Botswana’s economic development is a success story built in the 53 years since its independence and founded on diamonds, gold and coal. Bogolo Kenewendo, Minister of Investment, Trade and Industry, explains that success story and how Botswana deals with the challenge of having built its wealth using non-renewable resources.

Once, in an interview, you called yourself a Diamond Baby. What is the story behind this nickname?

I come from a country which is a diamond-mining country. The diamond revenues have been reinvested in people. In my case, I was born in a government hospital, I went to government schools, I was sent to university by the government and now I am employed by the government. That is why I said I was a ‘Diamond Baby.’ All of this was made possible by diamond revenues.

Botswana went from one of the poorest countries in Africa to a prosperous state. How was that achieved?

Through prudent management of resources and through negotiating the right model of using diamonds. We have a 50-50 partnership with [international diamond company] De Beers, in order to ensure that the ownership of diamonds is not just foreign, but is also shared with Botswana. Prosperity was further achieved by setting up the right legislative institutions, which allowed the economy to do well by working on governance, working on democracy and working on corruption.

What does good governance mean in the case of Botswana?

Good governance is a traditional and cultural aspect of who we are. Even before colonisation or independence, we had institutions called “Kgotla”: The Kgotla system is where people met and they made collective decisions as a community. I believe that is where our good governance comes from. It’s about inclusivity and ensuring that all voices are consulted and they are heard by the time we make a decision.

So adapting a post-colonial approach would translate into Botswana relying on its own, internal resources – rather than on foreign capital?

Yes. Being self-reliant, but also knowing when to ask for help.

When did Botswana ask for capital from outside?

Well, from the get-go. From independence. I do not know if you’ve heard the story: At some point, our government was only left with GBP 12 and they had to share salaries because there was not enough money. I think from that point on, we asked for foreign capital to come in, to help us invest, develop our industry and to make Botswana what it is today.

What is Botswana’s capital situation today?

It is interesting that you ask that question. We did a report a few years ago concluding that we are very rich in human capital, thanks to the reinvestment of diamond capital in education. About 20 to 25 percent of our government revenues are spent on education. There is health capital as well, because we invest about 20 percent of our government expenditures on healthcare. And natural capital, of course: It is incredible. We’re talking diamonds, gold, coal – there really is a lot of capital in Botswana. Not to forget the 360 days of sun each year, perfect for solar mining. The tourism is incredible as well, we have managed to conserve and protect our wildlife, we have some of the most untouched wildlife spaces and the largest herd of elephants on the continent.

Bogolo Kenewendo, born in 1987, is the youngest government minister in the history of Botswana. She obtained a Masters in International Economics from the University of Sussex and holds a Bachelor in Economics from the University of Botswana. Kenewendo worked as trade economist in the Ghanaian Ministry of Trade and Industry and was appointed as specially-elected Member of Parliament in 2016. One of her biggest achievements as Member of Parliament was to raise the age of sexual consent from 16 to 18 years. On April 4, 2018, President Mokgweetsi Masisi appointed Kenewendo as Minister of Investment, Trade and Industry.

So would you say the most important capital in Botswana is its natural capital, which can be transformed into financial capital and in turn used to improve other sectors?

The most important capital is human capital. As the ‘hard capital,’ the mineral capital, depletes, the only thing that you are left with is human capital. So we need to ensure that whatever we get from the hard capital we reinvest in order to develop human capital. That has been the growth story of Botswana. We are making a few changes to ensure that it becomes a story for the future as well.

These changes would mean diversifying the economy?

Yes. It is pretty much reliant on the diamond sector, and we want to change that in order to become a knowledge-based economy. We are not just diversifying away from mining, but diversifying even within mining and finding ways to add value and expand into the services and the manufacturing sectors.

How does this vision of diversification look like?

We are working on some industrial upscaling programs, on a special economic zone that is targeting the automobile industry, the light manufacturing side of it. We are offering incentives so that capital can move to Botswana or that capital which is in Botswana can be invested in those special economic zones. We created an International Finance Service Center (IFSC) where we make sure that we attract foreign direct investment — for instance, for the manufacturing industry, the meat- and leather industries as well as the tourism sector. We have a package of incentives including 17% tax cuts.

How connected is Botswana with international capital and investors?

We are very well connected to the rest of the world, and to capital sources. But unfortunately our international capital investors have been focusing mainly on the extractive industries and we are now looking for international capital that focuses on the service sector, because services are all about human capital. We are going around the world, encouraging investors to come to Botswana.

What part do postcolonial approaches take in your work? Not relying on external partners too much, not being exploited, and keeping resources inside the country, for example?

In the diamond sector, we started a process which saw the sale of diamonds happening from Botswana instead of London and that was very important for us. And when it comes to processing many of our raw materials, we want value to be added in Botswana. That is part of our trade negotiations, because value addition creates jobs and economic growth. It creates money domestically. And that is a very important growth story. The foreign direct investment is not necessarily an evil, but it’s important that we have good institutions ensuring that we do not over-borrow and find ourselves in a trap.

Which role does sustainability play in managing capital?

A key role. In the ‘80s, when the government drew up our investment policies, sustainability was right at the heart of it. We invest in human capital, but we also save something to ensure that future generations do not have to start from scratch once the diamonds run out.

What is the capital for purpose in Botswana that you wish for?

Capital for purpose now is capital for our transformation. We are going through a second wave of transformation, the first was from a heavily agricultural economy to a mineral economy. Now we want a transformation from mineral to a knowledge-based economy. And that transformation definitely needs capital associated with it. It needs capital that is not only looking for profit, but is looking to make an impact. Projects we invest in need to be scalable within Botswana and across the continent so that the investment has a bigger purpose.

Moving away from mere growth and having social impact sounds good on paper, but what does that mean in reality?

Capital for our transformation would mean capital in information and communications technology [ICT] investment, because if you compare Botswana to Switzerland, our Internet is not at the same level, and legislative investment in infrastructure in the ICT space is still not the same. The banking sector for ICT is not the same. So there are a lot of opportunities: On the production side, on the education side, on the logistics and management side. The scope for transformation is big and wide.

Key-Takeaway

Diamond revenues made Botswana’s economy boom: While the government once was left with GBP 12, Botswana’s GDP per capita is now USD 7,500. For Kenewendo, good governance means investing these revenues into education and healthcare. Botswana approaches the challenge of diversifying its economy by industrial upscaling programs.