Money – Capital & Investment · Editorial

By Moakanyi Magazine · Global Issue · June 2026

A sovereign rating is read most closely by the people who lend a country money. When a downgrade lands, it can raise the cost of government-backed projects, because lenders and contractors price the higher perceived risk into every tender. The 2026 budget projected a rebound, but the rating environment around that rebound shapes how much each public project ultimately costs to deliver.

The connection is easy to miss because it runs through finance rather than headlines. A notch on a rating scale sounds abstract, yet it travels through the cost of capital to the price of concrete, steel and labour on projects the public ultimately pays for. The rating is a number; the consequence is a road that costs more or arrives later.

For a country that funds much of its development through public and government-backed projects, that transmission matters more than it would for an economy where private investment carries the load. In Botswana, the state's borrowing cost is close to the centre of how much the country can build, which makes the rating a development variable as much as a financial one. The agencies that set it are, in effect, helping to set the country's construction budget.

How a rating reaches the tender

When a country's creditworthiness is marked down, the interest on government borrowing rises, and that higher cost of capital flows into any project the state backs or guarantees. A contractor pricing a road or power tender factors in the cost of financing and the risk of delayed payment, both of which a downgrade worsens. The same project that was affordable at one rating costs more at the next notch down, even though nothing about the road itself has changed.

That premium is paid quietly, spread across the life of the project and the tender book, which is precisely why it is easy to underestimate. A few percentage points on financing, compounded over a long-dated infrastructure project, is a substantial sum the budget must find from somewhere – usually by building less, or building later, than planned.

The effect compounds across a programme rather than a single contract. When every tender carries a slightly higher financing cost, the cumulative bill across a year of public projects is large enough to reshape what the country can afford, even if no single project looks dramatically more expensive on its own.

A downgrade is a price increase the country did not choose.

Why Botswana's record matters

Botswana has historically held one of the stronger credit profiles in Africa, a reputation built on prudent management and political stability. That standing is an asset precisely because it keeps the cost of government-backed projects lower than peers pay. Protecting it is not vanity; it is the difference between a tender that fits the budget and one that does not, repeated across every project the state commissions.

Because diamond revenue underpins the public finances, anything that pressures that revenue can pressure the rating, and so the tender bill. The chain runs from the global diamond market straight to the price of a domestic project, which is why fiscal credibility has to be defended in calm years rather than rescued in difficult ones. A rating is slow to earn and quick to lose, and the cost of regaining it is paid in the meantime.

This gives prudence a concrete payoff that is often hard to demonstrate. Every year of disciplined management that holds the rating steady is a year in which the country builds at a lower cost than its less careful peers – a saving that does not appear as a line item but is real in every tender that comes in affordable.

Creditworthiness is infrastructure you cannot see but always pay for.

The so-what for Botswana is that fiscal credibility and the cost of building are the same conversation. Holding a strong rating through a slower cycle is one of the most concrete ways the country can keep its development programme affordable, project by project and tender by tender – and the cheapest project is the one financed at a rate the country has earned the right to. Protecting that rate is unglamorous work, but it buys more roads, clinics and power lines than any single tender decision ever could.

Sources: Reuters