Botswana has signed an agreement worth about $2bn with Dubai-based Albaddad Group to develop a mixed-use urban project, in a move aimed at attracting foreign investment and boosting private sector participation in the country's economic development.

The state-owned Botswana Development Corporation (BDC) said the project, known as New Botswana City, will cover 124,000 square metres and include the Albaddad Botswana Global Exhibition and Trade Centre, a retail boulevard, five hotels and residential developments, the Arabian Gulf Business Insight wrote on June 8.

BDC managing director Oteng Keabetswe said the first phase of the development would be the exhibition and trade centre, with Albaddad providing full financing for the entire project.

“Our role as BDC was to advance our land into the project,” Keabetswe said, adding that the land contributed by the state-owned investment agency is valued at nearly 200mn pula ($15mn).

He said BDC's contribution represented just 0.75% of the total project cost, but the corporation would hold a 5% equity stake in the development, with plans to increase its shareholding to 26% over time.

“Albaddad, through its balance sheet, has been able to mobilise global capital to fund the project,” Keabetswe said.

The agreement comes as Botswana seeks to diversify investment sources amid liquidity constraints in the domestic market.

Albaddad Group's planned $2bn New Botswana City development is expected to rank among the largest foreign direct investment projects in the country's history.

Separately, President Duma Boko told Bloomberg the government was in talks with the United Arab Emirates and Oman over potential backing for Botswana to acquire a strategic stake in diamond producer De Beers from Anglo American. Botswana already owns 15% of De Beers.

While the UAE's direct investment presence in Botswana remains relatively modest, Emirati capital has expanded rapidly across Africa in recent years, making the Gulf state one of the continent's largest state-backed investors. UAE companies have acquired stakes in mining projects spanning Ethiopia, Mali, Ghana and Zambia, while logistics groups DP World (DFM: DPW) and AD Ports Group (ADX: ADPORTS) have invested heavily in ports, terminals and transport infrastructure across Central and West Africa.

The strategy reflects the UAE's growing focus on securing supplies of critical minerals and building influence over the trade routes that connect African resources to international markets.