The perils of relying largely on Diamonds-Botswana

Diposting oleh Unknown | Label: commodities, Development, emerging markets, finance, governance, manufacturing, policy, self-sustanance

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Despite its status as the best governed SSA economy Botswana's reliance on a singular source of income-Diamonds-is proving to be an achilles heel.The FT reports:

Even for Botswana, for long the model of how a poor country can use its minerals to build a path from poverty, there is no escape from the the financial crisis.
“There is no doubt we are facing a huge challenge,” said Ian Khama, Botswana’s president in his first wide-ranging interview with a foreign newspaper since taking office in April. “The main reason is because we have been very dependent on revenues from minerals, especially diamonds, ever since they were found in the seventies.”
Diamonds bring in four of every five of Botswana’s foreign exchange dollars and generate about a third of annual gross domestic product. But the US, which accounts for up to half of diamond demand, is in recession. Debswana, the joint venture between De Beers and Botswana that normally supplies almost a quarter of the world’s rough diamonds , sold no stones in November and few in the months since...[continue reading]