UDC government heeds Magang
TSHIAMO STEVENS | Monday September 22, 2025 10:19
About the only similarity it bears with SWFs proper is that it is meant for long-term investments and is not used for direct domestic investments. Otherwise, it has more peculiarities than commonalities with your regular SWF. For starters, the Pula Fund is not a corporate person with its own Balance Sheet. It is an investment vehicle that is an integral part of the Central Bank’s Foreign Exchange Reserves.”
Magang, in all probability, had hoped that the government of the day (then), the BDP, would take the cue and forthwith move to decouple the Pula Fund from the Bank of Botswana and fast-track the establishment of an SWF Pty in its own right. It turned out that the then-president Ian Khama and his finance minister Kenneth Matambo had not bothered to lend him an ear as the Pula Fund remained tethered to the Bank of Botswana, which, paradoxically, had not done that spectacular a job in its management. Khama’s successor too seemed indifferent to the tips Magang had proffered in the book: needless to say, he too did not act on any single one of the correctional measures he had set down. Not so with the incumbent President, Advocate Duma Boko. Boko seems to have an eagle’s eye for the merest hint of a potentially viable course of action to resuscitate our now beleaguered and possibly moribund economy. Every time he spots a gem of a tip, he squares up to act on it. He’s no procrastinator to all intents and purposes. Thus, last week, I was exhilarated to learn that his administration, which is only one year in power, has operationalised the formation of the Botswana Sovereign Wealth Fund Ltd (BSWFL), which, to me, is 45 years too late.
Boko’s gesture does ring a bell: when he ascended to the presidency, one of his key announcements was that in the next three years, the Botswana economy was going to be radically transformed. It now emerges that what he had in mind was the miracle BSWFL was going to bring about in the fullness of time. Maybe three years is too ambitious a time frame to make a revolutionary economic turnaround, but with the inception of BSWFL, Botswana no doubt is set on a path to an economic El Dorado. It’s not a matter of if: it’s a matter of when.
Why do I sound so positive if you may ask?
BDP’s dismal performance
If the truth may be told, the BDP government hardly performed wonders in a demonstrably tangible way when it came to growing the national wealth over the nearly 60 years it conducted the affairs of the country. If I were to rate its performance in this regard, I would give it no more than a B, and that is probably way too generous. In Delusions of Grandeur Vol 1, Magang pointedly notes that between 1983 and 2012, the BDP government netted $334 billion of inflation-adjusted mineral revenues. Of this, it was able to save a measly $3 billion (less than 1 percent!) “when our Exchequer teemed with economists flaunting a chain of degrees from Ivy League universities”. This, he writes, “was the lament of Dr Keith Jefferis, then and now the country’s most esteemed economist, way back in 2013 in this regard: ‘It seems unsatisfactory that after 40 years of mineral-led growth, virtually none of the fiscal revenues derived from mining have been saved in the form of financial assets’.”
On the strength of GDP figures alone, we were said to have outpaced the so-called Tiger Economies of Asia – Singapore, South Korea, Taiwan, and Hong Kong in the main – for over 30 years, but whereas the Tiger Economies now have graduated to First World status, we remain stuck in a Third World rut and we in fact are regressing, a spiral that began with the advent of our Fourth President. Thus, whereas economic statistics earned us rave reviews for donkey years and the covetous tag of the “African Miracle”, that did not translate to hard evidence on the ground and the associated figures in the national Balance Sheet.
Indeed, BDP’s economic stewardship has latterly been exposed as being shoddy in the grand scheme of things. For instance, in 2014, our Foreign Exchange Reserves stood at P80 billion. As of June 2025, they had plummeted to about half that amount. The proportion of Foreign Exchange Reserves that belong to the Government is kept in the Government Investment Account (GIA). This account has been so decimated Government may as well be said to be bankrupt. Whereas as of January 2023, the GIA had P14.8 billion parked in it, that sum had most chillingly dwindled to only P251 million as of December 2024, the last year BDP was in power. The result is that for an economy whose monthly expenditure overall averages P9 billion, the Boko administration has had to resort to borrowing to pay civil servants’ salaries (whose monthly tab hovers in the region of P2.5 billion) virtually every other month. SACU Revenues, which in the past constituted no more than a bonus, have now become a desperately needed lifebuoy.
Clearly, with the era of healthy diamond rents now a thing of the past, redemption can only come with radically newer rebound options, foremost of which is the BSWFL route.
Boko is on the right track
For as long as an SWF is skilfully managed, it can sustain a nation in perpetuity. Countries like Singapore and Norway, to mention just a few, predominantly subsist from the largesse accruing from SWFs. Singapore has three SWFs, with the healthiest being the Government of Singapore Investment Corporation (GIC). This year alone, the GIC, which was set into motion in 1981, flaunts $880 billion worth of assets, the bulk of which in liquid form. Norway’s 35-year-old SWF, the Oil Fund, sits at $1.9 trillion as of June 2025, the largest in the world, and this for a population of only 5.5 million. No wonder the Scandinavian countries have the highest standard of living on earth.
Considering that the Botswana government is so woefully cash-strapped, the seed capital that will fuel BSWFL will of necessity arise from debt – issuing bonds, securing a line of credit from international lenders, or tapping into the humongous BPOPF cash chest, for instance. Granted, the Government has several priorities vying for pride of place, including buying a larger stake in De Beers, and all these will need massive resource commitments. But if I could venture a word of advice to the national finance manager, Ndaba Gaolathe, I would urge that he place the accent on BSWFL first and foremost.
Trust me, five years or so down the line, it is BSWFL that will be our proverbial cash cow by far. It is BSWFL that will fill the Grand Canyon void that diamonds will have left. President Boko is clearly on the right track: let us give him the benefit of the doubt. For as long as he is focused and is not sidetracked a jot, we may as well say Botswana is going places socio-economically.
It is a pity the Khama/Masisi administrations neglected to pluck a leaf from Delusions of Grandeur. For had they done so, the economic depression, the slump in diamond sales, has occasioned would be the least of our concerns as the book is replete with very sound economic tips which if urgently and expeditiously applied in the macro economy have the potential to turn Botswana into the Singapore of Africa – an African Miracle proper as opposed to the rhetorical African Miracle of yesteryear