Upcoming B2B Gems & Jewellery Exhibition- 19th - 20th - 21st January 2019. Bangalore.

Botswana at a remarkable economic growth

2016-07-07


This growth has been underpinned by

The partnership between Botswana and De Beers!

This analysis – the first of its kind – examines the value generated by the Partnership in 2014, and demonstrates the shared long-term vision of the respective partners. It demonstrates a shared understanding that as much value as possible should be generated from the activities of the Partnership in Botswana, for Batswana. On Partnership revenues of almost US$7 billion in 2014, the Partnership directly generated US$4 billion of value to the economy, which was the equivalent of 25 per cent of GDP for the year. Put into context, the Partnership contributed nearly double that of the entire wholesale and retail trade sector combined in Botswana to the country’s GDP.

When the direct contributions of the Partnership to the economy are combined with the contribution through the supply chain and employee spending, the total economic contribution grows to US$4.4 billion, or 27 per cent of Botswana’s GDP in 2014.With taxes, royalties and dividends combined, the total distribution of Partnership revenues to the Government represents a significant proportion of its total revenue raised in 2014.These revenues help to provide employment and support skills development, which is strongly supported by the Partnership. In total, the Partnership contributed more than34,000 jobs in Botswana. Directly, it employed almost 8,000people in 2014, of whom 96 per cent were Botswana citizens, including almost 85 per cent of management.

A further12,870 jobs in the broader economy were supported through the Partnership’s supply chain contribution. Another 13,400jobs were supported by the spending of employees of the Partnership and its suppliers’ employees. In total, the Partnership supported one in every 20 jobs in Botswana. In addition, the Partnership spent approximatelyUS$6 million on 550,000 hours of training and skills development for employees.

2014 was the first full year that DBGSS operated from Botswana. The revenues generated from the sale of De Beers’ supply of rough diamonds to international diamantaires contributed US$380 million, or nine per cent of the Partnership’s total direct contribution to GDP. In addition, through supplier and employee expenditure, DBGSS added another US$30 million to GDP, representing 2.5 per cent of Botswana’s GDP. This analysis suggests that the Partnership is the largest single contributor to the Botswana economy, besides the Government itself.

Botswana has managed to turn the promise of resources below ground into opportunities above ground. A previously poor, small nation has achieved economic and social progress that is a modern success story. The foundations of this have been political stability, good governance, and the wise investment of diamond revenues in the long-term development of infrastructure and human capital. The Partnership between the Government and De Beers has played an important role in funding this progress by securing and realising high value from Botswana’s natural resource.

Few can dispute that diamonds have been positive for Botswana, but they have not been a panacea. The Government has been quick to recognise that past achievements do not automatically translate into future successes. Challenges such as unemployment, high levels of income inequality, residual poverty and an over-reliance on diamonds still need to be overcome. Progress is, however, being made. This is particularly true with regards to economic diversity, with the non-mining sector now making up 70 per cent of total value added to GDP compared with less than 50 per cent in 2002.

The Partnership can help Botswana to move further down this path. Arguably, its first responsibility is to continue to maximise the value of every Botswana diamond yet to be mined and sold. This will provide the fiscal basis to support further developmental investment, improve health and education, provide social safety nets and, importantly, support new, more sustainable sectors. This will require the extraction of diamonds as efficiently and safely as possible, making use of new technologies; exploring for new reserves; and investing in new assets such as Cut-8 at the Jwaneng Mine. The Partnership will need to continue to invest in building global demand for diamonds, safe guarding their image and guarding against challenges from other luxury products and synthetics.

It must also continue to support and promote Botswana as a global diamond hub, and use its considerable power in the economy to build linkages to local businesses, as well as to support initiatives outside of diamonds with enterprise development programmes such as Tokafala. The Partnership provides a model of how public and private interests can work together in the long term. The key is to have an aligned vision: in this case, a deep appreciation of diamonds as a finite, luxury product, and a long-term approach to creating value from one of nature’s treasures.

The partners will need to retain this long-term vision in order to deliver the next 50 years of development. The challenge that Botswana faces is to build on a foundation of wise development to create new areas of competitiveness and employment, while moving to a post-diamond era. But these challenges should not detract from the success the Partnership has had in spurring the country’s socio-economic development. By translating the potential of resources belowground into enduring value above ground, Botswana has succeeded where many others have failed.