Botswana needs to treat its DeBeers partner with a little more respect

The Botswana government and DeBeers mining partnership spans over half a decade and is hailed in many quarters in Africa as a model to follow.  I hold a different view though and would rather have a model where our government was not directly involved in the ownership of mines or any other business for that matter. After fifty years, the mines should now be in private hands with ordinary people having access to shares in local mining companies. That would be real empowerment compared to the current set up whereby diamond profits and dividends go to feed a bloated, unaccountable, wasteful and efficient public service. The level of waste is evident in the way the government for example, unnecessarily spends billions every year on a large vehicle fleet and fuel.

Just this week and  as a further sign of this incompetence, the Department of Road Transport and Safety  put out a statement to inform the public that it was unable to issue driving permits for five days due to a faulty system. The fact that it takes the transport department five days to fix a system error is a sign of the level of that incompetence. Even when their system works, members of the public are already forced to brave criminals and queue as early 4:00 am for permits.    

As a result of the diamond bonanza, the state has no appetite to introduce deep structural reforms to wean or diversify the economy from overdependence on diamonds. The lack of appetite runs the risk of becoming a self a self-fulfilling prophecy in which instead of diversification, even more energy is expended on milking the DeBeers partnership as hard as we can. However that is a debate for a different time. For purposes of today, the government’s unsavory treatment of its long term partner, DeBeers, in negotiations for a new diamond sales agreement is the subject of discussion.

The government’s conduct in its negotiations with its partner for fifty years as reported in the media as well as from with those in the know, is not what it should be. Firstly it raises doubts about whether one of the partners is negotiating in good faith. The fact that in the midst of negotiations, the government is simultaneously talking to third parties lends credence to doubts about good faith. It certainly leaves both DeBeers and observers alike wondering how negotiations between two parties that have been successfully doing business together for decades and catapulted Botswana into an upper middle income economy , now  seems like a three way negotiations process. Certainly if you are negotiating in good faith, you seek to preserve the integrity of that process and cannot afford to be seen to be concurrently talking to other potential suitors.  

Botswana must also remember that in the said negotiations, it is sending a message which is much bigger than DeBeers. It is a message about our posture regarding foreign direct investment.  Preferably, the posture must be one that is respectful and offers certainty to foreign investors. And for now such investors do not come bigger that DeBeers. If we create the impression that we can keep large investors guessing and not knowing whether they are coming or going on licenses, what more of relatively smaller players whom incidentally we keeping asking to do business on our shores?

In the business of attracting investors, glossy flyers and paying for exhibitions in exotic locations such as Dubai and Davos count for nothing if our words do not match deeds. At all times therefore, deeds matter more than words.  Investors listen to the smooth presentations by our investment promotion agencies but will invariably talk to fellow businesspeople on the ground to verify the true state of affairs in as far as the investment landscape is concerned. So may those who have been tasked to negotiate the sales agreement on behalf of Botswana government execute their mandate diligently and sensitively.