The debacle government, former mineworkers and creditors, find themselves in should serve as a reminder of the need for greater scrutiny in the country’s efforts to attract Foreign Direct Investment (FDI). The fiasco is in relation to Lerala Mine and the recovery of its stones in Belgium.
For decades, FDI was held up as the ‘unobtanium’ of our fledgling local economy, a thing so precious and rare that with findings, would miraculously repair all the structural defects, particularly the urgent need to diversify.
The thinking at policy level, which is true to an extent, has been that economic diversification, broad-based growth and the alleviation of extreme poverty will stem from creating an investment climate irresistible to foreign investors.
FDI carries with it, not only the hopes of investment in the diversified sectors of the economy, but also skills and technology transfer and the opening up of economic belts away from the urban areas.
Indeed, Botswana’s story as an economic success story is also a story of FDI, from the initial investments in diamond mining, to investments in sectors that sprang up as a result of the revenues from diamonds, such as financial services and manufacturing.
Today, Botswana carefully manages and curates its image as Africa’s most attractive investment destination, a policy approach that unfortunately means that amongst the droves attracted to our shores, are chancers, bargain hunters, opportunists and mercenaries of capital.
It is evident that little exists in the way of fastidious due diligence and monitoring to ensure that as we roll out the welcome mat for FDI, we are able to separate the wheat from the chaff.
Directors’ histories are not scrutinised, technical capacity is not assessed, financial capability is glossed over, track records are given. But a cursory glance and all that is focused on are the alleged millions to be invested and the thousands of jobs to be created, whether these are feasible or not.
As a result, mercenaries of capital receive red carpet treatment, benefit from investor incentives’ packages, receive preferential access to work permits, land, utilities, licensing and in some cases, discounted tax rates.
Effectively in these situations, the economy and its citizens find themselves mortgaged to adventurers who only too happily strip whatever resources or value they can derive, take advantage of the free capital flows and repatriate their illicitly gotten wealth across borders.
Government, workers and the general economy, are left holding the short end of the burning stick and this is a situation that could be prevented through policies that both introduce a healthy level of scepticism in our FDI drive and insulate our strategic interests.
“An investment in knowledge pays the best interest.”
- Benjamin Franklin