• Botswana to launch citizenship-by-investment to attract capital
• Program targets tourism, energy, housing amid diamond revenue slump
• IMF urges deeper reforms as economy faces fiscal, credit pressures

Botswana is moving to launch a citizenship-by-investment program to attract foreign capital and offset the slump in its diamond-dependent economy. Investment migration firm Arton Capital announced on Sept. 25 it signed a memorandum of understanding with the Botswanan government to launch the initiative.

The program is designed to grant citizenship to investors who can support the development of key sectors, an effort President Duma Boko is leading to revitalize the economy, which has been hard-hit by a decline in the natural diamond industry.

While the specific requirements for citizenship and the profile of sought-after investors have yet to be detailed, Gaborone has identified target sectors. These include luxury tourism, renewable energy, financial services, and the housing market. These areas are viewed as crucial new growth drivers for a country where diamonds account for one-third of fiscal revenue and 25 percent of GDP. President Boko stated the program would help "secure the long-term financial future" of the nation.

Fiscal Rigor and Currency Weakness

Facing a drop in global demand for natural diamonds, largely due to competition from synthetic ones, Botswana has implemented several austerity measures. Finance Minister Ndaba Gaolathe told Parliament in August 2025 that the government saved 5.5 billion pulas ($411 million) between November 2024 and June 2025 through drastic expenditure cuts. As a result, the budget deficit for the 2024/2025 fiscal year was limited to 7.8 billion pulas, significantly lower than the initial forecast of 11.1 billion, the central bank noted in its latest monetary policy report.

Concurrently, the local currency, the pula, has depreciated by 6 percent against the U.S. dollar and 8.6 percent against the South African rand since the Bank of Botswana adjusted its exchange rate policy in July 2025. The IMF attributes this change to the authorities' decision to increase the annual depreciation rate and widen the currency's trading margins, aiming to safeguard the competitiveness of local industries, promote diversification, and preserve foreign exchange reserves.

Accelerated Diversification Efforts

Beyond the citizenship program, the authorities are pushing hard for economic diversification. Gaborone has partnered with its primary diamond mining associate, De Beers, to create the Diamonds for Development Fund (DDF). Initiated with 1 billion pulas, the fund is intended to mobilize up to 10 billion pulas to support strategic, non-diamond sectors. It is focused on financing projects in smart agriculture, tourism, water, and energy.

A new sovereign wealth fund was also launched on Sept. 9, 2025, to stimulate growth and lessen dependence on diamonds. This vehicle is mandated to invest in productive assets, including some state-owned enterprises, with the goal of preserving capital and only utilizing the generated returns. The fund is part of the Botswana Economic Transformation Program, unveiled in July, which centers on four pillars, including transitioning to a service-oriented economy and establishing the country as a regional financial center.

IMF Warns of Insufficient Action

The IMF views the DDF as an opportunity to strengthen long-term economic diversification, provided its operations remain transparent, focus on local job creation, and avoid becoming a parallel funding tool to the state budget. The Bretton Woods institution is urging for deeper policy shifts beyond current efforts.

"Accelerating growth and job creation will require a fundamental shift towards greater private sector participation, a more diversified export base, and a more efficient public sector," said Edouard Martin, head of the IMF delegation that visited the country from Sept. 15 to 26. He stressed the need for better domestic revenue mobilization, more targeted social programs, stronger management of state-owned enterprises, and a more favorable business environment.

The urgency of these adjustments, which may be integrated into the new National Development Plan expected by late 2025, is heightened by S&P Global Ratings' recent decision to lower Botswana’s sovereign credit rating from BBB+ to BBB with a negative outlook. The agency warned that without significant policy adjustments, fiscal and external positions will continue to weaken, further eroding the stability of a country long considered a model in Southern Africa.

Emiliano Tossou