Diamond-market crash drives seismic political shift in Botswana

Global diamond sales have been impacted by oversupply, poor demand from the crucial Chinese market and pressures from lab-grown gems.

An opposition coalition emerged as the shock winner of Botswana’s parliamentary elections, the first time power has changed hands in the diamond-dependent southern African nation since independence almost six decades ago.

Duma Boko, a Harvard-educated human rights lawyer, is set to succeed Mokgweetsi Masisi as president after his Umbrella for Democratic Change secured an outright majority in the 61-seat legislature, partial vote tallies show. Masisi’s Botswana Democratic Party, which was widely expected to retain its majority, was in fourth place with just four seats. Final results are expected later on Friday.

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Voters punished the BDP for an economic downturn triggered by a collapse in the diamond market — which generates the bulk of government revenue and export earnings — and has left the country with a 28% unemployment rate. Rising levels of crime and corruption have also fueled public anger and led to growing disaffection with democracy.

“I will respectfully step aside,” Masisi told a briefing in the capital, Gaborone, that was broadcast on state television. “I wish to congratulate the opposition. I respect the will of the people.”

While Botswana has long been held up as one of Africa’s most successful democracies, satisfaction with the system has collapsed, an Afrobarometer survey published in July shows. Just 30% of respondents in the country expressed satisfaction with democracy, down from 70% a decade ago — which was among the sharpest drops on the continent.

Similar patterns have emerged elsewhere in the region, including neighbouring South Africa, where the African National Congress in May lost the parliamentary majority it’s held since the end of apartheid three decades ago. In Mozambique, the party that’s ruled for the past 49 years extended its tenure in October 9 elections that observers and opposition parties said were marred by irregularities.

The BDP’s leadership were stunned by the party’s implosion — it won 38 parliamentary seats five years ago — with outgoing Vice President Slumber Tsogwane saying he had no clue why it performed so badly.

Moeti Mohwasa, Boko’s spokesman, said the country’s outgoing leaders held themselves aloof from the people they were supposed to serve, weren’t accountable and failed to ensure resources were equitably distributed.

Boko, 54, who has run for the presidency twice before, has pledged to create at least 400 000 jobs within five years, boost the minimum wage, clamp down on corruption and cut water and electricity tariffs. Those undertakings clearly resonated with the electorate even though they may be hard to fulfill.

Botswana is the world’s largest producer of rough diamonds by value, with almost all of its gems mined by Debswana — which is jointly owned by the government and De Beers, a unit of Anglo American Plc. Global diamond sales have been impacted by oversupply, poor demand from the crucial Chinese market and pressures from lab-grown gems.

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Masisi’s administration last year negotiated a new 10-year accord with De Beers that will give the nation access to more diamonds and help it secure 10 billion pula ($749 million) in development funding.

Boko criticized a lack of transparency surrounding the deal, but hasn’t indicated whether he intends to renegotiate it. In a July interview, he said he wants Botswana’s government to increase its stake in De Beers to 51%, from 15% currently, and called for the company to relocate its headquarters from London to Gaborone.

Anglo American paid $5.1 billion for the Oppenheimer family’s 40% stake in De Beers in 2011.

In February, Anglo American wrote down the value of its 85% share in the diamond producer by $1.6 billion to about $7 billion, and in May it put the unit up for sale after fending off a $49 billion takeover bid for the group from BHP Group Ltd.

“It is an opportunity for the government of Botswana, in our view, to acquire a substantial controlling stake in De Beers,” Boko said in the interview. “When it’s in some crisis, it’s normally the best time to acquire.”

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