On the 9th of September 2025, President Duma Boko stood before an audience in Gaborone and launched what he called “a bold and visionary step toward reducing the country’s dependence on diamonds.” The Botswana Sovereign Wealth Fund Limited — distinct from the three-decade-old Pula Fund that had been gradually drained by recurring deficits — was formally established. The board, chaired by Farouk Gumel and with Emmah Peloetletse, Permanent Secretary to the President, as deputy chair, was given what Peloetletse described as “a clean piece of paper” to create something commercially focused but with a conscience. It would adopt the Santiago Principles of transparency and accountability. It would report quarterly. It would draw only from investment returns, never touching the corpus.
It was, by any measure, an encouraging institutional moment. It was also, by the timing of its arrival, a sobering one. The fund was launched in the same month that S&P Global downgraded Botswana’s credit rating to BBB with a negative outlook. Diamond revenue had fallen from roughly P24 billion in 2022/23 to approximately P7.4 billion the following year. The economy had contracted. The country had just declared a national health emergency over medicine shortages. Botswana was setting up a long-term savings vehicle at a moment when it was struggling to pay its current bills.
The instinct behind the fund is correct. The question the fund itself cannot answer is: what, exactly, is Botswana saving toward?
What the Fund Is — and What It Is Not
The Botswana Sovereign Wealth Fund Limited is not the Pula Fund. The Pula Fund, established in 1994 under the Bank of Botswana, was designed as a reserve stabilisation and intergenerational savings vehicle — a buffer against the day when diamonds ran out, managed conservatively and governed by the central bank. It worked, for decades, as intended. But it was drawn down repeatedly during the lean years of the early 2020s, when diamond revenues collapsed and the government needed to fund its deficit without going to external debt markets at scale.
The new fund is structured differently. It is a state-owned company run on commercial lines, with an investment mandate that covers both domestic and international assets — including the professionalisation of Botswana’s approximately 63 commercial state-owned enterprises, whose pooled cash reserves represent an underutilised financial asset. Abroad, the mandate allows the fund to be, in Peloetletse’s words, “agile and more diversified” than the Pula Fund’s tightly constrained reserve management ever permitted. The fund is part of the Botswana Economic Transformation Programme, the government’s broader four-pillar agenda: services-led economy, regional financial hub, investor attraction through stability, and inclusive growth.
A fund is only as useful as the economy it is investing in — and only as meaningful as the diversification strategy it is designed to serve.
The Destination Problem
Sovereign wealth funds work, historically, when they have two things: a clear source of income to build the corpus, and a clear vision of what the corpus is meant to produce. Norway’s Government Pension Fund — the world’s largest at over $1.7 trillion — had North Sea oil revenue as its source and an explicit mandate to invest abroad so as not to overheat the domestic economy, preserving wealth for a post-oil future. The UAE’s Abu Dhabi Investment Authority was built on oil revenue with an explicit mandate to diversify the emirate’s economic base. Botswana’s Pula Fund was built on diamond revenue with the explicit mandate to preserve wealth for a post-diamond future.
The new fund has a governance structure, a board, and a mandate. What it does not yet have, in any publicly detailed form, is a specific investment thesis for the sectors it intends to develop. President Boko has spoken of digital services, telemedicine, light manufacturing, agro-processing, and renewable energy. These are the right categories. They are also the categories Botswana has been naming as diversification targets for the better part of two decades without meaningfully shifting their contribution to GDP.
The fund’s domestic mandate — professionalising the 63 state-owned enterprises — is the more immediately tractable task. Many of these enterprises have operated inefficiently, functioning more as employment vehicles than commercial entities, with returns that have not been systematically captured or reinvested. Bringing them under a single commercial oversight structure, with IFRS-governed accounts and Santiago Principle-level transparency, could unlock real value. But it is also a rationalisation exercise, not a diversification one.
The Timing Challenge
Building a long-term investment vehicle at a moment of acute fiscal stress creates a structural tension that good governance alone cannot resolve. The fund’s mandate says it will draw only from investment returns, not the corpus — a sound principle that protects the long-term capital base. But in practice, the pressure on any savings vehicle during a period of national financial difficulty is to become a source of short-term liquidity rather than long-term investment. Botswana has been here before: the Pula Fund was not designed to be drawn down during diamond downturns, and yet it was. The governance safeguards in the new fund are stronger, and the legal structure is more explicit. Whether they are strong enough to withstand the political pressure of a country in fiscal stress is a proposition that has not yet been tested.
There is also an opportunity-cost dimension. Every pula committed to maintaining the De Beers acquisition bid — which Boko’s administration has pursued simultaneously with the fund launch — is a pula not available for the sectors the fund is notionally designed to develop. The two strategies are not necessarily incompatible, but the capital required for a controlling stake in De Beers at mid-2026 valuations is orders of magnitude larger than anything the fund has in hand, requiring Gulf sovereign wealth partnerships whose terms have not been publicly disclosed.
Good Governance Without a Destination Is Just a Very Tidy Dead End
Botswana has done something that many resource-dependent economies never manage: it has built a savings habit. The Pula Fund, despite its depletion, represented decades of discipline — the understanding that today’s diamonds should buy tomorrow’s options. The new Sovereign Wealth Fund, designed with stronger governance and a more commercial mandate, extends that habit into a more sophisticated institutional form. That matters. But the habit of saving, and the strategic clarity about what you are saving toward, are two different capabilities. The former, Botswana has demonstrated. The latter — the specific, funded, timelined plan for what comes after diamonds — remains the country’s most important unfinished piece of work. A fund without a destination is a very well-governed holding account.
Sources: The Africa Report; Ecofin Agency; Botswana Youth Magazine; The Executive Botswana; PACT Africa; Bloomberg; Bank of Botswana; Mmegi.