The market’s view of the BETP
Mbongeni Mguni | Monday August 17, 2026 13:39
Vice President, Ndaba Gaolathe, stresses that prudential guardrails will not be lowered.
As Finance Minister, he has a bird’s eye view of the billions of pula in capital held by sectors such as the pension funds and insurers. He also has an eye on the True North, a policy direction underpinned by the Botswana Economic Transformation Programme (BETP).
The BETP is a ten-year, state-backed, private sector-led initiative housing more than 180 projects which will require investment of about P514 billion. The True North is defined as a future that is digitally enabled, export driven, people-centred, economically diversified where every single citizen is empowered, is employed and is fulfilled.
The BETP represents the country’s single greatest push for economic diversification and structural transformation since Independence. Its ambitious goals are being made only more difficult and urgent by the ongoing fiscal constraints, which are linked to decades-long rolling deficits and long delayed structural reforms to the economy.
Gaolathe from his vantage point can see the challenge, the bountiful capital available as a solution and the promise of the True North.
“Botswana already possesses substantial pools of long-term savings,” he told a meeting with the African Development Bank on Monday. “Our pension system is among the most developed on the continent. “We have banks, we have insurance assets, institutional investors and public financial resources built over many years. “Yet businesses with potential still struggle to secure finance. “Infrastructure projects can take too long to move from conception to investment while much of our domestic capital continues to find opportunity elsewhere. “Botswana seeks capital while Botswana's capital seeks investable opportunities.”
In these remarks, the Finance Minister boiled down one of the central challenges facing the BETP and parts of the National Development Plan 12. The country’s pension funds held P175.4 billion by the end of May and are on track to easily pass P180 billion this year.
The figure for May represents about 61 percent of the forecast Gross Domestic Product (GDP) for 2026-2027 and is a healthy proportion rarely seen on the continent.
In 2023, the Retirement Funds Act was amended to require pension funds to hold at least 50 percent of their assets domestically, from a previous limit of 30 percent. Pension funds were given five years to gradually increase their domestic holdings, with a target of 47% by December 2026 and full compliance at 50% by December 2027.
The policy decision was a climb down from previous plans to require pension funds to move at least 70 percent of their assets back home, a move roundly condemned by asset managers, trustees and pensioners.
A seasoned asset manager, with decades of expertise in private equity, told Mmegi that the primary challenge with channelling domestic or even international capital into the BETP, is the nature of the funding required.
Many of the 180 projects in the BETP, while transformational for the economy, are early stage or start-ups, increasing their level of risk for investors and requiring certain types of funding. For institutional investors and their backers such as pensioners, the investment mandates or policies they require their asset managers to operate on, just do not accommodate the level of risk required.
“Many of the BETP projects are early stage projects and that’s a very particular part of the capital market which typically attracts venture capital,” the asset manager told Mmegi on condition of anonymity for professional reasons. “Asset managers operate by mandate and even by investment policy statement, which are approved by the pension funds and boards of trustees. “These dictate how much are they allowed and comfortable with investing in venture capital and so there are real constraints.”
Essentially, pensioners, who are the ultimate owners of the funds, are not willing to take risks with early stage initiatives. The asset managers and global investing standards, equally have little appetite for the risk and for many projects in the BETP, the patient capital is lacking.
The asset manager told Mmegi that the Non-Bank Financial Institutions Regulatory Authority (NBFIRA), which regulates the capital market, also has limits on how much asset managers can allocate in their portfolios for venture capital.
“Of course, the capital may come from international investors, but the same rules apply of how much start-up capital can really come in? “To what extent are they willing to take a risk in a start-up,” he said.
Botswana Public Officers Pension Fund (BPOPF), chief investment officer, Tshepang Loeto, explains the situation the fund finds itself in. The BPOPF, with assets of P128 billion, is the country’s single largest investor outside government, and a key shareholder in most listed companies in the country.
“It's the risk aspect,” he said during a panel discussion at the AfDB meeting. “Our studies of what we've seen contained within the BETP indicate that a number of the projects are green and brown. “Now that's more towards your venture capital. “Infrastructure, the way we're thinking about it, and private equity more broadly, we're targeting those businesses that have graduated a bit from that stage. “As a pension fund, I think you would understand why the risk appetite maybe is not that aggressive, but we are exploring and I say this prematurely, but with the right professional looking after that opportunity as opposed to maybe directly a pension fund itself, you could find opportunities in which you play round about the green and the brownfield.”
The BETP, in which more than 60 percent of projects are private sector-led, does however present an opportunity to unlock new models of funding at scale from both domestic and external sources of capital.
Loeto said the pension fund had an allocation of P1 billion for infrastructure and was thinking outside the box.
“In my mind, it does not have to be predominantly government that actually uses it,” he said. “I think that's actually been the position in the past, that government has crowded out opportunities for PPPs and opportunities for private capital to come into this space. “So maybe now the conversation needs to be done a little bit differently and that's where the opportunity might be. “Government de-risks, does regulation, provides the necessary licensing and everything and then private capital can start to flow in. “I think that's where the opportunity is.”
That opportunity could also translate to the challenge of the BETP being dominated by early stage projects. While government has not provided nor is likely to consider any type of guarantees or comfort arrangements for any project in the initiative, policymakers have been clear that the BETP enjoys strong political will. That state-backing could translate into de-risking, while enhanced efficiencies or reforms in the capital market and in regulation, could open up room for the vehicles required to structure funding towards the BETP.
While it searches out funding in a capital flush market, the government stresses that it won’t change the rules to win support for the BETP.
“The response cannot be, and certainly cannot be, weakened prudence,” Gaolathe said. “Pension trustees carry a serious responsibility and banks have to understand and price risk properly. “Investors require credible returns. “Government's work is to improve the quality and depth of opportunity available here at home. “That work is already underway and it carries an important cultural and operational shift across government.”
According to Gaolathe, the focus is on ensuring greater capacity and capability for execution in the public sector and enhancing the allure of projects through strengthened preparation.
The goal is to build a highly efficient public sector supporting the fine-tuned projects within the BETP. Through that, capital will increasingly flow through the vehicles and platforms that build up the BETP and transform the economy.