MINING consultancy, Core Consultants’ remarks this week Botswana remains a popular investment destination, specifically on the mining sector despite infrastructure challenges and global economic downturn, must be provide some sobering reflection in Harare.
While there are many African economies rising, besides powerhouses like South Africa and Nigeria, such as Mozambique, Angola, Tanzania, Mauritius, Ghana and Kenya, Botswana’s case is very interesting.
When Botswana gained Independence from Britain in 1966, it was one of the poorest countries in the world — without a currency of its own and with only 10km of tarred road. It was broke as its annual revenue was less than P10 million, just over US$1 million.
Put differently, it was one of Africa’s largest wastelands. Basically it was a village. The country, which is 70% desert and landlocked, had no infrastructure to talk about and relied on South Africa and other neighbours for just about everything, including water, electricity, schools, health facilities and shopping centres. However, since its discovery of diamonds in the late 1960s Botswana’s GDP has grown to about US$16 billion and its annual growth rate has averaged 7%.
In fact, the country is now the world’s biggest producer of diamonds by value and that has transformed it into a middle-income nation. The sector is now the second largest employer. The country’s rise has been amazing. Botswana’s annual income has increased from just over US$1 million in 1966 to over US$5 billion. The country, which has over two million people, has also accumulated over US$10 billion in reserves. Its mineral revenue could increase by 30,4% in the current fiscal year.
Diamonds account for 76% of Botswana’s export revenue, 45% of government revenue and 33% of GDP. Without them, Botswana would lose approximately US$3 billion in revenue per year. This loss would badly impact on everything, from spending on social programmes to government’s capital expenditures.
Apart from Core Consultants’ remarks on Botswana this week that the country ranks high on the rating scales and enjoys huge FDI receipts, the Fraser Institute mining Policy Perception Index 2014 ranked it first in Africa and 25th in the world in terms of attracting mining investment and ease of doing business. It guarantees a good investment climate.
Despite lingering social problems and infrastructure deficits, Botswana managed to all achieve this largely due to consistent good leadership and effective policies.
Yet Zimbabwe, which has huge mineral resources including diamonds, gold and platinum, vast tracts of fertile agricultural land and a solid human resource capital base, is wallowing in poverty. Many Zimbabweans are now economic refugees in Botswana and elsewhere, something unthinkable in 1980.
Zimbabwe’s economy remains in a fragile state, with an unsustainably high debt, massive de-industrialisation and informalisation. Problems of doing business in Zimbabwe, now without a currency of its own, include policy inconsistencies, corruption, red tape and collapsing infrastructure.
In short, leadership and policy failures have ruined Zimbabwe with disastrous consequences. Let’s learn from others. Botswana provides a good model.