Diamonds and Distorted Development in Botswana

The recent release of the film Blood Diamond  has raised the issue of whether Botswana ought to be punished by a boycott of its diamonds because of the government’s “forced removal” of its hunter-gatherer people -- known as the Bushman, the San, or the Basarwa – from their traditional lands on the Kalahari Desert.  Survival International (SI), which advocates for tribal peoples worldwide, sought unsuccessfully to persuade the film’s leading actors – Leonardo DiCaprio, Djimon Hounsou, and Jennifer Connelly – to condemn Botswana’s policies and support a boycott.
The Botswana government and DeBeers, the world diamond cartel, have aggressively countered SI, especially in the United States, by arguing that diamonds in Botswana have been the basis for the country’s astounding annual economic growth of 7 percent per year in real terms since independence in 1966. Moreover, representatives of the government and DeBeers have pointed out that in contrast to other resource rich countries, Botswana has used its huge income from diamonds to provide some of the best education, health care and housing programs in Africa for its 1.8 million population.
There is truth in both positions. As Botswana’s High Court pointed out last month, the Botswana government has indeed unconstitutionally removed the Basarwa from their traditional lands. On the other hand, the government and DeBeers are quite correct to argue that Botswana has used its diamond income to support major social and economic improvements for all sections of the population. 
This debate, however, obscures a much more important question: what kind of development are Botswana’s diamonds supporting?  The country’s supporters present a startling list of accomplishments.   Per capita income has risen to close to $7,000 from $80 in 1966. Free public education is provided to all children up to age 13, after which only a minimum tuition is required.  Government health facilities are distributed across the country, and these facilities are close to providing antiretroviral therapy to one-hundred thousand citizens infected with HIV and in need of treatment for AIDS. Five thousand miles of paved and well maintained roads allow travelers to move effortlessly between major population centers. Government almost totally finances the education of 12,000 students to study at the University of Botswana, providing room, board and a small allowance. Another 7,000 young people study overseas on full public scholarships.  High quality game parks and wildlife management areas cover over one-third of the country. Observance of the rule of law is widespread. There is little corruption and minimal crime and poaching. To top off this list, Botswana is the only country in Africa which has had substantial political freedom and regular democratic elections since its independence, over 40 years ago.
Yet there is another, more pessimistic side to the story of Botswana’s development. To put the matter simply, diamonds have produced distorted development. Most obvious has been the limited economic spin-off in terms of employment. Debswana, the diamond mining corporation owned jointly by the government and DeBeers, employs about 6,500 people, or just 2 percent of the workforce. To be sure, there is significant secondary employment generated by the company’s contractors and consumption by Debswana employees.  The bottom line, however, is that after decades of rapid GDP growth, about 40 percent of the working age population is unemployed. Apart from the diamond industry, no other economic sector has experienced much growth. In the meantime, the educational system, well funded by diamond income, annually churns out large numbers of students who cannot find jobs, even when they have a university education.  Top planners in the education have concluded that government must restructure the system to prepare youth for export to the global economy, since few jobs will be available inside the country in the foreseeable future!
Another distortion has to do with the size of government. Diamond sales have fueled rapid expansion of government employment. The result is that the public sector now employs almost 45 percent of the workforce (295,000), if parastatal corporations are included. The national government alone employs one-third of the total workforce. The result is the emergence of a bureaucratic behemoth with a capacity to penetrate and regulate many aspects of society. The government’s power and effectiveness in regulation is enhanced by the fact Tswana culture cherishes obedience to the law.  The economic paternalism of the ruling elite has thus meant that government has created and effectively enforced a highly rigid set of rules, providing a major impediment to private entrepreneurial activity and the emergence of economic development in other sectors of the economy. A recent study of southern African states indicated that regulatory delays for starting a new business in Botswana were the longest of any regional economy, on average more than a year.
Still another distortion is that the government is inclined to use its massive income to subsidize major sectors of economy and society. Other African states have privatized sizeable sections of their governments over the last several decades. In contrast, the Botswana government has been moving at a snail’s pace. Regular money losers like Air Botswana and the copper mines continue to limp along with subsidies from the government. Even civil society in Botswana is subsidized by all sorts of subventions. Teacher associations are paid to run music and sports competitions. Most private newspapers cannot survive without government advertising. A plethora of “voluntary” HIV/AIDS organizations require regular grants from government (and international organizations as well) to realize their goals. In a very real sense, diamonds are creating a society which is heavily dependent on government. Citizen initiatives without government support are almost non-existent. 
A looming political danger to government is the power of the diamond trade unions. If the unions should launch a sustained strike (Debswana holds a considerable diamond reserve, so government could survive a short strike), the government could be brought to its knees. As a result labor laws serve to restrict union activity severely, particularly in the diamond sector. The last strike by diamond workers resulted in over 400 losing their jobs. Most disturbing, many of these workers and their families found themselves without the free ARVs provided by Debswana to treat HIV/AIDS.
Making the distorting effect of diamonds on Botswana even worse, the mining sector is poised for a major expansion. A new exploration model for locating diamond pipes has already led to the development of a major new mine. When it comes on line next year, the mine will be one of the top ten in the world. In addition, a surge of diamond exploration is taking place all over the country, in part stimulated by the new model.  So, a real possibility exists for even more diamond mines. The only major economic diversification on the horizon is a large coal mining operation and power plant which will export to electricity starved South Africa.  However, the new diamond and coal mines and the power plant will be capital intensive, thus creating very few jobs. Ultimately, government’s income will be considerably expanded, while unemployment will be little changed and the other problems just mentioned will grow worse. 
Botswana’s diamond funded development seems certain to be sustained for the foreseeable future, but in its highly distorted form: little employment, an overdeveloped state, an underdeveloped private sector, school graduates leaving the country to find work, a submissive civil society, and a skilled working class of diamond miners who could bring the whole structure down. The High Court’s decision in favor of the Basarwa will probably improve their economic situation somewhat. However, confronting the distorted effect of diamonds on Botswana’s development seems not to be on any domestic or international group’s agenda.  It will take a major shock to change a status quo in which all major interests seem blissfully comfortable.
John D. Holm has been conducting political research on Botswana for over thirty years.  He is currently Director of International Education and Partnerships at the University of Botswana. 

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John D. Holm