schools to healthcare. But that model is under growing strain as demand from China weakens, lab-grown diamonds gain market share and global luxury spending slows. Faced with shrinking revenues and tighter public finances, the government is increasingly looking beyond its mineral wealth and toward foreign investors to finance its next chapter of growth. The United Arab Emirates has emerged as one of the most aggressive investors on the African continent, deploying billions of dollars into ports, logistics networks, mining assets and real estate development.

Botswana is turning to Gulf investors to help finance its next phase of economic development, announcing plans for a $1.9 billion mixed-use urban project backed entirely by a Dubai-based company in what officials say will be among the largest foreign direct investments in the country’s history.

The project, led by Dubai construction and infrastructure company Albaddad, comes as Botswana seeks new sources of capital to diversify an economy heavily dependent on diamonds, a sector facing mounting pressure from weak global demand and competition from lab-grown stones.

The 124,000-square-meter development, known as New Botswana City, will include a trade and exhibition center, office towers, retail space, residential properties and five hotels. Construction of the Botswana World Trade Center, a centerpiece of the project, has already begun, President Duma Boko said.

Albaddad will provide all of the financing for the development, according to Botswana Development Corporation, the state-owned investment agency overseeing the project. The agency is contributing land and will initially hold a 5% stake, which it hopes to increase to 26% over time.

The investment reflects Botswana’s growing efforts to attract foreign capital as government finances come under strain.

Botswana is looking “to use other people’s capital to advance [its] growth mandate […] as our current capital is drying [up],” Oteng Keabetswe, managing director of Botswana Development Corporation, said. He described the southern African nation as “a safe haven” for investors that “provides the security [and] no exchange controls […] that are important to global capital.”

The deal highlights the expanding economic footprint of the United Arab Emirates across Africa, where Emirati companies have become major investors in sectors ranging from ports and logistics to mining, energy and real estate.

While the UAE has maintained a relatively limited presence in Botswana compared with other African countries, it has emerged as one of the continent’s largest state-backed investors. Emirati firms have established positions in mining projects in Ethiopia, Mali, Ghana and Zambia, while logistics giants such as DP World and AD Ports have expanded operations across Central and West Africa as Gulf states seek access to critical minerals and trade corridors.

For Botswana, the timing is significant.

Diamonds account for roughly 80% of the country’s exports and about a quarter of economic output. But declining diamond prices, weaker demand from China and growing competition from synthetic alternatives have weighed on growth, pressured public finances and contributed to a downgrade of the country’s sovereign credit rating.

The government’s search for new investment partners extends beyond urban development. Botswana is also in discussions with the UAE and Oman about securing support for a potential acquisition of a larger stake in De Beers, the world’s largest diamond producer.

President Boko recently told Bloomberg that the Gulf nations were among several partners being considered to help finance a strategic investment in the company, where Botswana already owns a 15% stake.

The UAE’s interest in Botswana also fits into a broader push by Gulf investors to expand their international real estate portfolios.

Earlier this year, Emaar founder Mohamed Alabbar unveiled plans to invest between $10 billion and $11 billion in developments around Damascus through Eagle Hills, while the company is studying as much as $50 billion in projects across Syria. Other major Emirati-backed ventures include Egypt’s $35 billion Ras El Hekma coastal development and large-scale regeneration projects in London.

For Botswana, however, the New Botswana City project carries particular significance. The country has long been praised for political stability and prudent economic management, but slowing diamond revenues are forcing policymakers to rethink how growth is financed.

The arrival of nearly $2 billion in foreign capital suggests Gulf investors increasingly view Africa’s stable democracies as attractive destinations for long-term investment, even as competition intensifies for influence and economic opportunities across the continent.

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