Modern Mining November 2024

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Botswana losing its shine By Dr Ross Harvey, director of research and programmes at Good Governance Africa (GGA)

De Beers’ partnership with Botswana has served the country immeasurably well since independence.

B otswana has long been held up as a rare example in southern Africa of a country that has escaped the ‘resource curse’ – the paradoxical nature of the relationship between abundant natural resources and underdevelopment in many weakly institutionalised countries. By and large, it has. Certainly, by the standards of Zimbabwe, Mozambique, Angola and the DRC, Botswana is a rare jewel in an apparently cursed region. Its founding president, Sir Seretse Khama, ensured that the country’s sub-soil wealth was held in custodianship by the state pretty much from its independence in 1966. The state entered a partnership with De Beers when diamonds were discovered, forming the 50/50 joint venture now known as Debswana. This took bold and visionary leadership. A model of what could be in respect of fair value between host countries and multinational companies was formed. It has stood the test of time. While the terms of the current deal are not well known – I am told that they have not even been seen by parliament – it seems relatively accepted knowledge that the government’s 50% stake in the company produces taxes, royalties and dividends worth 85 cents to the US$ of total

diamond revenues. Funds of roughly (if you’ll forgive the bad pun) US$250 million accrue to the state from the dividends of each diamond auction alone, ten per annum. This is significant revenue for a country with only 2.5 million people. US$2.5 billion per year is already an average of US$1,000 per person per year. Indeed, Botswana’s income per capita was US$6,708/year by 2023, substantially higher than its nearest regional competitor, Namibia, which shares a similar mining development model to Botswana in the form of Namdeb. Namibia’s income per capita was US$4,511 by 2023. Much larger countries, like the DRC, with unspeakable sub-soil wealth, come in at a miserly US$555 GDP per capita per year. Botswana’s people, on this metric, are about 12 times wealthier than DRC residents. This development differential is further reflected in under-5 mortality rates. Botswana and Namibia lost about 38 children per 1 000 live births in 2022 while Angola lost 67 and the DRC lost 76. The good news is that the trend on child mortality is downwards across southern Africa. But 76 is still heinously high, and it should be lower in Botswana and Namibia too. What GDP per capita does not tell us is how income is distributed, nor about the underlying

Dr Ross Harvey, director of research and programmes at Good Governance Africa (GGA).

36  MODERN MINING  www.modernminingmagazine.co.za | November 2024