Monday, October 26, 2020

Botswana’s secrecy in mining contracts under World Bank spotlight

A Mining Investment and Governance review report compiled by the World Bank has highlighted Botswana’s lack of disclosure on mining contracts singling out diamonds as one of the minerals whose business dealings are conducted under heavy secrecy.

The report which was launched in the capital Gaborone this week called on Botswana to make details of its large mining contracts with companies’ public. The report stated that such development will improve transparency in Botswana business dealings.

According to the report, one of the major issues of contention expressed by different stakeholders, including some government institutions, concerns the country’s decision to keep the negotiations process around contracts for diamonds mining and large integrated projects “confidential and secretive”.

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.

At the same, in what it calls, “challenging options”, the World Bank group said that Botswana should also consider the Africa Mining Vision’s recommendation that a portion of mineral revenue be returned to local government, through communities where mining has negatively impacted on the people and natural resources of a particular area.

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.

The country has over the years used the precious stones to fuel much of the expansion which currently accounts for one quarter of the Gross Domestic Product (GDP). At the same time, diamonds share of exports earnings is at approximately 85 percent contributing about one-third of the government’s revenue.

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