Botswana: Diamonds and challenges

By Diplomat Magazine

Four decades of uninterrupted civilian leadership, progressive social policies, and significant capital investment have made Botswana one of the most dynamic economies in Africa. H.E. Dr. Mokgweetsi Masisi, President of the Republic of Botswana, came to Brussels for high level political discussions, with the aim to show to all Botswana’s development and get support from the European Union to fight the country’s latest challenge, COVID-19.

Mineral extraction, principally diamond mining, dominates Botswana’s economic activities, although the country is also rich in copper, nickel, salt, soda ash, potash, coal, iron ore, and silver, and tourism is a growing sector thanks to the country’s solid conservation practices and its extensive natural reserves. 

Botswana is seeking to develop a knowledge-based economy through fiscal discipline and sound management. The country has transformed itself from one of the poorest countries in the world to a middle-income country, maintaining one of the world’s highest growth rates since independence in 1966. Botswana is also ranked by two different rankings as having the best credit risk in Africa.

“When you have limited resources, you are usually more efficient with them. We may have more supply of diamonds than other people, but we also really have to get the most out of them. With our culture of humility, we interact with everything and everyone with respect, trying to manage our resources so that they have a positive impact on the country.”

“Our first step has been to decree that all natural resources belong to the state, and this is fundamental. Diamonds and other resources are not privatized, they are a public national good. Therefore, it is up to the government to redistribute the wealth that comes from these resources. Moreover, we have put in place a legislative framework that governs this, so the process is rules-based” – President Masisi explained.

Diamond mining has fueled much of Botswana’s economic expansion and currently accounts for more than one-third of GDP and for nine-tenths of export earnings.

Botswana’s progressive land legislation in Sub-Saharan Africa allows for different regimes of land management, including tribal land, state land, and freehold land. Yet, natural resources are managed by the government even if they are extracted from land under the freehold regime. “You may own the land, but you do not own the minerals. That is to the state. The State will manage how the minerals are extracted, and issue licenses though regulations. Those who apply and are successful will manage the operations, and the state will tax and supervise them, so as to ensure public returns. The state is co-investor in this chain” – President Masisi explained.

While the state has asserted its ownership over the minerals, it is also engaged in major mining partnership with other countries that have invested in diamonds extraction and exploration in Botswana.

“There is South African company, which is an old Anglo-American company called De Beers, and Botswana’s government owns 50% of it. They are a big mining company. We regulate all of this, and we have developed a unique joint-venture between De Beer and Botswana’s Government. It is called Debswana, it is the world’s leading producer of diamonds by value, and it operates four diamond mines as well as a coal mine. It is a 50-50 partnership – a very successful one, and one of the longest in the world. We also have a sales agreement, we tax the company, and we collect royalties.”

“There is also a small Canadian company, Lucara Diamond Corp, which operates a mine, and it has an exploration licence that it has managed very successfully.” Lucara also owns Clara Diamond Solutions, a digital sales platform which ensures diamond provenance.

Despite this natural wealth, the government still has to deal with high rates of unemployment and poverty, as well as with the highest rates in the world on HIV. Lately, COVID-19 has added further pressure on the country’s health situation.

“To begin with, as you well know, the impact of COVID-19 was devastating – as everywhere in the world. Being in the developing world, Botswana received vaccines only late, and only a small amount of them. Therefore, it was upon us to leverage our values and our own strength to promote prevention. We launched a sensibilization campaign, we put together a Covid presidential task team to develop health protocols, and as we learned more we sought to inform the public about COVID-19. This worked very well for us for a while” – President Masisi recounted.

Botswana implemented an ambitious national prevention program before the arrival of vaccines.

“Only prevention was standing between us and the graves. We made prevention from COVID-19 a number one priority nationally, so we reprioritized our budget, moving huge sums into the prevention campaign. We invested in medicines and PPE equipment, we expanded the capacity of hospitals, we trained our health staff, we launched a massive multimedia information campaign, inviting people to follow protocols. We also started to buy vaccines through the COVAX initiatives and through bilateral arrangements, spending a considerable amount of money for a small country like Botswana. Luckily, we managed to benefit from higher diamond prices to fund our efforts. Our diamond money has always been used for development, and the same has happened during COVID-19 times.”

Against the backdrop of the pandemic’s devastating effects, the country is now on track to vaccinate 64% of the population before the end of the year.

President Masisi also drew attention to the National Vision 2036 program and to the government’s efforts to raise Botswana to the rank of High-Income Nation by that year.

Part of these efforts hinge on energy reforms. “We are revamping the country, increasing and diversifying our sourcing and generation of electricity. We have an integrated resource plan by which we want to diversify our energy risks, so that we do not only depends on thermo electricity, but we also get electricity from the sun. We are introducing solar energy generation on a large scale. We also have the intention to tap into the wind’s energy generation potential, when research is completed, and investments will come into the sector. We hope that the private sector will invest in this.”

As part of the national development program, the government is also implementing a vast sanitation program that relies on improving sanitation facilities. “We are a very water-scarce country. Water is really precious – hence the name of our currency, Pula, which means rain.  Pula is very important – ‘well wishes’ is Pula, ‘goodbye’ is Pula. Despite water scarcity, however, Botswana does have a good crops production and livestock rearing, although for some crops it is hard to grow due to the climate conditions.”

The President continued by highlighting the effects of climate change in Botswana. “Climate change affects Botswana a lot, and all we have to do is to invest a lot on adaptation. Rising heat has the potential to harm those who are more vulnerable, like the youngest and the oldest segments of the population. Heat also affects the ability to work during the day, particularly for those who go to school or work in the fields. We feel the heat waves very badly. We also have to face the challenge of limited rainfall, which has a direct effect on the flora and the fauna.”

The President also praised his country’s commitment to address climate change related issues. “We certainly feel the effect of climate change, and we are playing our part in contributing to the reduction of emissions.” Botswana has signed international environmental agreements related to Biodiversity and Climate Change, Desertification, Endangered Species, Hazardous Wastes, Law of the Sea, Nuclear Test Ban, Ozone Layer Protection, Wetlands, as well as the Kyoto Protocol and the Paris Agreement on climate change.

“Let’s hope that it will rain in Botswana” – President Masisi said. “Let’s hope that we can also get fertilizers, because COVID-19 has disrupted supply chains and the cost of fertilizers has increased more than three times, making it more difficult for us to afford it.”

President Masisi also talked about Botswana’s relations with the European Union. “We talked to the European Union about their diplomatic engagement in our country, which has a strong focus on green energy and on partnerships related to climate adaptation projects. These include replanting efforts, interventions in small-scale agriculture, interventions in the industry sector to promote efficiency, the establishment of early warning systems, as well as interventions in the education sector, so that there is more content on issues related to the environment.”

President Masisi was optimistic when talking to us about Botswana’s social and economic recovery. “Botswana is stable. We don’t have security challenges in terms of terrorism, for instance – we never had them. We just deal with what any country would occasionally have to deal with do.”

Our conversation finally turned to the President’s beloved land, which is – in the President’s words – a true paradise. “I can speak about my country because this is what I know best. This is not to suggest that tourism is not vibrant in other countries – the region is amazing. But Botswana is unique, it is a gem. It is the epicenter of southern Africa. We have majestic sites and venues. The Okavango Rive, for instance, which ends into the Kalahari desert. The river comes from the highlands of Angola, and is also shared with Namibia. It is not a small river – its inflow is above 11.3 billions cubic liters of the freshest, cleanest, and tastiest water you can imagine. Its delta in the desert of Kalahari creates a unique environment with a fantastic aquatic life. You can see the fishes, the frogs, the butterflies, the antelopes, the crocodiles, the biggest elephants, the birds. Everything that has been created, you will find it there. I don’t know if you read the Genesis in the Bible. You get immersed into the nature, your feel into your skin, your breath. In the Okavango delta in Botswana you can visit the Garden of Eden.”