Botswana has no shortage of savings. Local pension funds alone hold more than P158 billion in assets, according to Botswana Development Corporation (BDC) Managing Director Oteng Keabetswe. Yet businesses across the country continue to struggle to access funding, raising a critical question: if the money exists, why is so little of it reaching productive investment opportunities?
That question dominated discussions at the inaugural Botswana Investment Forum hosted by BDC, where pension fund managers, private equity investors and regional financiers offered differing explanations for why private capital remains difficult to unlock.
The panel discussion, titled “Private Capital in Botswana: Can the Market Deliver at Scale?”, brought together Thato Norman, Chief Executive Officer of Debswana Pension Fund; Bafana Molomo, Managing Director of Aleyo Capital; Nathaniel Nyika, Chief Investment Officer at Agaciro Development Fund; and Caesar Siwale, Executive Chairman of Pangaea Holdings.
For Norman, the answer was simple: capital follows returns, and pension fund managers have a responsibility to protect members’ savings.
Molomo argued that investment opportunities exist in Botswana, but the financing ecosystem remains too underdeveloped to support businesses at different stages of growth.
Nyika pointed to the shortage of projects large enough to attract international investors, while Siwale challenged African investors and governments to place greater confidence in local entrepreneurs rather than looking abroad for investment solutions.
Capital Follows Returns
Norman cautioned against treating pension assets as readily available financing simply because the money exists, noting that fund managers must protect and grow the savings entrusted to them.
“Capital follows returns,” he said.
He illustrated that responsibility using the example of an eight-year-old orphan whose inherited benefits must be preserved and grown until adulthood, alongside a pensioner who depends on retirement savings to meet everyday needs.
Those obligations, he argued, mean investment decisions cannot be driven solely by efforts to increase domestic investment. Businesses must demonstrate credible management, sound financial positions and strategies capable of generating sustainable returns.
Still using the example of the orphan whose savings must grow over many years, Norman said he would seek annualised returns of at least eight to nine percent over the long term.
Questioned on whether pension fund localisation was translating into investment in businesses or merely increasing the amount of pension money held in domestic bank accounts, Norman acknowledged that substantial sums remained as cash.
However, he maintained that investment opportunities must meet institutional standards of governance and returns before capital can flow into them.
He also warned that entering a poor investment could be easy, while exiting an illiquid one could prove considerably more difficult.
For that reason, he emphasised that pension funds require credible financial information, appropriate risk allocation and diversified portfolios.
Nearly 400 Projects, Just Six Investments
Molomo offered a different perspective, arguing that Botswana’s challenge is not necessarily a shortage of business opportunities.
“I think there’s plenty of opportunities,” he said.
What the country lacks, he argued, is a sufficiently developed investment ecosystem, with specialised investors capable of financing businesses at different stages, from project preparation and venture capital to private equity.
He illustrated the challenge using Aleyo Capital’s own investment experience.
Over roughly eight years, Molomo said the firm reviewed nearly 400 projects but invested in only six, highlighting the difficulty of converting business proposals into completed transactions.
He attributed the low conversion rate to restrictive investment mandates, disagreements over business valuations, unsuitable transaction sizes and weak project sponsorship.
Additionally, he noted that some business promoters lacked sufficient financial commitment to their own projects, commonly described by investors as having “skin in the game”.
For Molomo, the financing gap cannot be closed simply by increasing the amount of capital available.
It also requires a broader range of investors, more suitable financing structures and businesses capable of meeting different capital providers’ requirements.
The Problem of Scale
Nyika, who previously worked in Botswana before joining Rwanda’s Agaciro Development Fund, argued that the structure of Botswana’s economy has limited the development of investable projects.
The country’s historical dependence on diamonds, he said, has constrained the development of broader industrial value chains capable of generating new businesses and investment opportunities.
Even within the diamond industry, he suggested, opportunities to develop supporting services have not been fully exploited.
For Nyika, identifying a business opportunity is only the beginning.
That opportunity must then be developed into a project of sufficient scale and commercial strength to attract investors.
He recounted a discussion with major institutional investors in Abu Dhabi, where a proposal to co-invest was met with a requirement for transactions worth approximately US$500 million.
Botswana, he argued, needs to develop opportunities across entire value chains and structure projects at a scale capable of attracting institutional capital.
Back Local Entrepreneurs, Says Siwale
While other panellists focused on governance, project readiness and financing structures, Siwale challenged the tendency of African economies to look outside the continent for capital and investment solutions.
Drawing on his experience in Zambia and other regional markets, the Pangaea Holdings Executive Chairman questioned whether African governments and investors are sufficiently willing to back their own entrepreneurs.
He pointed to Zambia’s energy sector, where reforms opened electricity generation and transmission to private businesses.
According to Siwale, a Zambian company that had only recently entered the sector secured approximately US$250 million from a Swiss partner to develop electricity transmission infrastructure linked to the Democratic Republic of Congo.
He also described a fertiliser producer that initially struggled to attract financing because of its size and financial position.
Approximately US$70 million was eventually raised to support the project, he said, allowing the business to expand and supply regional markets, including Botswana.
For Siwale, these examples demonstrate that African businesses can develop into substantial investment opportunities if domestic investors and institutions are prepared to support their early growth.
He also called for closer regional cooperation, arguing that Southern African countries should identify complementary strengths and develop investment opportunities across borders.
Rather than relying primarily on capital from Europe, the United States or the Middle East, he urged African economies to make greater use of regional development finance institutions and local entrepreneurs to finance growth.
What Needs to Change?
Despite their different perspectives, the panellists identified several common requirements for unlocking private capital: stronger businesses, better-prepared projects, financing structures suited to different stages of development, capable investment managers and greater regional cooperation.
Where they differed was on which challenge should be addressed first.
Molomo’s experience of reviewing nearly 400 projects but investing in only six illustrated how business opportunities can struggle to meet investors’ requirements.
Norman’s emphasis on governance and returns explained why pension funds remain cautious about committing retirement savings to investments that may be difficult to exit.
Nyika’s argument highlighted the importance of developing projects large enough to attract international capital, while Siwale’s examples suggested that domestic entrepreneurs could build businesses of significant scale if given access to financing and investment opportunities.
The debate comes as BDC seeks to expand its role in mobilising private capital through a new strategy centred on co-investments, partnerships and the development of larger domestic businesses.
Earlier at the forum, Keabetswe described Botswana as “savings rich, but capital scarce”, arguing that the country must find ways to channel its substantial savings into productive investments.
The debate that followed suggested that the challenge is not the absence of money, but the ability to connect that money with businesses, projects and entrepreneurs capable of putting it to work.
