Good afternoon!
For the past two weeks, I haven’t been able to properly keep my schedule, posting time, and social media posting. I have been really busy with events, it kept me away from properly writing articles and scheduling. Since now I see this might continue, I will have to adjust myself to the constant shifts so I can continue with this article, but anyway, let’s get into it!
I agree with Mr president, Botswana should buy De Beers, based on the arguments for economic sovereignty and long-term control.
1. Vertical Integration (Owning the Whole Pipeline)
Currently, Botswana makes most of its money from mining (the dirty work). By owning De Beers, the country would capture value from the entire chain:
Marketing & Sales: You don't just dig the stones; you control how they are sold, to whom, and at what price. President Boko has explicitly criticized De Beers for "not doing its job" in marketing, suggesting Botswana could do it better.
Retail Margins: De Beers owns retail brands (like De Beers Jewellers and Forevermark). Owning the company means Botswana gets a cut of the final jewelry sale in New York or Shanghai, not just the rough stone sale in Gaborone.
Beneficiation: A foreign owner often wants to process diamonds wherever it is cheapest (often India). A Botswana-owned De Beers would prioritize cutting and polishing inside Botswana, forcing job creation locally.
2. Preventing a "Hostile" Buyer
Anglo American is selling De Beers. If Botswana doesn't buy it, someone else will.
The Risk: Imagine if a private equity firm or a company from a competing nation bought De Beers. They might care only about stripping assets, closing unprofitable mines (which employ Batswana), or artificially manipulating supply to benefit mines in other countries.
The Defense: By buying the company, Botswana guarantees that no foreign entity can ever shut down its economic engine to suit their own foreign interests. It secures the national interest permanently.
3. Buying Low (The "Distressed Asset" Theory)
The IMF says "don't buy a declining asset." A savvy investor might say "buy quality assets when they are cheap."
De Beers' valuation is currently at a historic low due to the slump in diamond prices and the rise of lab-grown stones.
If you believe natural diamonds are cyclical and will bounce back (scarcity value), buying De Beers now is getting a global monopoly for a bargain price. You would be buying at the bottom of the market, not the top.
4. Correcting the "Principal-Agent" Problem
For decades, there has been a tension:
Botswana (The Principal) wants maximum revenue for national development now.
De Beers (The Agent) wants to maximize shareholder value for Anglo American over time, which sometimes means holding back stock or investing in mines in other countries (like Canada or South Africa) using profits made in Botswana.
The Fix: If Botswana owns the company, this conflict disappears. Every dollar De Beers earns anywhere in the world belongs to Botswana. The company's strategy becomes 100% aligned with the country's national development plan.
The "High Stakes" Reality
It is "high time" for control, but the IMF's warning highlights the price of that control.
The IMF View: "It's too expensive and risky to put all your money in one basket."
The Sovereign View: "It's too risky not to own the basket when your survival depends on it."
If Botswana executes this well, it transitions from a "resource-rich country" to a global "mining and luxury powerhouse." If they execute poorly, they inherit a dying company with massive debt. It is the ultimate bet on the country's own ability to manage business better than the British did.
Source: Radio Botswana
