Monday, 6 September 2010

News Digest: Africa Mining Comment & Analysis – Botswana

The IMF yesterday 2nd September reported that following the contraction of 2009 and the country's first recession since independence, economic growth would be restored to 8 per cent -levels in 2010, driven by a recovery in diamond mining output. The release followed a presentation in Perth on 1st September by the Minerals, Energy and Water Resources Ministry outlining the government's plans to streamline licence and permit applications, and to drive greater local beneficiation and diversification.

Chris Melville
, Africa mining consultant with Menas Associates today commented:

“With Botswana's mining industry now back on its feet, the government is once again raising the bar for other pretenders to its title as the most progressive and investor-friendly mining regime in Africa”.

“This is what mining investors like about Botswana - the government's dual commitment to a predictable regulatory framework while making gradual but concerted efforts to enhance the investment environment”.

“Despite Botswana's regular appearance at the top of indices for investment attractiveness in Africa, there is no resting on laurels. The economic crisis exposed Botswana's over-reliance on diamond production and the administration's promotion of diversification is to be welcomed, both from the perspective of the country's long-term economic health and in continuing to spark the interest of global mining companies”.

“As in many mining countries in southern Africa, mining companies face continued infrastructural and operational constraints – however, it is refreshing to see a government prepared to invest heavily to address these deficiencies”.

“Things may be looking a little dicey within the ruling BDP and recent high-level corruption scandals are a cause for concern. But these developments remain notable for their somewhat exceptional nature and it would be wrong to suggest that Botswana's economic and political miracle is under serious threat”.


The Botswana economy contracted by 3.7 per cent in 2009 after the collapse in diamond prices saw multiple mine closures, double-digit declines in employment and significant falls in diamond output (which accounts for 70 per cent of revenues in the crucial mining sector). However, the investment environment continues to enjoy the favour of foreign investors, regularly appearing in the top places in surveys of investor sentiment: a 2010 Fraser Institute report ranked Botswana first among African countries for the attractiveness of its mining policies and 21st of the 72 jurisdictions surveyed.

President Ian Seretse Khama's authoritarian style of managing the ruling Botswana Democratic Party (BDP) is continuing to drive defectors into the arms of the opposition Botswana Movement for Democracy (BMD) splinter party, while Khama's cousin, former defence minister Ramadeluka Seretse was yesterday charged with failing to disclose shareholdings in a company that was awarded a government defence contract.

© 2010 Menas Associates

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