Diamonds are not forever

Botswana has been keen to portray its diamond industry as key to its economic success and stability, in contrast to the suffering and poverty associated with "conflict diamonds" in other parts of Africa. But according to a report by the Diamonds and Human Security Project of the Montreal-based organisation Partnership Africa Canada, while the impact of diamonds on the economy has been clear, the "trickle down" benefits in terms of the country's social indicators have been less discernable. Much evidence has pointed to the "curse of natural resources", where the heavier a country's reliance is on natural resources in exports, the slower the rate of its economic growth. According to an Oxfam America report, "Digging to Development?", although the rule has a few exceptions, "the statistical evidence clearly undermines the proposition that investments in mining can set a nation on the path of sustained development." Botswana is by far the world's largest diamond producer by value. They are mined by the De Beers-Botswana Mining Company (Debswana), a private unlisted company jointly owned by De Beers and the government. In 2000, minerals of which diamonds represented the bulk, contributed over 33 percent to Botswana's annual GDP and represented 79 percent of the value of Botswana's exports. The 6,000 diamond mining and quarrying workers were the largest labour sector in the country, and the industry contributed 60 percent of total government tax revenue, the Partnership Africa Canada report said. "In pure economic terms, diamonds have resulted in Botswana having higher economic growth rates than any other country in the world over the past thirty years," the report noted. It is also one of Africa's most politically stable countries. However, in terms of social indicators, Botswana has performed relatively poorly. It was ranked 126th out of 173 countries on the UNDP Human Development Index in 2002, falling from 95th place in 1991. Swaziland, Gabon and Equatorial Guinea all scored better. Adult literacy was 72 percent in 2000, compared with neighbouring Zimbabwe's rate of 88.7 percent. Life expectancy at birth was a lowly 40 years, as opposed to 56 years in Sudan. HIV/AIDS could have a bearing on Botswana's performance. "But a major reason for Botswana's low ranking is the high percentage of the population living below the poverty line, along with the country's highly skewed income distribution," the Montreal-based group said. It concluded that Botswana's economic boom had really benefited only a small elite. Although the production of rough diamonds has increased over the years, technology has displaced labour at a faster rate. In 1993 there were between 9,000 and 10,000 miners working in the industry, a third more than employed in 2000. The report also quoted a 1997 poverty study which found that 47 percent of individuals were classed as poor. However, despite the inequalities, "Botswana has proven the critical value of good governance and a stable political environment," said the Partnership Africa Canada report. "Botswana is, in fact, a counter-example to findings in a 2001 World Bank study which showed that countries with a dependence of more than 32 percent of GDP on a single primary commodity export are in 'peak danger' of civil war. The variable, in fact, may not be economic dependence on a single commodity, but the way in which the commodity and governance are managed," it noted. However, diamonds will not last forever. Botswana's reserves at current production rates are estimated at 30 years, and the government has stressed the need for diversification in its economic plans.