Botswana's Finance Chief Wants Private Capital to Replace Diamond Money

Botswana's Vice President and Minister of Finance, Ndaba Gaolathe, has called for a new development financing model that mobilises private and institutional investment to cut the country's dependence on government funding and diamond revenues. He made the case at the inaugural Botswana Investment Forum 2026.

His core proposition is a repositioning of the state. Government should act as a catalyst for investment rather than the primary source of funding for major development projects. Declining diamond revenues and rising fiscal demands, Gaolathe told the forum, are putting growing pressure on public finances.

Why the old model stopped working

For decades, Botswana financed infrastructure, education and healthcare largely from diamond income. That single-sector dependence has become a liability. Shifts in global diamond demand and market conditions now directly squeeze government income and limit resources for development spending.

The fiscal arithmetic is unforgiving. Government must keep funding essential services and maintaining infrastructure while leaving room for new industries to grow. When public revenues fall, financing large projects exclusively from the budget becomes difficult. Gaolathe's answer: mobilise private and institutional capital to bridge the gap, freeing public money for strategic priorities.

What does the catalyst role mean in practice?

The Vice President's framework has concrete components:

• Building policies, regulations and partnerships that draw private investors into development
• Improving the business environment and cutting unnecessary administrative barriers
• Giving investors greater certainty
• Identifying strategic sectors where investment delivers economic and social returns

Target sectors named include agriculture, tourism, manufacturing, energy and infrastructure. Gaolathe stressed that diversification needs more than promising sectors — it requires capital, appropriate infrastructure, skilled workers and business-friendly policy.

Institutional investors and the bankability problem

Institutional investors manage large pools of capital and seek long-term returns, making them natural funders of infrastructure and industrial projects with extended horizons. But attracting them demands credible projects, transparent governance and predictable investment conditions, according to the Vice President's remarks.

Project preparation emerged as a central theme. A project can hold strong economic potential yet fail to attract funding without detailed feasibility studies, clear financial arrangements and an implementation plan. Investors need reliable information on costs, expected returns, risks and the institutions responsible for delivery.

A bankable project, in this framing, has a sufficiently clear financial and operational structure to attract institutional funding. Government can help by building project development capacity and engaging technical experts and potential investors early. Development finance institutions can reduce investment risk through appropriate financing instruments.

Better coordination among development banks

Gaolathe also pressed for stronger coordination among development finance institutions. These bodies provide funding, guarantees and technical assistance, but their impact depends on how well they align financing with national priorities. Better cooperation, he argued, would reduce duplication, improve resource use, speed up project implementation and make it easier to blend public funding, development finance and private investment in large-scale projects.

Strategic partnerships complete the picture. Cooperation among government, private companies, development finance institutions and international investors can pool resources and expertise for complex projects, encourage knowledge transfer and strengthen local business capacity — provided agreements are clear and decisions transparent.

What is at stake for Batswana?

The ultimate test, Gaolathe indicated, is tangible benefit: sustainable jobs, improved incomes and opportunities for local businesses and young people entering the labour market. Stronger domestic industries would also reduce Botswana's exposure to international commodity price swings.

The Vice President flagged a caution on structure. Public-private partnerships can deliver useful financing arrangements, but they must be structured carefully to avoid transferring excessive financial risk to the state, with safeguards for transparency, oversight and value for money.

Botswana also sees regional upside. Cross-border infrastructure, regional trade and access to wider Southern African markets could support manufacturing, logistics and energy industries, and help local businesses expand.

The forum's first edition framed the practical agenda: connecting national development ambitions with fundable opportunities. Whether Botswana translates these discussions into reforms and financed projects will determine the success of its diversification push as diamond revenues decline.