For the first time in five years, Ndaba Gaolathe didn’t get a chance to share his thoughts on the budget speech. However, the Alliance for Progressives leader and former Gaborone Bonnington South MP, who intellectually overwhelmed the house every budget-speech session, still has a mouthful to say on how Botswana can move itself forward economically.
The economic miracle that dirt-poor Botswana became has been chalked down to its partnership with De Beers – itself a corporate nonentity until it dug out gem diamonds from Jwaneng. At independence in 1966, Botswana, with 80 percent of desert land, was one of the poorest countries in the world. The country would remain dependent on the British Exchequer for international aid until 1972 when Orapa diamond mine, which now ranks as the biggest open cast mine in the world, was commissioned. Another that would be opened 11 years later in Jwaneng has the best gem quality diamonds in the world. Botswana and De Beers formed the Debswana Diamond Company and it was through this partnership that the country enjoyed Africa’s longest boom and one of the world’s longest economic booms. Its 2001 per capita income was approximately twice as high as the average East Asian tiger’s per capita average of $3,854 and more than four times the $1,826 average per capita income of an individual living in sub-Saharan Africa.
Gaolathe says that Debswana was an undertaking explicitly pursued to generate profits, foreign exchange, employment and other benefits such as technology transfer.
“Debswana has generated consistent profits, and perhaps the only debate is whether Botswana has optimised this investment,” he says.
One optimisation option would have been in the form of targetting strategic opportunities to create what Gaolathe describes as “indigenous outperformer companies or multi-billion pula companies in which government is a shareholder.”
He gives three examples: Dubai World and Istithmar World in Dubai and Temasek Holdings Private Limited in Singapore.
Dubai World is an investment company that manages and supervises a portfolio of businesses and projects for the government of Dubai across a wide range of industry segments and projects that promote Dubai as a hub for commerce and trading. It focuses on the strategic growth areas of transport and logistics, dry docks and maritime, urban development, investment and financial services. Established in 2003, Istithmar is a state-run premier investment company owned by Dubai World with a broad international portfolio across North America, Europe, the Middle East, Asia and Africa. Temasek is a Singaporean holding company that is owned by the government of Singapore. Incorporated in 1974 as a commercial investment company, Temasek, which has credit ratings of “AAA/Aaa” by Standard & Poor’s Global Ratings and Moody’s Investors Service respectively since their inaugural ratings in 2004, owns and manages a net portfolio of US$313 billion, with S$28 billion divested and S$24 billion invested during the year.
Gaolathe says that relying on De Beers/Debswana as the only serious experiment in high-value investment has been a significant case of lost opportunity for Botswana’s potential emergence as an economic force.
“What is wrong with our system is an unwillingness to build capacity within or around government to conceive, drive and implement strategy,” he says.
The latter statement indicts multi-year effort that the government has undertaken through the National Strategy Office, which falls under the Office of the President.