Mining: How much has it benefitted Botswana
At independence, Botswana was ranked amongst the ten least developed countries in the world. That was before the discovery of diamonds, but operations were underway in Selebi-Phikwe where the Bamangwato Concession Limited (BCL) mined copper and nickel, having come into operation a decade before independence. The then Bechuanaland Protectorate relied on Agriculture for its revenue.
The country’s current largest contributor to the economy, the diamonds, were discovered a year after independence and it still, in large part sustains the economic expansion and social spending in the country. As of 2012, the country’s Gross Domestic Product (GDP) had risen to US$14.5 billion (P116 billion) to make it one of the fastest growing economies the world over, with the minerals sector contributing more than half of the revenues.
According to our-africa.org, a website that talks about economies of various countries in Africa, Botswana has since 1970, been one of only three countries along with Cape Verde and the Maldives, to have risen out of the United Nations group of the Least Developed Countries.
The country’s economy is growing at a rate of 5.9% a year, with diamonds accounting for a larger part of its foreign earnings resulting in its supply of over a fifth of the world’s rough diamonds. The country also makes revenue from coal, copper and gold, though, at very low amounts. Exploration has brought out other minerals that can and might be exploited. This therefore means mining is still likely to be the main driver of the economy for the foreseeable future. Looking back however, the question that arises is whether mining has benefitted Botswana as much as it could have? How has Botswana and Batswana benefitted from the mining sector in other ways other than creation of employment? How much citizen empowerment has there been?
“BCL has provided almost nothing to the revenue of Botswana but has created a great deal of employment in Selebi-Phikwe. Tati Nickel has provided some employment and income over the years. There is also one small gold mine (Mupane Gold), which has provided employment and some revenues. We have one coal mine at Morupule which has provided employment and some revenue to government but the main source of revenue has been diamonds,” said Professor Roman Grynberg, a Senior Research Fellow at the Botswana Institute for Development Policy Analysis (BIDPA).
Government owns 50% stake of Debswana, the world’s leading producer of diamonds by value, has a shareholding of approximately 96% at BCL and owns 15% of Tati Nickel in the North East District. The entire mining sector currently employs just over 14, 000 people.
On individual citizen ownership, Professor Grynberg said that there are Batswana who are already involved in the sector but if they are going to get some ownership, it will have to be through a state mining company which the government has long discussed.
He said that if young Batswana want to make money out of mining, the best way is to provide services that the miners need. “After all, one of the biggest profits ever made from mining was Levi’s which provided the jeans for the gold miners during the California gold rush in the 19th century. Batswana can, in the theory at least, make money exploring. If you find the next Orapa or Jwaneng, that’s it, you can retire for life but the deposits are usually found by Australian and Canadian junior miners who raise the risk capital off the Australian and Toronto exchanges. If you do not have deep pockets, you cannot explore for long,” he said.
Botswana Chamber of Mines (BCM), Chief Executive Officer Charles Siwawa says that the economy of Botswana is where it is because the country has used its minerals properly especially after the discovery of diamonds in the late 1960s.
Some of the major structures that were constructed post independence, with the revenues generated from the mining sector, include the roads, health institutions and schools. “There is nothing that has contributed to the economy of Botswana more than minerals, at the time we got independence in 1966, we relied on Agriculture, we were one of the lowest ranked economies in the world but now we are ranked in the top four in Africa in terms of economic development,” says Siwawa.
He says that it should be noted that there are countries that have minerals but were/are not able to use them efficiently to the benefit of their economies, and said that the way Botswana used its minerals was economically sound and “at one point we were one of the highest growing economies in Africa.”
The government has benefited from minerals in terms of royalties, revenues and taxes paid to it. All the mines, according to Siwawa, have contributed to about 80% of the government revenue and contribute to over 33% of its GDP.
A local extractive metallurgist, Lebogang Oneilwe says that for the past 40 years, the number of mines has grown due to many mine deposits that were discovered but not many mines mine valuable minerals. “We have only few Gold mines, e.g, Mupane Gold mine in Francistown. The most valuable minerals are diamonds and as you know Diamonds are getting finished, the ones that are available are expensive to mine since they are in the deeper levels of the ground, therefore you consume more power when mining them,” he says, adding that many mines around mine nickel and copper which are less valuable.
In regards to royalties, he said Botswana does not get enough compared to what other countries get from their mines. “Botswana owns no shares in other mines but get royalties which are not enough in terms of percentage when comparing it to other countries like Australia who charge mining companies more money,” he says.
Bongi says that in terms of business, young aspiring businessmen do not stand a chance as many foreign companies do business in the mines, and young Batswana are not protected or nothing is reserved for them. He also says that some job opportunities here have been taken by foreigners and Batswana end up going to find jobs in countries like Australia, Canada, the United Kingdom and South Africa where most of them had studied.