DIAMONDS SHAPE UP BOTSWANA FUTURE

Photo: the Signing of Jwaneng Mining Lease Agreement, 1982: Dr G.K.T Chiepe former Minister of Mineral Resources and Water Affairs and H.F Oppenheimer, the former Executive Chairman of the De Beers and Anglo American Corporation Group.

GABORONE:  Dr. Gaositwe Chiepe holds the distinct record of being Botswana’s first woman Member of Parliament and Cabinet Minister. When President Sir Seretse Khama redeployed her from the civil service into his Cabinet in 1974, it was to entrust her with the Ministry of Mineral Resources and Water Affairs, becoming the second person to hold the portfolio.

It was a crucial appointment given the emerging picture that mining, especially diamond extraction, would evolve into Botswana’s livelihood. De Beers’ prospectors had discovered diamonds in Orapa seven years previously.

At the time the announcement of the diamond discovery was made in 1967, Chiepe was still in the civil service. Today, after retiring from public office, she remembers the collective euphoria that gripped the nation.

“It was real excitement. To say it was a pleasant excitement would be an understatement. It seemed just too good to be true. It was great,” she says.

Coming just a year after independence, the diamond discovery would transform Botswana from one of the world’s poorest countries into a middle-income economy. But before the miracle transformation that was the rapid economic development, there were hard decisions to be made. The nation’s founding fathers had taken the view that wherever mineral deposits were found, they would not belong to the community in that area, but ownership would rest with the State.

The first diamond deposits were in an area that formed part of the Ngwato territory, and Sir Seretse – born the tribe’s prince in 1921 – went to convince his subjects on the wisdom of pooling together national resources. That was the easy part. The challenge was how to extract the wealth that was buried deep under the belly of earth. The nation had no skilled citizens who understood mines and minerals.

“We had to start training our own people for the mining industry, as well as other things. So we sent people to Canada and other countries to study mining engineering, and geology. At the time, the Mining Commissioner and other senior officers were all expatriates. Even the Director of Geological Surveys was an expatriate,” Chiepe recalls.

When Jwaneng deposits were discovered, Chiepe was now the minister in charge of minerals. She talks of the excitement – “real excitement”, in her own words – that she felt when the news was broken to her.

The early years laid the firm relationship between De Beers and the Government of Botswana. The understanding was that De Beers brought its capital and skills, while the people of Botswana contributed their national resource.  Chiepe says the partners knew that they needed each other, and there was mutual trust and respect.

“The partners worked very well together,” Chiepe says. “Each wanted the best. We could argue, but in the end, we always found consensus. Management and workers worked very well to bring us where we are today.”

It is a long way from the days when expatriates held all senior posts. Today, citizens have taken over the running and operations of Debswana – the 50/50 joint venture between De Beers and Government of Botswana that mines the country’s diamond deposits. Chiepe says complete localization might have taken a long time, but quality had to be assured.

“Our children should not only maintain the high standards, but they should do better,” she points out. “Now that we have better understanding and skills, I am glad that more work relating to our diamonds is going to be done in the country. We are attracting investment in the industry into Botswana, and that is as it should be.”

The person Chiepe handed the baton to in 1984, as minister responsible for minerals, also carries a distinct first – the first Permanent Secretary to the President. Without hesitation, Archie Mogwe says the most significant event of his lifetime was the discovery “of the world’s finest deposits of gem diamonds in Botswana”.

He explains that while the trend in the 1960s and 70s among African states was to nationalise mineral resources, Botswana preferred to take the position of regulatory authority whilst joint venture companies owned the mines and operated within the private business sector.

He says the entire Botswana population owes its improved standard of living to the diamond industry, which has enabled government to invest in education, healthcare, housing, and transportation links.

At the beginning of the Jwaneng negotiation, among the Botswana team was the Administrative Secretary at Office of the President. In 1979, he was transferred to the Ministry of Mineral Resources and Water Affairs as Permanent Secretary. In 2004, Charles Tibone was appointed Cabinet Minister at what has since been renamed the Ministry of Minerals, Energy and Water Affairs. 

Tibone’s career in the civil service and now politics has afforded him unparalleled insight into the development of Botswana’s diamond industry. Explaining the unique minerals policy that Botswana adopted early in its development as a modern nation state, Tibone says it came from the principle that the founding fathers had that Botswana was one nation – and should remain a united nation. This is what informed the understanding that natural resources belong to the entire nation, and if exploited, that should be to the equal benefit of all.

“Any deviation from that fundamental principle might have caused fragmentation, which would have been an anathema to what the founding fathers set out to achieve when they established this nation,” says Tibone. “Even from a legal perspective, it was deemed to be a more acceptable model to establish and make it easier for the private sector to operate in Botswana, that the investor would deal with one entity owing the resource of the country – which is government. The model ensured consistency in terms of how the resource would be developed, and how people developing the resource would be treated.”

What would have been the opposite?

“The opposite would have probably meant that each district would have had to negotiate its own regime with whoever came to participate in the development of the resource, and we would have ended up with different treaties, and maybe those in better endowed parts of the country would have been luckier than others in terms of income streams that accrued to them, and there would have been imbalance in the country’s development. History has shown elsewhere that such imbalances bring instability, and that could have been the likely result of the opposite.”

He says the development of diamond mining in Botswana is mirrored in the development of the country’s economy and improvement of the citizens’ standard of living.

While he shares the view that beneficiation is important for Botswana, he cautions that everything has its own gestation period. He says much as the leadership of Botswana would have liked to see beneficiation of Botswana diamonds earlier, uppermost was finding revenue for the exchequer. He explains that diamonds being the major contributor to the national purse, there was a cash-flow programme where as soon as the diamond left the mine, government needed money from the sale of that stone to finance its development obligations.

“You could have beneficiated at that time and perhaps earned a little more, but that could have delayed receipts and that might have impacted negatively on your budgeting programme,” Tibone explains. “But there are other considerations as well. For instance, beneficiation had to be managed, and as part of this gestation, there was need to develop management expertise to effect it because if not managed properly, it wouldn’t have yielded results that owners of the resource would have expected. Now we feel more confident to deal with it.”