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Botswana and De Beers: What a Diamond stands for

A diamond symbolises an enduring relation relationship, much more like the partnership between the government of Botswana and DeBeers, this was said in the inaugural DeBeers report, “Turning finite resources into enduring opportunity: The economic contribution to Botswana of the Partnership between the Government of the Republic of Botswana and De Beers” which was launched at the conference recently held in Gaborone.  The report explores the economic contributions to Botswana of the partnership which has endured for 50 years.

The partnership comprises of four companies, all operating in Botswana. Botswana has a 50/50 joint venture with DeBeers called Debswana, the primary producer of diamonds. Then there is Diamond Trading Company Botswana (DTCB) which is also a 50/50 joint venture, DTCB sorts and values rough diamonds mined by Debswana. There is also DeBeers Global Sightholder Sales, a rough diamond sales arm of DeBeers, which is responsible for selling the bulk of DeBeers global production to its rough diamond customers.

“When De Beers’ geologists first discovered diamonds in Botswana in 1967 – only a year after the country gained its independence – few could have imagined the wealth hidden below ground.

Fewer still could have imagined that these hidden treasures would transform the country so dramatically and that it would, as a consequence, experience one of the world’s longest periods of economic growth,” Philippe Mellier, CEO of DeBeers Group, said in the foreword of the report, later adding on that such partnership between the public and private sectors are not uncommon, but ones that endure for almost 50 years certainly are uncommon.

Mellier said that the success of the partnership is hinged on full commitment between the partners. Botswana committed itself by becoming a minority shareholder in DeBeers by holding 15%, the rest is held by Anglo American. In appreciation and also part of their commitment, DeBeers relocated their multibillion dollar international sales function from London to Gaborone, a move that was seen as a first step towards diamond beneficiation.

Botswana, other than being hailed as a beacon of democracy in Africa has also enjoyed accolades across the world for its prudent use of its most important natural resource, diamonds, to fuel its economic and transform it from the world’s poorest to a middle income country. This was in contrast to other African countries that have abundant natural resources yet failed to use them, earning them the tagline “resource cursed economies” due to instabilities that have plagued such countries.

According to the report, as soon as the diamonds were discovered, a decision was taken to partner with the private sector in developing the diamond resource. “Engaging private capital and expertise was an unusual decision in an era when nationalisation and a preference for state-led development was common in much of Africa,” read part of the report.

It was the uncommon partnership that saw DeBeers bearing all the costs and leveraging on its expertise to develop mines. In the process the capital expenditure stimulated other sectors of the economy such as construction, financial services and transport. The growth of the economy increased development investment and lifted national wealth levels rapidly. As DeBeers provided capital, technology, skills transfer and an effective route to the market, the government provided a stable and supporting environment. “De Beers has also respected and supported the broader developmental aspirations of Botswana, while the Government has granted De Beers long-term access to diamond supply,” the report highlighted.

The report points to a fruitful relationship as the biggest single contributor to the economy has been this partnership. As per stated in the report, partnership revenues of almost US$7 billion in 2014,  the partnership directly generated US$4 billion of value to the economy, which was the equivalent of 25 per cent of GDP for the year. When the direct contributions of the Partnership to the economy are combined with the contribution through the supply chain and employee spending, the total economic contribution grows to US$4.4 billion or 27 per cent of Botswana’s GDP in 2014. With taxes, royalties and dividends combined, the total distribution of Partnership revenues to the Government represents a significant proportion of its total revenue raised in 2014.

The revenues have been used to sustain and create employment and skills development. The partnership contributed more than 34,000 jobs in Botswana. Directly, it employed almost 8,000 people in 2014, of whom 96 per cent were Botswana citizens, including almost 85 per cent of management. A further 12,870 jobs in the broader economy were supported through the Partnership’s supply chain contribution. Another 13,400 jobs were supported by the spending of employees of the Partnership and its suppliers’ employees. In total, the Partnership supported one in every 20 jobs in Botswana.

The report heaped praise on Botswana for its stellar use of diamonds to drive the economy. This was attributed to Botswana’s sound macroeconomic policies and its firm belief in democracy, and when all this factors are combined, Botswana flourished both economically and socially as evidenced by the wise use of diamond revenues in long term development of infrastructure and human capital. The report suggests that Botswana’s experience in harnessing its diamond resources can be used in other sectors of the economy to provide a strong foundation for further growth and economic diversification.

From the report, DeBeers is cognisant of challenges besieging Botswana but remains committed in helping its partner sail through those challenges. “Challenges such as unemployment, high levels of income inequality, residual poverty and an over-reliance on diamonds still need to be overcome. Progress is, however, being made. This is particularly true with regards to economic diversification, with the non-mining sector now making up 70 per cent of total value added to GDP compared with less than 50 per cent in 2002. The Partnership can help Botswana to move further down this path,” read the report.

To achieve this, it will involve continued mining operations that maximise the value of every Botswana diamond yet to be mined and sold, as the revenues will provide and support further developmental investment, improve health and education, provide social safety nets and, importantly, support new, more sustainable sectors. Furthermore the partnership will put concerted efforts against threats such as synthetic diamonds and coming up with ways in building global demand for diamonds. DeBeers says it will support and promote Botswana as a global diamond hub, while domestically it will use its mighty power to build linkages to local businesses, as well as to support initiatives outside of diamonds with enterprise development programmes such as Tokafala.

The diamond mining behemoth says the partnership provides a model of how public and private interests can work together in the long term. “The key is to have an aligned vision: in this case, a deep appreciation of diamonds as a finite, luxury product, and a long-term approach to creating value from one of nature’s treasures,” the report further added that the partners will need to stick to this long term vision in order to deliver another 50 years of development. Furthermore, the challenges of transitioning from a diamond led economy should not detract from the success the partnership has had in turning Botswana from of the world’s poorest countries to a thriving economy it is today. “By translating the potential of resources below ground into enduring value above ground, Botswana has succeeded where many others have failed,” stated the report.

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The Taiwan Question: China ramps up military exercises to rebuff US provocations

18th August 2022

US House Speaker Nancy Pelosis visit to Taiwan has violated the One-China policy, and caused the escalation of tensions across the Taiwan Strait. Experts and political observers across the spectra agree that Pelosis actions and subsequent pronouncements by US President Joe Biden gave impetus to an already simmering tension in the Taiwan Strait, provoking China to strengthen its legitimate hold on the Taiwan Strait waters, which the US and Taiwan deem as international waters.

Pelosis visit to Chinas Taiwan region has been heavily criticised across the globe, with China arguing that this is a serious violation of the one-China principle and the provisions of the three China-US Joint Communiqus. In response to this reckless move which seriously undermined China’s sovereignty, and interfered in China’s internal affairs, the expectation is for China to give a firm response. Pelosi visit violated the commitments made by the U.S. side, and seriously jeopardized peace and stability across the Taiwan Strait.

To give context to Chinas position over Taiwan region, the history behind gives us perspective. It is also important to note that the history between China and Taiwan is well documented and the US has always recognized it.

The Peoples Republic of China recognises Taiwan as its territory. It has always been the case even before the Nationalist Republic of China government fled to the previously Japanese-ruled Island after losing the civil war on the mainland in 1949. According to literature that threat was contained for decades first with a military alliance between the US and the ROC on Taiwan, and after Washington switched diplomatic recognition to the PRC in 1979 by the US One China policy, which acknowledges Beijings position that Taiwan is part of One China. Effectively, Taiwans administration was transferred to the Republic of China from Japan after the Second World War in 1945, along with the split between the Peoples Republic of China (PRC) and the Republic of China (ROC) as a consequence of the Chinese Civil War. Disregarding this history, as the US is attempting to do, will surely initiate some defence reaction on the side of China to affirm its sovereignty.

However, this history was undermined since Taiwan claimed to democratise in the 1990s and China has grown ever more belligerent. Furthermore, it is well documented that the Biden administration, following the Trump presidency, has made subtle changes in the way it deals with Taipei, such as loosening restrictions on US officials meeting Taiwanese officials this should make China uneasy. And while the White House continues to say it does not support Taiwanese independence, Bidens words and actions are parallel to this pledge because he has warned China that the US would intervene militarily if China attacked Taiwan another statement that has provoked China.

Pelosi, in her private space, would know that her actions amount to provocation of China. This act of aggression by the USA seriously undermines the virtues of sovereignty and territorial integrity which has a huge potential to destabilize not only the Taiwan Strait but the whole of the Asia- Pacific region. The Americans know very well that their provocative behavior is deliberately invoking the spirit of separatism masqueraded as Taiwan independence. The US is misled to think that by supporting separatism of Taiwan from China that would give them an edge over China in a geopolitics. This is what one Chinese diplomat said this week: The critical point is if every country put their One-China policy into practice with sincerity, with no compromise, is going to guarantee the peace and stability across the Taiwan Strait. Therefore, it was in the wake of US House speaker Nancy Pelosis visit to Taiwan, that China, in a natural response revealed plans for unprecedented military exercises near the island, prompting fears of a crisis in the Taiwan Strait and the entire Asia-Pacific region. The world community must promote and foster peace, this may be achieved when international laws are respected. It may also happen when nations respect the sovereignty of another. China may be in a better space because it is well capacitated to stake its territorial integrity, what about a small nation, if this happens to it?

As to why military exercises by Beijing; it is an expected response because China was provoked by the actions of Pelosi. To fortify this position, Chinese President, Xi signed a legal basis for Chinas Peoples Liberation Army to safeguard Chinas national sovereignty, security and development interests. The legal basis will also allow military missions around disaster relief, humanitarian aid and peacekeeping. In addition the legal changes would allow troops to prevent spillover effects of regional instabilities from affecting China, secure vital transport routes for strategic materials like oil, or safeguard Chinas overseas investments, projects and personnel. It then follows that President Xis administration cannot afford to look weak under a US provocation. President Xi must protector Chinas sovereignty and territorial integrity, of which Taiwan is a central part. Beijing is very clear on One-China Policy, and expects all world players to recognize and respect it.

The Peoples Liberation Army has made it clear that it has firepower that covers all of Taiwan, and it can strike wherever it wants. This sentiments have been attributed to Zhang Junshe, a researcher at the PLA Navy Research Institute. Zheng further said, We got really close to Taiwan. We encircled Taiwan. And we demonstrated that we can effectively stop intervention by foreign forces. This is a strong reaction from China to warn the US against provocation and violation of the One-China Policy.

Beijings military exercises will certainly shake Taiwans confidence in the sources of its economic and political survival. The potential for an effective blockade threatens the air and shipping routes that support Taiwans central role in global technology supply chains. Should a humanitarian situation arise in Taiwan, the blame would squarely be on the US.

As Chinas military exercises along the Taiwan Strait progress and grow, it remains that the decision by Nancy Pelosi to visit Chinas Taiwan region gravely undermined peace and stability across the Taiwan Strait, and sent a wrong signal to Taiwan independence separatist forces. This then speaks to international conventions, as the UN Secretary-General Antnio Guterres explicitly stressed that the UN remains committed to the UN General Assembly Resolution 2758. The centerpiece is the one-China principle, namely, there is but one China in the world, the government of the Peoples Republic of China is the sole legal government representing the whole of China, and Taiwan is a part of China. It must be noted that the US and the US-led NATO countries have selectively applied international law, this has been going on unabated. There is a plethora of actions that have collapsed several states after they were attacked under the pretext of the so-called possession of weapons of mass destruction illuminating them as threats – and sometimes even without any valid reason. to blatantly launch military strikes and even unleash wars on sovereign countrie

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Internal party-democracy under pressure

21st June 2022

British novelist, W. Somerset Maugham once opined: If a nation values anything more than freedom, it will lose its freedom; and the irony of it is that if it is comfort or money that it values more, it will lose that too.

The truism in these words cannot be underestimated, especially when contextualizing against the political developments in Botswana. We have become a nation that does not value democracy, yet nothing represent freedom more than democracy. In fact, we desire, and value winning power or clinging to power more than anything else, even if it harms the democratic credentials of our political institutions. This is happening across political parties ruling and opposition.

As far as democracy is concerned, we are regressing. We are becoming worse-off than we were in the past. If not arrested, Botswana will lose its status as among few democratic nations in the Africa. Ironically, Botswana was the first country in Africa to embrace democracy, and has held elections every five years without fail since independence.

We were once viewed as the shining example of Africa. Those accolades are not worth it any more. Young democracies such as South Africa, with strong institutions, deserves to be exalted. Botswana has lost faith in democracy, and we will pay a price for it. It is a slippery slope to dictatorship, which will bring among other excess, assault on civil liberties and human rights violations.

Former President, Festus Mogae once stated that Botswanas democracy will only become authentic, when a different party, other than the Botswana Democratic Party (BDP) wins elections, and when the President of such party is not from Serowe.

Although many may not publicly care to admit, Mogaes assertion is true. BDP has over the years projected itself as a dyed-in-the-wool proponent of democracy, but the moment its stay in power became threatened and uncertain, it started behaving in a manner that is at variance with democratic values.This has been happening over the years now, and the situation is getting worse by the day.

Recently, the BDP party leadership has been preaching compromise and consensus candidates for 2024 general elections. Essentially, the leadership has lost faith in theBulela Ditswedispensation, which has been used to selected party candidates for council and parliament since 2003. The leadership is discouraging democracy because they believe primary elections threaten party unity. It is a strange assertion indeed.

Bulela Ditswewas an enrichment of internal party democracy in the sense that it replaced the previous method of selection of candidates known as Committee of 18, in which a branch committee made of 18 people endorsed the representatives. While it is true that political contest can divide, the ruling party should be investing in political education and strengthening in its primary elections processes. Democracy does not come cheap or easy, but it is valuable.

Any unity that we desire so much at the expense of democracy is not true unity. Like W. Somerset Maugham said, democracy would be lost in the process, and ultimately, even the unity that was desired would eventually be lost too. Any solution that sacrifice democracy would not bring any results in the long run, except misery.

We have seen that also in opposition ranks. The Umbrella for Democratic Change (UDC) recently indicated that its incumbent Members of Parliament (MPs) should not be challenged for their seats. While BDP is sacrificing democracy to stay in power, UDC is sacrificing democracy to win power. It is a scary reality given the fact that both parties ruling and opposition have embraced this position and believe democracy is the hindrance to their political ambitions.

These current reality points to one thing; our political parties have lost faith in democracy. They desire power more than, the purpose of power itself. It is also a crisis of leadership across the political divide, where we have seen dissenting views being met with persecution. We have seen perverting of political process endorsed by those in echelons of power to manipulate political outcomes in their favour.

Democracy should not be optional, it should be mandatory. Any leader proposing curtailing of democracy should be viewed with suspicion, and his adventures should be rejected before it is too late. Members of political parties, as subscribers of democracy, should collectively rise to the occasion to save their democracy from self-interest that is becoming prevalent among Botswana political parties.

The so-called compromise candidates, only benefits the leadership because it creates comforts for them. But for members, and for the nation, it is causing damage by reversing the gains that have been made over the years. We should reject leaders who only preach democracy in word, but are hesitant to practice it.

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The Big Deal About Piracy

21st June 2022

Piracy of all kinds continues to have a massive impact on the global creative industry and the economies of the countries where it thrives.

One of the biggest misconceptions around piracy is that an individual consumers piracy activities, especially in a market the size of Botswanas, is only a drop in the pool of potential losses to the different sectors of the economy piracy affects.

When someone sitting in Gaborone, Botswana logs onto an illegal site to download King Richard online, they dont imagine that their one download will do anything to the production houses pocket or make a dent in the actors net worth. At best, the sensitivity towards this illegal pirating activity likely only exists when contemplating going about pirating a local musicians music or a short film produced locally.

The ripple effects of piracy at whatever scale reach far beyond what the average consumer could ever imagine. Figures released by software security and media technology company, Irdeto, show that users in five major African territories made approximately 17,4 million total visits to the top 10 identified piracy sites on the internet.

The economic impact of this on the creative industry alone soars to between 40 and 97.1 billion dollars, according a 2022 Dataprot study. In addition, they estimate that illegally streamed copyrighted content consumes 24% of global bandwidth.

As Botswanas creative industry remains relatively slight on the scale of comparison to industries such as Nollywood and Nilewood where the creative industry contributes a huge proportion to West and East Africas respective GDPs, that does not imply that piracy activities in Botswana do not have a similar impact on our economy and the ability of our creative industry to grow.

When individuals make decisions to illegally consume content via internet streaming sites they believe they are saving money for themselves in the name of enjoying content they desire to consume. Although this is a personal choice that remains the prerogative of the consumer, looking beyond the fact that streaming on illegal content sites is piracy, the ripple effect of this decision also has an endless trail of impact where funds which could be used to grow the local creative industry through increased consumption, and revenue which would otherwise be fed back into Botswanas economy are being diverted.

Why cant our local creative industry grow? Why dont we see more home-grown films and shows in Botswana? are questions constantly posed by those who consume television content in Botswana. The answer to this lies largely in the fact that Botswanas local content needs an audience in order for it to grow. It needs support from government and entities which are in a position to fund and help the industry scale greater heights.

Any organisational body willing to support and grow the local creative industry needs to exist and operate in an economy which can support its mandates. Content piracy is a cycle that can only be alleviated when consumers make wiser decisions around what they consume and how.

This goes beyond eradicating piracy activities in so far as television content is concerned. This extends to the importation and trade in counterfeit goods, resale of goods and services not intended for resale across the border, outside its jurisdiction, and more. All of these activities stunt the growth of an economy and make it nearly impossible for industries and sectors to propel themselves to places where they can positively impact society and reinvest into the countrys economy.

So what can be done to turn the tide here in Botswana in order to see our local production houses gain the momentum required to produce more, license more and expand their horizons? While those who enforce the law continue to work towards minimizing piracy activities, its imperative that as consumers we work to make their efforts easier by being mindful of how our individual actions play a role in preventing the success of our local creative networks and our economys growth.

Whether you are pirating a Hollywood Blockbuster, illegally streaming a popular Motswana artists music, or smuggling in an illegal decoder to view content restricted to South Africa only, your actions have an impact on how we as a nation will make our mark on the global landscape with local creative productions. Thembi Legwaila is Corporate Affairs Manager, MultiChoice Botswana

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