Par Phil Sandick*
Botswana. Post publié(e) le 2008-11-17

Today is a good day, but Friday, October 10 was better. Botswana, that bastion of political and economic stability since its 30 September 1966 Independence, took the next step forward in its domination of the diamond trade. A deal was finally struck between African Diamonds and De Beers, allowing work to proceed on the much-anticipated AK6 mine in the centre of the country. African Diamonds (28% owners) alleged that De Beers (71%) were holding up the process while they sorted out some important marketing issues with the Botswana government: namely, the government wanted the diamonds to be sold in auctions in the country instead of going through Diamond Trading Company (DTC) Botswana. De Beers denied the claim, stating they were concerned with the regional crisis in power, not pricing. (As DTC Botswana is a 50/50 Botswana/De Beers joint venture, the import of in-country auction is debatable but probably not negligible.)

Whatever the holdup, it’s over, and the mine is slated to begin production in April 2011. (Knowing Botswana, one should expect production before Q4 2011 - but not much before.) De Beers estimates AK6 will produce 300,000 carats/year for the first three years, and then 800,000 carats/year for the next seven. That’s over 8.1m carats in the ten-year life of the mine. The figure is not so staggering when you consider that the workhorse mines in Botswana produced 33.6m carats in 2007.

The difference however, is ownership. Those workhorse mines (Jwaneng, Orapa, Letlhakane, and Damtshaa) are indeed all owned by Debswana Diamond Company (Pty) Ltd (50/50 partnership between Botswana and De Beers). For those of you wondering about the last 1% ownership of AK6, it will be held by Wati, a local Botswana company. Thus, the entire mine will be privately held. Botswana will take the standard 10% royalty only. With all of the benefits listed above, it might seem odd that the Republic of Botswana will have no ownership stake in AK6. In reality, it’s the best thing they could do.

While great for the historical and immediate well-being of the country, the success of the public sector has been a detriment to the private sector. General lethargy reigns supreme, all the way down to a visible attitude of entitlement in many of today’s youth. The government cannot and should not be solely responsible for the welfare of its people, especially when the success of the government rests on a portfolio painfully lacking in diversity.

Rather, the Botswana government should encourage innovation and entrepreneurship among its people. To be fair, it tries. The Local Enterprise Authority (LEA) gives business planning and advisory services, networking opportunities, and financial assistance to Batswana starting their own businesses. LEA was established in 2003, and seems to be working.

The Botswana Export Development and Investment Authority (BEDIA), established by act of parliament in 1997, was set up to “encourage, promote and facilitate the establishment of export-oriented enterprises and selected services which will result in economic diversification, rapid economic growth and creation of sustained employment opportunities.” From what I’ve heard, their assistance is about as helpful as their mission is concise. BEDIA’s recent exercise in branding the country was also laughable: “Botswana: Opportunity and tranquillity beckons”. Compare that with neighbouring “Proudly South African”, and the difference is clear. Maybe comfort not only breeds lethargy, but actually stifles creativity.

Meanwhile, Botswana’s “good fortune” continues: earlier this month, RecourceStocks’ annual World Risk Survey placed Botswana third out of 74 countries, with first carrying the least risk for investors in resources. One and two were Finland and Canada, respectively. The US came in at eighth, the UK at fourteenth. They certainly hadn’t yet heard about Zulu Energy, a US-based coalbed methane exploration and development company, hitting natural gas around the northeast boarder with Zimbabwe last week. I’m guessing those surveyed were similarly unaware of an acquaintance of mine who sits on his land in another part of the country and sips whiskey as he watches a flame illuminate just how much natural gas is under his little slice of heaven. (I haven’t even mentioned recent copper and silver findings.)

A Setswana expression illustrates well the cause of the present condition: Moja morago ke kgosi - “The last person to eat is the chief.” Luckily, Botswana has had enough food to go around. In order to capitalise upon all of this recent good fortune, His Excellency President Seretse Khama Ian Khama should do exactly what he is doing: privatise wherever possible. Only people who have stood on their own two feet for some time will be able to remain standing when the wells – or mines – run dry. And only when people are empowered enough to feed themselves will HE Kgosi Khama be able to sit down, fulfilled, and eat his share.

*Phil Sandick is a graduate of Columbia University.