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Botswana sold itself short in De Beers deal – Gaolathe

Alliance for Progressives (AP) leader, Ndaba Gaolathe has said De Beers’ dealings with Government of Botswana have so far proven that the former never wanted to support Botswana’s economic ambitions given its overly dominance in key decisions.

When responding to President Ian Khama’s valedictory State of Nation Address (SONA), Gaolathe said the question should not be whether Botswana had benefited from its diamond-based growth path through the DeBeers partnership but rather whether Botswana could have benefited more under a different arrangement with De Beers, had the arrangement allowed for greater value addition much earlier on.

“Over an extended period, many far-sighted citizens argued that the cutting and polishing of diamonds locally is necessary to further local economic development ensuring that a greater proportion of value derived from diamond exploitation stays 'in country' and benefits local communities, through skills development and job creation opportunities,” he said.

“The limited employment spill overs in the current growth path have meant that many locals still live in poverty despite the high GDP per capita and Botswana being classified as a middle-income country,” he said. “Thus a desire to create jobs is a major part of what inspired Government’s move towards beneficiation in recent years.”

Gaolathe, who is the son of former Debswana Managing Director, the late Baledzi Gaolathe said De Beers’ was never keen no supporting Botswana’s ambitions, as it kept on insisting that cutting and polishing activities were not economically viable in Botswana.

Gaolathe said historically, citizens have questioned whether the DeBeers arrangement allowed the country to take full advantage of its diamond resource and whether beneficiating the country’s diamonds would not lead to greater local economic benefit through job creation.

“The concept of diamond beneficiation has therefore been driven by civic population. The Government is a late-comer to the beneficiation school of thought, a school of thought premised on the idea that diamonds can result in new and deeper linkages with the local economy,” he said.

Gaolathe said it was through civil and other pressure as well as Government’s new-found bargaining strength in 2005 that resulted in the signing of an unprecedented 25 years mining sales agreement with De Beers, in exchange of De Beers assisting Botswana in creating a viable cutting and polishing industry.

The contract included the following three agreements; a renewal of the mining licences for Debswana for 25 years, the sale of Debswana’s production to the Diamond Trading Company (DTC) International for another five years; and the establishment of DTC Botswana.

DTC Botswana is responsible not just for sorting and valuing Debswana’s production but also for the sale of rough diamonds to local manufacturers. According to Gaolathe, on paper the new beneficiation drive is manna from the sky for Botswana, through the potential multiple investment opportunities for Botswana in both the diamond and related ancillary industries and although this also gives Botswana an impeccable name of the global stage, while the hard truth is that Botswana has failed to tap on the opportunity, and have in the process missed opportunities to create tens of thousands of jobs.

He said, Botswana has missed opportunities mainly because De Beer has served its own interest not that of Botswana government. “We have missed because the span of control in the diamond industry, it seems, was structured on no clear, transparent process based on merit and that De Beers continued to dictate, at DTC, all the technical management of the company, including, pricing, categorization of diamonds, security and all diamond logistical operations. The Government continues carries little knowledge of what really goes on at DTC Botswana,” he observed.

“DTC international solely serves De Beers interest; It aggregates diamonds from Botswana, Namibia, South Africa and its mines in Canada, for allocation to its sight holders internationally, including those in Botswana. The price determination of Botswana diamonds is formulated by them. The international diamond market is influenced by them.” Gaolathe said the determination of mining of Botswana diamonds is done by De Beers and the marketing of 85% Botswana diamonds by De Beers as well.

“Botswana government has no knowledge of DTC International operations. Botswana Government should rather have traded its 15% shareholding in De Beers for shareholding in DTC International, that’s indeed if the rationale for that was to gain insight and have influence in De Beers’s operations,” Gaolathe argued. He said although Botswana owns 15% in De Beers, its representation is limited to two board members and none at operational level, yet Botswana diamonds contribute 70% of De Beers’s revenues.

“The returns to Botswana are presented as a compound figure. There is no knowing what each business unit contribute,” he said. “The Government Valuator has been an expatriate domain since the 80’s up to now. De Beers and GDV expatriates are close allies. It has been shown to be case in South Africa when the GDV endorsed every pricing De Beers paid for SA diamonds. It has been shown when Botswana GDV went to Sierra Leone with De Beers’s executives to be introduced to the Government as ideal valuators that would assist the government there. It is only recently that citizen trainees were enrolled as GDVs, but the function is 80% expatriate controlled.”

Gaolathe also took a swipe at the government owned Okavango Diamond Company (ODC) as he noted that it is as good as non-existent. “We allowed De Beers DTC to receive ODC portion direct from the mine, sort the diamonds for ODC and present them half sorted for ODC to sell to the same international market De Beers is selling to. What this means is that De Beers DTC can manipulate the assortment and make sure it matches its own, such that what ODC present to the market is exactly the same as De Beers presents. That is why there is no difference in the prices DTC and ODC fetch in the market,” he contended.

“In this case ODC has no reason to exist and its mandate should be reviewed.” Gaolathe said diamonds will remain an integral part of party of economic diversification thorough    local involvement by developing new capabilities and new niche engines of economic activity, as the civil population have always advised.

“For all the talk about the need for our country to diversify our economy, the real potent potential still remains how we best make use of our diamonds, as that engine for diversification. The way we are missing the opportunities with our diamonds typifies how we continue to miss glaring opportunities elsewhere,” he argued. “With our diamonds alone, we can inspire tens of thousands of jobs, but to achieve this we need refine and enhance our diamond roadmap and our delivery capacity and capabilities within Government.”

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Gov’t has no budget for Magosi’s SADC chase

12th April 2021
Elias Magosi

Despite the government of Botswana’s ambition to have one of its own to lead Southern Africa Development Community (SADC) since its establishment in 1980, the Presidency says there is no budget specifically dedicated to the campaign.

The Government has released the name of Permanent Secretary to the President, Elias Mpedi Magosi, as the candidate for the SADC Executive Secretary position. Magosi is expected to face off with Democratic Republic of Congo (DRC) candidate, Faustin Mukela. The position will become vacant in August this year.

However, despite the optimism the Botswana Government has not yet set aside a budget to assist Magosi to win against the seemingly DRC giant. “We all know that the COVID-19 pandemic has negatively affected the country’s ability to effectively fund any new project. This campaign is not an exception. As such, we do not have any budget for the campaign. However, we have so far managed to take advantage of His Excellency the President’s working visits to the neighbouring countries to also carry out the campaigns,” Press Secretary to the President, Batlhalefi Leagajang, explained.

Botswana has housed SADC since the establishment of the then SADCC in 1980, but has never occupied top most leadership positions at the SADC Secretariat.  “We therefore, strongly believe that we should also have an opportunity to contribute to the management of our regional body as it continues to drive the important issues of regional integration industrialization and socio-economic development.

This will also profile Botswana as a strong advocate of regional integration,” he responded to this publication’s questionnaire as to why the Government wants to occupy the plum post. SADC is a Member State driven organization. As such, Leagajang said, needs a well-grounded Executive Secretary with a blend of management and leadership acumen; a transformational leader with political awareness and integrity; private and public sector experience; a deep culture of corporate governance; as well as strategic agility and result-oriented consummate diplomat.

“These are the unique attributes of our candidate,” he said. So far President Mokgweetsi Masisi has visited nine out of 16 SADC member states on a working visit and also taking an opportunity to present to them his candidate.

“The countries have appreciated this effort and we remain hopeful. However, it is important to note that this is a democratic and competitive process which must be respected,” he responded when asked about the reception and assurances from various countries to cast a vote for Magosi.

In 2018, when Pelonomi Venson-Moitoi challenged for the Africa Union (AU) Chairperson, the government appointed former President Festus Mogae to be the campaign leader. Does the Government have anyone apart from Masisi to help with the campaign?

“The campaigns for the candidate are strictly led by the Government of Botswana. Since this is a candidate for Botswana, not just the Government, it will be appreciated if all Batswana, including the media, could also shoulder the responsibility to campaign for the candidate in their own spheres of influence,” Leagajang responded.

While there are sceptics on Magosi winning against the DRC man, the Government is confident and believes that with the unique traits that he possess, Magosi stands a chance. He is said to be a strong advocate of justice and fairness as he has played this role in his current role as PSP and in his previous roles as PS and in the private sector. He has helped individuals and companies to find justice and fairness in most of their dealings with Government.

Magosi is also said to be a proponent of corporate governance and which he has relentlessly pursued in most of his career including in Government and other sectors. A strong believer in following laid down procedures and laws. “He carries a variety of skills as an HR expert with experience in different sectors, a strategist and an Organization development specialist.

His experience and exposure spans government, parastatal, private sector and at regional level as well, thus making him a suitable candidate for the regional role. He has worked with governments, businesses, development partners and politicians and is comfortable navigating through all of them,” Leagajang concluded.

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Mzwinila’s P4.3 Billion gamble to keep water flowing

12th April 2021
orth-South-Carrier

The Minister of Land Management, Water and Sanitation Services, Kefentse Mzwinila looked a politician set to shoot the moon as he laid bare his billions of pula development agenda recently in Parliament.

His Ministry’s combined Recurrent and Development Budget Proposals for the 2021/ 2022 Financial Year is pegged at Four Billion, Three Hundred and Sixty – Five Million, two Hundred and Nineteen Thousand, Five Hundred and Sixty Pula (P4, 365, 219, 560). This is a budget 38.3% more than the allocation for the 2020/2021 Financial Year.

Mzwinila preluded his request to parliament with a demonstration that his Ministry has no champagne taste on a beer budget – indicating that his ministry’s expenditure at the end of February 2021P2.111 Billion or 96% of development budget; and P910 million or 90% of the recurrent budget.

Notwithstanding the budget dust, the Minister justified this year’s increase in the Ministry’s total budget. He attributed the escalation to the commencement of major projects under the water sector. These include the implementation of the North South Carrier (NSC) 22.2 covering various sub projects. Mzwinila noted that these are all public value projects which are aimed at improving the lives of Batswana.

Mzwinila’s Ministry has projected that the sum of Nine Hundred and Sixty –Three Million, Nine Hundred and Forty – Seven Thousand, Five Hundred and Sixty Pula (P963, 947, 560) be permitted for the Recurrent Budget and stand part of the 2021 / 2022 Appropriation Bill ( No. 1 of 2021).

“55% of the Recurrent Budget is geared towards the Revenue Support Grant for 12 Land Boards and their subordinate authorities while the sum of P5 Million is allocated to the Real Estate Advisory Council (REAC). The remaining 44% is proposed for the Ministry Departments.”

The sum of Three Billion, Four Hundred and One Million, Two hundred and Seventy –Two Thousand Pula (P3, 401, 272, 000), for the Development Budget was approved and stand part of the same schedule of the appropriation (2021/2022).

When breaking down the Development Budget, Minister Mzwinila noted that Water Supply and Sanitation projects will account for P1.098 Billion to finance the Maun Water and Sanitation project, Molepolole Sanitation projects and the Shakawe Water Treatment Plant Rehabilitation.

With all the implementation bottlenecks troubling several projects in the country, Mzwinila had to satisfy the question of whether his Ministry demonstrated a dire need for the budget with reference to its execution of the budget for the financial year 2020/2021 and its delivery of strategic initiatives and projects?

Mzwinila’s pitch found favour with parliament and his ministry will get an aggregate budget of P3.198 Billion for the 2020/ 2021 Financial Year. Within this allocation, P2.188 Billion is for the Development Budget and P1.010 Billion will cover the Recurrent Budget.

The Minister revealed his strategic interventions for land management, water and sanitation services. Highlighting that efforts by Government to provide serviced residential land to citizens on the waiting list are being hampered by limited resources. He shared that his ministry needs P94 Billion to cover such costs which will directly link to water, sewage, roads, electricity, telecommunications and storm water drainage leading to the allocation of 4 587 plots on un-serviced land.

The minister projected that 22 952 un-serviced residential plots are planned to be allocated in the next financial year. However, there is a trend where allocated land remains fallow and undeveloped which raises misgivings that the requests could have been made on speculative plans.

Mzwinila noted that in the spirit of forging stronger International connections, the Ministry will in June 2021 sign a Memorandum of Understanding on Land matters between Namibia and Botswana with the aim of opening doors to the creation of Dry Ports in the country, facilitate international trade through Walvis Bay Sea Port.

Botswana is already challenged by scarcity of naturally occurring water resources due to the aridity of the country creating persistent water shortages. The type of infrastructure required to improve national water security is a true reflection of intensive investment needed in the water sector The Minister stressed.

“An emerging issue such as the COVID -19 pandemic poses serious challenges as the control of the virus requires reliable water supply. In an effort to mitigate the challenge, the Ministry has undertaken extensive bowsing throughout the country which included the provision of additional capacity for supplementary bowsing to areas with pervasive water shortages, plus an additional forty one (41) un-gazetted settlements.

Operational costs due to bowsing were at an average of P6 Million per month before the COVID-19 pandemic and increased to an unsustainable amount of the order of P13 Million per month, since the beginning of the State of Emergency in April 2020,” the minister shared.

Through the support of a World Bank Loan, the Ministry is implementing several initiatives under the Botswana Emergency Water Security and Efficiency (BEWSE) project. Through BEWSE the Raw Water Pricing and Abstraction Strategy will assess the pricing of water in a manner that enables the provision of water to support new economic development, the strategy is planned to be completed in June 2021.

The Ministry has commenced the development of a long term National Water Security Strategy to improve resilience to climate change impacts. The strategy development entails prioritization of the proposed future mega water transfers such as the Chobe – Zambezi water transfer, the Atlantic Ocean water transfer to Botswana through Namibia and Lesotho – Botswana water transfer.

Following the signing of the tripartite Memorandum of Agreement (MoA) between Botswana, Lesotho and South Africa in November 2017 for the Lesotho –Botswana Water Transfer project, a 24 months contract for a combined prefeasibility and feasibility study for the development of a bankable Lesotho – Botswana Water Transfer project feasibility study was signed and is to be completed in 2022.

One of the Ministry’s famous major water supply projects such as the North South Carrier (NSC) 2.2 has experienced hiccups; having tenders for contract 1 (Masama to Mmamashia Pipeline) and Contract 2 (Mahalapye to Masama Pipeline) cancelled due to budgetary constraints.

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Will Botswana’s Climate Change policy climax?

12th April 2021
Botswana Climate

The Botswana Climate Change policy draft of 2021 was tabled in Parliament by the Minister of Environment, Natural Resources Conservation and Tourism, Philda Kereng for consideration and adoption.

The policy attempts to indicate the country’s environmentally conscious development agenda as Substantial resources are being dedicated to research and policy efforts to mitigate climate change and support adaptation to the current and future impacts of greenhouse gas emissions.

Kereng indicated that Botswana is not immune to the impacts of climate change and it continues to delay the country’s national development efforts and that the key economic development sectors dependent on the climate system have recorded declines over the years due to the variability of the rainfall and other climatic conditions. Experts elsewhere have pointed out that lack of consideration of population dynamics hampers the development of stronger, more effective solutions to the challenges climate change poses – hopefully this policy if effectively implemented could partly answer this question.

Kereng underscored that sectors such as agriculture, water, bio diversity, health and tourism have suffered the most and the consequences of these have contributed significantly to the decline of livelihoods in Botswana especially in rural areas.

To respond to the changing climate, Botswana has embarked on sectoral reform such as climate smart agriculture, poverty alleviation initiatives, building resilience on the economic productive sectors, diversification of tourism for the improvement of livelihoods and income generation, local economic development and sustainable environment.

The efforts require a coordinated mechanism that will provide an enabling environment for an integrated approach to the formulation and implantation of development plans and socio economic related policies in Botswana that are responsive to the changing climatic conditions.

Minister Kereng explained the draft policy is characterized by an inclusive and integrated approach to social, economic development and governance modalities that would enable the country to achieve a sustainable development pathway. It provides opportunities for improved livelihoods through creation of green jobs, development and transfer of relevant technologies as well as creation and ease of access to both local and international markets. It also commits the government, private sector and non-state actors to adopt adaptation and mitigation measures that would facilitate sustainability and building of resilience of all sectors.

While Members of Parliament were trying to comprehend the policy, this publication got in touch with Green Botswana to solicit their views on the policy draft. Ms. Sela Motshwane, the Founder of the Trust highlighted that “the Climate Change policy was meant to be read in August 2019. It is long overdue, and we all need to see it and understand it in full.

I understand the current budget does not allow for a full implementation- but I could be wrong. More funds could have been allocated since. I think generally, Batswana need to understand fully what this means to our daily lives. I believe the true understanding is by policy drafters and the Ministry of Environment only.”

In the same vein, Green Botswana Trust took to the streets to provide a community solution to climate change on World Health Day (Wednesday). Green Botswana held a “Free Trees for Babies” at Extension 2 Clinic where fruit trees were gifted to parents, expectant mothers, 25 health workers, police officers and the prison officers who had accompanied prisoners to the clinic.

Motshwane said: “The decision to do the “Free Trees for Babies” by gifting fruit trees was to raise awareness to our imminent food security issue as stated by the Deputy Permanent Secretary of the Ministry of Agricultural Development and Food Security, Mr. Thabang Botshoma and encourage the general public to plant a tree so that we can reach our SGD Goal 13 : Climate Action. The trees gifted are to be named after the baby recipient”.

Green Botswana is calling for the urgent action from government and members of the public to create a culture of community accountability and collegiality in moving Botswana towards climate action and sustainability. To achieve the 2030 Paris Agreement Pledge, it will take all citizens and not just the government to reach goals.

Parliament resolved to adopt the Botswana Climate Change Policy, 2021.

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