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Botswana duped in diamonds sales

SHARE   |   Monday, 05 March 2018   |   By Phillimon Mmeso 
Botswana duped in diamonds sales

The Natural Resource Governance Institute (NRGI) has raised a concern on how Botswana government is managing its sovereign wealth fund, Pula Fund. The Resource Governance index (RGI) has raised concern that although the Pula Fund through its investments and financials are audited and reviewed by Parliament, its deposit and withdrawal rules and practices is worrisome. Although it is meant to cushion the country during economic meltdown, RGI has observed that recently money withdrawn from the fund was shrouded in secrecy with no information given for its purpose. In September 2012, P21 billion was withdrawn from the Fund in order to meet the country’s spiralling import bill. The country's foreign exchange reserves are made up of the Pula Fund, the Liquidity Portfolio, which has two components and several assets associated with the International Monetary Fund.

Botswana, DeBeers 

The relationship between Botswana Government and DeBeers Company through their joint venture Debswana has come under scrutiny from the Resource Governance index (RGI). According to the 2017 Resource Governance Index, Debswana has scored 29 out 100 points on RGI and is ranked 61 of 74 state owned entities (SOEs) in the index and hangs on the border between the poor and failing performance bands. “Debswana does not disclose the transfers of funds to the government and details relating to the sale of diamonds,” reads the report. Although Debswana provides information in its annual reports, RGI stated that their researchers could not find the core financial details that analysts require to provide effective independent oversight of the company. There are concerns that the agreement between DeBeers and Botswana is shrouded in secrecy and that Botswana might not be benefiting as it is supposed to be from the sale of diamonds. Another concern from RGI regarding mining in Botswana is the secrecy on the issuing of mining licences, which scored 18 out of 100 in licensing. “The low licensing score is a result of the opacity of the licensing process, including what specific elements are up for negotiation, thereby leaving the government with considerable discretion,” reads the report.  The report also observes that government does not require the disclosure of the ultimate beneficial owners of the extractive projects and public officials’ interest in extractive project.