Botswana has set up a new sovereign wealth fund to help diversify the economy beyond diamonds, create jobs and take a more active role in managing state-owned companies, officials said on Wednesday, as a prolonged downturn in global diamond demand weighs on growth.
The southern African country has run the central bank-managed Pula Fund for more than three decades to save mineral revenues and stabilise public finances. But repeated budget deficits have eroded those buffers, prompting a separate vehicle with a different mandate.
“The Pula Fund is a liquidity stabilisation fund; it takes cash and keeps it for a rainy day. This sovereign wealth fund will not be only about stabilisation — it’s about growth,” board chair Farouk Gumel told a press conference. “We are not only going to be managing cash, but also assets, including some state-owned entities.”
Deputy board chair Emma Peloetletse said withdrawals would be limited to investment returns rather than capital and that the fund could invest both domestically and abroad. Officials said the inaugural board blends local and international experts.
Botswana owns dozens of state firms, many loss-making and reliant on government support. The economy contracted 3% last year and authorities forecast another contraction in 2025 as diamond sales remain weak. Diamonds account for roughly three-quarters of exports and about one-third of fiscal revenue.