"It is limping along and there is a real danger that the whole thing could collapse," Khama told AFP on the sidelines of a rally ahead of elections in Botswana.
His comments come as Prime Minister Morgan Tsvangirai called off a cabinet meeting and any further appointments after his close ally Roy Bennett was detained on terrorism charges in a ruling his party said was a serious attack on the credibility of the inclusive government.
Khama has been the only southern African leader to break ranks and criticise President Robert Mugabe, refusing to recognise his government after failed elections in March last year which were accompanied by political violence.
"If it was to collapse for genuine reasons we would certainly not recognise a Zanu PF-only government or certainly not one headed by President Robert Mugabe because he certainly did not win the presidential election last year," he said.
Khama said while he supported the lifting of targeted sanctions against Mugabe and his allies to help the process along this did not mean "we want to allow them to be let off the hook."
"They should still demonstrate very categorically that their heart is in the process of bringing about a new direction for that country."- AFP