An eye for the deal
Lewanika Timothy | Tuesday August 4, 2026 11:46
Private equity has long operated in the shadows, yet it has become one of the most influential sources of growth capital for businesses seeking to move beyond the limitations of traditional bank finance. Unlike lenders, private equity firms do not simply extend credit; they acquire ownership stakes, inject long-term capital and actively reshape businesses with the aim of unlocking value before eventually exiting their investments.
For Botswana, the conversation around private capital has gained renewed significance as the country grapples with slowing economic growth, rising fiscal pressures and an urgent need to diversify beyond diamonds. With government finances under strain and commercial banks naturally constrained by their lending mandates, institutional investors are increasingly being viewed as critical partners in financing the country's next phase of economic expansion.
Pension funds oversee billions of pula's in retirement savings, creating one of the deepest pools of domestic capital in the economy. The challenge facing policymakers, regulators and fund managers alike is how that capital can be deployed to stimulate productive investment while safeguarding the retirement savings entrusted to them. It is a delicate balance between preserving capital and pursuing the higher returns often associated with private markets.
Around the world, private equity has played a pivotal role in building globally recognised companies by providing patient capital to businesses with strong fundamentals but limited access to growth finance. In emerging markets, it has increasingly become a vehicle for strengthening corporate governance, professionalising management and transforming medium-sized enterprises into national and regional champions capable of attracting further investment.
Botswana's own private equity market remains relatively young, but its ambitions have grown alongside the maturation of the country's pension industry. As institutional investors search for opportunities beyond listed equities and fixed income securities, private equity is increasingly being recognised not merely as an alternative asset class, but as a strategic instrument for economic diversification, industrial development and job creation.
Against this backdrop, those entrusted with allocating billions of pula are playing an increasingly influential role in determining which sectors grow, which businesses scale and ultimately, what Botswana's economy could look like over the coming decades. Understanding how these investment decisions are made offers a rare window into the thinking behind the capital shaping the country's corporate future.
Bame Pula, founder and CEO of Africa Lighthouse sheds light
Mmegi: Africa is a market often times deemed to be fraught with challenges and risk. As a financial expert investing in Africa, what do you think of the Africa’s risk perception and how it can be managed? Pule: Challenges exist everywhere. Let us not pretend they are unique to Africa. Every market in the world has challenges. As investors, our job is to navigate them. People often talk about risk. Well, as investors, our job is to take risk and mitigate risk. When that reassurance comes from a successful local investor, it provides confidence to the international investor. It also provides risk-sharing.
If a project requires US$200 million, the international investor may contribute US$180 million while the local investor contributes US$20 million. That is meaningful risk-sharing.
The local investor is aligned with the project and can help manage and mitigate risks because they understand the operating environment.
So, the single biggest gap is the creation of large pools of local capital.
Let us do a thought experiment. Without local capital, if you want to grow an ICT sector, you generally end up with SMEs that remain small. They do not become national champions, regional champions or pan-African champions.
Building a company of national scale requires capital. Debt alone is not sufficient to build a large business.
Mmegi: What local examples of capital deployed right come at the top of your mind apart from investments made by Africa Lighthouse directly? Pule: You will remember that Choppies once received private equity investment from Standard Chartered. Choppies grew because Standard Chartered Private Equity provided the growth capital it needed. That demonstrates that companies cannot become national champions through bank financing alone.
You need equity capital before a company reaches scale. That is what private equity provides. So you need local capital to help companies become businesses of national significance.
And then, the best way to attract international capital is by pairing it with local capital that understands the risks, the opportunities and the realities on the ground.
As you can see, the businesses we invest in are highly commercial enterprises.
Mmegi: It takes a commercial mindset to run Africa Lighthouse. Walk us through your investment pipeline. Obviously it changes over time, but just to give readers an appreciation of the level of activity in the market, what does your pipeline typically look like? Pule: Our pipeline, in terms of demand for capital, is about 15 times the amount of money we currently manage.
There is such a huge demand for our capital that the opportunities available to us are roughly 15 times larger than the funds we have under management. The opportunities are enormous. They are vast. They are across virtually every sector of the economy.
We constantly receive requests from businesses saying, 'Please help us fund this project,' or, 'Please invest in our company so that we can execute these projects.' The demand is significant.
Our pipeline cuts across all sectors. It includes private education, primary education, secondary education, healthcare, medical device manufacturing, healthcare services across different scales and specialisations, manufacturing of virtually every kind, wildlife tourism, urban tourism, specialised services supporting wildlife tourism, financial services, different forms of lending, insurance and many other industries.
Mmegi: What sectors are most interesting for investor appetite currently especially in Botswana where capital is consistently being seen as a tool to unlock new avenues of economic growth? Pule: We have a genuine financial services sector listed on the Botswana Stock Exchange. You cannot say that about every sector of the economy. If you examine the market capitalisations, these companies are worth hundreds of millions of dollars. These are businesses of real scale that have meaningful impact across the country. You go into communities throughout Botswana and people are participating in our formal financial services sector.
We have done a good job there as a country.
Now we should critically examine what we did right in financial services and ask how we can replicate that success in other sectors of the economy. It has taken decades of work to build the financial services industry we have today.
What more can we do to achieve that same level of success in manufacturing, tourism, healthcare and other sectors?
Can we build sectors whose companies become large enough to list on the stock exchange, achieve significant market capitalisations, reach households across the country and become attractive to international investors?
As you know, international investors already have significant exposure to Botswana's financial services sector. That sector therefore continues to interest me.
Mmegi: What sectors will your next fund target? Pule: I am confident that Fund II will make further investments in financial services.
Fund I, as you know, invested in Bayport and FSG.
FSG is a funeral services and insurance business, while Bayport is a market-leading financial services company. I expect Fund II to identify additional opportunities within financial services.
There is still considerable white space in the sector.
We do not yet have broad-based adoption of savings products across the country. There are also additional investment products that could be developed to give people more options for growing their wealth rather than simply spending their money.
I look forward to Fund II investing in those areas.
There is also still insufficient financial literacy in Botswana, which means there remains significant room for growth in financial products and services.
Another sector where I feel strongly we will invest in Fund II is wildlife tourism. The pandemic did not fundamentally change the long-term outlook for that industry. Globally, demand for spending time in nature continues to increase significantly. That sector is not driven by the same economic dynamics affecting many other industries.
While broader economies may experience periods of weakness, demand for nature-based tourism continues to grow because it is being driven by a worldwide desire to experience natural environments. That trend is accelerating.
As a result, we expect wildlife tourism businesses to perform strongly throughout the investment life of Fund II. We therefore have a high degree of confidence in that sector.
Those are just two examples.
Another sector where I expect us to invest is manufacturing. I do not believe manufacturing receives enough recognition, particularly considering how much employment it creates in Botswana. We also already have several outstanding, high-performing manufacturing companies that are highly competitive, even when compared with businesses elsewhere in the region.
Of course, we want more manufacturing companies. We want existing manufacturers to become even more competitive, but that should not take away from the fact that Botswana already has excellent manufacturing businesses. That is another sector in which I expect Fund II to invest.
As always, the great thing about Africa Lighthouse Capital is that we do not simply invest in companies because they are already good businesses. That is not our philosophy.
We invest because we identify a gap between where a company is today and where we believe its full potential lies. Before we invest, we work closely through the board with management to understand how that business can move from its current position to its full potential.
We identify a handful of value-creation initiatives and actively work with management to implement them.
That is exactly what we are doing in financial services. It is what we intend to do in wildlife tourism. And it is what we expect to do in manufacturing through Fund II