The central bank emphasized that infrastructure is essential for the success of beneficiation in the extractive industry, highlighting the need for the mineral-led economy to invest heavily in developing energy, water, transport, and communication networks.
The Bank of Botswana (BoB) underscored in its annual report for the year ended 2023 that successful beneficiation cannot occur without adequate infrastructure, particularly in a mining-dependent economy.
Adequate infrastructure is crucial for the viability and competitiveness of local industries and, therefore, key in the beneficiation journey, the bank stated.
BoB suggested that implementing a Public-Private Partnership (PPP) strategy would facilitate private sector involvement in public works. This approach would allow the government to leverage private sector resources and expertise through risk and revenue-sharing arrangements, efficiently delivering public infrastructure and social services such as education, skills development, and health.
In the context of the economic transformation agenda, the role of the private sector should be increasingly promoted, BoB added. Notably, the funding framework for infrastructure development by the private sector also presents an investment opportunity for households through asset managers and pension funds.
BoB warned that economic performance would ultimately suffer if mineral extraction continues to dominate without beneficiation. Mining that includes mineral beneficiation industries significantly contributes to a healthy macroeconomic environment by generating foreign exchange reserves from export receipts and fiscal revenues from taxes, royalties, and fees paid by mining companies to the government. These revenues are used to finance socioeconomic development, contributing to fiscal sustainability and economic resilience, BoB stated. Moreover, mining and beneficiation activities can stimulate demand for goods and services in supportive sectors, such as equipment manufacturing, transportation, and construction, creating a multiplier effect that enhances the impact of mining 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 constitutes a significant share of government revenue, beneficiation can strengthen fiscal resilience and sustain economic activities beyond mineral depletion, BoB noted.
BoB highlighted that Botswana has limited beneficiation of its valuable natural diamond resources. Consequently, the country has experienced fast overall economic growth and relatively high per capita income compared to the African continent but still faces high levels of poverty and unemployment. BoB stressed the need for industrialization strategies that capitalize on the growing global demand for minerals for both conventional and emerging high-technology applications. This should involve 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 where beneficiated and value-added minerals become the feedstock for domestic manufacturing of semi-finished products, BoB stated. It is equally important to diversify economic opportunities within the diamond industry and the broader mining sector. The strategy should also adapt and align the countrys ICT landscape with global standards.
The strategy seeks to develop a program for the feasibility study of mineral exploration and beneficiation industries in Botswana. It will also 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, BoB said.
The potential benefits associated with mineral beneficiation include employment creation, as it involves the creation or expansion of industries and service providers, thereby multiplying economic activities and expanding employment opportunities. Unlike capital-intensive mineral extraction, secondary processing or manufacturing, and the provision of services often involve extensive use of labor, leading to the development of diverse skills to support such activities.
BoB believes that beneficiation has the potential to significantly increase the mining industrys contribution to employment, which currently stands at about 19,000 jobs (less than 2 percent of the total labor force), thus helping to alleviate unemployment, inequality, and poverty.
