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Cutifani: What diamond-rich Botswana needs to boost economic growth

01 december 2014

Anglo American chief executive and De Beers group chairperson Mark Cutifani, recently made a keynote address at the Botswana Confederation of Commerce Industry and Manpower (BOCCIM)’s 13th national business conference held in the capital, Gaborone.

He was asked to share his insights on Botswana, a country where De Beers gets the majority of its diamonds.

The country also now host De Beers’ diamond sales.

Cutifani acknowledged that Botswana was battling to diversify its economy away from the dangerous dependence on diamond mining.

The country, he said, arguably remains vulnerable to shifts in the global diamond market as a result of this dependence. 

“On this basis it is understandable that the leadership would like to make more progress towards having a more vibrant manufacturing, services and export economy,” said Cutifani. 

He said the key question was how should Botswana best leverage its enviable strengths to continue the growth trajectory established in the half-century since independence? 

In his attempt to answer this question, Cutifani suggested three “key ingredients” that he thought would help drive the depth and breadth of the country’s primary growth path.

These are: 

Building off natural resources

He opined that there are very few economies that had not begun their growth path outside of the mining and agricultural sectors. Botswana, he said, was in a fortunate position to not only have the mineral endowment but to have used it well. 

“As you know, mineral resources are like any other natural resource, you can either use them well, or squander your endowment through short-sighted and inadequate policy frameworks and approaches,” said Cutifani.

“As ever, Anglo American stands ready to partner with the government of Botswana in evaluating the economic viability of natural resource projects, across a range of commodities. 

“At the same time we also understand resource development is a partnership that must benefit society in its broader context if we are to avoid a resource blessing becoming a resource curse.”

He said diversification beyond extractives in general – and diamonds in particular – was crucial as resources would eventually deplete. 

“There is therefore no room for complacency in thinking that ‘we will always have diamonds’.  Alternative economically viable industries need to be created and nurtured in anticipation of that day eventually arriving,” he said.  

“Creating opportunities through investments in infrastructure is also critical: without infrastructure sustainable growth and a truly diversified economy cannot be achieved.”

Cutifani said beyond mining, tourism would continue playing a key role in promoting Botswana to the rest of the world. 

He said tourist centres should be supported with complementary attractions and superior service that would be competitive with target customer base’s choices for high quality vacation experiences.

Botswana’s ‘strong’ institutions and sound policy frameworks

Cutifani was of the opinion that modern public governance best practice indicates that progressive, consistent, transparent and business-friendly policy environments are needed for business and economies to flourish and Botswana was no exception.

He said the country should continue to strengthen its public institutions to develop standards and norms compatible with the most successful democracies in the world.  

“As a country, to decide to truly play on the international stage is a choice, and success in this arena requires a hard and honest look at yourselves and a readiness to make changes where necessary to the country’s way of life, norms and customs,” said Cutifani. 

“As we reflect on this choice, I encourage you to be confident in what you bring to the world but at the same time realise that you are competing for capital against the likes of Singapore, Brazil, Tanzania, Italy and South Africa.”

He said Botswana should reduce red tape, which would make it easier for businesses to operate in the country.

Develop and include all in the growth plan 

Cutifani argues that Botswana had been “blessed” as the world’s greatest and most destructive sources of social divisions and strife – ethnicity, religion, language and class – had relatively minimum impact on the country’s social fabric in the period since the country’s independence.  “Instead, Botswana can look back on a proud recent history of peace and benevolence, many times a place of refuge for those seeking shelter in times of great instability across your borders,” he said.

“In fact, many of those seeking freedom of speech and liberty have walked their own long walks through Lobatse or Francistown.”

Although there had been indignation over President Ian Khama’s leadership style of late, Cutifani said it was “encouraging” that democracy, development, dignity, discipline, and delivery continue to be upheld as the country’s moral code.

“This is an essential ingredient to maintaining peace, the rule of law and stability in the country,” he said.

The De Beers chairperson said health and physical well-being of citizens was essential while education and skills development were not only essential for human development, but they also dictate the fortunes of societies and nations.

He said Botswana, which had established a global profile “second to none” in the engagement of its people in the political process, should treasure that, as it opened doors to the world of reputable business. 

Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished