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Posted on Friday, 27 November 2015 11:00

Botswana Country Profile 2015: Gems still at the heart of things

By The Africa Report

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Buoyed by Botswana's continuing economic growth, President Ian Khama won a second five-year term in the October 2014 election as the ruling Botswana Democratic Party (BDP) managed to hang onto power.

Despite not winning a majority of votes, the BDP took a majority of parliamentary seats. This came in the face of an unprecedented challenge from a three-party opposition alliance, the Umbrella for Democratic Change (UDC), which succeeded in securing 30.1% of the vote and 17 seats in parliament to become the official opposition.

The opposition Botswana Congress Party took 20.4% of the votes. The UDC alliance, under the leadership of Duma Boko, increased its appeal by calling for the creation of more jobs, but it was dealt a serious blow when its secretary general, Gomolemo Motswaledi, died in a car accident three months before the polls.

Motswaledi had been president of the UDC's largest constituent, the Botswana Movement for Democracy, which broke away from the BDP in 2010.

Although observers were satisfied that the election process was free, oppositionists reported suspicious burglaries of their houses and vehicles in the run-up to the polls, while one newspaper editor was detained.

Khama makes enemies

The BDP's tally of elected seats in parliament was reduced by eight to 37 out of 57, but Khama is unlikely to modify his top-down leadership style. He has alienated BDP elders, including two former presidents, as well as parliamentary speaker Margaret Nasha.

Both former presidents have been frustrated at Khama's refusal to accept their advice. His immediate predecessor, Festus Mogae, declared that the government disrespects the rule of law.

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Ketumile Masire, speaking at Motswaledi's funeral, implicitly endorsed the opposition as a government in waiting. A key pointer to the survival of multi-party democracy will be Khama's choice of vice-president to succeed Ponatshego Kedikilwe, who is due to retire. Contenders include finance minister Kenneth Matambo and foreign affairs minister Phandu Skelemani.

An appointment of one of Khama's inner clique could spark renewed dissidence within the BDP. The International Monetary Fund projects that economic growth will remain strong. It notes that Botswana's lack of export diversification has kept the economy vulnerable to fluctuations in demand for diamonds.

No real diversification is happening, and the development of coal exports looks to be a long-term prospect. The second major export, beef, has been hit by a foot-and-mouth disease outbreak, which has made exports to Europe impossible for the past two years. Diamond exports were $4.2bn in 2013, accounting for 76% of total exports. A budget surplus is anticipated in 2014/2015, with minerals accounting for 30% of revenue and South African Customs Union receipts 32%.

De Beers brings a boost

Diamond-cutting activities have expanded, with Indian firms now involved, stimulating a construction boom in Gaborone's central business district. This was boosted by De Beers' move of its global 'sightholder' sales to Botswana during 2013.

Most of the De Beers' diamond valuers have relocated to Gaborone from London, despite the continued absence of direct international flights. The government/De Beers 50:50 joint venture Debswana Diamond Corporation was forecast to produce some 24m carats in 2014.

The company's mine at Jwaneng – which produces the greatest proportion of gem-quality stones – is expected to last until 2028. Two smaller mines have started production and diamond exploration has soared. London-listed Gem Diamonds commissioned the underground Ghaghoo mine, controversially located in the Central Kalahari Game Reserve, in September 2014.

The government hopes to incentivise investors to exploit estimated reserves of 212bn tonnes of bituminous coal for export and domestic and regional thermal power plants. The 300MW Sese integrated coal and power project of Australia's African Energy Resources is the first to have been approved, and Botswana and Namibia have jointly committed to build a 1,500km trans-Kalahari railway. This ambitious goal depends on attracting private-sector stakeholders to fund the $9bn estimated cost.



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