Lesson in patience for SA and ANC from Botswana

SINCE the ’ 80s Botswana has been trying to extract more value from its diamonds than just mining them and sending them on to places such as India for cutting and Belgium for trading. The source of almost a fifth of world supply, it has been on a road paved with many failures and a few successes.

With De Beers, the government has pursued a several avenues to grow the diamond industry beyond just widening the Jwaneng pit, the world’s richest mine.

Last year, they achieved success in this almost 30-year pursuit to get the country and its economy to accrue greater benefit from its diamond wealth. That was the transfer of De Beers’ diamond trading activities to Gaborone.

The miner and the Botswana government signed a 10-year deal to move the London Diamond Trading Company to Botswana. The process is expected to reach completion by the end of next year; the first group of London expatriates should have arrived by now.

It’s a big victory, and perhaps best explains why the country decided not to exercise its right to increase its shareholding in De Beers. It cleared the way for Anglo American to proceed with its plans to raise its stake in the world’s biggest miner of the gem to 85%. Why else would Botswana be happy with a minority holding and a board seat at the most important company address in Gaborone?

Finances played a major part in that decision. Exercising its right would have cost $1.28bn, a large amount for a small country whose government budget is in deficit.

If it had felt that its biggest asset by far was really slipping from its grip, I’m sure economic prudence would’ve given way to patriotism.

Herein lies the lesson for SA and certain factions of the ruling party in their rush for nationalisation as a means to extract more wealth for the country — patience in the game of give and take between government and business. Efforts beginning with the opening of the Jwaneng mine in 1982 are only now paying off.

It’s been a long way that the country of about 2-million people have had to travel to get what they’ve always wanted from a com- pany that has added much wealth to Botswana’s coffers.

The move to the country of De Beers’ trading company has triggered growth in Botswana’s diamond-cutting industry, vital for the creation of jobs. Let’s hope that when the 10-year deal ends, the industry will be so deeply entrenched that Anglo American can’t consider relocation again.

The country has many other problems that in close to 46 years of independence it has not quite managed to overcome, such as greater diversification away from diamonds, and dependence on a buoyant South African and Zimbabwean economy for it to grow at a faster pace, seeing that it is landlocked with limited options.

But in the big beneficiation debate, it may just have overcome one of Africa’s biggest problems.

THE tar being laid across subSaharan Africa with Chinese, European and Eastern European money leads to ports or to railways that are the fastest ticket out of the continent.

If there happens to be a comfortable road between the Democratic Republic of Congo and, say, the Republic of Congo, it is not because interregional infrastructure is top of mind for governments but rather an unintended consequence. About 60% of the continent’s trade is with anyone but neighbouring countries.

And it’s exactly that on which SA, looking to diversify away from European, US and Asian trade links, needs to put its focus.

Even if Europe manages to allay concerns over a potential collapse of the euro as a project, and the US economic growth gets some traction, SA will have to rely on greater trade links in Africa for both South African business and government to reap greater dividends. It is potential that cannot be turned on immediately, mainly because of infrastructural problems, but it has to be navigated.

Not too many South African companies can lay claim to having cracked markets north of our border. There are MTN and the grocer Shoprite, perhaps the two headline success stories. Gold miners AngloGold Ashanti and Gold Fields, have also done exceptionally well.

Many more South African businesses are going to have to make a concerted push, piggybacking on the success of the few that have gone before.

I was recently listening to a radio interview with a founder of a trendy restaurant and her expansion plans into the UK and Europe.

All I kept thinking of was a spot in the middle of Nairobi, Kenya or the Nigerian capital Abuja.

E-Mail: derbyr@bdfm.co.za Twitter: @ronderby