Botswana’s subtle revolution: Orchestrating economic liberation through mineral wealth (Part 2)
In the intricate dance of global economics, Botswana stands as both a player and a pawn, its mineral wealth shaping its destiny but also being manipulated in a shadowy game of profit-shifting.
As we continue our exploration into Botswana’s economic landscape, the spotlight shifts from the allure of diamonds to the covert manoeuvres that are bleeding the nation of its rightful gains. Mineral rents, the economic heartbeat of the sector, are meant to be the windfall from a nation’s precious resources, providing a lifeline to economic growth.
However, as the curtains are drawn back, it becomes painfully clear that the true value of Botswana’s rough gemstone diamonds is being siphoned off beyond its borders, leaving the nation with a fraction of what it rightfully deserves.
Data reveals a startling reality: a staggering 77.6% increase in the value of Botswana’s diamonds once they leave the confines of the nation. A clandestine journey begins as these gems traverse foreign lands, with their worth mysteriously ballooning even before the first cut or polish. These tax-free havens act as a pivotal hub, witnessing an unprecedented 200% surge in diamond value, courtesy of an age-old trick—profit-shifting. Between 2003 and 2016, the numbers tell a tale of exploitation, with the value of Botswana’s diamonds skyrocketing from $519 to $1,644 per carat upon re-export.
The labyrinth of re-imports and re-exports between tax havens, shrouded in corporate secrecy laws, leaves us grappling with the question: Who are the puppeteers pulling the strings behind these subsidiaries, and what drives this orchestrated manipulation?
A sinister subplot unfolds, revealing that at least half of this multi-billion-dollar diamond trade involves the same stones packaged differently. Subsidiaries, cloaked in anonymity, engage in a shell game that inflates the diamonds’ value as they journey through various tax havens. The lack of transparency not only shields these practices from scrutiny but also prevents us from exposing the entities responsible for this economic legerdemain.
In the grand theatre of mineral exploitation, Botswana finds itself at a crossroads, held hostage by a system that thrives on opacity. The diamonds, once a beacon of hope for economic diversification, are now a symbol of a nation’s struggle against forces determined to keep it shackled to a cycle of diminishing returns.
This is why data matters – not the garbage in garbage out rubbish we often see, but irrefutable, traceable, transparent, and democratised data. Every step of the way, the people in the know must assert their influence. The truth is the days of hiding behind veils of secrecy are over. Transparency is not some fanciful concept from a business school playbook; it’s a demand rooted in the fact that these minerals rightfully belong to their countries of origin.
Enter the disruptors, like an avant-garde force in the form of HB Antwerp, challenging the status quo and bringing transparency to an industry that has thrived on opacity. They unravel the entire journey of a stone, from the unforgiving depths of the mine. It’s a breath of fresh air, a radical departure from years of suppression fuelled by a lack of information and camouflaged under the guise of ‘it’s just business.’
In this new era, information isn’t just power; it’s the key to dismantling a system built on greed. It’s a brazen call to arms against those who would exploit and manipulate, a rallying cry for a world where the truth about resource ownership and exploitation can no longer be concealed. The narrative has shifted, and it’s time to break free from the chains of misinformation and embrace a future where transparency reigns supreme.
The path to ‘more’ lies not in insular improvements but in empowering producer countries to control longer supply chains. Current dynamics favouring distant value-creating activities perpetuate a system where local communities remain at the mercy of global economic fluctuations.
It’s time for responsible sourcing practices to extend beyond mere commitments and actively support the building of capabilities in producer countries, ensuring that the true beneficiaries are the very communities that house these precious resources.
In the wake of the Russia-Ukraine war, traceability and provenance have emerged as imperative, albeit overdue, considerations.
Both are equally vital, especially in the context of celebrating the country of origin, as in the case of Botswana. Provenance is not merely a ceremonial acknowledgment but a potential catalyst for economic diversification. In Part 3, let’s delve into the critical role that provenance plays in reshaping Africa’s economic landscape.