Tuesday, October 17, 2006

Diamonds and Development: The Botswana Story

Event Title: Diamonds and Development: The Botswana Story
Sponsor: Center for Global Development
Location: Peter G. Peterson Conference Center, Institute for Int’l Economics
Date: Wednesday, October 11, 2006

Time: 2:00 p.m. – 3:30 p.m.
Approximate Number of Attendees: 95
Intern Attending: Saadiqa Lundy

Speaker: His Excellency Festus Gontebanya Mogae, President of Botswana.

Botswana’s current Head of State, President Festus Gontebanya Mogae, spoke about Botswana’s achievements and challenges since independence in 1966. According to President Mogae, Botswana is Africa’s oldest Multi-Party Democracy and it upholds the values of democracy. Botswana is known for having one of the best economies in Africa. Its economic success is largely due to the export of diamonds through the diamond industry. Diamonds have been synonymous with development in Botswana. Botswana’s economic growth rate is reflected through its increase in GDP over the last 40 years.

President Mogae pointed out the increase by giving the current stats on GDP in Botswana. According to President Mogae, Botswana’s per capita GDP has increased from US$70-90 to US$4,000. Exports have grown from about US$2 million to US$2.5 billion and imports from US$3 million to US$2 billion. Formal sector employment has risen from 13,800 people to 300,000. Primary school enrollment rose from 66,000 children to 327,600. Agriculture accounted for 40% of GDP in 1966 and now accounts for less than 3% of GDP. Today mining has become the largest contributor to GDP. Mineral revenue is used to develop different sectors of Botswana’s economy. All mineral rights are vested in the state to ensure that all citizens enjoy the benefits of their country’s natural resources. A large percentage of public expenditure goes to education and health.

Although the diamond industry has bought much success to the country, it also accounts for some of the problems Botswana faces today. President Mogae noted that some of the problem areas are tied to the rise of conflict diamonds as well as Botswana’s dependency on diamonds. Conflict diamonds are diamonds that are mined illegally and sold to finance wars/conflict in Africa. Mogae noted that an insignificant percentage of diamonds are from conflict areas. Conflict diamonds cause hardship, and pain and suffering to many people. In order to reduce conflicts in the diamond market, the Kimberly Process Certification Scheme was formed. The Kimberley Process is a voluntary monitoring mechanism used to ensure that diamonds are from conflict free sources. It was adopted in 2003 to ensure the transparent use of diamonds and helps ensure that revenue is channeled through the government. People involved with the diamond industry in Botswana have to adhere to the Kimberly process.

However, because diamonds are such a hot commodity there will always be a risk of new conflict development. As too much dependency on one commodity is not a good thing, President Mogae stressed the need for diversification. In efforts to decrease dependency, Botswana has shifted some of its focus to tourism, manufacturing, foreign direct investment, integration and incorporation, and environmental conservation as means of diversifying their economy. Thus far, the results of these diversification efforts have been positive and President Mogae expressed his hope that this process would continue.

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