The central bank said that infrastructure is key to the success of beneficiation in the extractive industry, signaling the need for the mineral-led economy to invest heavily in the development of energy, water, transport and communications networks.
Bank of Botswana highlighted in the annual report for the year ended 2023 that successful beneficiation cannot happen in the absence of good infrastructure particularly for an economy that relies heavily on mining.
“Adequate infrastructure is crucial for viability and competitiveness of local industries and, therefore, key in the beneficiation journey,” the bank said.
According to the bank, the implementation of a Public Private Partnership strategy would facilitate the involvement of the private sector in public works, thereby allowing the government to leverage the resources and expertise of the private sector, through risk and revenue-sharing arrangements, to efficiently deliver public infrastructure and provision of social services (for example, education, skills development, and health).
“Indeed, it is considered that, in the context of economic transformation agenda, private sector role should increasingly be promoted,” said BoB adding that “Notably, the funding framework for infrastructure development by the private sector also presents an investment opportunity for households through asset managers and pension funds.”
BoBs says economic performance ultimately falters in the instance of continued dominance of mineral extraction as a backbone to economic performance and in the absence of beneficiation. “Mining that involves mineral beneficiation industries significantly contribute to a healthy macroeconomic environment by, among others, generating foreign exchange reserves from export receipts and fiscal revenues from taxes, royalties, and fees paid by mining companies to the government, which are used to finance socioeconomic development, while contributing to fiscal sustainability and economic resilience,” said BoB. Further, the bank said, that mining and beneficiation activities have the potential to stimulate enterprise and demand for goods and services in supportive sectors, such as equipment manufacturing, transportation, and construction activities, thus a multiplier effect that accentuates the impact of mining activities on the economy.
“There is also room for policy discretion, enabled by the fiscal buffers generated from mining-related earnings by the public sector. For Botswana, where mineral revenue makes up a significant share of the government revenue, beneficiation can strengthen fiscal resilience and sustain economic activities past mineral depletion,” said BoB.
It says Botswana, so far, has limited beneficiation of its lucrative natural diamond resources. According to the BoB, the result, therefore, has been fast overall economic growth and relatively high per capita income with reference to the African continent, coexisting with relatively high levels of poverty, and unemployment. BoB said scope for industrialisation strategies and development that capitalise on the growing global demand for minerals for both conventional and emerging high-technology applications. It says this should entail deliberate and supportive strategies to promote all aspects of beneficiation, including downstream processing, upstream supplies and side-stream infrastructure and services.
“The long-term aim would be to grow an internationally competitive mining industry in which beneficiated and value-added minerals become the feedstock in the domestic manufacturing of semi- the Bank said it is equally important to emphasise the need to diversify economic opportunities within the diamond industry and the mining sector broadly adding that aligned with the concomitant need for digital advancement, there is also an endeavour to improve, adapt and align the country’s ICT landscape to what pertains globally.
“Among others, the strategy seeks to develop a programme for the feasibility study of mineral exploration and beneficiation industries in Botswana. Furthermore, it will provide clear fiscal incentives and infrastructure for mineral exploration and beneficiation projects; and encourage mining companies to include considerations for beneficiation and value addition in their mineral development plans,” said BoB. It says the potential benefits associated with mineral beneficiation therefore include employment creation noting that beneficiation implies the creation or expansion of industries and service providers, hence the multiplication of economic activities and a wider range of employment opportunities. Notably, BoB said, in contrast to capital-intensive mineral extraction, secondary processing or manufacturing and the provision of services invariably involve extensive use of labour. In turn, there is inherent development of deep and diverse skills to support such activities.
Thus, BoB is of the view that beneficiation has the potential to significantly raise the mining industry’s current contribution to employment of about 19 000 jobs (less than 2 percent of the total labour force), helping to alleviate unemployment, inequality and poverty challenges.
