Job creation through beneficiation should be explored
Dithapelo Keorapetse | Friday February 17, 2017 11:29
Notwithstanding the appearance of the word diversification in almost all budget speeches and state of the nation addresses, nothing has happened in practice. The opposition has strongly argued that through proper and well thought public policy decisions jobs can be created through diversification of the economy, something which the government concurs is needed but fails to implement. The opposition contends, as the debate on the general principles of the budget rages on in Parliament, that development is inherently political and that the state has a primary responsibility to see to it that jobs are created. Flawed public policy decisions have resulted in the undiversified economy which is unable to create jobs and has left the economy in the hands of foreigners and naturalised citizens. The situation is untenable as it is unacceptable. Prominent features of the economy remain poverty, unemployment and underemployment, wealth and income gaps and inadequate access to basic services.
The opposition has been calling for a beneficiation policy. They point that beneficiation will diversify the economy and create jobs. Since the discovery of minerals in recoverable quantities, this policy was never a priority for the government of Botswana. It was never considered until recently and in a somewhat halfhearted manner. In the ruling party, it would seem, only David Magang has strongly argued for beneficiation at the time when it would have been more appropriate to start it, particularly in the diamond industry. As he says in his autobiography, The Magic of Perseverance, his comrades thought he was a mad man for suggesting beneficiation of diamonds by diamond cutting and polishing and jewelry and other manufacturing. The country would be far by now, if you consider for instance that Mauritius with no diamond or any precious minerals for that matter is far ahead of Botswana in terms of jewelry (including time pieces) manufacturing. Magang also shed light in his book that De Beers preferred a situation where there was no beneficiation and whereby the country and its people have no clue about the ins and outs of the diamond industry. He pointed or implied that De Beers would do anything to sabotage beneficiation attempts. De Beers should not be blamed but the powers that be who had the authority to turn things around.
It is perturbing that government is and has been disinterested in this initiative and is bereft of ideas on what do with the country’s mineral resources after extraction. Why else would a country endowed with so many resources be having an undiversified economy with scaring levels of unemployment and underemployment, poverty, income and wealth inequalities and general economic hardship? Why is Botswana not having many of its citizens involved in big mining businesses instead of getting crumbs from this sector? Why is the country exporting raw minerals and consequently jobs to other countries? Why is the country only having a mining school now after three decades without it?
As stated by many observers, Botswana has transformed from a poor country at independence to an upper-middle income country today. This is mainly because of the fortuitous discovery of diamonds and other minerals in recoverable quantities. The mining industry has been the mainstay of the economy since the discovery of minerals and the economy remains undiversified. It is said that 18% of diamonds are cut and polished internally, with 82% done elsewhere and that in 2010 and 2011 respectively, P27.7 billion and P31.5 billion worth of raw products were exported without beneficiation.
For copper that was mined in Selebi-Phikwe and Francistown area before provisional liquidation of BCL, BCL Investment and Tati Nickel, the country was exporting blister copper after conversion. Other stages like anode casting, electro-refining and manufacturing were done elsewhere. In other words, many Batswana would have been employed in Nickel and Copper plants where anode casting, electro-refining and manufacturing would be done. The government saw nothing wrong with exporting jobs by allowing these processes to be carried out elsewhere. The country has vast coal deposits but is not energy self-sufficient. In fact it has a shortage that causes perpetual power outages. This is unacceptable for a country that has been mining minerals for more than three decades. At 50 years, the country has no coal liquefaction plant to turn coal into liquids fuel and other profitable by-products. This is not withstanding the gargantuan appetitive of over one billion liters of petroleum products per annum by the economy and the dependency on other countries for fuel.
When MP Dikgang Makgalemele of the ruling party spoke in favour of mineral beneficiation law during the tenth Parliament, Minister Dorcas Makgatho argued that beneficiation law would scare away investors and called for a policy or strategy. It was unclear how a law would scare away investors given the fact that Botswana’s economy has not diversified in part because of limited success in foreign direct investment (FDI). Hostile immigration laws have now exacerbated the FDI problem. Because FDI has not yielded the desired results, what is needed is domestic investment, partly through beneficiation. In fact if pursued with vigor, beneficiation can be another means to FDI. A law may be appropriate because policy, codified or not, is not binding whereas a law is. In Botswana there are good policy papers that have been shelved.
A law can be informed by a policy document and strategy. Regardless of refusals to enact a law, the government, it would appear, still lacks a clear strategy to beneficiate the country’s minerals. Why is the government without clear targets of how much percentage of minerals it seeks to beneficiate?