Thursday, October 22, 2020

Over reliance on mineral revenue spells doom for Botswana’s economy – Bonyongo

FRANCISTOWN – Debswana Managing Director Balisi Bonyongo has called for a shift in mindset for Botswana to be able to diversify its economy and move away from over dependence in mineral revenue as this spells doom for the country. 

Speaking during a 14th   Biennial National Business Conference (NBC) dinner hosted by Debswana last week in Francistown, he said although diamonds were the reason Botswana was able to ascend to a middle income country, they are equally the reason the country remained trapped as a middle income one.

“This does not bode well for the future of this country; we must do something fundamentally different if our economy is to grow and diversify. We must strive to mature into a high income country economy and the only way to truly achieve that is to develop industries and businesses that are not dependent on diamonds and mining in general,” he said.

To achieve this, Bonyongo said Batswana must individually and collectively shape the development of the country for the next 50 years. He said such an initiative should start with the leadership, across politics, government, business and society at large with change of mindsets. He said it was important to accept that by making success in the past 50 years will not necessarily help the country succeed in the next 50 years.

“Leaders must place accountability, performance, delivery, productivity and exemplary work ethics at the centre of all that we do. The private sector in our country now needs to move from relying on tenders from a few big players in the economy and grow businesses that compete in regional, continental and global markets,” he added.

Bonyongo said this would mean that government must be seen as a facilitator in the economy and the private sector as a driver. Sharing the story of Debswana, he said that the mining giant had been extracting diamonds for nearly as long as Botswana has been independent. He said Debswana prides itself in its purpose to turn diamonds dreams into lasting reality. 

“As you are all aware, 2015 was a challenging year not only for Debswana or diamonds but for the mining industry at large. The business environment of 2016 continues to be volatile and complex. This is the nature of today’s business environment where many organisations are constantly adjusting and flexing to stay afloat and aligned to market needs,” he said.

He said their measured response was to reduce production levels by three million carats in 2015. 

He also said that they focused on driving down costs and pushing up operational efficiencies whilst preserving jobs in preparation for a market upturn. Bonyongo explained that underpinning all these decisions was an unwavering resolution to prioritise safety and maintain employee engagement and morale. He said that Debswana’s commitment to this measured response remained steadfast and they had maintained this approach throughout 2016.

“The demand for rough diamonds exceeded expectations during the first seven sales of this year and this allowed us to reduce excessive inventory levels that had built up in 2015 to within normal operating hours. Although this development is encouraging we remain cautious as it is still unclear whether the underlying consumer demand will be strong enough to sustain the momentum experienced,” he said.

He revealed that so far in 2016, consumer demand for diamond jewellery had remained stable. Bonyongo said the US had driven 2016 performance, supported by the economy posting strong growth in consumer spending and solid employment numbers and added that China had seen flattish growth so far while India had realised ongoing challenges with the month-long jewelers strike in March 2016 impacting the domestic market. He further said that rough diamond sales have continued to be relatively flat since the beginning of the year while mid-stream liquidity appeared to be stabilising with new sources of capital entering the industry.

“Prevailing geo-political uncertainties such as the impending US elections, BREXIT and the war in Syria continue to cast a shadow over security of the global economic outlook as well as consumer demand. Our company is alive to these developments as we develop our production and sale plans for the 2017 and beyond,” he said.

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