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REGIONS MIDDLE EAST & AFRICA


Diversifyto stabilisefurther


BOTSWANA IS LOOKING BEYOND ITS LUCRATIVE DIAMOND MINES TO FACILITATE ITS VISION 2036 PLAN. JACOPO DETTONI REPORTS


development since gaining inde- pendence in 1966, but it is invest- ment in resources other than dia- monds, both above and below ground, that will determine its future economic success. The African country has gained a


B


reputation for political stability and economic development over the


years. Powered by a thriving diamond industry – Botswana is home to two of the world’s big- gest diamond mines, Jwaneng and Orapa – the country of 2.4 million people has risen to the top of the table of GDP per capita in sub-Saha- ran Africa. Its stable governance and growth trajectory


are reflected in international metrics: at BBB+, the country’s Standard & Poor’s credit rating is higher than the likes of Italy, Brazil or Turkey, while Transparency International rates it as the least corrupt country in Africa. However, its diamond-based model has shortcomings even for a small population like Botswana’s, as its jobs dividend is limited and inequalities per- sist. The government has designed a transform- ative agenda aimed to lift the country further to high-income status through economic reform and diversification.


Mining-powereddemocracy Botswana gained independence in 1966, when it broke loose from its previous status as a British protectorate. Since then, the country’s young democracy has endured by holding elec- tions every five years. The country is regularly among Africa’s top countries for overall govern- ance in the IbrahimIndex, ameasure of govern- ment performance across the continent pro- duced by the London-based Mo Ibrahim Foundation. The fortunes of Botswana’s democratic


institutions have been closely entwined with those of its diamond industry, but Botswana’s underground resources include more than dia- monds. The country has major nickel and cop- per deposits, and the country’snewest and only operational copper mine, Khoemacau, devel- oped by US-based Cupric Canyon, is expected to start production in 2021. The country also has some of Africa’s largest untapped coal reserves. At present, only two coalmines are operating in the country: state-owned Morupule Coal Mine and the first privately-held coal mine in the


84


otswana’s rich supply of dia- mondsmaywell be responsible for the country’s economic


country, Masama, which has been developed and operated by South Africa’s Minergy. “Botswana has in excess of 212bn tonnes of


[estimated] coal available and it is our viewspe- cifically as Minergy that coal will continue to play a veryimportant role in delivering energy,” says Minergy CEO Morne du Plessis. “We have developing countries like India and China that are all using coal and it’s going to be very diffi- cult for them to switch to renewables in the short term. So, coal has a role to play and I believe Botswana can help with that specifi- cally.”


Astable appeal The extractive industry as a whole has provided unprecedented opportunities for the economy. Its nominal GDP has consistently grown to reach $18.3bn in 2019, from only $58.6m in 1966. The country has gained upper-middle- income status thanks to its GDP per capita of almost $8000 in 2019, according toWorld Bank figures. Last year marked the worst recession in Botswana’s independent history – the GDP shrank by almost 10%– but the IMF expects it to stage an 8.7%recovery in 2021. Stability and growth, combined with a lib-


eral investment environment, have not gone unnoticed by investors outside the mining industry. Among them is Rajiva Chandra, founder and managing director of Sunita Cables, a producer of copper wires and cables that set up shop in Botswana in 2003. “The main reason is that Botswana was


encouraging the set-up of manufacturing oper- ations, and we realised that it’s a safe country, the rule of law prevails, there is political and financial stability, no political interference and no exchange controls. All these factors contrib- uted to my decision to set up the factory in Botswana,” he says.


Investmentandtrade Investments by the likes of Sunita Cables are vital for the country to pursue the transforma- tive agenda outlined in the government’s Vision 2036. To increase the country’s investment appeal


beyondits limited domesticmarket, the govern- ment has joined a number of regional and international platforms aimed at substantiat- ing its investment proposition. Botswana is part of the Southern Africa Customs Union (SACU), which gives its products duty-free access to South Africa, Lesotho, Namibia and Swaziland. The SACU bloc also has free trade


www.fDiIntelligence.com February/March 2021


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