Monday, October 25, 2021

Botswana’s Mining Revenue sharing formula needs revision ÔÇô World Bank

The Botswana government has been called to ensure that communities suffering the negative impacts from mining also benefit specifically from mineral development in their areas. 

A Mining Investment and Governance Report compiled by the World Bank Group has noted with concern that Botswana has no legislated mineral revenue sharing formula or mechanism from the national level to mining affected areas. 

The bank says that while Botswana pursues a policy of equitable development, there may be advantages to ensuring that the communities suffering the negative impacts from mining also benefit specifically from mineral development. 

“Currently, the distribution of mineral revenue is not reaching the poorest segments of society, resulting in a high level of rural poverty and a high disparity of income between wealthy and poor”, noted the World Bank report.

As part of the solution, World Bank Group says Botswana should consider the Africa Mining Vision’s recommendation that a portion of mineral revenue be returned to local government (through to communities) where mining has negatively impacted on the people and natural resources of a particular area. 

The bank went further to encourage Botswana government to ensure that there is transparency in issues relating to mining contracts of big projects. The call follows the revelation by the office of the Auditor General that it has over the years been barred from auditing government diamond contracts. 

Apart from the Auditor General’s office, the World Bank says it aware that some representatives from civil society groups have cited the lack of transparency around closed government negotiations for large scale diamond and integrated project contracts as a governance weakness.

Deals between the Botswana government and the world’s leading diamond producing giant, De Beers Mining Company have always been highly secretive. However the World Bank says to address issues regarding transparency and accountability in the licensing allocation process, some developing country jurisdictions have sought to separate the licensing function from the overarching ministry. 

The Botswana government negotiates the terms and conditions of these agreements including the percentage of ownership stake it will purchase. The said contracts are not published and even the Auditor General is not allowed to audit these agreements.

In his presentation of the report, World Bank Group Consultant Nils Handler said that the Botswana government’s decision to keep the negotiation process around contracts for diamond mining and large integrated projects confidential was a cause for concern.

“The lack of disclosure of diamond and integrated project contracts has affected the scoring of transparency and accountability in license allocation,” reads part of the World Bank report.

The World Bank Group consultants went on to suggest that the Botswana government should consider publishing mining contracts and subject them to audit by the Auditor General

In March 2016, Member of Parliament (MP) for Boteti East Setlhomo Lelatisitswe, expressed fears that the mining townships of Orapa and Letlhakane in Boteti will not be spared the same economic woes that engulfed the mining town of Selibe Phikwe.

Speaking in Parliament then, Lelatisitswe said that just as government injected money into the mining town of Selibe Phikwe to save it from economic failure, the same should be done for Boteti region, which is inundated with diamond reserves whose existence cannot be guaranteed forever. 

Currently Botswana has various large-scale mining, sales and marketing contracts with Anglo American’s diamond unit, De Beers. Through a joint venture, Debswana Mining Company operates in Boteti region as well as Jwaneng where it mines the precious stones. 

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