Botswana’s government is pushing forward with a new proposal that could significantly increase local ownership in its mining sector. The plan, which will be debated by lawmakers, encourages new mining projects to offer up to 24% of their equity to local citizens if the government does not exercise its right to buy a stake.
The proposed changes are outlined in amendments to the Mines and Minerals Act. This legislation will be presented to Parliament, where the ruling Botswana Democratic Party (BDP) holds a strong majority. Consequently, government-proposed bills typically face little opposition or change.
Under the current law, Botswana’s government has the right to acquire up to 15% equity in any new mining project. The new amendment aims to boost local ownership by encouraging mining ventures to sell up to 24% of their shares to Botswana citizens or citizen-owned companies when the government opts not to take up its 15% stake.
The draft legislation specifies that if the government chooses not to acquire its 15% stake upon granting a mining license, the mining company must make a genuine effort to sell the 24% stake to local stakeholders. This proposed measure reflects Botswana’s ongoing commitment to enhancing local participation in its lucrative mining sector.
Botswana, recognized as the world’s largest producer of rough diamonds by value, is known for its stable and predictable mining regulations. This stability has made it one of Africa’s top destinations for mineral investment. Mining constitutes about one-third of the country’s budget revenue and is the primary source of foreign-currency earnings.
Globally, there is a rising trend of resource nationalism as developing countries seek a greater share of the profits from their mineral resources. This movement aims to address historical inequalities in the distribution of mining revenues. In Botswana, there has been growing pressure from citizens for a more direct share of the benefits of the country’s mining industry. The proposed amendments have been in the works since at least 2016, when the government initially suggested increasing the 15% equity entitlement and allowing citizens to step in when the state chose not to exercise its right.
In addition to promoting local ownership, the draft legislation includes other significant changes. Mining companies would be required to process their minerals within Botswana “as far as is economically feasible” and to the satisfaction of the minister. Furthermore, companies holding mining licenses would need to prioritize local citizens and businesses in their procurement processes.
Although the Botswana government seldom exercises its 15% equity option, it does hold notable stakes in several major mining operations. For instance, the government owns a significant share in diamond producer De Beers, Morupule Coal Mine, and Botswana Ash Ltd., which produces salt and soda ash.
These proposed changes are designed to ensure that the benefits of Botswana’s mineral wealth are more evenly distributed among its citizens. By increasing local participation and encouraging processing and procurement within the country, the government aims to boost economic growth and create more opportunities for its people.
