COMMENTARY: Diamonds are not forever

SHARE   |   Sunday, 19 April 2015   |   By Staff Writer

Since the early 1980s, the mining industry has been the largest contributor to real gross domestic product (GDP), contributing between 30 and 50 percent. Its value has been increasing at an annual rate of nearly 20 percent. These mineral contributions enabled the government to undertake investments in both human and physical infrastructure development over time. In 2013, mining accounted for 22.4 percent of Botswana’s GDP, and more than 50 percent of government revenues. Even though the mining sector’s contribution to GDP has been below 25 percent since the 2009 recession, available data indicates that the sector still leads in terms of value added contribution to GDP. Despite its great contribution to Botswana’s GDP, the mining industry is capital intensive and accounts for less than 5 percent of employment in the private sector. Government should not be fooled by the rosy picture painted by this statistic. There is danger in continuing on this trajectory of over reliance on diamonds.

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Statistics Botswana reports that although the total index of mining production growth increased in most parts of the period 2004 to 2014, it decreased at an average annual rate of 1.5 percent during the last ten years. At the end of fourth quarter of 2014, mining production index showed a negative year-on-year growth of 4.0 percent, the negative growth rates recorded was 5.7 percent for diamonds. On annual basis, the total index of mining production increased by 3.3 percent in 2014 as compared to 17.3 percent in the previous year. This was mainly due to the slow growth in diamond production which increased by 6.6 percent in 2014 compared to an increase of 12.2 percent registered in 2013. Although these are short term figures, and we have been promised that the lifespan of our diamond mines can be stretched to around 2050 we still maintain that the best time to vigorously pursue diversification is now.
A report by economist Professor Roman Grynberg this week pointed to the precarious situation the country is facing, should we fail to diversify our economy away from diamonds. Diversifying the economy, especially in the manufacturing industry, is the one thing that will create sustainable jobs. Research and available data has shown that the textile and clothing/garment subsector of the manufacturing industry holds great potential for economic diversification because it can employ large numbers of semi-skilled people, particularly women who are adversely affected by poverty as they often have to raise families alone. Sectors earmarked by the Economic Diversification Drive as strategic opportunities should be strengthened to take off now rather than later so that by the time diamond mining takes a nose dive we will have other options to sustain the economy. Already we are seeing massive job losses in the diamond industry as sightholders are retrenching staff complaining about high costs of rough diamonds and prohibitive operational costs. We need not wait any longer.

The Botswana government has identified agriculture as a crucial sector for diversifying the country’s mineral-based economy. More than 80% of Botswana’s population relies on agriculture, yet farming is tough in the semi-arid conditions that prevail here, and production falls short of meeting the country’s food needs. The dairy goat initiative is one of three projects from the Botswana College of Agriculture that is being supported by the Regional Universities Forum for Capacity Building in Agriculture (RUFORUM), a consortium of 45 African universities in 22 different countries, through its Competitive Research Grants programme to support masters-level training, working with farmers as reported elsewhere in this publication. The three competitive research grants from RUFORUM have helped to build capacity in the critical areas of dairy goat farming, rainwater harvesting, and safe urban agriculture
Botswana currently imports about 80% of its milk supply, but at the same time the country has done little to harness the ubiquitous livestock resources in its own ‘backyard’ to satisfy the growing demand for milk. The reliance on imports siphons cash out of the local economy, and at the same time makes a valuable source of nutrition too expensive for vulnerable populations, particularly the extraordinarily high percentage of the population. Thus the development of a proper dairy goat industry has enormous potential for generating wealth and boosting food and nutrition security, especially among the poor and vulnerable.
Studies from Malawi and Zimbabwe have shown that intensive farming management systems and practices, developed through scientific research, are critical for farming success. As Africa’s shift towards urbanisation opens up new market opportunities for small-scale farmers, the trend has also introduced new challenges in areas of urban food production. Pressures are intensifying on farmers to produce more food to feed growing urban populations, with fewer land and water resources available. We hope that our government is listening.



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