How Botswana is Profiting from the Russia-Ukraine War

Botswana is recording a surplus in its current account ahead of its SACU peers Mining Index now lists Botswana’s Jwaneng and Orapa as the world’s richest diamond mines MoF’s outlook bullish for the economy as it predicts investors in the diamond sector becoming increasingly compelled to look to the country Profits linked to the Russian invasion of Ukraine are flowing into Botswana because the conflict is driving prices of rough diamond high, helping Botswana to reclaim its distinction as the world’s leading diamond producer, The Business Weekly & Review has established. [ihc-hide-content ihc_mb_type="show" ihc_mb_who="1,2,3,4" ihc_mb_template="3" ] A brief prepared by Botswana’s Ministry of Finance states: “Botswana’s current account is anticipated to remain at a surplus due to increased demand for diamond exports as a result of (the) continued ban on Russian diamonds. “However, the current accounts of most member states (of the Southern African Customs Union (SACU) are expected to decrease in 2023.” The report states that compared to other SACU member states, Botswana recorded a surplus in its current account over the period January to September 2022. “Compared to its peers in the SACU region, for the latest available information, Botswana recorded a marginal budget surplus in the first half of 2022/23 (April-September),” it says. As at the end of September, total revenue and grants amounted to P38 558.29 million while total expenditure was P37 959.62 million, yielding a budget surplus of P598.67 million. All observed countries recorded deficits in the same period. Namibia recorded the highest deficit of 15 percent of GDP while South Africa registered the smallest deficit (smallest budget) among selected members in the region. According to the report, 2022 fiscal balance for SACU region is expected to improve going forward. The position is in harmony with predictions in a report submitted to the Public Accounts Committee (PAC) by the Permanent Secretary in the Ministry of Minerals and Energy Ellen Richard-Madisa last year that with signs of recovery being witnessed across the globe, the war in Ukraine would benefit Botswana’s economy as investors in the diamond sector would be compelled to look to the country. She noted that the Russian invasion of Ukraine had created an extremely volatile and unpredictable situation for the diamond industry, thanks to Western sanctions against Russia that are affecting the global supply of diamonds used in jewellery. Richard-Madisa said the ban on Russian diamonds directly targets Alrosa, which the US government has identified as the world’s largest diamond mining company responsible for 90 percent of Russia’s diamond mining capacity and accounting for 28 percent or nearly a third of global diamond output. The latest revelation by the Ministry of Finance that Botswana is profiting from the Russia-Ukraine conflict also comes at a time when international media reports show that Botswana has dethroned Russia as the country with the richest diamond mine. A new list by Mining Index has identified Jwaneng Mine as the world’s richest diamond mine in terms of production for the first three quarters of 2022. It was also ranked the richest diamond mine in terms of value. Jwaneng produced 10.3 million carats in 2022. Another diamond mine in Botswana, Orapa, came second with 8 million carats. Orapa and Jwaneng were also listed as the two highest value diamond mines in the world, estimated at US1.2 billion and US976 million respectively “based on average historic annualised prices of US$ 121 per carat,” media reports indicated. International media reports also indicate that although Alrosa has not published production figures since the war between Russia and Ukraine broke out in February last year, miningintelligence.com bases its conclusion on the company’s Udachny mine’s 2021 production of 4.6 million carats. [/ihc-hide-content]

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How Botswana is Profiting from the Russia-Ukraine War

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