What is the Pula Fund

The Pula Fund is an investment fund launched by the government of Botswana in 1994. The fund is jointly owned between the government and the Bank of Botswana, and is to set aside and grow a portion of revenues from a diamond industry projected to wane in the coming decades.


The Pula Fund is Africa’s largest and oldest sovereign wealth fund (SWF). It is named for the currency of Botswana. The Bank of Botswana created the fund to preserve a portion of Botswana’s earnings from diamond extraction in anticipation of the exhaustion of that natural resource. The fund was seeded with excess foreign currency reserves derived directly from the diamond industry. Mining experts have projected that Botswana’s diamond supply will expire sometime in the mid-2030s. The diamond industry represents a huge portion of the country’s revenues, accounting for approximately 80 percent of foreign exchange earnings and 40 percent of Botswana’s overall economy in the first decade of the 2000s.

The management team is chaired by the bank’s governor and an unnamed management committee. Recent reports have expressed concern over the transparency of fund management and suspicions that the Bank of Botswana and the finance ministry have been making inappropriate draws on the Pula Fund. The committee made draws on the fund several times since 2000, and explained that these transactions have helped to fund public pensions and other social benefits while allowing the government to avoid unpleasant moves such as ending tuition-free schools. Outside observers such as the Columbia Center on Sustainable Investment have expressed skepticism at these claims, citing a lack of documentation for the committee’s explanations. They have also criticized fund managers for poor fund performance over recent years in spite of a booming international diamond market.

The Pula Fund and Other National Funds

The Pula fund is modeled after several SWFs established by other nations over the second half of the 20th century. Kuwait is believed to have established the first SWF in 1958. These funds pull excess capital from foreign exchange reserves, generally to either save funds for future generations or to support the government budget during future periods of economic instability. Countries with particularly valuable natural resource reserves often establish an SWF to provide a cushion for future periods when either resource prices or supplies might decline significantly or suddenly. Top-performing SWFs, such as those of Norway or the United Arab Emirates have succeeded by pursuing a policy of setting money aside for overseas investment under rigorous oversight and restrictions on government access to those funds. Botswana’s Pula Fund uses a similar asset aggregation and investment strategy but is considerably weaker than many other countries on fund oversight.