03.09.10 Menas Associates
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”.
Background
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