In 1966, Botswana faced a daunting future. As it stood on the cusp of independence from Britain, the nation’s prospects seemed bleak, writes developmental writer, Kevin Mofokeng.
With a mere 12km of paved roads, a meager number of secondary-school graduates, and a GDP per capita that lagged behind the sub-Saharan African average, hope was scarce.
However, the winds of change began to blow, and Botswana embarked on a remarkable journey.
Today, this remarkable country proudly boasts the highest average income on the African mainland, rivaling even the wealthy petrostates. What’s even more astonishing is that Botswana has remained a beacon of democracy throughout its transformation.
Truly, this is a tale of resilience, progress, and the power of the people.
The path to Botswana’s remarkable success would have been an insurmountable challenge without the invaluable contribution of diamonds.
In the year 1967, De Beers, a dominant force in global diamond production, held a near-monopoly position, which it still retains today as the largest mining company by value.
It was during this time that De Beers unearthed the awe-inspiring Orapa, the world’s largest open-pit diamond mine.
While many African nations have tragically squandered such unexpected blessings, Botswana’s early leaders displayed visionary leadership by establishing a fruitful partnership with the mining giant.
Leveraging the substantial profits generated from diamond mining, Botswana’s wise leaders not only kept public debt at bay but also created substantial reserves for uncertain times, all the while prioritising crucial sectors such as healthcare, education, and infrastructure.
This harmonious collaboration laid the foundation for Botswana’s extraordinary progress.
However, the current President of Botswana, Mokgweetsi Masisi, is now questioning the longstanding relationship with De Beers, as the deadline for renewal approaches on June 30th.
Speaking passionately at a rally for the ruling Botswana Democratic Party, President Masisi expressed the pressing need for a more favorable agreement, asserting,
“Clearly, our current agreement with De Beers restricts us greatly, and we must either secure a better deal or completely sever ties. We must refuse to be shackled and enslaved.”
The president’s rhetoric reflects both the upcoming election campaign and a shared aspiration among African nations to derive greater benefits from their valuable natural resources.
Nonetheless, this shift has sparked concerns among those who fear that Botswana may be drifting towards volatility, nationalism, and populism, gradually losing its unique and cherished status as a rare gem on the African continent.
Within the intricate web of agreements between Botswana and De Beers lie numerous arrangements that shape their partnership.
In a joint venture known as Debswana, both parties hold an equal stake, with Debswana responsible for mining 95% of Botswana’s diamonds, positioning the country as the second-largest producer globally, trailing only Russia.
Similarly, the Diamond Trading Company Botswana, responsible for sorting the diamond output, is also evenly divided between the two entities.
Furthermore, a quarter of the uncut diamonds are allocated to the state-owned Okavango Diamond Corporation (ODC), which auctions off its share.
Additionally, the government maintains a 15% ownership stake in De Beers.
Taking into account taxes, royalties, and dividends, estimates suggest that approximately 80 cents out of every dollar earned by Debswana in Botswana flow into the state’s coffers.
These sparkling gems constitute over 80% of Botswana’s exports and account for around one-third of its GDP.
While President Masisi has not explicitly lodged specific grievances, he argues that Botswana is still being shortchanged in this arrangement.
He desires an increased allocation of over a quarter of the uncut diamonds to the ODC.
Moreover, he believes that Botswana should expand its involvement in the downstream diamond business, including cutting and polishing operations.
To realise these ambitions, President Masisi announced in March that the government would acquire a 24% stake in HB Antwerp, a diamond firm based in Belgium.
This move has garnered attention from other African governments eager to move beyond the exportation of raw commodities.
At a newly established facility in Gaborone, the capital of Botswana, HB Antwerp plans to undertake diamond cutting for Lucara, a prominent Canadian mining company known for its sizable gemstones.
The intention is for hb Antwerp to extend these services to diamonds sourced by the ODC.
Nevertheless, this proposal has sparked concern and unease.
Neither the cost nor the terms of the deal have been disclosed to the public, leaving even finance ministry technocrats uncertain about the specifics.
Western governments express apprehension that such a partnership could draw President Masisi closer to Felix Tshisekedi, the president of the Democratic Republic of Congo, who maintains close ties with one of HB Antwerp’s co-founders.
The concerns arise from Congo’s reputation for inadequate resource management.
The prospect of HB Antwerp becoming a substantial competitor to De Beers remains uncertain.
Despite Botswana’s longstanding commitment to pursue greater “beneficiation” in the diamond industry, the necessary policies have never been effectively implemented, asserts Sheila Khama, a former De Beers executive.
This challenge stems from Botswana’s geographical disadvantage as a landlocked country with a population of 2.6 million and no significant domestic diamond market.
Consequently, compared to regions that specialize in various segments of the diamond value chain, Botswana faces inherent limitations.
For instance, the bustling Indian city of Surat alone employs more individuals in the diamond industry than Botswana’s entire formal workforce.
De Beers contends that it has made efforts to foster the development of downstream industries in Botswana.
As evidence, they highlight the fact that since 2013, they have relocated their global sales meetings to the country.
Both De Beers and HB Antwerp share the belief that advancements in technology will enhance the cost-effectiveness of manufacturing processes in Botswana.
They anticipate that innovative tracing technologies, enabling easier verification of diamond origins,
will prove instrumental. In this regard, they anticipate that consumers will be willing to pay a premium for traceable Botswana stones compared to those sourced from conflict-ridden regions like Russia.
De Beers reports that, in the previous year, approximately $1 billion worth of their $6 billion global sales of rough diamonds were directed towards 31 cutting and polishing factories based in Botswana.
President Masisi’s language and rhetoric have raised concerns among Botswana’s supporters in the Western world.
His inclination towards protectionism is evident in his decisions to ban the import of certain vegetables from South Africa and impose restrictions on foreign ownership in specific sectors.
Additionally, President Masisi’s professed admiration for Emmerson Mnangagwa, the assertive president of Zimbabwe, has fueled apprehension.
Reports of intimidation tactics targeting journalists further contribute to a climate of unease surrounding the current situation in Botswana.
A bitter feud ensues between Ian Khama, the former president, and his chosen successor, Mokgweetsi Masisi, creating a tumultuous political landscape.
Khama accuses the current president of possessing “the character of a typical dictator” while asserting that he himself has been the target of three attempted poisonings.
In response, the Botswana authorities have leveled coup allegations against Khama, although those charges have since been dropped.
Nevertheless, Khama, now living in exile in Johannesburg, remains wanted in Gaborone on firearms and other charges.
Firmly committed to achieving “regime change” in the upcoming election, Khama and Masisi are locked in a relentless battle, demonstrating a disregard for the potential damage inflicted upon Botswana’s reputation.
Despite the animosity, analysts anticipate that Botswana and De Beers will eventually reach a mutually beneficial agreement.
Both parties find themselves with limited alternatives. Botswana serves as De Beers’s primary source of diamond supply, while other mining companies may not offer more favorable terms.
One of De Beers’s competitors, Alrosa, faces American sanctions, rendering it an unattractive partner given that American consumers account for approximately half of all finished diamond purchases.
Thus, the relationship between Botswana and De Beers can be described as one of interdependence, where production is mutually assured.
As advancements in traceability technology continue, Botswana stands at a significant advantage. Being a relatively stable African nation that allocates its diamond proceeds prudently, Botswana can target consumers who are concerned about purchasing diamonds from Russia or indirectly supporting warlords.
However, to command a premium, Botswana must prioritize maintaining the brilliance of its brand, ensuring that its diamonds continue to shine brightly in the global market.
*The writer of this article is Kevin Mofokeng, a developmental writer and digital PR strategist based in Gaborone, Botswana. The views expressed by Kevin Mofokeng are not necessarily those of The Bulrushes
