10:21 am
25 October 2016

Will Botswana’s Diamonds Last Forever?

Botswana. A land locked country in southern part of Africa is popularly described as one of Africa’s most stable countries and is debatably recognised as one of the world’s most successful economies. Education is free in the country and that has resulted in its above 70% literacy rate. Diamond is the major component of the economy, providing 20% of the world’s diamond supply, contributing almost 70 percent of foreign earnings and constitutes approximately 32 percent of its GDP.

Are diamonds forever?

The first kimberlite pipes were discovered in 1967 at Orapa and production commenced in 1971. Currently, most of its diamond production are of gem quality. In 2014, the Orapa mines was projected to be the world’s largest by value with an estimated production of $1.9 billion worth of diamonds and the world’s largest in terms of carats, producing 12.9 million carats.

The weighty impact diamond production has had on Botswana’s success has resulted in the government becoming dangerously dependent on this single-source of revenue. Many sing the tune – diamonds are forever but forecasts predict reserves will only last another 35 years. This is currently a big challenge facing the country as its leaders see a need to diversify the economic base and broaden the sources of government revenue.

khama diamonds

Botswana may be the land of diamonds but income distribution is relatively uneven, and many live in poverty.

The bright face

In the 1970s, Botswana was ranked as one of the world’s poorest countries with a GDP per capita below US$ 200 and no economy to speak of. No urban settlement was worthy of being called a city. The country didn’t participate in either regional or continental politics, and almost unbelievably had only a single 11-kilometre-long paved road. Before its 70% literacy rate, educational facilities were nearly nonexistent, with less than two percent of the population having completed primary school, only a few thousand pupils attending secondary school and fewer than 100 students enrolled in university courses. All of these outside the country.

But! Botswana has been blessed with great leaders, men who have guided the nation and its people with vision and commitment. While the discovery of diamonds shortly after independence was undoubtedly the major catalyst for growth, prosperity has been brought about because of the wise management mining revenues . This country is now the fourth highest gross national income at purchasing power parity in Africa giving it a standard of living around that of Mexico and Turkey.
The political leaders and business related entities are aware of the need to deeply diversify industry. Over the last decade, effort has been made to grow its tourism industry and the country has attracted external investment in areas such as insurance and auto-mobile. The government is restructuring policies to enhance competitiveness, including new Foreign Direct Investment Strategy, Competition Policy, Privatisation Master Plan, and National Export Development Strategy.

Despite its wealth in diamonds, Botswana was never fully colonised. It is a peaceful country with no history of civil war or other serious internal conflict. There are many examples, both in Africa and worldwide, where countries blessed with a far greater supply of natural resources have not achieved even what this country has.
While the diamond and other mineral reserves are in decline, many wonder if new government policies, industry transforms and sustainable eco-tourism will be enough to maintain the growing economy. We can debate the reality of Botswana’s future but only time will truly unveil what lies ahead.