Botswana has officially unveiled a new sovereign wealth fund designed to boost economic diversification, create jobs, and strengthen the management of state companies, government officials confirmed on Wednesday.
The move comes at a difficult time for the Southern African nation, which has long been considered an African economic success story but is now facing the impact of a prolonged slump in the global diamond market, its main export.
For more than three decades, the country has operated the Pula Fund, a sovereign wealth fund managed by the central bank, which preserved diamond revenues for future generations and provided a buffer against fiscal shocks. However, years of recurring deficits have significantly eroded the Pula Fund’s reserves.
The new sovereign wealth fund is intended to serve a broader purpose. Its first board of directors includes both local and international experts, tasked with reimagining how Botswana can use its resources to foster growth.
Board chairperson Farouk Gumel explained that, unlike the Pula Fund, the new institution will not simply be about savings.
“The Pula Fund is a liquidity stabilisation fund, it is a fund that takes cash and keeps it for a rainy day. This sovereign wealth fund will not be only about stabilisation, it’s about growth.”
Farouk Gumel
He stressed that the mandate would extend to managing assets, including some of the nation’s underperforming state-owned enterprises.
Deputy board chairperson Emma Peloetletse, who also serves as permanent secretary to the president, added that the fund’s structure would ensure sustainability. “The plan was to draw only from returns generated by the fund, not its capital investments,” she explained. She also confirmed that investments could be made both within Botswana and abroad.
Fund Aims To Cushion Diamond Dependency
Botswana currently operates dozens of state-owned companies, many of which are struggling financially and require continuous government support. Officials hope that the new fund can help turn these enterprises into viable contributors to national revenue.
The country’s economy contracted by 3% last year, with forecasts pointing to another contraction in 2025 due to the persistent downturn in diamond sales. Diamonds still account for about 75% of export earnings and one-third of government revenues, leaving the nation exposed to global market volatility.
This economic vulnerability has spurred an intensified effort to diversify. Earlier this year, President Duma Boko launched the Botswana Economic Transformation Programme (BETP), a strategic framework aimed at shifting the country’s economic base beyond diamonds. The BETP prioritises the development of manufacturing, agriculture, financial services, and tourism while positioning Botswana as a regional financial hub.
A central feature of this plan is an emphasis on digital innovation and e-commerce. The government has rolled out a national e-commerce strategy to foster a vibrant knowledge economy, supporting entrepreneurship and signalling a shift from resource extraction to digital-driven growth. Infrastructure upgrades, particularly in transport, logistics, and technology hubs, are also underway to attract both domestic and foreign investment.
Tourism remains another pillar of diversification. With its globally renowned wildlife and natural reserves, Botswana is promoting eco-tourism as a sustainable sector that can generate jobs and foreign exchange. Small and medium enterprises are also being encouraged through initiatives to improve access to finance and new markets.
These measures align with Vision 2036, the country’s long-term development plan, which envisions inclusive and sustainable growth. The plan emphasises reforms in the public sector to create a more competitive business environment and unlock the full potential of the private sector.
Botswana’s new sovereign wealth fund is therefore more than a financial mechanism. It is a strategic tool intended to cushion the economy from external shocks, channel investment into priority sectors, and drive the country toward a diversified future.
As diamond revenues decline, the urgency for transformation grows stronger. By combining disciplined financial management with bold investments in new industries, Botswana aims to safeguard its legacy of stability while building a more resilient foundation for the decades ahead.
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