Monday, May 6, 2013

Botswana's Diamonds: Turning Resources into Foreign Policy - By Sam Worley

Botswana is a small, landlocked country in Southern Africa. Besides being one of the only countries in Africa with a relatively stable government, Botswana has also had considerable economic growth not seen in any other country in Africa. This is unarguably because of diamonds, Botswana's main export and key non-renewable natural resource. After gaining independence from Great Britain in 1966, Botswana found significant diamond mines and after some years of negotiations, control exactly half of the company that manages all of the diamond mining in Botswana, Debswana.

Diamonds generate immense amounts of wealth for Botswana. A Botswana Export Development and Investment Agency statistical report on their economy stated, “The mining sector remains the main engine of growth for the Botswana economy. The sector contributes over a third of GDP, 75% of export earnings and over 55% of total government revenue. The main driving force for the sector has been the diamond sub-sector.”  But this is a double-edged sword because being dependent on the activity of one economic activity exposes Botswana's economy to greater risks of fluctuations in GDP, export earnings, and Government revenues. Botswana has a small, specialized economy and is still a developing nation, thus exploiting global markets is necessary to achieve sustainable growth and economic diversification. Botswana is therefore tailoring foreign policy initiatives to target Botswana's competitiveness and productivity in the global market.
Diamond's revenues have led to a stable government through the creation of a bureaucracy that grew parallel to the increase in diamond revenues. Unlike other South African countries, the wealth generated from diamonds and the subsequent proper allocation of these revenues, pushed Botswana into a position of short-run economic stability. Once this stable government and revenue stream was established, a foreign policy could be implemented.
Botswana's government knows it can only benefit short-term from a specialized, diamond-dominated economy, a non-renewable resource can only go so far. Botswana's foreign policy is mostly concerned with its own economic diversification, which pushes their policy towards a regional integration of neighboring countries. Botswana's prominent role in the South African Development Community (SADC) and its strengthening of this entity to restore Africa's importance in the global economy, shows Botswana's policy commitment to fostering regional economic cooperation.  Botswana's strong involvement in the SADC and stable government gave them clout to move their foreign policy a step further, speaking out against anti-democratic movements and participating in conflict management in neighboring countries.
Internationally, Botswana participates in numerous organizations the promote democracy and human rights, namely International Institute for Democratic and Electoral Assistance (IDEA). By being a part of IDEA, Botswana is engaging in a foreign policy aimed at improving its international image as a stable, democratic nation that is worthy of investment in the private sector. A rapidly growing private sector, with foreign investment, is a strong way to diversify Botswana's diamond heavy economy. 
Diamonds and their revenues helped establish a strong government and bureaucracy in Botswana and therefore a strong regional foreign policy, but if Botswana continues to lag in diversification of their economy, their ability to be a political force in Southern Africa will diminish. Not to mention a continued dependence on diamond revenues will lead to a collapse of society, environment, and economy. Diamonds created a stable bureaucracy and short-term revenue stream in Botswana, therefore creating a foreign policy that was initially geared towards regional stability. In full circle, Botswana's government is now pursuing a domestic policy to slow down growth in the diamond mining sector and tailoring their foreign policy to give their economy a variegated model as to have long-term stability and constant revenues. 

1 comment:

  1. Sounds like a great example of government actually doing what it is supposed to....