Mmegi

De Beers or the copper century?

Decisions: Minerals and Energy minister, Bogolo Kenewendo, examines a natural diamond at a local cutting and polishing firm. Botswana wants a greater hold of the diamond pipeline PIC: MBONGENI MGUNI
Decisions: Minerals and Energy minister, Bogolo Kenewendo, examines a natural diamond at a local cutting and polishing firm. Botswana wants a greater hold of the diamond pipeline PIC: MBONGENI MGUNI

Are Botswana and De Beers truly meant for each other? The government's push to acquire a majority stake in De Beers from Anglo American suggests it believes they are. A long-shared history, however, can romanticize what is ultimately a financial decision that needs a clear-eyed assessment of price and risk.

The Botswana government has in mind a consortium with partners such as the Oman Investment Authority and/or Angola's Endiama to spread the risk of any acquisition. Even so, taking control of a loss-making business would still require significant borrowing, placing real strain on Botswana's public finances.

Despite significant challenges, Botswana is the only mainland country in sub-Saharan Africa with investment-grade sovereign debt. Buying a controlling stake in De Beers risks putting that hard-won credibility at stake. Whether the investment makes sense comes down to two questions: can De Beers be successfully turned around under state ownership, and are there alternative uses of Botswana's sovereign resources that would better secure the country's long-term future?

Editor's Comment
The State apparatus must be sanitised

When the State cannot rely on its own machinery to pursue suspected wrongdoing, repairing that machinery must become a national priority.The establishment of a Special Investigations and Asset Recovery Task Force may help government respond to the immediate challenge. However, Botswana cannot afford to leave the Directorate on Corruption and Economic Crime (DCEC) and the Directorate of Public Prosecutions (DPP) struggling whilst building...

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