Global financial crisis set to stall Botswana growth

Business Report, 15/12/2008

The global economic crisis had started to affect Botswana's output and would significantly damage the mineral sector, which accounted for the bulk of export earnings, the country's finance minister, Baledzi Gaolathe, said on Friday.

Gaolathe told parliament that the world credit crunch had forced the curtailment and postponement of Botswana's capital expenditure programmes, worsening the decline in demand and hitting employment.

"The lack of available credit and long-term investment funds has slowed down growth in consumer spending, [and] reduced employment and incomes, as well as causing capital losses on personal savings and other assets," he said.

Mineral exports, in particular diamond sales, had started to fall significantly last month and there had been a been a sharp decline in commodity prices for other minerals - such as copper, nickel and gold - in the past three months.

"As a result of these developments, there will be a slowdown in economic growth and decline in government revenues, in particular mineral revenue, which forms the bulk of government's total revenues, from the end of 2008/09 until 2010/11," Gaolathe said.

"The expected substantial reduction in mineral revenue due to the global financial crisis is a cause for serious concern, given that such revenues have accounted for about 35 percent to 50 percent of the total government revenues over the past five years."

However, Botswana's foreign exchange reserves had increased, with the value of the Bank of Botswana's investment portfolios rising because of the relatively good performance of the global bond markets and relative strength of the currencies in which the portfolios were invested.

"[But] in the face of uncertainty as to the duration of the global economic slowdown, the cushion provided by the foreign exchange reserves may not be sufficient to ensure long-term budget sustainability," Gaolathe said.

L'ancien président du Botswana s’exprime à la BAD sur les industries extractives en Afrique

Source

« Si le Botswana est un cas de succès, le pays le doit à la discipline et à la transparence » a déclaré, jeudi à Tunis, l'ancien président du Botswana, Festus Mogae, qui faisait un exposé dans le cadre du programme des conférenciers émérites de la BAD, sur le thème «les industries extractives et le développement de l'Afrique: les leçons du Botswana". M Mogae s’exprimait ainsi au siège de relocalisation temporaire de l’institution, devant de nombreux participants, notamment, les administrateurs et le personnel de la Banque, les membres du corps diplomatique et la presse.

Dans son allocution de bienvenue, le président de la BAD, M. Donald Kaberuka a salué le parcours exceptionnel du conférencier qui a successivement occupé d’éminentes positions dans la fonction publique internationale notamment celles d’administrateur au Fonds monétaire international, de gouverneurs à la Banque mondiale et de président du Conseil des ministres de la communauté régionale pour l’Afrique australe. Il a gravi presque tous les échelons de l’administration publique de son pays (gouverneur de la banque centrale, ministre des finances et de la planification, vice-président) avant d’être élu président de la république en mars 1998. Son mandat de président a pris fin le 31 mars 2008. Son engagement en faveur de la bonne gouvernance et de la démocratie lui valu la reconnaissance internationale avec le prix Mo Ibrahim qui lui a été décerné en 2008. Né en 1939, le Président Mogae est titulaire de nombreuses distinctions honorifiques. Il est commandeur de la légion d’honneur (Grand-Croix) de la république française...

Dans sa note introductive, le président Mogae a déclaré : « si le Botswana est un cas de succès, le pays le doit à la discipline et à la transparence ». En effet, le Botswana met un accent particulier sur les différentes étapes du processus, notamment au niveau de l’exploration, de l’exploitation et de la fiscalité, pour s’assurer que ses intérêts sont sauvegardés dans les négociations des contrats miniers. Il a indiqué que son pays gère de façon transparente les ressources tirées des mines, notamment en investissant l’argent dans des projets de développement. Selon le président Mogae, « les ressources du continent devraient servir à financer le développement et non à susciter des conflits ». Il a indiqué que souvent les conflits naissent du partage de la richesse et c’est la raison pour laquelle les Etats devraient veiller à bien négocier les contrats. S’il arrive que les contrats soient mal négociés, il serait judicieux de procéder à des renégociations a-t-il déclaré. Il a enfin invité les africains à mettre un accent particulier sur le leadership qui est un viatique pour la promotion d’un développement durable.

La Banque africaine de développement a un rôle important à jouer pour assister les pays qui le souhaitent dans les négociations ou renégociations des contrats miniers, a déclaré l’éminent conférencier.

L’hôte de la BAD a eu le même jour, une session extraordinaire avec le conseil d'administration de la Banque sur le même sujet, après sa conférence. M. Mogae, rappelle-t-on, est aujourd'hui, l'un des dirigeants africains les plus réputés, en raison de sa remarquable réussite et de son leadership qui a permis une gestion transparente des richesses minières de son pays.

Prix Ibrahim 2008 décerné à l'ex-président du Botswana Festus Mogae

BOTSWANA - 20 octobre 2008 - AFP

L'ancien président du Botswana, Festus Gontebanye Mogae, a reçu le prix Ibrahim 2008 de la bonne gouvernance en Afrique pour avoir su faire bon usage des richesses, notamment en diamants, du sous-sol de ce pays d'Afrique australe miné par le sida.

"Le remarquable leadership du président Mogae a permis de garantir au peuple botswanais la poursuite de la stabilité et de la prospérité dans un pays confronté à une pandémie de sida dont l'ampleur menaçait gravement son avenir", a déclaré l'ancien secrétaire général des Nations unies, Kofi Annan, en décernant le prix à Londres, devant un parterre de diplomates et journalistes.

"Dans un continent où trop souvent la richesse des sous-sols s'est transformée en malédiction, le Botswana a su démontrer qu'un pays doté de ressources naturelles pouvait, par une gouvernance de qualité, parvenir à un développement durable", a ajouté M. Annan.

Festus Mogae, 69 ans, a quitté le 1er avril la présidence du Botswana après une décennie à sa tête, au cours de laquelle son pays, premier producteur mondial de diamants, est devenu l'un des plus prospères d'Afrique, en dépit des craintes de voir ses progrès balayés par le sida.

Tandis que d'autres, comme la Sierra Leone ou la République démocratique du Congo (RDC), n'ont pas su tirer les bénéfices de ce genre de ressources précieuses, le Botswana a diversifié son économie, encouragé l'exploitation d'importantes réserves de charbon et développé le tourisme sur la base des paysages et de la faune sauvage spectaculaires du pays.

"Regardez la différence entre le Botswana et la Sierre Leone", a déclaré -en français- l'ancienne ministre guinéenne de l'Education, Aïcha Bah Diallo. "Ca, c'est la bonne gouvernance et la bonne éducation. Nous devrions nous réjouir qu'il y ait quelqu'un qui dise 'mon pays est riche, je vais le partager'", a-t-elle ajouté.

Toutefois, Survival International, organisation de défense des peuples indigènes dont le siège est à Londres, a critiqué la remise du prix à M. Mogae, dont le gouvernement a, selon elle, supervisé l'éviction des Bushmen du Kalahari de leurs terres en 2002.

"La bonne gouvernance exige le respect des minorités", a déclaré le directeur de Survival International, Stephen Corry.

Économiste habile, Mogae s'est fait le défenseur d'une gestion rigoureuse des dépenses publiques. Dans un de ses derniers discours au Parlement, il avait déclaré : "Aussi sûr qu'un noceur paie ses excès d'une gueule de bois au réveil, un châtiment encore plus sévère attend une nation qui dépense sans compter pour satisfaire des plaisirs immédiats au lieu d'investir dans un développement durable".

Dans son dernier budget en février dernier, Mogae avait alloué plus d'un quart des dépenses à la lutte contre le sida. La pandémie a fait chuter l'espérance de vie de 65 ans à moins de 40 ans dans ce pays comptant 270.000 séropositifs sur moins de deux millions d'habitants.

Mais les dernières années au pouvoir de Mogae ont été ternies par un long procès contre l'éviction des bushmen San de leurs terres ancestrales du désert du Kalahari.

Le prix a été fondé en octobre 2006 par Mo Ibrahim, magnat britannique des télécommunications d'origine soudanaise. Il est décerné parmi des anciens chefs d'Etat ou de gouvernement de pays de l'Afrique subsaharienne qui ont été élus démocratiquement.

Se disant "le prix annuel le plus richement doté au monde", il attribue au récipiendaire cinq millions de dollars sur dix ans, et par la suite une somme annuelle de 200.000 dollars à vie. La Fondation envisagera également de verser 200.000 dollars supplémentaires tous les ans pendant dix ans pour des activités d'intérêt public et des bonnes causes chères au coeur du lauréat.

En octobre 2007, Joaquim Chissano, ancien président du Mozambique, était devenu le premier Lauréat du prix Ibrahim.

Khama's roadmap for Botswana

Mmegi, 2 April 2008
Let me from the outset pay tribute to Rre Mogae as he begins his retirement after years of exemplary service to our nation.

When looking back at his lifelong commitment to national service, it is hardlysurprising to anyone that he eventually ascended to the highest office in the land. Rre Mogae's achievements and the legacy he will bequeath us are well documented, as indeed outlined in his last State of the Nation Address in November last year. Immense strides in areas such as economic management, gender equality, HIV/AIDS, infrastructure development and social transformation, to mention but a few, have been made under his stewardship of our country. As president, Rre Mogae was recognised locally and abroad for these achievements. He can boast an admirable track record that serves as an example for future leaders of this country and elsewhere in the international community.

*An example of Rre Mogae's wise leadership is best re-stated by his own words during his last State of the Nation Address when he said and I quote "I have not allowed political expediency and the pursuit of populism to cloud my judgement and service to the nation. For the road to political expediency and populism may be lined with cheering crowds, but in the end we cannot escape the cold hard facts of our limitations as a developing country. Harsh punishment awaits a nation that spends unwisely in pursuit of immediate gratification rather than sustainable development", end quote. These are indeed wise words, and words I wish to identify myself with. On behalf of the nation, Rre Mogae, I wish to thank you Rraetsho for all you have done, and we wish you all the best in your retirement. Please feel free to call on me at anytime to render advice on any issue, and I hope I too can call on you for the same.

*A change of leadership does not mean radical changes in the way we have been setting out our objectives as agreed upon by the ruling party and government for this nation. Our party has a manifesto that I signed on to and the government has a national development plan that I am also a party to. However, in the course of the incoming administration, you may detect a change in style and special emphasis on a number of issues. This should not cause any alarm or uncertainty.

Afterall, changes should be seen in the context that no two people are the same. However, the overall objectives remain the same and not least because we, Rre Mogae and I, have been working together for quite some years to achieve them.

*Leadership changes can be a time of unease. I can only allay any disquiet by once more evoking President Mogae's words in his State of the Nation Address and I quote "Let us therefore face the future with confidence and determination: to lift our nation to greater heights, and determination to use our current achievements as stepping-stones towards prosperity and greater success" end Quote. I certainly intend to carry out my duties within the spirit and intent of those words.

*I am confident in the future, and I am determined to build upon the solid foundation that has already been laid since independence by my predecessors. For me to succeed, we must all be growing in success. No one can achieve anything on his or her own. This is our country, the only country we have. Botswana can achieve greater success, only if we show a collective will and when we all participate fully in her affairs.

Therefore whatever we do or whatever we say must be done and said in the best interests of this country.

*We have a clear vision of what we want Botswana's future to be. The successful implementation of our economic diversification policies and all this implies, will require focused and a single-minded pursuit of our goals and objectives. I am confident that with the right leadership at all levels and the appropriate mindset, we can, together, secure that success.

*Batswana have every right to reflect with pride on four decades of independence, stability and major economic and social development. But we cannot bask in past glory forever as has been the tendency. We need to think of the coming decades and about the prosperity and welfare of future generations. Botswana has become a middle-income country by prudently managing and investing the proceeds from her natural resources. This, in turn, has provided a stable and fulfilling environment for its citizens and business. Today, the country faces challenges that require further responses and initiatives. Areas that I feel need special emphasis are employment creation and poverty alleviation, programmes for the youth, health, housing and the fight against crime, to mention a few.

*But we also face new challenges such as environmental protection, and changing social values, brought about by rapid urbanisation. The external perceptions about Botswana have also changed: Botswana is no longer seen as the only beacon of success in Africa. A growing number of countries on our continent have become stable, democratic and increasingly attractive for investors, tourists and like-spirited people.

*These are some of the issues I am mindful of as I take the oath of office. Hence my roadmap for the nation will be underpinned and characterised by the principles of Democracy, Development, Dignity and Discipline. That they all start with the letter D is purely by coincidence.

*The first D, Democracy, has served our country and its people well. It is an important cornerstone of good governance and prudent economic management. Only democracy guarantees human rights, the rule of law, accountability and basic freedoms that we have enjoyed over the years. Yet again it is President Mogae who said "we are a country with a rich democratic political tradition and something positive to demonstrate and contribute to the rest of the world", end Quote.

*All the success we have registered is on account of our adherence to democratic ideals. Nothing should be allowed to detract us from this path. There is no substitute for it. I believe that Batswana recognise that only democracy can create the most favourable conditions to ensure that our aspirations can be fulfilled.

*I am a democrat. I have always believed in democratic ideals, and joined the military to defend this democracy. I consider myself an integral part of this system of governance that has become entrenched in
the life of Batswana.

*The second D, Development, refers to improving the standard of living of Batswana. This will manifest itself through the continued provision of national infrastructure such as roads, hospitals, electricity, schools, stadia and other life-affirming opportunities, most importantly jobs.

For this to happen, we have to create an enabling environment for the private sector, and to actively encourage it to become the driving force of and the main investor in our economy.

Government cannot alone bring about change. I also expect the private sector to do much more in support of the change process, especially in areas such as innovation, staff training and skills development.

l We need to change the mindset among Batswana by encouraging and helping them to fully develop their talents, and through stimulating creativity and hard work, so they can contribute to the economic development of our country. This must include a change in the way in which we see ourselves relative to non-Batswana stakeholders in different spheres of life, and the absolute need to embrace the realities of the internationalisation and globalisation processes. It will also demand an acceptance that Government's empowerment policies will increasingly be based on ability, effective delivery, wealth creation and capacity building through skill development and hard work, rather than on entitlement.

*With reference to the third D, Dignity, no one should need to live an undignified life as a result of poor shelter or health and abuse in a domestic environment. Anything in life that brings you suffering affects your dignity as a person and we shall seek to address and overcome some of these challenges.

*Living in dignity must go hand in hand with being treated with dignity. In this regard, I call upon all of us, politicians, the public service, and the private sector to ensure that our interaction with the public must at all times be underpinned by dignity. Botho is an integral part of our culture. Every citizen must (especially the political leadership) strive to maintain our culture of modesty and avoid extravagance at all costs.

*Last, but not least, the fourth D, is the principle of Discipline. Nothing can be achieved successfully without discipline in any society. May I quote President Mogae again when he said, "As I prepare to leave office, let me ask that we take a firm stand against all the negative tendencies that are creeping into our society and defacing our image.", end Quote.

*Allow me to highlight some of the social problems in our society that we need to address as a nation. These range from alcohol abuse, reckless driving on our roads, disrespect for elders, vandalising of school property, wastage of scarce resources such as water, the use of abusive language in public discourse and defamation, slander and false statements in the media. The examples I have cited reflect a lack of discipline by some sections of our community.

*Batswana must be reminded that in a democracy, the rights and freedoms of one individual end where those of other citizens begin. Freedoms go hand in hand with responsibility.

*The 4 Ds, I believe will help guide us towards our National Vision 2016. As Batswana, we have formulated a clear roadmap of our future. We can only realise this noble vision through focused actions, by government, business and citizenry. Two major strategies have recently been developed to help realise Vision 2016. They are the Business Economic Advisory Council's Economic Strategy designed to drive our country's much needed economic diversification, and a Brand Strategy - to inform ourselves and the world what Botswana holds in store for investors, visitors, traders and foreign residents.

*To actualise the contribution these two strategies will make towards realising Vision 2016, it will be necessary to make some changes in the way our country operates. This requires decisive and inspirational leadership in both government and business to instil self-confidence in the workforce and inculcate a results-oriented culture. It also necessitates better organisational skills and capacities to effect the changes required. Our young people need jobs-ready training and education to obtain the skills business requires. They need to be equipped with the abilities and mindsets to excel in their jobs and to start and grow their own enterprises.

*Accelerating globalisation and the rapidly changing international economic environment and related competitive pressures will continue to have a dramatic impact on Botswana. This change process also fuels the international fight to attract scarce and often highly sophisticated skills and know-how, and the Foreign Direct Investment which can commercialise such skills and thus help achieve longer term economic success.

*These developments dictate that Botswana must reposition itself.
Botswana must learn to benchmark itself internationally, and we, collectively and individually, must develop the capacity to compete internationally on equal terms. This is the basis for our policy "Citizen Empowerment through Excellence".

*I shall set up a special Committee of Cabinet responsible for economic issues and employment that will report to Cabinet monthly on progress made with regards to these various initiatives. This committee will be headed by the Vice President.

*Finally, I intend to try and find ways to phase out any excessive or counter-productive bureaucracy. Our public service, at both central and local level, must become optimally efficient, transparent, motivated and disciplined. Within Government I will continue to attach importance to team work, accountability, effective co-ordination and providing staff with clear objectives and targets.

*To this end I shall start by laying out to the Cabinet and the entire senior management of government in a meeting later this week and with local authorities next week, my expectations of them with respect to making good on the pledges we have made to Batswana. As part of a team charged with delivering services and development to the nation, I hope they are all up to the task because those unable to deliver cannot be kept on the team.

*Bagaetsho, "Success starts with a vision, but nothing will come of it unless the follow-through is swift and only single minded pursuit of goals brings success"
"We cannot stand still - we must improve further on our past gains. With the support of the nation I will do my best to lift Botswana to the next level of development"

*Let me conclude by thanking all of you for your attention, and to all those who have sent messages of goodwill to me, and to those who have travelled from afar to be here for this occasion.

SACU Revenues Grow While AGOA Receipts Decline

BY WANETSHA MOSINYI, Mmegi, 10/03/2008
Botswana will hope that the impasse in the ongoing negotiations between the EU and SADC countries on signing the Economic Partnership Agreement (EPA) does not adversely affect SACU from which the country raked in P6.6 billion in revenue pool receipts for the 2006/2007 financial year.

According to the Botswana Unified Revenue Services (BURS) annual report for 2007, Botswana's share from the common revenue pool increased from P3.9 billion in the previous year to P6.6 billion, an increase of P2.68 billion or 68 percent over the 2005/06 amount.

A significant proportion of the increase amounting to P1.4 billion or 52 percent resulted from the better than anticipated performance of the common revenue pool receipts, says Burs Commissioner General Freddy Modise.

This is attributed to the growth in the value of imports and excisable goods into the SACU area, which was largely fuelled by rising international commodity prices.
Botswana's share from the pool was nearly 16 percent of the total shares due to be paid to SACU member sates during 2007/08.

It is anticipated that the size of the pool will grow in spite of the continued reduction of average tariffs in SACU External Tariff resulting from the customs union's commitments under the World Trade Organisation (WTO).

The lower tariffs will make international commodity prices cheaper and result in increased volumes of imports into SACU.

During the year under review, the export of textile and apparel products exported to the United States, under the Africa Growth and Opportunity Act (AGOA) amounted to US$36.3 million (about P221.4 million), a decrease of 56 percent from 2005/06 exports, which stood at US$81.8 million (about P498.3 million).

The decrease is mainly attributable to the phasing out of textile and clothing quotas by the WTO, which has resulted in stiff competition from China and other Asian countries, says the report.

"It is anticipated that Botswana will continue to benefit from the scheme, particularly with the recent extension of the provision for least developed beneficiary countries to source fabric from third countries," says the Commissioner General.

"This provision, which was scheduled to expire in September 2007, has now been extended to 2012."

Being a middle-income country, Botswana has been granted a special dispensation to benefit from the scheme.

The country's imports under the Botswana/Zimbabwe Trade Agreement increased from P162,440 million during 2005/06 to P181, 334 million during the year under review. This was an increase of P18. 9 million or 11.6 percent.

Exports also increased, growing from P6,755 million during 2005/06 to P8,907 million during 2006/07, an increase of 31,8 percent.

During the year under review the Customs and Excise division processed a substantially greater amount of imports and exports.

Imports' declarations worth P18. 8 billion were processed in 2006/07, an increase of 16 percent as compared to the previous year, which stood at P16.2 billion.

Exports' declarations processed were worth P28 billion, an increase of 26 percent, from the P23 billion processed in 2005/06.

The overall growth in the value of exports is mainly attributable to diamond sales and the under-valuation of the pula relative to other currencies.

Botswana recorded a cumulative positive trade balance amounting to P10, 07 billion during the 2006/07 financial year. However, owing to a decline in the exports of diamonds, trade deficits were recorded for April and September 2006.

Botswana's leader to keep winning formula

By Gordon Bell, IOL, 30/03/2008

Vice President Seretse Khama Ian Khama takes over the leadership of Botswana this week and is expected to stay on an economic and political course that has made the country one of Africa's rare success stories.

President Festus Mogae will retire after nearly a decade in power, handing over to Khama, a former general who is the son of the country's first independent leader, at an inauguration on Tuesday. A general election is expected in 2009.

Khama, 55, will inherit one of the best performing economies in southern Africa.

The mineral-rich nation, which is the world's top diamond producer and famous for its sprawling wildlife reserves, has enjoyed average growth of around 8 percent over the last two decades.

GDP per capita is forecast at $8 453 in 2008, the highest in sub-Saharan Africa, according to global investment banking group UBS.

Botswana also has the highest sovereign ratings in Africa, and is ranked the continent's least corrupt country by Transparency International.

In 1999, Mogae succeeded retiring President Ketumile Masire in a landslide election victory at the head of the Botswana Democratic Party (BDP) that has ruled the former British colony since 1966.

The Batswana expect prosperity regardless of who is in charge of the southern African country of nearly 2 million.

"I think things will stay the same, since they are from the same party," said B Kasome, 35, a scout at a game reserve near the capital Gaborone, before adding he was content with life.

"At the moment we are happy with him (Mogae), why change when things are going well."

Unlike many countries in Africa, Botswana has rejected the ruler-for-life path, limiting presidential terms to 10 years.

Tribal chief

Analysts say the handover has been carefully orchestrated to cause as few ripples as possible, in contrast to the often disruptive and sometimes violent succession crises that have erupted in other parts of the continent.

The ruling party, which has won every election since independence from Britain, seems assured of another victory next year, with Khama, the paramount chief of the country's biggest tribe, the Bangwato, at its helm.

The new president has the right credentials, being the first-born son of Botswana's hugely popular founding president, Seretse Khama.

A qualified pilot, who attended Sandhurst military academy, he is admired by many, but others fear his military background may bring in an authoritarian leadership style.

"Ian is a chief and he was a soldier so he might use those powers in ruling. It might be bad," said Tshego Ngeza, 27, a nursery school assistant.

"I would prefer Mogae. People are so worried, really worried about Ian's background."

While successful on the macroeconomic front, the government has recently come under fire over its human rights record and commitment to democracy.

Botswana faced international scrutiny in 2006 when its highest court ruled it had illegally forced its San Bushmen off their ancestral lands, and last year banned 17 people, mostly foreign journalists and human rights activists from the country.

Analysts don't expect any major shifts in policies, at least not before the election.

"I don't envision any impact from this change. The telling time will come after the election," said Hilton Coghlan, chief investment officer at Fleming Asset Management Botswana.

Aids fight

The government has won wide praise for its battle against one of the worst Aids crises in the world, offering drugs and other treatment to contain an epidemic estimated to have infected one in three adults.

The country has been a island of stability in a turbulent region and some believe Khama is the candidate to keep the country on the right track.

"The new president Ian Khama will bring some changes. If you have a problem he is always prepared to help you, he always helps orphans and other poor people," said 26-year-old childcare worker Boitshepo Mmualefae.

Botswana gems to sparkle at home

Peter Biles, BBC News, 19/03/2008
A new diamond-processing plant, The Diamond Trading Company, has opened in Botswana, creating about 3,000 jobs.

Until now, diamonds from Botswana have been sent abroad to be polished, marketed and sold.

The $83m plant, jointly owned by the government and diamond giant De Beers, will become a processing centre for diamonds from De Beers mines worldwide.

Botswana is the world's largest producer of diamonds and one of Africa's most stable countries.

The presence of the new advanced diamond sorting facility in the capital, Gaborone, is expected to create further jobs in the finance, security and telecommunications sectors.

Vast pit

Diamonds are a finite resource, but they still make up 80% of Botswana's foreign earnings.

For quarter of a century, diamonds have been dug from Jwaneng Mine - the richest diamond mine in the world.

Jwaneng means "the place of small stones".

Its vast open pit yields the bedrock of Botswana's economy, and looks to do so for decades to come, guaranteeing continued growth.

The mine's general manager, Balisi Bonyongo, argues that development in Botswana "really took off" when Jwaneng Mine was discovered, and when it started operating in 1982.

"We have seen wealth creation in this country," he said.

"We have seen a lot of opportunities being created, for employment, for infrastructure, hospitals, health services - on the back of the discovery of this great operation - Jwaneng Mine."

Previously, mined diamonds were exported straight to London to be processed.

But with the rough gems now being sorted at the Diamond Trading Company, the production process will be centred in Botswana.

That will eventually benefit thousands of local workers.

Long-term investment

De Beers, which has been operating in Botswana for more half a century, says it makes economic sense to move the technology and skills to the country.

Botswana's reputation as a stable country is attractive to investors, argue the firm's management.

"Mining is a long term investment," said Sheila Khama, Chief Executive Officer of De Beers Botswana.

"And one of the pre-requisites to investing in mining, is political and economic stability... of the country in which the investor puts their money.

"Botswana's successful beneficiation ensures Botswana's economic stability."

Ms Khama accepts that concerns remain about the finite nature of the diamond industry.

"We know diamonds are a finite resource and over 50 years, we spent $93m in Botswana searching for diamonds," she said.

"We need to find other deposits."

Stiff competition

Delphinah Kehathilwe, a local diamond sorter, knew nothing about diamonds before she underwent six months of training.

"They say diamonds are a lady's friend, but before I didn't see much in a diamond. But touching them on a daily basis, I began to like them," she said.

Cutting and polishing facilities are also being moved to Africa, with 16 different manufacturers agreeing to start operations in the country.

While this diversification will face stiff competition from the traditional centres in China and India, the developments are important ones for Botswana.

The transfer of skills from abroad should put the country on the map as never before, and change the face of its diamond industry.

Botswana expects Mmamabula contracts to be signed soon

18/03/2008

A Botswana government official said on Tuesday that he hoped that the contracts for the power tariffs and construction of the 2 400 MW Mmamabula power plant to be built in the country would be signed "within the next month of so".

Permanent secretary in the Ministry of Mines, Akolang Tombale, said that the project was expected to cost between $6-billion and $10,5-billion, and that cost increases for the construction of the project had been "enormous".

Engineering News Online reported earlier this year that the developer of the project, Canada's CIC Energy wanted to first conclude a definitive agreement with a selected engineering and construction partner before it would be in a position to sign power purchase agreements with either the South African power utility, Eskom, or the Botswana Power Corporation.

At the time, the company was still engaging with a short-listed group of potential engineering, procurement and construction consortia, which would be contracted by CIC Energy to develop the project on a turnkey basis.

The company announced in January that the schedule for the Mmamabula project would be delayed by about six months. It said strong demand for power plant builds, and the prevailing engineering resource constraints, were increasing lead times for power plant equipment and construction services.

Financial close for the first phase of the project was now expected in the fourth quarter of 2008, followed immediately with the start of construction in the same quarter.

This would push the commercial operation of the first unit of the power station to late 2012, or early 2013. The second and third units would come online at six-month intervals following the first unit.

Food prices push Botswana inflation higher

Reuters, 19/02/2008

Botswana's inflation rate rose to 8,4 percent year-on-year in January from 8,1 percent in December due largely to higher food prices, the central bank said on Tuesday.

Botswana imports food from neighbouring South Africa, where food inflation ticked up to 13,5 percent year-on-year in December and is seen trending higher.

"Food makes up 21,8 percent of the CPI basket," the Bank of Botswana said in a statement on its website.

Botswana's central bank left its key lending rate steady at 14,5 percent in December despite expectations inflation would remain above its 4-7 percent target range.

It said core inflation in January was sharply higher at 8,5 percent from 7,4 percent in December, although the pace of price increases slowed for transportation, education, restaurants, hotel, clothing and footwear, communication and recreation.

SA: construction of 4 300 MW hydropower project to start in next 18 to 24 months

By Christy van der Merwe, Engineering News, 18/02/2008

The Western Power Corridor Company (Westcor) has announced the launch of the Inga Three hydropower project, under the leadership of the African Union, and developed by Angola, Botswana, the Democratic Republic of Congo, Namibia, and South Africa.

The pre-feasibility study for the 4 300 MW baseload capacity station, was completed by the end of 2007, and it was expected that construction would start in about 18 months to 24 months.

Westcor has called for the expression of interest for the appointment of legal advisors, as well as planning for the recruitment of advisors, consultants and front line office operation staff to be involved in what would be the largest single power station in Africa.

The organisation was also calling for the expression of interest for the appointment of power system economic advisors, financial advisors, engineering consultants, environmental impact assessment contractors, risk management advisors, project managers and quantity surveyors, as well as full time employment, to be taken up in Gabarone in Botswana;

US recession may leave Botswana’s exports dry

Mokgoabone, Kabo - Mmegi/The Reporter (Gaborone), 08/02/2008

Botswana may face a number of challenges this year even while the macroeconomic environment “looks good”. Such potential hazards include the possibility of a US recession, regional power cuts, and the ‘fiscal surge’ promised in the 2008 budget speech.

Apart from its AGOA II (African Growth and Opportunity Act) which allows duty-free treatment of exports, largely in the textile industry, from Botswana and other African countries, the United States is the world’s single largest diamond market which has led economic pundits to warn that a recession – expected in the first quarter of this year – would have an impact on Botswana’s exports.

According to Dr Keith Jefferis, Managing Director of Econsult, “any slowdown there (in the US) would undoubtedly lead to lower sales, or reduced prices, or both, resulting in reduced diamond earnings and possible stockpiling if production levels are maintained”.

“Speaking yesterday during an after-budget breakfast meeting hosted by First National Bank (FNB) at the GICC, the former Bank of Botswana (BoB) Deputy Governor reasoned that while there are other markets for diamonds, especially in Asia, those markets are also dependent on their own exports to the US, ‘hence a generalised slowdown in demand is almost certain’.” Some key diamond markets along with the US (which accounts for over 45 percent of the world’s diamond market) are Europe, India, Japan and China.

Jefferis was quick to point out, however, that a slowdown in export earnings would have little direct impact on Botswana due to the country’s high levels of foreign exchange reserves which are accumulated for such eventualities. Botswana had, as at November 2007, US$10.2 billion in foreign exchange reserves, which would represent a 28-month import cover bill. According to Jefferis, the problem of having to decrease imports or borrow to finance current account deficits would not apply to Botswana.

The current power crisis is another challenge because many companies are being forced to purchase generators at a time when diesel prices are rising. Botswana is currently experiencing recurring power outages because Eskom, South Africa’s power utility, which supplies almost three-quarters of the country’s energy requirements, is under pressure to meet growing domestic demand. Jefferis stated that “the current situation of unplanned and unannounced power outages is highly disruptive and will have inevitable costs in terms of reduced output and growth and additional costs as businesses are forced to invest in expensive diesel-powered generators”.

In terms of the fiscal surge, it was announced at the 2008/09 budget speech that development spending is projected to more than double to reach P8.5 billion next year, although Jefferis pointed out that “it is unrealistic that spending will increase by 53 percent”.

“Developments such as this perpetuate the stop-go cycle in government spending, which in turn leads to economic volatility, contributes to uncertainty in the private sector and makes planning difficult, and - during the ‘up’ phase - contributes to inflationary pressures. Such volatility in spending is unlikely to reflect good controls or a rational allocation of resources.”

Botswana: An African Success Story Shows Strains

Author: Stephanie Hanson, News Editor

Botswana is an upper middle-income country touted as one of Africa’s few success stories. The diamond-rich country enjoys stable economic growth, consistently ranks near the top of international anticorruption measures, and remains untouched by the political instability that has roiled so many African nations. But daily life in Botswana reveals a more complicated picture: The cost of food and fuel is up, unemployment is high, and the country copes with one of the world’s highest HIV/AIDS infection rates. In addition, the government is struggling to cope with a steady influx of Zimbabweans fleeing their country’s economic crisis. The Botswana government is working to encourage economic diversification, but such efforts have yet to produce results, illustrating the challenge that many African states will face as they attempt to grow in a competitive global economy.

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Southern Africa: Botswana Signs EPAs

Mmegi/The Reporter (Gaborone), 27 November 2007

Botswana, together with Lesotho, Mozambique and Swaziland, has signed an Interim Economic Partnership Agreement (EPA) with the European Union (EU), the Ministry of Trade and Industry has announced.

A statement from the ministry says the agreement was signed last Friday in Brussels, Belgium after extensive negotiations which began in 2004 between the EU and the SADC EPA configuration.

Under the new trade agreement, Botswana's exports, including beef, will now enjoy permanent duty free, quota free (DFQF) access to the European market. Additionally some textile products will benefit from single transformation for export.

"This improved market access should enable higher returns and better profits to producers and hence higher employment and growth to the Botswana economy," the statement says.

"The Interim Agreement also provides for support from the European Union through development assistance through capacity building in various areas impacting trade."

Botswana's Minister of Trade and Industry, Neo Moroka, was the Chief Coordinator of the SADC EPA Group while his Permanent Secretary, Banny Molosiwa, served as Chief Negotiator.

The Botswana delegation was led by M.K.J. Masisi, who acted as the country's Chief Negotiator. He was supported by senior officials and technical experts from various ministries.

The media statement says the Interim EPA, which will come into effect on January 1,2008, is meant to ensure continuity of trade between both the EU and signatory SADC EPA states.

The current trade regime of the Cotonou Partnership Agreement between the EU and ACP countries expires on December 31, 2007, and the waiver, which extended preferences to ACP countries was WTO incompatible.

"The agreement provides for continuation of the negotiations beyond December 2007, after which a comprehensive EPA will be concluded," the statement says.

Critical areas of future negotiations include Trade in Services and Investment. The agreement now provides an opportunity for local and foreign investors and producers to access the markets of the 27 countries of the European Union.

"The Ministry of Trade and Industry therefore encourages entrepreneurs to take full advantage of the benefits of this agreement," the statement says.

Botswana plans 250 MW independent power project

By Olivia Spadavecchia, Engineering News, 19 Nov 07

State-owned electricity utility, the Botswana Power Corporation (BPC), said over the weekend that the country might get a new 250 MW peaking to midmerit power plant to cater for what it termed a "supply gap".

It was envisaged that an independent power producer (IPP) would develop the power station.

In an invitation to show interest, published in local Sunday newspapers, the utility said that the "gestation period" for the IPP power plant should not be more than two years from January 1, 2008.

The BPC would buy the capacity and energy from the developer through a power purchase agreement. It might also consider a build, own, operate and transfer arrangement.

Electricity demand in Botswana is said to be at about 500 MW currently, which may rise to about 600 MW over the next three to four years.

The BPC is concerned about a supply gap, particularly during the 2010/11 period before its new generation investment, the four by 33-MW coal-fired Morupule power station, comes on stream in 2012.

Imports contributed some 75% of total national energy consumption, and the company said that the Southern African region's ever-increasing demand for electricity was posing a significant challenge for regional power utilities that were tasked with securing supply for their respective countries.

The closing date for the expressions of interest is December 14, and it is hoped that talks with the interested party will advance quickly despite the holiday period.

Botswana leads fractured SADC EPA negotiating team

As the December deadline draws nearer, Botswana is leading the SADC team at the on-going trade negotiations between the European Union and ACP countries on Economic Partnership Agreements in Brussels, the Acting Permanent Secretary in the Ministry of Trade and Industry Gaylard Kombani says.

But the SADC bloc Botswana is leading is made up of only eight - Angola, Mozambique, Namibia, Lesotho, Swaziland, Tanzania , South Africa and Botswana itself - of the 15-member bloc.

Other members of SADC are negotiating under COMESA, while the islands states of Mauritius, the Seychelles and Madagascar also have their own negotiating bloc, the Pacific.

Some of the countries with Botswana are classified as Least Developing Countries (LDCs). These are Lesotho, Angola, Mozambique and Tanzania, which do not have the same challenges as Swaziland, Namibia, Botswana, and South Africa, which are characterised as developing countries.

Botswana is under pressure to strike a new trade agreement with Europe to ensure that its beef, which enjoys preferential treatment under the Cotonou Agreement, continues to benefit beyond the December 31 deadline, failing which it will have to compete with South American beef.

Responding to a questionnaire this week, the Ministry of Trade and Industry said the LDCs trade with the EU under the Everything But Arms (EBA) initiative, which accords their products duty-free and quota-free access into the EU market.

South Africa has a bilateral agreement [the Trade, Development and Cooperation Agreement (TDCA)] with the EU.

"This means that if the negotiations are not concluded by 31st December 2007, the LDCs and South Africa will continue trading with the EU under the EBA initiative and the TDCA respectively," says the Ministry. "The three countries (Botswana, Swaziland and Namibia) will have no fallback position and will lose the preferential market access they currently enjoy under the Cotonou Agreement."

Saturday, September 22, 2007

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