Time to change – Jefferis

SHARE   |   Monday, 20 June 2016   |   By Kabelo Adamson
Dr Jefferis Dr Jefferis

Though the country will continue to heavily rely on resources, mainly the diamonds it will not be at the same level as in the past. Speaking in a panel discussion on the potential of resource driven economy at the Botswana Resource Sector Conference this week, Dr Keith Jefferis, the Managing Director of Econsult, said Botswana has been fortunate to have extremely large and profitable diamond deposits. Speaking alongside Thapelo Tsheole, Botswana Stock Exchange (BSE) Chief Executive and Botswana Geoscience Institute CEO, Tiyapo Ngwisanyi, he said the country was lucky to have discovered diamonds after independence which could have been a different story were they discovered during the colonial rule.

With diamonds revenues accounting for the largest portion of government revenues, Jefferis has said there has been a downfall in fiscal revenues due to decline in commodity prices. According to Jefferis, there is a perception that mining is a profitable business. He said while the statement is true about the past, it is not true about the future, calling for a fundamental change in mindset and policies. He said another challenge that would work against mineral revenue in mining operations being run like social services such as the case with BCL Mine, which is wholly owned by government. This, he said, presents a challenge such that toughest decisions become hard to be made.

Jefferis also called for development in the supply chain and encouraged increase in local procurement by mining companies with operations here. The conference, which was held in the midst of low commodity prices, was attempting to come up with ways in which the country could still benefit from resources as a driver of the economy. Three companies from the coal industry presented at the conference with each illustrating how the mineral is still viable despite challenges such as limited markets, low prices and high transportation costs. A campaign has been started to boycott “dirty” minerals such as coal by pressure groups calling on countries to instead shift to cleaner sources of energy.

Head of Power at Jindal Africa Neeraj Saxeena said there should be clear policy which will guide the development of coal mineral such as development of the downstream supply chain. He said some of the challenge they face as the industry is the non-availability of infrastructure that reach to all mining areas resulting in high transportation costs. Another speaker from the coal industry, Mashale Phumaphi – the Managing Director of the Stock Exchange Mauritius (SEM) listed company, Shumba coal – said coal deposits that are found in the country present a big opportunity for the economy. He said his company which is dual listed on the BSE aims to build a sustainable platform for energy generation that would not only meet local demand but the region as well. Phumaphi said there is a huge electricity deficit in the region which has seen tariffs jump 300 percent over the last seven years.

Ngwisanyi, who is head of the Geoscience Institute, said it is important that the country immense itself with Africa Mining Vision, which will assist in making sure that resources of the country are used for the benefit of the nation. “The goal of the vision is to create, a ‘transparent, equitable and optimal exploitation of mineral resources to under-pin broad-based sustainable growth and socio-economic development,” he said. “The challenge with many countries is that they not been able to come up with a formula that will enable equal share of the national cake,” Ngisanyi said. He said even though 24 percent of the world agricultural land and 40 percent of the world resources are found in Africa, it is unfortunate that 75 percent of the poorest countries are from the continent.

This, he said, is because of factors such as greed and poor governance where the country is rich but people are poor. He also called for improvement in the procurement and supply chain. Tsheole, whose company is home to eight mining companies that have listed, said they have started a partnership with Botswana Chamber of Mines (BCM) to come with the listing rules tailor made for mining companies. He said the approach is intended to attract mining companies and retain them, saying the BSE is a good destination for mining companies since the bourse first admitted them in 2000.