Botswana has launched a new sovereign wealth fund aimed at diversifying the economy, creating jobs, and improving the management of state-owned enterprises. The announcement was made by authorities on Wednesday (10), at a time when the country is facing economic challenges.
Although considered a success story in Africa, Botswana has entered a recession due to the prolonged slowdown in the international diamond market, its main export product and the backbone of its economy.
For more than three decades, the country created the Pula Fund, intended to preserve a portion of diamond revenues for future generations and stabilize public finances. However, this fund, managed by the central bank, was depleted due to recurring budget deficits.
Authorities assure that the new fund will have a different role, focusing on economic growth. Its Board of Directors consists of national and international experts who will guide investment strategy and asset management.
“The Pula Fund is a liquidity stabilization fund—it receives money and keeps it for difficult times. This sovereign fund will not only be for stabilization but also for growth,” said Farouk Gumel, Chairman of the Board, at a press conference. Emma Peloetletse, Vice-Chair and Permanent Secretary to the President, explained that only the income generated by the fund will be used, preserving the invested capital, and that the fund may allocate resources both abroad and within Botswana.
The country has dozens of state-owned enterprises, but many operate at a loss and rely on government support. In 2024, the economy contracted by 3%, and according to official forecasts, it is expected to record another decline in 2025 as a result of the recession in the diamond sector, which accounts for three-quarters of exports and one-third of national tax revenue.
Source: Reuters
