Botswana Mining Investment and Governance Review THE MINING INVESTMENT AND GOVERNANCE REVIEW (MInGov) AUGUST 2016 © 2016 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington, DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Rights and Permissions The material in this work is subject to copyright. 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Any queries on rights and licenses, including subsidiary rights, should be addressed to: World Bank Publications The World Bank Group 1818 H Street NW Washington, DC 20433 USA Fax: 202-522-2625 Email: pubrights@worldbank.org ii Funded by: Implemented by: In association with: iii BOTSWANA MINING INVESTMENT AND GOVERNANCE REVIEW Abbreviations & Acronyms AG Auditor General ASM Artisanal and Small-scale Mining BCL Bamangwato Concessions Ltd CSR Corporate Social Responsibility CDA Community Development Agreement DBsa De Beers Société Anonyme EITI Extractive Industries Transparency Initiative EIA Environmental Impact Assessment FDI Foreign Direct Investment GDP Gross Domestic Product GNI Gross National Income GRB Government of the Republic of Botswana ICSID International Center for Settlement of Investment Disputes IMF International Monetary Fund JV Joint Venture MInGov Mining Investment and Governance Review MMEWR Ministry of Minerals, Energy and Water Resources PEFA Public Expenditure and Financial Accountability PMO Programme Management Office SADC Southern Africa Development Community SOE State Owned Enterprise SMME Small and Medium Micro Enterprises VPSHR Voluntary Principles on Security and Human Rights WB World Bank iv TABLE OF CONTENTS Table of Contents EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1 INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 2 MINING IN BOTSWANA – COUNTRY CONTEXT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 3 OVERVIEW of MInGov FINDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 3.1 Introduction and Performance Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 3.2 Overview of “Value Chain” and “Theme” Performance . . . . . . . . . . . . . . . . . . . 11 3.3 Mining Sector Importance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 3.4 Performance from a Value Chain Perspective . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 3.4.1 Contracts, Licenses and Exploration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 3.4.2 Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 3.4.3 Taxation and State Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 3.4.4 Revenue Distribution and Management . . . . . . . . . . . . . . . . . . . . . . . . . 19 3.4.5 Local Impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 3.5 Performance of Cross-cutting Themes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 3.5.1 Economic Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 3.5.2 Political Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 3.5.3 Sustainable Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 3.6 Special Topic: Botswana’s Governance of the Diamond Industry . . . . . . . . . . 27 4 STAKEHOLDER PRIORITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 5 CONCLUSIONS AND ACTION POINTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 5.1 Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 5.2 Action points . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 5.2.1 Recommended Follow-up Points . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37 ANNEX 1 THE BOTSWANA MINGOV DATA COMPENDIUM . . . . . . . . . . . . . . . . . . . . . . . . . . 40 v BOTSWANA MINING INVESTMENT AND GOVERNANCE REVIEW FIGURES Figure 1 Mining in Botswana at a Glance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Figure 2 Botswana Country Dashboard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Figure 3 Performance by Value Chain Stage and Theme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Figure 4 Mining Sector Importance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Figure 5 Overlap between Stakeholder-selected Priorities . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Figure 6 Stakeholder-selected Priorities (All Stakeholders) . . . . . . . . . . . . . . . . . . . . . . . . . 34 TABLES Table 1 Performance of the Contract, Licenses, and Exploration Stage . . . . . . . . . . . . . . . 13 Table 2 Performance of the Operations Stage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Table 3 Performance of the Taxation and State Participation Stage . . . . . . . . . . . . . . . . . . 18 Table 4 Performance of the Revenue Distribution and Management Stage . . . . . . . . . . . 20 Table 5 Performance of the Local Impact Stage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Table 6 Economic Environment Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Table 7 Political Environment Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Table 8 Sustainable Development Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 ANNEX 1 FIGURES AND TABLES Table 1 Themes, Value Chain Stage, Topics, Indicators and Information Source . . . . . . . 41 Table 2 Theme Scores . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Table 3 Value Chain Stages Scores . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Table 4 Topic Score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Table 5 Indicator Scores . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Table 6 Question Scores . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 Figure 1 Topic Scores (Max-Min Chart) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Figure 2 Indicator Scores (Max-min Chart) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 Figure 3 Stakeholder prioritisation, Government . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 Figure 4 Stakeholder prioritisation, CSO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 Figure 5 Stakeholder prioritisation, Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 vi ACKNOWLEDGEMENTS AND REPORT EFFECTIVENESS Acknowledgements and Report Effectiveness This Botswana Report is a product of The Mining Investment and Governance Review for Botswana, which was under- taken between October 15-30, 2015 and then in May 2016 by a team led by Lois Hooge and consisting of Christianna Pangalos, Michael Baxter, Anne Claire Howard, Julia Baxter, Yann Lebrat, David Mihalyi and Antoniya Mihaylova. A wide range of stakeholders was interviewed during the review and the team wishes to thank all participants for their time and valuable comments. This report presents data on mining investment and governance indicators for Botswana that are current as of October 30, 2015. Scores for any of the indicators in the review may have changed since that time. vii BOTSWANA MINING INVESTMENT AND GOVERNANCE REVIEW EXECUTIVE SUMMARY The Botswana Mining Investment and Governance mining sector does not provide substantial employment Review (MInGov) collects and shares information on in a country where the unemployment rate averages mining sector governance, its attractiveness to investors, 20%. Better linkages between the mining sector and the and how it contributes to national development. The economy as well as stronger capacity of the SMME sector, review, based on data from primary and secondary are needed. These are among government priorities to sources and in-Botswana interviews, assesses sector increase the impact of mining on local development and performance from the perspective of three stakeholder employment, particularly in rural areas. groups – government, investors in the mining value chain and civil society – and identifies gaps between declared The review’s key findings are: and actual government policy and practice. Findings are categorized by topics, and topics are grouped under • Performance across the minerals value chain is stages of the mining “value chain” and “themes” relevant better in the latter stages related to investment, to mining investment and governance. accumulation, and expenditure of mineral revenue. The assessment of the contracting and operational Mining is extremely important in Botswana, in particular stages of mining exposed a few weaknesses, mostly the diamond resource that mostly has accounted for around transparency, clarity of rules, and accounta- the country’s steady, significant growth rate from its bility of decisions. discovery half a century ago to present day. This mineral has transformed a deeply poor country with few indus- • The mining policy and legal framework are largely trial prospects to an upper middle-income jurisdiction in sound. Some “bottleneck” gaps in the regulatory under 50 years. regime have been identified including the need for greater detail and clarity around licensing; Diamond mining and trading have been Botswana’s most notably published timeframes for processing, an important wealth generating activities, but the country updated mineral law and the drafting of regulations has also received revenue from the mining of base metals, to accompany a new law. The lack of disclosure gold, soda ash and coal. As diamond production has of diamond and integrated project contracts has slowed in the last several years due to the downward affected the scoring of transparency and accounta- commodity cycle, and recognizing that it will become bility in license allocation. increasingly costly to mine a declining diamond resource, government has intensified its efforts to diversify the • The environmental protection legislation is quite economy. Distribution of revenue (which largely comes current and mostly based on ‘good practice’ except from the mineral sector) has been challenging and there in areas where greater efforts need to be made to is a high disparity between the wealthy, mostly urban ensure that Environmental Impact Assessments population and the poor, mostly rural people. The (EIAs) are accessible and interactive throughout the 1  EXECUTIVE SUMMARY mining lifecycle; the public participation process ting would be beneficial; and government wants to is strengthened, requirements around biodiversity have sufficient resourcing to be able to manage the protection and mine closure are more defined; and sector effectively. some form of company-community development agreement is required. Possible areas for action are identified in the review. A survey of priorities for stakeholder groups identifies six • Land use issues, including resettlement and “low hanging fruit” to improve governance. These are: compensation, require a more inclusive process and stronger legislated framework, although the • Update the Mines and Minerals Act, 1999 to reflect Land Board and Tribunal at least provide a local current good practices in mineral regulation. There governance structure for the management of are presently no regulations accompanying this land. Competing land use (with mineral develop- Act and these should be drafted to accompany a ment) continues to be emotive, especially when new Act. As a precursor to a revision of the Act, a values such as indigenous rights around traditional mineral policy should be developed that includes a occupation of land and eco-tourism conflict with wide range of stakeholder input at the national and the development of minerals. local levels. • A local content policy for the mining industry • Increase the Department of Mines’ HR capacity in should be developed with mining sector participa- licensing; in geo-data collection and management; tion (to ensure that both the needs of government and introduce an interactive mining cadastre. and of industry are met in this regard). This should build on the Citizen Economic Empowerment Policy • Publish mining contracts (large scale diamond and but tailored to the procurement requirements of the integrated projects) and subject them to audit by mining industry; this would assist the development the Auditor General. of upstream and potentially downstream linkages and strengthen the SMME sector, resulting in greater • Strengthen the EIA Act 2011 to ensure a stronger employment impact from mining. element of public participation, accessibility of EIAs, and a required iterative process throughout the • Institutions are for the most part staffed with life cycle of the mine. A separate but related policy trained, qualified people although sometimes there should be developed around resettlement and are not sufficient numbers of staff with the required compensation that reflects good practice (relevant experience. It is recognized that there is a small WB Guidelines, for example). This latter policy population in Botswana, and hence, a correspond- component could be part of a national CSR policy ingly small pool of qualified candidates; however, for the EI sector, as noted below. greater attention to education weaknesses would assist in increasing numbers of students in the • Consider developing a national CSR Policy for the mining sciences. Extractives Sector in Botswana or include a CSR component in the national mineral policy. Many • The top shared priority by all three stakeholder countries have created a policy framework to guide groups is Sector Management and Intragovern- private sector contributions to local economic mental Coordination. From civil society’s point development. As part of this policy framework, of view, this reflects the need for government to increasingly countries are including guidelines for coordinate its development objectives with equal the negotiation of a community-company develop- participation from all Ministries, instead of the ment plan. There are a number of different models, current situation where minerals development including the World Bank Community Develop- dominates decisions around land use (where a more ment Agreement (CDA), the South African Social inclusive approach would consider other values and Labour Plan and the Canadian Impacts and such as eco-tourism, for example). From the indus- Benefits Agreements; emphasis needs to be on try’s perspective, better synergy between timing of interventions that are negotiated with appropriate applications for mining and environmental permit- 2 BOTSWANA MINING INVESTMENT AND GOVERNANCE REVIEW stakeholders, aimed to address issues that emerge • Develop a national land use policy and strategy that during different stages of the mining lifecycle, are has the input of a range of stakeholders, including sustainable, and coordinated with local government civil society, community, industry, academic, development planning. government and traditional authorities. It should include a process for public input into government • Develop a local content strategy specifically decisions on land use, and determine if mining is targeted toward the mining sector. This would always the preferable option. include development of local suppliers and should have participation by the industry and ensure that • Consider developing a protected areas strategy that industry needs are met as well as government would remove certain ecologically sensitive land localization objectives. from mineral exploration or development. Four more somewhat challenging options – which remain • Increase intra-governmental communication so that fundamental to the good governance of the mining sector the timing of various types of mine permitting is and its contribution to national development – are: coordinated; and to ensure that there is a “whole of government” approach to land use, consideration of • Create an Access to Information Act to ensure mining compared to other socio-economic activities public access to all relevant government such as eco-tourism, and other opportunities for information; economic diversification. • Consider an initiative to improve transparency in • Consider the Africa Mining Vision’s recommendation the sector and create a forum to allow for on-going that a portion of mineral revenue be returned to dialogue between government, civil society and local government (through to communities) where industry stakeholders; mining has negatively impacted on the people and natural resources of a particular area. 3 1 INTRODUCTION 1 INTRODUCTION The Botswana Mining Investment and Governance Review The remaining four themes are either cross-cutting (D to (MInGov) collects and shares information on mining F) or assess the importance of mining (M) in Botswana. sector governance, its attractiveness to investors and how These themes are: its activities affect national development. It reviews sector performance from the perspective of three main stake- D Economic Environment. This cross-cutting theme holder groups – government, investors in the mining reviews broader economic factors, including cost value chain and civil society – and identifies gaps between competiveness, economic stability, the general declared and actual government policy and practice. investment climate, and skills and human capital. MInGov identifies the status and challenges facing E Political Environment. This cross-cutting theme mining governance and investment across seven measures political risks relevant to the mining sector themes and the extractive industry value chain. Three and which include stability of mining and fiscal of these themes are assessed across five stages of the policy, political stability and security, and expropria- value chain—Contracts, Licenses and Exploration; tion risk. Operations; Taxation and State Participation; Revenue Distribution and Management; and Local Impact. F Sustainable Development. This cross-cutting theme covers development planning, local supplier devel- The three value chain themes are: opment, economic diversification and leveraging private sector investments in infrastructure. A Policy, Legislation and Regulation. This theme measures de jure governance, or in other words the M Mining Sector Importance. This theme measures scope and quality of mining sector rules compared the importance of the mining sector in Botswana to good practice. in terms of geological potential, the level of foreign direct investment, and its contribution to national B Accountability and Inclusiveness. This theme revenue and employment. measures accountability, transparency practices and the extent to which the public and other relevant MInGov’s methodology focuses on the status of govern- stakeholders are involved in governance processes. ance and investment conditions in the mining sector from the perspective of stakeholders, and as reported C Institutional Capacity and Effectiveness. This theme in primary and secondary sources. However, while measures the quality of government organizations analysis is based on data from 314 questions, some areas and their ability to effectively govern, including the important to the mining sector and government and extent to which the de jure intent of the rules is civil society in relation to mining are not covered. These applied in practice (de facto governance). less-well-covered areas include the quality of its infra- 4 BOTSWANA MINING INVESTMENT AND GOVERNANCE REVIEW structure services, the security of property from theft, the of countries that are similar in terms of mining sector underlying strength of institutions, and ways to enhance importance, governance and investment attractiveness; mining’s contribution to local and national development. and (iii) the identification of stakeholder priorities. This The Botswana MInGov report has one annex: The information should help stakeholders develop options to Botswana MInGov Data Compendium. It contains scores strengthen sector governance, investment and impact. for each of the 314 individual questions, and their aggre- However, it should be kept in mind that MInGov is neither gation to theme and value chain stage level. In time, the a ranking nor an index: it does not present rankings of MInGov website will provide access to MInGov Botswana countries on the strength of their mining sector gover- reports and their underlying data, as well as other infor- nance or attractiveness for investment in the sector. mation on MInGov. This report presents data on mining investment and Botswana review data is made available in this report governance indicators for Botswana that are current as of (and in future on the website) to facilitate: (i) the user’s October 30, 2015. ability to drill down into the data; (ii) the identification 5 2 MINING IN BOTSWANA – COUNTRY CONTEXT 2 MINING IN BOTSWANA – COUNTRY CONTEXT Botswana has been an extraordinary developmental half of the world’s global production of rough diamonds success story on the African continent and the country’s (CNBC 2012). wise management of mineral resources, and especially, diamonds has been responsible for this achievement. In Key features of the mining sector in Botswana are summa- 2012, Botswana and Russia together produced almost rized in Figure 1. Figure 1: Mining in Botswana at a Glance Main minerals mined Mining exports Pula (USD1.254 billion) during • Diamond - main mineral, • 89.9% of total export value the 2015/2016 fiscal year. accounting for 53% (473 is from the mining sector 27% of the total revenue for licenses operated by 29 (March 2016) with 85.4 percent 2015/2016. (2016) companies) of all prospecting (5, 456.9 million Pula) from licenses issued in Botswana diamonds and 4.5 percent Employment in the mining sector (2008) (290.4 million Pula) from • Mining employment that is copper-nickel (March 2016). in formal sector: 12,7731 • Copper-Nickel - second most important mineral product Mining contribution to national • Share of total formal with total copper, nickel and revenue employment: 3.2% (2015)2 cobalt matte production • Government revenue from reaching 61,686 tons in 2008. Mineral Tax was 4,458.02 Foreign direct investment BCL Limited and Tati Nickel million Pula (USD404 million) • Mining accounts for 44.6 % Company produce the majority during the 2015/2016 fiscal of FDI (2014) of total metal matte produc- year. This was 9% of the total tion, with 52,423 tons in 2008. revenue for 2015/2016. (2016) Local procurement • Up to 50% of imported goods • Mining share of GDP 24.5% • Government revenue from and services (14 billion Pula/ (2013) Mineral Royalties and USD1.27 billion) were for the Dividends was 13,840.81 million mining industry 2010. 1 Figures are not available for informal, unlicensed artisanal or small scale miners. 2 Figures are not available for informal, unlicensed artisanal or small scale miners. 6 BOTSWANA MINING INVESTMENT AND GOVERNANCE REVIEW The modern era of mining in Botswana began one year gaining an increasingly large share of the global diamond after independence in 1965 when De Beers discovered value chain. The GRB has established strong government the first kimberlite pipe after decades of fruitless explo- institutions and has followed a careful macro-economic ration activity. In 1971 the first diamonds were produced policy; it has sought to entrench democratic principles at Orapa, followed by copper-nickel production at the and has promoted adherence to the rule of law. Bamangwato Concessions Ltd (BCL) at Selibe-Phikwe several years later. Currently diamonds provide 89.9% of Today, Botswana enjoys an upper middle-income status export sales (Statistics Botswana, 2016). Mineral royalties and although there have been issues around health, high and dividends account for 27% of government revenue unemployment rates and international criticism around and 24.5% of GDP. Debswana, the 50-50% joint venture exploration and mining of diamonds in the ecologically between De Beers Consolidated Mines and the Govern- sensitive Central Kalahari Game Reserve, the country’s ment of the Republic of Botswana (GRB) diamond economic progress has been remarkable. However, the company, is the largest contributor to the national country is also on a precipice regarding its reliance on treasury. Botswana’s gross domestic product (GDP) has diamonds for its future prosperity. been growing at about 7% since diamonds were produced and has been one of the fastest growing economies in the In the last several years, diamond production has declined world. Without the diamond trade, Botswana would lose due to lower global demand and falling commodity approximately $500 million in export revenue per year. prices. The impact of this on the Botswana economy has been somewhat tempered by increased coal and gold The mining industry as a whole has provided the greatest production and sales. However, the declining revenue contribution of all industrial sectors to GDP since the from diamond production has strengthened the GRB’s early 1980s, ranging from 30-50%. Although the industry resolve to diversify the economy and to shift its reliance contributes significantly to the country’s financial away from diamonds. The cost of extracting diamonds is reserves, it provides 3.2% percent of formal employment expected to rise in about 15 years, due to conversion of (Statistics Botswana, 2015). some open cast mines to underground and the closure of several smaller diamond mines. Along with providing The GRB’s success in deriving significant benefit from diamond cutting, polishing and marketing facilities,4 its diamond resource, in particular, has been the envy of the country is currently focusing on the development of many resource rich developing countries. Not all devel- large coal reserves and base metals to offset its reliance oping countries are successful in developing their nations on diamonds. It should be noted that mining’s contribu- due to the presence of mineral resources, as commen- tion to the GDP was 46.1% in 2006 (AfDB, 2012) and has tators on the “resource curse” have often noted.3 The declined to just under 25% in 2013. This would indicate government has been able to retain a significant portion that the development of other sectors in the economy is of mineral wealth through a policy of profit-sharing and reducing the country’s reliance on mining. equity stakes in the Debswana mining operation (as well as the global De Beers diamond operations) as well as The GRB’s commercially driven stance on mineral in other profitable mines. De Beers has been a collegial development has resulted in an investor-friendly invest- partner, recognizing the long-term benefit of maintaining ment climate, but its concern about unemployment has a good relationship with the GRB. increased the focus on local hiring practices. Companies have identified serious issues about their ability to hire Botswana has managed to use its mineral resources specialized skills outside Botswana. The country will wisely, keeping long-term goals in mind, including need to be careful to maintain its reputation as an investor 3 There is some dispute as to whether Botswana has in fact managed to avoid the resource curse, given the economy’s high dependence on one commodity – diamond production and trading. A full discussion of this issue goes beyond the purview of this assessment although it is discussed briefly under a later section describing how diamonds have been used for development. 4 To diversify the industry’s products and export markets as well as encouraging downstream cutting and polishing activities, Botswana launched its own diamond trading company, Diamond Trading Company Botswana (DTCB), in September 2013. The creation of the DTCB, a joint venture between De Beers and the Botswana Government is bringing to an end the practice of sending rough diamonds to De Beers’ London-based main Diamond Trading Company for sorting and marketing. 7 2 MINING IN BOTSWANA – COUNTRY CONTEXT friendly investment regime if it is to encourage foreign by inefficient management of health facilities, as well as investment in mining. high fertility rates and a high percentage of youth popula- tion infected by HIV (Africa Economic Outlook, 2015). The mining industry in Botswana is governed through the Mines and Mineral Act of 1999. The Act is currently Companies operating in Botswana are not legally required under review. Other relevant legislation includes the to contribute to local economic development, including Mines, Quarries, Works and Machineries Act, 1973, that requirements for local procurement or hiring.5 However, deals with the health and safety of employees involved a Citizen’s Economic Empowerment Policy (CEEP) has in prospecting, mining and quarrying operations, and been drafted (2012) that includes a range of measures to the Environmental Assessment Act, 2011 that requires increase the participation of Batswana in the economy, environmental impact assessments of prospecting and including local content requirements. This draft policy mining activities.  Prospecting and mining activities brings together existing disparate policies that encourage that result in discoveries of precious and semi-precious the development of local businesses at the SMME level stones are subject to the provisions of the Precious and as well as increasing participation of Batswana in large- Semi-Precious Stones (Protection) Act, 1969. All of these scale industrial sectors, including mining. For example, Acts have had some chapters or sections of amendment the Localisation Policy gives preference to employment over the past several decades. of Batswana over non-citizens given similar educational and training qualifications. Agencies such as the Local Despite its ability to achieve sound resource-led growth Enterprise Authority and Citizen Entrepreneurial Devel- and development over the decades since Independence, opment Agency provide funding and other types of Botswana has not been without significant socio-eco- support to SMME development.6 Apart from the Local- nomic challenges. Income disparity is one of the worst isation Policy component of the draft CEEP, the GRB in the world (GINI index of 60.5 in 2009) and while great has not implemented fully this draft CEE policy in the strides have been made to eradicate poverty, particu- mining sector, driven by concerns about increasing costs larly in the last decade, inequality and exclusion are still for the industry at a time when commodity prices are in a serious issues in Botswana. The rurally based population downward cycle. The draft policy emphasizes the need for in remote areas lacks access to employment opportuni- local Batswana individuals and companies to develop the ties and to productive land. The unemployment rate has necessary skills and expertise to be able to take advantage worsened in the last several years and is reported to be of opportunities presented by sectors such as mining. around 20% with youth particularly badly affected. However, it stops short of requiring a percentage of local company equity in exploration or mining projects, or a Botswana has had challenges controlling a number of required percentage of local procurement spending. serious diseases, chief among these, HIV/AIDS. Although the country still has a high HIV prevalence rate, the rate Botswana supports a policy of equitable development of new infections among the adult population is on the where mineral revenue is deposited at the National decline. More than 95% of the total population has access Treasury where it is dispersed according to national to a health centre; however, there is a high rate of infant developmental priorities (named in the five-year National (35 per 1,000 births in 2015) and maternal deaths caused Development Plans). 5 Such as would be provided through a negotiated community-company development agreement or compliance with national guidelines around private sector participation in local economic development initiatives. 6 http://www.miti.gov.bw/content/citizen-economic-empowerment-policy 8 BOTSWANA MINING INVESTMENT AND GOVERNANCE REVIEW 3 OVERVIEW OF MInGov FINDINGS This section presents an overview of the results of the respect to governance, attractiveness for investment and Botswana MInGov. broader impact of the sector on national development.7 The dashboard presents the results of the question- 3.1 Introduction and Performance naire-based review against 36 topics each one of which Summary is represented by a cell in the matrix or, in the case of Mining Sector Importance, a bar. Results of performance Findings of the Botswana MInGov are summarized in the per topic (cell) are color coded according to a scoring key “dashboard” of Figure 2. The dashboard gives an overview of Very Low to Very High (see Scoring Key, Figure 2). of performance of the mining sector in Botswana with 7 Results of the analysis of data derived from the questionnaire are summarized in Annex 1. This annex includes the score given the answer to each question, and the score for value chain stages, themes, topics and indicators; the relationship between these different categories is shown in Annex 1, Table 1. 9 3 OVERVIEW OF MInGov FINDINGS Fig 2: Botswana Country Dashboard Extractive Industries Value Chain Theme Revenue Contracts, Licences Taxation and State Operations Distribution and Local Impact and Exploration Participation Management Rules for License Public Financial Policy, Clarity and Tax policy, Instruments Policies to Mitigate Allocation and Management Legislation and Harmonization of and State Owned Environmental and Geological Data Regulation, Including Regulation Sector Rules Enterprise Rules Social Impact Collection Revenue Sharing Openness, Accountability of Mining Taxation and Human Rights, Accountability Processes, Compensation, Budget Transparency Transparency and State Owned Employment Equity and Resettlement and Artisanal and Accountability, and Independence of and Smallscale Mining Enterprise Financial and Environmental Inclusiveness Public Integrity Licensing Process Voice Management Transparency Budget Community Mining Tax Institutional Cadastre, Geodata, Sector Management Implementation and Consultation and Administration and Capacity and License and Tenure and Intragovernmental Macrofiscal Environmental and State Owned Effectiveness Management Coordination Management Social Impact Enterprise Governance Effectiveness Management Cross Cutting Themes Diversity and Business and Macro- National Skills and Economic Mining Stability of Investment economic Growth and Human Capital Human Health Environment Infrastructure National Environment Stability Savings Availability Revenues Political Predictable Mining and Tax Expropriation Risk Political Stability Control of Corruption Environment Policy Sustainable Investment Promotion Development Planning Local Supplier Development Leveraging Infrastructure Development (Diversification) Mining Sector Importance 1.0 - 1.75 >1.75 - 2.50 >2.50 - 3.25 >3.25 - 4.0 Prospectivityand Potential Geological  Foreign DirectInvestmentin Mining  articipationin Mining State P Significanceof MiningRevenue of Mining  Budget Share  Revenues Employmentand EconomicShare of Mining Grey bars indicate the range of scores of indicators that support each value chain stage or theme. The represents the average of the indicators. Very low Low High Very High Not applicable or information not available Scoring Key 1.0 - 1.75 >1.75 - 2.50 >2.50 - 3.25 >3.25 - 4.0 N/A 10 BOTSWANA MINING INVESTMENT AND GOVERNANCE REVIEW Fig 3: Performance by Value Chain Stage and Theme A range of performance exists across the value chain stage and across themes. Value Chain Stage 1.0 - 1.75 >1.75 - 2.50 >2.50 - 3.25 >3.25 - 4.0 Contracts, Licences and Exploration Operations Taxation and State Participation Revenue Distribution and Management Local Impact Theme 1.0 - 1.75 >1.75 - 2.50 >2.50 - 3.25 >3.25 - 4.0 Policy, Legislation and Regulation Accountability and Inclusiveness Institutional Capacity and Effectiveness Economic Environment Political Environment Sustainable Development Notes: 1. Grey bars indicate the range of scores of indicators that support each value chain stage or theme. The represents the average of the indicators. 2. The scale for performance is: n Very low (1.0-1.75); n Low (>1.75-2.50); n High (>2.50-3.25); n Very High (>3.25-4.0). A higher score corresponds to better governance and capacity. 3. A list of indicators comprising the value chain stage and themes can be found in Table 1, Annex 1 3.2 Overview of “Value Chain” and • All themes score well, with Political Environment “Theme” Performance scored “very high”, while themes relating to legisla- tion and accountability both score borderline “high” This section provides an overview of performance scores. The Economic Environment theme scored across the five value chain stages and the six cross-cut- slightly less high than the Political Environment due ting themes.8 Subsequent sections present detailed to the economic impact of HIV/Aids on the produc- results for each value chain stage and theme. The perfor- tive population demographic. mance of each value chain stage and theme are discussed in subsequent sections. However, general comments • There are no value chain stages, nor themes that on value chain stage and theme performance are: score very poorly, i.e. “very low”. The ones reflecting relatively lower scores are stages one and two of the • The Revenue Distribution and Management, Taxation value chain – Contracts, Licenses and Exploration; and State Participation and Operation stages score and Operations. higher than the Contracts, licenses and Exploration and Local Impact stages of the mineral value chain. The latter two both score in the “low” range. 8 Scores of questions, indicators, topics, value chain stages and themes are in Annex 1, the Data Compendium. 11 3 OVERVIEW OF MInGov FINDINGS Fig 4: Mining Sector Importance Mining Sector Importance 1.0 - 1.75 >1.75 - 2.50 >2.50 - 3.25 >3.25 - 4.0 Prospectivityand Potential Geological  Foreign DirectInvestmentin Mining  articipationin Mining State P Significanceof MiningRevenue of Mining R Budget Share   evenues Employmentand EconomicShare of Mining 3.3 Mining Sector Importance 3.2 Performance from a Value Chain Perspective Mining Sector Importance (Figure 4, also represented in This section presents findings against the five stages the dashboard, Figure 2), the seventh theme, is composed of the extractive industry value chain, it goes beyond of six indicators: Geological Prospectivity and Potential, presenting information at the topic level and shows the Foreign Direct Investment in Mining, State Participation in performance of the underlying indicators. Scores reflect Mining, Significance of Mining Revenue, Budget Share of mining governance performance and the attractive- Mining Revenues and Employment and Economic Share of ness of the sector to investment. The five value chain Mining. Scores for these indicators, which are based on stages are assessed against three themes: Policy, Legisla- primary and secondary data, indicate the importance of tion and Regulation; Accountability and Inclusiveness; the mining sector in a given economy, from its geological and Institutional Capacity and Effectiveness. The other potential to its impact on the economy and measure the three cross-cutting themes are discussed in Section, 3.5. potential for mining led growth.9 Diamond production in Botswana has been the backbone 3.4.1 Contracts, Licenses and Exploration of its economy for many decades. However, there have been dips in its contribution to the country’s GDP in the The Contracts, Licenses and Exploration stage obtained last couple of years (currently is at about 25% of GDP) due the second lowest score of all five stages. There were to a global commodity price slowdown in demand and highly performing aspects of this phase of mining devel- prices and to diversification efforts of the GRB to develop opment, as well as areas where improvement is needed. other sectors of the economy. It is anticipated, however, that demand for diamonds will strengthen and Botswana The Mines and Minerals Act, 1999 sets out a clear regula- will continue to develop other mineral resources, notably tory framework for the licensing of mineral development base metals and coal. Additionally, employment in the in Botswana. The Act provides a level of detail for the mining sector is only 3.2% of total formal employment awarding and managing of concessions that somewhat in Botswana. As diamond production is expected to slow compensates for the lack of accompanying regulations by 2030, due to costs associated with extraction, it will be that would be the norm in many mining jurisdictions. crucial for the GRB to intensify its efforts to diversify in While the Act specifies the requirements in the licensing these years leading up to the time when it can no longer process for all minerals, a specific paragraph (51) notes rely on diamonds for its prosperity. that diamond mining licensing requires a negotiated process between the applicant and the government. The 9 Intervals for scoring performance are as in the dashboard, that is: Very low (1.0-1.75); Low (>1.75-2.50); High (>2.50-3.25); and Very High (>3.25-4.0). A higher score corresponds to better governance and capacity. 12 BOTSWANA MINING INVESTMENT AND GOVERNANCE REVIEW Table 1: Performance of the Contract, Licenses, and Exploration Stage Value Chain Stage 1. Contracts, Licenses and Exploration (2.38) Theme Topic Underlying Indicators Clarity of Rules for License Allocation, Conversion and Transfer (3.25) Policy, Legislation Rules for License allocation Geological Data Collection (4) and Regulation and Geological Data (2.55) Collection (2.44) Modern Mining Cadastre (1) License Approval and Review Timeframes (1.5) Accountability Openness, Transparency Openness and Transparency of Licensing Process (2.5) and Inclusiveness and Independence of (2.45) Licensing Process (1.75) Independence of Licensing Authority (1) Collecting Geological Information (3.04) State of Mapping and Geological Exploration (3.23) Institutional Capacity Cadastre, Geodata, License Mining Cadastre Effectiveness (1.75) and Effectiveness and Tenure Management (2.92) (2.96) Allocating Licenses Effectively (3.84) Transferability of Licenses (4) Managing Licenses Effectively (1.9) Note: The score for each theme is the average of scores of the five value chain stages in that theme (see Figure 2). The score for the value chain stage is the average of the three topics within that stage (which are shown in this figure). The score against the topic is the average of the scores of the underlying indicator scores; the indicator scores are the average of the scores of their underlying questions. The color coding is the same as in the matrix (Figure 2). Intervals for scoring performance are as follows: n Very low (1.0-1.75); n Low (>1.75-2.50); n High (>2.50-3.25); and n Very high (>3.25-4.0), where a higher score corresponds to better governance and capacity. difference in the way that diamonds are managed by the takes the place of an interactive, formal, mining cadastre. GRB accounts for a number of stakeholder concerns. This While the licensing authority resides in the Department issue is discussed further as a “special topic” in this report. of Mines and is not independent from the MMEWR, industry stakeholders interviewed indicated that Botswana Details of all licenses can be found on the Ministry of has a fair and equitable licensing process (no discrim- Minerals, Energy and Water Resources (MMEWR) Depart- ination of foreign owned companies, for example, in ment of Mines’ website (www.mines.gov.bw). Various licensing allocation). concession maps are displayed that include the name of the company, coordinates of the area under license, the type of As referenced above, the Mines and Minerals Act, 1999 license, the type of commodity, and the status of the license provides a clear “de jure” process regarding application (i.e. original, renewal, etc.). The only contracts that exist requirements for prospecting,11 retention, and mining are those negotiated for diamond mining as noted above.10 licenses for larger-scale mining; and a minerals permit The concession map is updated every three months and for small scale mining. The Act ensures security of tenure, 10 For large vertically integrated projects, a development order is negotiated, as required also for diamond mining. 11 In this document, when the generic term “exploration” is used, it refers to prospecting” in the Botswana context. 13 3 OVERVIEW OF MInGov FINDINGS competitive tax rates, right to arbitration and other features lack of legal timeframes included in the legislation means of a modern mining regime. It allows for the transferability that companies have no legal recourse mechanisms to hold of licenses and provides clear instructions for the provision the Ministry to account. The Geological Survey in the of geological data. It specifies that companies must report past managed exploration licenses but this function has on the results of their prospecting work plans every three been transferred to the Department of Mines. It appears months, at the time of prospecting renewals and when the that adequate resourcing for this new responsibility has project has been completed. not been sufficient to perform this function in a timely manner. The “de jure” topic of Rules for License Allocation Reflecting the aspects noted above regarding Botswana’s and Geological Data Collection therefore scored “low” due clear, “de jure” legal framework for mining, the indicator to the lack of a fully functioning mining cadastre and to the measuring Clarity of license allocation, conversion and absence of license approval and review timeframes in the transfer and data collection rules scored highly, (despite the legal framework. This factor also contributed to a low score lack of regulations accompanying the Mines and Minerals under Managing Licenses Effectively. Mining companies Act, 1999, which would be an improvement and raise the cited this issue as one of their highest priorities. score of this indicator). Most modern mining legislation includes timeframes for Botswana has a strong geological survey that has mapped processing of applications for prospecting, mining and most of the country and that maintains a library of geolog- other types of licenses. Examples of these from the Southern ical data. Some companies acknowledged the information African region include the South African14 Minerals and available but noted that better geological data would facil- Petroleum Resources Development Act (2002) and the itate prospecting and exploration efforts. The Survey is Zambian Mineral Development Act (2008).15 An example in the process of converting to a parastatal12 that will be from the Canadian province of Ontario includes license conducted along business lines with its own salary scale application approval timeframes in the Regulations and with an enhanced cost recovery objective.13 This should accompanying the Mining Act (2012).16 The insertion improve the attraction of skilled geologists to the Survey of timeframes into either a mining Act or Regulations is and help to maintain critical staff; this has been a problem important for a number of reasons. Primarily it ensures as mining companies provide more competitive compen- that companies that are seeking decisions on exploration, sation. Cadastre, Geodata, License and Tenure Management mining or other types of licenses can provide a degree is thus the highest scoring topic, containing two underlying of certainty regarding the decision-making horizon to indicators performing at maximum strength. the investor or financier. When companies are seeking financing for a project, this type of assurance can increase One of the areas cited most often by mining companies investor confidence and also provide companies with a as requiring attention was the lack of legal timeframes legal framework in which to lodge appeals, should these for the processing of various types of licenses. “De facto”, timeframes not be honoured. the MMEWR applies administrative service guidelines (that include aspirational timeframes) to the processing of For civil society, including the union responsible for these exploration and mining applications. However, the mineworkers, transparency and holding government to 12 During the World Bank Botswana Mingov validation meeting of August 11, 2016, it was confirmed that the Geological Survey had become a parastatal in December 2015. It is now called the Botswana Geoscience Institute. 13 At the validation review with government held on 11th August 2016, it was confirmed this reform was completed. 14 Granting and Duration of a Prospecting Right: 17.(3) If the Minister refuses to grant a prospecting right, the Minister must, within 30 days of the decision, in writing notify the applicant of the decision with reasons.Granting and Duration of a Mining Right: 23. (4) If the Minister refuses to grant a mining right, the Minister must, within 30 days of the decision, in writing notify the applicant of the decision and the reasons. (South Africa MPRDA, 2002) 15 16 (1): The Director of the Geological Survey, within 60 days of receipt of an application…must grant a prospecting license to the applicant where the appli- cant meets the requirements of this Act (Zambia Mineral Development Act, 2008). 16 15 (1) Within 50 days of the circulation date…the Director shall make a decision as to whether to issue an exploration permit…and if so what terms and conditions apply to the permit. (Ontario Mining Act Regulations, 2012). 14 BOTSWANA MINING INVESTMENT AND GOVERNANCE REVIEW account for decisions on mineral resource development in in the institutional capacity to regulate this phase of the the country was one of the highest stakeholder priorities minerals value chain. These are discussed below. (see Section 4). Representatives from civil society groups cited the lack of transparency around closed government Mining activity at the operations stage is managed by negotiations for large scale diamond and integrated project different divisions within the Department of Mines. These contracts as a governance weakness. This concern was divisions allocate licenses, inspect operations and generally expressed also by government representatives, notably the monitor compliance with the regulatory framework for Auditor General’s office that is not allowed to audit these mining operations. Well trained staff are comparatively well contracts as part of their mandated auditing function. paid (within the SADC country context) and are supported Publishing contracts and making them subject to an AG by good physical and telecommunications infrastructure. audit (with an accompanying publicly available report) would improve the country’s scoring on this theme and It is clear that the GRB wants to encourage investment into align them with international best practices. the mining sector and strives to be an efficient responder to industry concerns; companies indicated that when they have To address issues regarding transparency and completed their exploration work and move into the opera- accountability in the licensing allocation process, tional (or productive) stage of mining, they are regulated by some developing country jurisdictions have sought quite a competent and adequately resourced Department to separate the licensing function from the overar- of Mines. Mostly, it does not want to deter the industry in ching MMEWR. This separation can reduce potential reaching production targets as tax revenue will be held up for political interference in the licensing process and if operations are in any way delayed. Therefore, the Depart- reduces opportunities for irregular transactions. ment of Mines tends to take a non-punitive approach However, in jurisdictions with a very low incidence of generally to the management of mining operations, without perceived corruption, such as Botswana, this may not clearly contravening its own regulatory requirements. be necessary. Therefore, the monitoring of production, sales and trade aspects at this stage of mine development appears to include Not surprisingly, the lowest scoring topic under this ample opportunity for company compliance. stage of the value chain that reflects the concerns and priorities of a number of respondents throughout all The mining legislation is clear (as it was for the first stage stakeholder groups interviewed was Openness, Trans- of the value chain) at the operations phase. There are no parency and Independence of the Licensing Process. conflicting legislative requirements across government institutions regulating the sector and government appears It should be noted that while Botswana does provide to be well coordinated in managing different aspects of details on concessions, it has not completed the process the licensing process throughout the operational phase of of installing a permanent mining cadastre, although mining. Inter-ministerial committees are set up to coordi- it has been investigating various trial period options, nate licensing requirements for large-scale integrated including Flexi-Cadastre for some time. While the projects that require a number of ministries to approve mineral concession map is updated regularly, it does various aspects of licensing (including, energy, water, not provide for an interactive process between the transportation). Thus, the topic of Sector Management and concession holder and licensing officials or provide Intragovernmental Coordination that assesses these issues up-to-date information on the cadastre for potential received a “high” score. mineral investors. This is why this indicator (Mining Cadastre Effectiveness) scores in the “very low” to While there are some areas (as outlined above) where there “low” range. is strong institutional capacity, there are negative impacts from the lack of “de jure” time frames for license renewal approvals. This aspect was discussed in the previous stage 3.4.2 Operations of the minerals value chain also. This affects the industry’s ability to operate without breaks in continuity. Delays in The Operations stage is a high performing stage of the exploration license renewals, for example, appear to have mineral value chain in Botswana. However, there are some resulted in situations where some exploration companies gaps in the regulatory framework and areas of weakness operated for a period illegally when renewals were not 15 3 OVERVIEW OF MInGov FINDINGS processed before the old ones expired. The lowest ranking “De facto”, there were issues expressed by stakeholders indicator on the “dashboard”, Clarity of Legislation, Rules and regarding coordination of government ministries charged Timeframes reflects this concern. with some regulatory aspect of the mining sector. This was raised particularly in light of conflicting government prior- In some areas, however, there is insufficient human resource ities around values of the environment (eco-tourism and capacity (in terms of approval of prospecting license renewals, protected areas) with development of mineral resources. It for example) due to a relatively small pool of qualified candi- was noted that approvals for environmental permitting are dates. However, companies have indicated that there is good sometimes slow and cause delays in mining projects. This access to Ministry officials when industry complaints are explains the “low” scored indicator measuring Intra-govern- raised about various aspects of government-industry inter- mental Coordination. action during the production phase (either individually or through the Chamber of Mines). Land issues can be the most contentious aspect of mining, particularly when there are sensitive eco-systems While most stakeholders agreed that the current mining and limited productive land available. Botswana’s land law is competitive and clear, a set of regulations that put management system includes rurally based Land Boards in place more specific guidelines (including timeframes, and Tribunals that set out requirements for compensa- as has been noted) would assist in clarifying aspects tion and resettlement when land for mining development of the mineral law. De jure, the regulatory framework is required. Companies have stated that there are clear around mining development is quite clear and without expectations around their role regarding resettlement obvious contradictions. and compensation for people or communities displaced by mining activities. Table 2: Performance of the Operations Stage Value Chain Stage 2. Operations (2.69) Theme Topic Underlying Indicators Clarity of Legislation, Rules and Timeframes (1.5) Policy, Legislation Clarity and Harmonization Harmonization of Legislation and Government and Regulation of Sector Rules Coordination (3) (2.54) (2.33) Provisions for Artisanal and Smallscale Mining (2.5) Access to Land, Compensation and Resettlement (2.86) Accountability of Processes, Accountability Compensation, Resettle- Access and Accountability of Mining Legislation and Pro- and Inclusiveness ment and Artisanal and cesses (3.16) (2.58) Smallscale Mining Voice (3.01) Artisanal and Smallscale Mining Voice Representation (..) Timeframes for Approvals (2.5) Sector Management and Institutional Capacity Intragovernmental and Effectiveness Intragovernmental Coordination (2.3) Coordination (2.93) (2.74) Support to Artisanal and Smallscale Mining (3.43) Note: The score for each theme is the average of scores of the five value chain stages in that theme (see Figure 2). The score for the value chain stage is the average of the three topics within that stage (which are shown in this figure). The score against the topic is the average of the scores of the underlying indicator scores; the indicator scores are the average of the scores of their underlying questions. The color coding is the same as in the matrix (Figure 2). Intervals for scoring performance are as follows: n Very low (1.0-1.75); n Low (>1.75-2.50); n High (>2.50-3.25); and n Very high (>3.25-4.0), where a higher score corresponds to better governance and capacity. 16 BOTSWANA MINING INVESTMENT AND GOVERNANCE REVIEW Some companies noted, however, that they voluntarily that all small-scale mining is licensed. Hence, there does pay higher rates for land compensation that are stipu- not appear to be an illegal artisanal/small scale mining lated by the Land Board, mostly to achieve a “social sector as is found in many other mining jurisdictions in license” to mine, especially in ecologically sensitive areas the developing world. There was some dispute over this (around the Okavango Delta or in the Central Kalahari official government stance expressed by other stake- Game Reserve). Companies have also called for better holders. guidelines around resettlement and compensation for displaced people. However, companies have also noted For the purposes of this report, only governance issues that they are able to access land that has been allocated related to licensed small scale mining will be scored and through the formal licensing process, unlike many discussed. This explains why the indicator related to the developing countries when land access is blocked by Voice of Artisanal and Small Scale Mining Representa- traditional authorities or illegal miners. The access to land tion has not been included in the evaluation of this stage as well as clear guidelines (while somewhat less detailed of the mining value chain. This mineral governance that desired) explain the “high” scoring on the indicator aspect usually relates to countries that have large, illegal, related to Access to Land, Compensation and Resettlement. artisanal mining activity. In such cases, these miners can be vulnerable to exploitation by mining lease owners due In addition to compensation for land used for mining, to lack of education and conditions of poverty. In some there are also issues related to competing water uses. of these instances, governments have not put in place Mining is a water-intensive activity and thus the sufficient socio-economic protection policies regarding industry is a major user of the resource. With extremely the human rights of these miners. This is not the case in low precipitation in most parts of Botswana, access to Botswana; therefore, this indicator has been scored as groundwater provides water resources for all water users, non-applicable to this country’s assessment. including communities as well as industry. The regulatory framework in the country provides for compensation In terms of the regulatory framework for ASM, the when mining depths reach the level of aquifers (large Mines and Minerals Act, 1999 does include provision for stores of water under the saturated water table level below Minerals Permits (as distinguished from Mining Licenses the surface). Farmers are the primary beneficiaries of this for larger scale mining). This part of the Law specifically compensation. Impacts and mitigation strategies related aims to allow small scale miners access to smaller plots to mining’s impact on water resources are included in the of mineral rich land to mine industrial minerals through mining project EIA process. mechanized means. Therefore, there are regulatory provi- sions for small scale miners, but because artisanal mining While government has noted that the mining sector does not exist in Botswana, nothing appears in the legisla- is carefully monitored in its water use, there have been tion relevant to artisanal mining. Therefore the Provisions instances where communities have expressed concern. for Artisanal and Small Scale Mining Sector indicator There were community issues around access to water was ranked according to the constraints posed by the at the Debswana Orapa mine, for example, in the past. methodology that groups these two types of mining into Debswana has addressed the issue through construction one category. of sophisticated recycling facilities and use of storm water as alternatives to groundwater use. Some other companies operating in the Kalahari area have provided desalination 3.4.3 Taxation and State Participation plants for community access to water. Government has noted that the mining sector is largely compliant with The third stage of the value chain, Taxation and State water management regulations due to the high profile Participation, is the second highest scoring of the five nature of this resource. value chain stages. The GRB has created a tax admin- istration regime that has not discouraged investors, Another issue that has potential to result in conflict but has resulted in a very high percentage of mineral over land use relates to the presence and management revenue being returned to the State. There has been of artisanal and small scale mining. The Department effective state participation in mining projects, of Mines does not formally recognize the presence of resulting in a return of two-thirds of diamond revenue informal artisanal mining in Botswana and has stated through general income tax, royalties and dividends. 17 3 OVERVIEW OF MInGov FINDINGS Table 3: Performance of the Taxation and State Participation Stage Value Chain Stage 3. Taxation and State Participation (2.91) Theme Topic Underlying Indicators Tax Policy and Instruments (3) Policy, Legislation Tax policy, Instruments and Regulation and State Owned Rules for Auditing, Base Erosion and Profit Shifting (3) (2.54) Enterprise Rules (2.58) State Owned Enterprise Governance Rules (1.75) Accountability Mining Taxation and State Accountability of Mining Taxation (2.25) and Inclusiveness Owned Enterprise Financial (2.58) Management (2.78) State-Owned Enterprise Financial Management (3.3) Mining Tax Administration (3.08) Institutional Capacity Mining Tax Administration and Effectiveness and State Owned Enterprise (2.93) Governance (3.38) State-Owned Enterprise Governance (3.67) Note: The score for each theme is the average of scores of the five value chain stages in that theme (see Figure 2). The score for the value chain stage is the average of the three topics within that stage (which are shown in this figure). The score against the topic is the average of the scores of the underlying indicator scores; the indicator scores are the average of the scores of their underlying questions. The color coding is the same as in the matrix (Figure 2). Intervals for scoring performance are as follows: n Very low (1.0-1.75); n Low (>1.75-2.50); n High (>2.50-3.25); and n Very high (>3.25-4.0), where a higher score corresponds to better governance and capacity. The high scoring of the topic that describes mining tax State Owned Enterprises in the mining sector in Botswana.18 administration and SOE governance mostly confirms the Government does not consider the BCL mine to be an SOE effectiveness of Botswana’s tax administration. The GRB in the same category as other parastatals such as Bank of has clear laws put in place regarding tax collection and Botswana or Air Botswana, for example. Secondly, the payments required from resource companies and the government does participate in Debswana, a 50-50% joint mining fiscal regime includes progressive fiscal instruments. venture with De Beers Consolidated Mines, Ltd. However, for the purpose of MInGov, this is not considered an SOE, as Botswana has had a stable and competitive tax policy De Beers is the operator in the JV. Therefore, the state partic- in place for several decades that has been successful in ipation component of the scoring of the relevant indicators attracting a healthy number of exploration and mining in this stage must be considered in this light. companies to the country. The indicators, Tax Policy and Instruments and Rules for Auditing, Base Erosion As has been the pattern in these first two stages of mine and Profit Sharing have scored in the “high” range, development, the theme, Accountability and Inclu- reflecting the solid “de jure” tax regime. siveness has scored the lowest of the three themes. The indicator, Accountability of Mining Taxation score However, with regard to the component State Owned Enter- received a “low” score, indicating a lack of openness prise Governance, it should be noted that there are no true17 regarding the disclosure of mining tax payments and 17 In Botswana, SOEs are created by an Act in Parliament and are required to report their finances and operations to Parliament. SOEs, by this definition, do not exist in the mining sector in Botswana. However, for the purpose of MinGov, the definition of an SOE includes a company with a significant percentage of government ownership and falls under the Botswana Companies Act 2007 18 During the Botswana MInGov validation meeting of August 11, 2016, it was reported that the Minerals Development Company Botswana (MDCB) is currently taking transfer of BCL, the Morupule Coal Mine and 15% interest in the De Beers Group. MDCB is a fully government owned Holding Company that was incorporated under the Companies Act in October 2012. It began its limited operations in 2015 and first key appointments were made in 2016. 18 BOTSWANA MINING INVESTMENT AND GOVERNANCE REVIEW the receipt of these by government. The GRB annually resource exports, estimates of investment in mining discloses aggregate mineral revenues in the Budget development, license fees, and aggregated figures for all Speech made to Parliament and the Bank of Botswana revenues received from mining, including taxes, dividends, posts quarterly budget tables with mineral revenues and royalties. on their website. From the industry side, mining companies are not required to disclose their revenue, These factors explain that this topic received one of the payments and/or losses in Botswana, though some highest scores on the dashboard. All topics in this value companies report this information to their countries chain achieved “high” performance, with Public Financial of origination, as per the requirements of their Management Regulation, Including Revenue Sharing home governments. reaching the “very high” score. To improve the “low” score in this section, the govern- One of the positive financial management mechanisms in ment could consider requiring the government and place in Botswana that was helpful in reducing the impact companies to disclose all significant payments made, of the global financial crisis and its impact on diamond and material benefits given, to government. As encour- sales is Botswana’s Pula Fund. The GRB established this aged in international best practice, the information natural resource based stabilization and savings fund in would be disaggregated by revenue stream including, 1994. It is constructed as a sovereign wealth fund that but not limited to, profits, production entitlements, preserves part of the funds from diamond export sales for royalties, dividends, bonuses, and license fees. This future generations. Legally, the Fund is divided into two information could then be made publicly available components: the GRB controls the Government Invest- online and through the media, to ensure citizen access ment Account and the Bank of Botswana is entrusted by and also audited by the Auditor General’s office. the GRB to control the Foreign Reserves Account. In 2006, the GRB implemented an expenditure rule that prohibits the government from spending more than 40% of GDP in 3.4.4 Revenue Distribution and any given year, and any fiscal savings are transferred to the Management government’s portion of the Pula Fund. The fourth stage, Revenue Distribution and Management, is While general budget principles guide flows into and out the highest performing stage in the minerals value chain. of the Fund, explicit operational rules for deposits and This is not surprising, given Botswana’s well-documented withdrawals do not exist and there is no domestic oversight success in gaining optimal levels of mining revenue committee. However, the Fund is subject to regular and through its participation in upstream and downstream independent external audits and some financial informa- activities in the diamond sub-sector. These revenues have tion is provided in the Bank of Botswana’s annual reports. been well managed through a strong regulatory framework The fund is managed according to internationally accepted and by well-resourced and high functioning institutions. guidelines, the Santiago Principles. Botswana’s decades of incremental, increasing invest- The fund has substantially gained in value since its ment into the local and global diamond mining sector inception, although there have been significant expendi- has resulted in the country receiving significant annual tures arising from the 2008 global downturn in mineral revenues. The country has ensured that it has the capacity demand and commodity prices. It was valued at $5.5 to manage these well through a highly skilled bureaucracy. billion (61,183,450,000 Pula) in the 2015 Bank of Botswana Annual Report. The Botswana United Revenue Service operates as a government parastatal and has significant data analysis In terms of revenue distribution, there is no specific and reporting practices. It reports mineral revenue, legal requirement regarding distribution of a portion of but bundles royalties and dividends together as one mineral wealth gained through mineral taxation to local statistic. It also publishes information on production government (on behalf of affected communities) in areas volumes and the value of resource exports in annual where communities may be exposed to negative impacts reports audited by the Office of the Auditor General. of mining. This aspect of a formula-based, revenue distri- The central bank publishes statistics on the value of bution policy can be found in many countries, including 19 3 OVERVIEW OF MInGov FINDINGS Ghana, Mozambique, Papua New Guinea, the Canadian be expected. The relatively low performance of this indicator province of British Columbia, and many other advanced reflects some issues in the public procurement process, mining jurisdictions. Most compelling, it has been included including the frequency of cost-overruns on public infra- in the Africa Mining Vision Implementation Plan (2011) structure projects and the somewhat uneven approach to that states under Programme Cluster 1 on Managing procurement contract audits, particularly. Mineral Revenue and Rents: “Develop rent distribution systems for allocating part of mineral revenue to commu- Other institutional weaknesses in the management of large- nities near mining areas and local authorities.” scale public investment include lack of full implementation of the government’s objective to place a Program Manage- Fair distribution of national mineral revenue has been ment Office within each Ministry. The PMO is made up raised as a priority issue by some civil society groups of officials from the Ministry of Finance, the Ministry of operating in Botswana and could be raised under a discus- Justice and the Auditor/General’s office. The intention is to sion on a national CSR policy for the EI sector. It should be empower ministries to make their own project and procure- noted, however, that this specific revenue sharing approach ment decisions beneath a certain ceiling of expense. is not consistent with the national development direction that the GRB is currently pursing (i.e. equitable develop- The only underlying indicator that does not achieve a ment where all share equally in the benefits of mineral definitively high score is the Large Scale Public Investment revenue). Still, reference to such a formula-based, mineral indicator. With the full implementation of the PMO process, revenue sharing policy is included here as an international performance regarding management of large-scale public benchmark of good minerals governance practice. investment projects would be better. One of the few weaknesses uncovered in the assessment of As has been noted earlier in this report, the GRB has taken a this stage of the value chain concerns how large scale public prudent fiscal approach that has resulted in a budget surplus investment is managed. There is less rigorous accountability for many recent years. The Botswana Overview provided built into the procurement of large scale projects than would by the WBG noted that Botswana also achieved a current Table 4: Performance of the Revenue Distribution and Management Stage Value Chain Stage 4. Revenue Distribution and Management (3.21) Theme Topic Underlying Indicators Policy, Legislation Public Financial Manage- Public Financial Management and Revenue Sharing (3) and Regulation ment Regulation, Including (2.54) Revenue Sharing (3.5) Macrofiscal Management Rules and Stabilization (4) Accountability Budget Transparency and Budget Transparency and Accountability (3) and Inclusiveness Accountability, and Public (2.58) Integrity (3.13) Public Investment Integrity (3.25) Budget Implementation (3.29) Budget Implementation Institutional Capacity and Macrofiscal Manage- Large Scale Public Investment (2.5) and Effectiveness ment Effectiveness (2.93) (3.01) Macrofiscal Management and Revenue Stabilization Effec- tiveness (3.25) Note: The score for each theme is the average of scores of the five value chain stages in that theme (see Figure 2). The score for the value chain stage is the average of the three topics within that stage (which are shown in this figure). The score against the topic is the average of the scores of the underlying indicator scores; the indicator scores are the average of the scores of their underlying questions. The color coding is the same as in the matrix (Figure 2). Intervals for scoring performance are as follows: n Very low (1.0-1.75); n Low (>1.75-2.50); n High (>2.50-3.25); and n Very high (>3.25-4.0), where a higher score corresponds to better governance and capacity. 20 BOTSWANA MINING INVESTMENT AND GOVERNANCE REVIEW account surplus of 15.7% of GDP in 2014. While the surplus financed CSR activities (notably provision of bore holes is expected to continue to narrow until there is an upswing to access ground water) before there is a revenue stream in the commodity cycle, the country is still expected to from mining activity. Where there are competing land register a current account surplus in the next few years. use priorities such as eco-tourism in the Okavango Delta or traditional indigenous use of the land in the Central Government also follows an inclusive and complex process Kalahari Game Reserve, companies are even more of consultation regarding budget/spending priorities from sensitive to international NGO scrutiny. the national level down to the village level of governance structures and population. High performance of this topic Many companies (most visible being Debswana) provide reflects the country’s approach to national planning through health and education facilities to mineworkers, their the National Development Plan framework, where devel- families, and surrounding communities, as well as other opment priorities are outlined and budgets are applied local economic development initiatives. Smaller, less to ensure these are addressed (and reported on) annually. well-resourced companies, however, may not provide The “very high” performance of the Budget Implementation this type of voluntary community development assis- indicator reflects these factors. tance. The lack of a policy framework around CSR has meant that there is no formal framework to apply across the whole mining sector. This has resulted in an uneven 3.4.5 Local Impact application of social development contributions and a lack of formal measurement systems to determine the The final stage of the value chain is Local Impact, earning effectiveness of these programs. Guidance in the form of an overall “low” performance score, although the “de a required community-company development agreement facto” practices indicate a greater attention to these issues would raise the score of this topic. than the legislative framework would suggest. There have been complaints by civil society that the Underlying most of the analysis of the mining govern- relationship between government and industry is too ance regime in Botswana is the GRB’s business-like, close (given the state involvement in the mining sector) investor friendly approach to mining development. The and that community needs and aspirations are not GRB has chosen to focus on attracting and facilitating adequately taken into account when large-scale mining mining development; and on investing tax and dividend projects are developed. For example, the issue of land revenues in developmental priorities. It does not consider use (mineral development versus aboriginal rights) in that the mining industry should take over its role as the Central Kalahari Game Reserve garnered significant provider of basic services in rural areas or local economic attention and international activists protested against the development, unlike most other resource-rich developing removal of the San people.19 countries. In this light, the GRB has paid relatively less attention to the impacts of mining on local communities Botswana’s EIA Act, 2011 prescribes the requirement than on other stages of the mineral value chain. for an environmental impact assessment (including a mitigation plan) when proposed activities will have a Although there are no legislated social obligation require- serious negative impact on the environment. There is a ments laid out in law except regarding the environmental public consultation process laid out and a requirement impact assessment process, “de facto”, many companies for publishing summaries of the EIA in the Gazette and understand that to achieve a “social license to mine”, in local newspapers. Policies to Mitigate Environmental they need to engage with local communities as early Impact ranked “high”, reflecting these requirements. as the prospecting phase. This is especially true when However, there are elements of discretion in the legis- companies are in the advanced exploration stage and lation regarding the public consultation process20 that intend to mine an area in future. Some companies have partly account for a “low” score under Community Impact, 19 It must be noted that the BCL, Ltd mine has not been a profitable venture for many years and government has had to provide financial support to keep it going, mostly because it supports such a large number of mineworkers and the effects on the community of closure would be severe. 20 The EIA Act, 2011: Article 11 1) notes that a public hearing may be held depending on the degree of negative public response. 21 3 OVERVIEW OF MInGov FINDINGS Table 5: Performance of the Local Impact Stage Value Chain Stage 5. Local Impact (2.23) Theme Topic Underlying Indicators Community Impact, Consultation and Corporate Social Responsibility (1.5) Policy, Legislation Policies to Mitigate and Regulation Environmental and Social (2.54) Impact (1.83) Rules for Environmental and Social Impact Management (3) Rules for Financial Sureties for Decommissioning (1) Accountability Human Rights, Employment Human Rights and Employment Equity (2) and Inclusiveness Equity and Environmental (2.58) Transparency (2.25) Environmental and Social Impact Transparency (2.5) Impact and Community Consultation (2.67) Community Consultation Institutional Capacity and Environmental and Environmental and Social Impact Management and Effectiveness Social Impact Management Effectiveness (2.58) (2.93) (2.62) Effectiveness of Sureties for Decommissioning (..) Note: The score for each theme is the average of scores of the five value chain stages in that theme (see Figure 2). The score for the value chain stage is the average of the three topics within that stage (which are shown in this figure). The score against the topic is the average of the scores of the underlying indicator scores; the indicator scores are the average of the scores of their underlying questions. The color coding is the same as in the matrix (Figure 2). Intervals for scoring performance are as follows: n Very low (1.0-1.75); n Low (>1.75-2.50); n High (>2.50-3.25); and n Very high (>3.25-4.0), where a higher score corresponds to better governance and capacity. Consultation and Corporate Social Responsibility. The Institutional Capacity and Effectiveness theme further. environmental legislation requires that companies spend In terms of attention to human rights, Botswana follows funds to rehabilitate areas as mining progresses. However, a centrist government approach to mining develop- there is no legislated form of requirement for up-front ment that views minerals as a national hegemony with mine reclamation funds to be captured in a bond or some equal distribution of its benefits. This means necessarily other form of environmental surety. Further, as noted that local concerns and rights issues around mining above, there is no prescribed requirement for corporate development may not be given the same attention as social responsibility from a development perspective (as in a jurisdiction that recognises that communities opposed to a mitigation perspective). Combined, these suffering negative impacts from mining should receive factors result in a low score for this indicator. a portion of revenue, an expectation of employment, business development skills, or some other forms of In addition to the voluntary attention paid by companies compensation. Although there is a Localisation Policy, to local impacts, there appears to be quite effective insti- this doesn’t seem to have been applied fully to the tutional capacity in the Ministry of Environment to mining sector. Some employment requirements are manage social and environmental impacts caused by contained in Development Order Agreements, however. mining. Some companies noted that the capacity was somewhat uneven, with some regional offices performing The mining sector has expressed concerns about imple- very well, and others less so. The addition of an environ- mentation of the Localisation Policy when resident skills mental division within the MMEWR would increase or goods and services are not available. The govern- knowledge and capacity around mining related environ- ment’s focus on encouraging companies to hire locally mental issues. Improvements in these areas would has negatively affecting companies’ ability to secure raise the “high” score for Community Consultation and appropriate visas/work permits needed to hire special- Environmental and Social Impact Management under the ised foreign workers. The BRG needs to recognize that 22 BOTSWANA MINING INVESTMENT AND GOVERNANCE REVIEW there is an impact on the mining industry’s ability to 3.5.1 Economic Environment operate when government insists on local hiring, regard- less of the skills or experience needed by a mining The cross-cutting theme of Economic Environment company. covers elements relevant to investment in the mining sector and the national economy. The overall performance The creation of an employment equity policy that deals of the Economic Environment theme is at the lower end with requirements around gender or other types of of the “high” range and performance per topic is variable. discrimination in the workplace would be helpful. National Growth and Savings is the highest scoring topic rating, followed by Macroeconomic Stability. Another key aspect of the human rights component of this indicator relates to the treatment of indigenous Botswana ranked well on the WBG Doing Business people living off land resources in various protected areas Index, 2016. It scored 72 out of 189 economies. This is in Botswana. Exploration and mining are allowed in indicative of the GRB’s interest in facilitating private national parks, for example where indigenous peoples are sector-led growth and development. However, the Doing still living. There have been problems around balancing Business ranking indicated that although Botswana the priorities for development of resources (especially provided a favourable business climate for some issues of in light of the government’s concern about dwindling high importance to the mining sector such as protection diamond reserves) with other socio-economic activi- of minority investors, trading across borders and ease of ties such as eco-tourism. The sensitive issue regarding tax payments, other issues such as accessing electricity competing land uses in Botswana is underpinned by scored much worse. The mining sector’s ability to access the handling of the rights of inhabitants who have an water, electricity and transportation infrastructure is occupational relationship to the land. Civil society groups an on-going challenge. Therefore, Mining Infrastructure have expressed concerns about the extent to which local scored somewhat lower than the Business and Invest- communities can affect decisions that may be perceived ment Environment indicator, although both scored in the as having already been made by government concerning “high” range. mining projects. There are also concerns about the relative power and influence at a GRB level of the MMEWR In terms of the impact of the national health status on relative to other Ministries with less economically signif- society, Botswana has the third highest prevalence of HIV icant mandates. These weaknesses are reflected in the worldwide and a relatively low ranking on international Human Rights, Employment Equity and Environmental life expectancy indicators. The impact of a high incidence Transparency topic that scored “low”. of HIV in the younger, productive segment of the popula- tion on the economy can be severe. Prevalence has declined A number of topics in this section that relate to the slightly in recent years, however, and Botswana has demon- management of social and environmental impacts have strated a strong national commitment in responding to its been identified as priority areas by governments, CSO HIV and AIDS epidemic through provision of universal and Industry representatives. free antiretroviral treatment. The impact of govern- ment efforts to address this challenge has been almost a 40% decline in new infections from 2005. However, the 3.5 Performance of Cross-cutting government’s treatment programs are not reaching all Themes people in Botswana infected by HIV; in fact less than 50% are receiving treatment. These factors have contributed to Performance of the cross-cutting themes is summarized a “low” score for the Human Health indicator. in the matrix (Figure 2).21 A more detailed review is presented below. Regarding availability of skills and human capital, the results of the assessment were somewhat mixed. 21 Information on cross-cutting themes is collected from a similar range of primary, secondary and in-Botswana interview sources as other themes. However, given the nature of information required and available, secondary sources are more significant to cross-cutting themes than to other themes (see Annex 2, Table 1). 23 3 OVERVIEW OF MInGov FINDINGS Botswana has tertiary institutions that provide training in mining sciences. However, secondary school exam results are very poor. Only about 25% of students receive 3.5.2 Political Environment a C or higher grade, indicating that education quality in secondary school is low. However, Botswana has a policy Botswana has been one of the most stable countries in of providing financial support to promising secondary Africa since achieving independence. It has performed school graduates wishing to pursue higher specialised well as a multi-party democracy despite the dominance degrees abroad in internationally acclaimed institutions. of the ruling Botswana Democratic Party on the political In the mining sector, there is a strong history of officials landscape. The country has a free media and an independent from the Department of Mines attending well-known judicial system. Elections are held when terms have expired mining universities such as Queen’s University in and an independent Electoral Commission (IEC) was Canada. These factors account for the “high” ranking of established in 1996 to consolidate Botswana’s reputation this indicator although better performance of students at for fairness in voting. In addition to its long-term internal the secondary school level would raise this ranking. stability, it has been able to sustain positive relationships with SADC region neighbours. In keeping with its focus on “De facto”, it appears there has been a problem in attracting investment by developing a jurisdiction with a persuading graduates to return to Botswana to fill senior positive country risk rating, Botswana has maintained low positions within government. A number of these students levels of corruption and a relatively well-paid civil service. have chosen to stay in the country of their advanced Reflecting these factors, the Political Economy theme has education, leaving Botswana with a shortage of highly been scored “very high” and is the highest performing technically trained staff. A number of respondents theme assessed in this review. noted that graduates were employed and put into senior positions without the requisite experience, and also that Since Botswana achieved independence from Britain in there is a high turnover of staff. 1965, it has been one of the few countries in Africa that has had no wars or tribally based conflicts. The government The rating for diversity and stability of national revenue has pursued democratically robust policies, and according that measures the variation of domestic revenues in real to the 2016 Index for Economic Freedom (that includes terms over 5 years is “low”; however, strong credit ratings indicators on a range of socio-economic factors) Botswana and average total debt service to gross national income is ranked 71%22 (out of 100%) second only to Mauritius on (GNI) help boost macroeconomic stability to a “very the African Continent. Botswana is also the least corrupt high” score. country in Africa, according to the 2015 Transparency Table 6: Economic Environment Performance Cross-Cutting Theme Topic (and indicator) Skills and Business and Business and Macro- National Economic Mining Human Investment Investment economic Growth and Human Health Environment Infrastructure Capital Environment Environment Stability Savings (1.67) (2.78) (2.6) Availability (2.86) (2.86) (3.33)s (3.67) (2.86) Note: The score for the cross-cutting theme is the average of the scores of the underlying topics (which are in effect indicators since the topics for cross-cutting themes do not have indicators). The topic score is the average of the scores of questions that comprise the topic. The color coding is the same as in the matrix (Figure 2). Intervals for scoring performance are as follows: n Very low (1.0-1.75); n Low (>1.75-2.50); n High (>2.50-3.25); and n Very high (>3.25-4.0), where a higher score corresponds to better governance and capacity. 22 The Index notes a world average regarding measurement of economic freedom of 60%. 24 BOTSWANA MINING INVESTMENT AND GOVERNANCE REVIEW Table 7: Political Environment Performance Cross-Cutting Theme Topic (and indicator) Predictable Mining Political Environment Expropriation Risk Political Stability Control of Corruption and Tax Policy (3.96) (3.83) (4) (4) (4) Note: The score for the cross-cutting theme is the average of the scores of the underlying topics (which are in effect indicators since the topics for cross-cutting themes do not have indicators). The topic score is the average of the scores of questions that comprise the topic. The color coding is the same as in the matrix (Figure 2). Intervals for scoring performance are as follows: n Very low (1.0-1.75); n Low (>1.75-2.50); n High (>2.50-3.25); and n Very high (>3.25-4.0), where a higher score corresponds to better governance and capacity. International Index on Corruption. Performance questions periodically to ensure that new trends in international in the review related to actual experiences of corrup- good practise are taken into account. Also, shifts in policy tion - particularly regarding the exploration and mining related to the changing focus on different minerals can licensing process - were posed to various respondents mean that legislation may have to become more dynamic from different stakeholder groups. There was no indication and be amended according to the country’s current prior- that government officials were co-opting applicants for ities. In this regard, the coal sector in Botswana is one that personal gain. There was also no indication that companies is receiving a degree of interest, particularly in light of the had to pay bribes to officials at any stage throughout the government’s intention to diversify away from its reliance mine permitting process as the mine developed. The GRB on diamonds. Some coal producers noted that the current has a strong Anti-Corruption Commission (DCEC) which legal framework does not take into account aspects of coal looks into corruption allegations. This explains the “very mining. For example, there is a cost base for exporting a high” ranking on the Control of Corruption topic. bulk commodity such as coal (that differs from exporting precious gemstones) as the Minerals and Mining Law Botswana is a signatory country of the International of 1999 was drafted with a focus on the development of Centre for the Settlement of Investment Disputes (ICSID) diamonds. Convention and has put in place a good domestic law for the international arbitration of foreign investment disputes. According to the World Economic Forum and 3.5.3 Sustainable Development the OECD, Botswana is also in the top 25 percent countries when it comes to managing expropriation risk, transfer Botswana scored “high” overall on its approach to sustain- and convertibility risk and protecting property rights and able development regarding the mining sector. Given the investors. Companies have indicated that there is security importance of mining to national and local economies, of tenure in mineral rights, even to the extent that they the GRB has ensured that the sector is integrated well in can be operating without licenses for short periods of time national development planning (the indicator Develop- (between renewals) without fear of losing property. These ment Planning received just under a “very high” score) factors have contributed to the “very high” performance and government uses mining rents effectively to address under Expropriation Risk. developmental priorities throughout the country. As has been noted in earlier sections of this report, the Botswana has had a strong history of prudent financial country has enjoyed a stable mining regulatory regime and management, recruitment of highly skilled and competent a consistently applied tax policy that has been carried on by senior officials and applying a far-sighted outlook in terms successive governments. The indicator, Predictable Mining of economic development. Therefore, it has anticipated the and Tax Policy has achieved the highest ranked score. There need to diversify from its reliance on diamonds and has is a cautionary note to this governance aspect, however, concentrated on developing base metal and coal resources in that countries need to update their mining legislation effectively. In addition, it was successful in relocating the 25 3 OVERVIEW OF MInGov FINDINGS De Beers central diamond sorting facility based in the UK rate of unemployment in the country, particularly in the to Botswana several years ago – this move was intended to youth demographic. There has been a Citizen Economic add value in the diamond value chain through job creation Empowerment Policy for some time to bring effect to some and capacity building around diamond processing as well of the local content/employment objectives of government. as stimulate demand for peripheral services. The Botswana If the “de Jure” aspect of local content were strengthened, Investment and Trade Centre has been created to provide a the ranking of the Local Supplier indicator that is currently professional service to potential investors and partners with scored “low” would undoubtedly be higher. the MMEWR in the promotion of the industry at various international events. The Centre is helping to identify How well a country leverages its natural resource sector to investors in prospecting and expansion of existing mining contribute to the creation of infrastructure that will create projects, new mining projects, beneficiation of minerals further investment opportunities is a key aspect of sustain- and improved value chain benefits. The GRB hence scores able development. In this regard, Botswana does not have highly on Investment Promotion (Diversification). a legislative framework that facilitates co-ownership of public infrastructure (with the private sector). “De facto” In terms of increasing downstream and upstream linkages there have been instances where mining companies have into the overall economy, Botswana needs to increase local provided energy and transportation infrastructure but capacity to take advantage of opportunities created by the then have handed these over the government to manage. presence of large scale mining activity. Currently, the large- BCL, for example, built a dam and a power station and scale mining sector in Botswana does not tend to look to although these were constructed for the mine’s purposes, the local market for its goods and services, particularly at the public and government benefited also. However, “de the sophisticated end of mining equipment. It tends to have jure” there is no formal legislative framework that allows long-term supply contracts with neighboring countries for industry and government co-sharing and co-financing where such supplier capacity is very high, primarily South publicly used infrastructure. Leveraging Infrastructure has Africa. Without a commitment on the part of government been ranked at 2.5, a score that straddles “low” and “high” and companies together to build capacity of local suppliers, ranking. Performance would be improved if government it is unlikely that this trend will change. Companies are not implemented more innovative ways to develop its legisla- required to procure locally as part of the terms and condi- tive framework around private-public sector-partnerships. tions of their mining license although these issues can be raised during negotiations around contracts for diamonds or other large-scale integrated projects. 3.6 Special Topic: Diamonds Led Development in Botswana In keeping with its business-like attitude toward the mining industry (largely driven by its active role in the sector), the This report has documented Botswana’s impressive government has been concerned about creating obligations economic progress since Independence, derived mostly on the mines that would impact on their competitiveness. from careful, targeted investment in the development of However, the GRB is also very concerned about the high its diamonds and effective spending on socio-economic Table 8: Sustainable Development Performance Cross-Cutting Theme Topic (and indicator) Investment Sustainable Development Local Supplier Leveraging Promotion Development Planning Development Infrastructure (Diversification) (2.93) (3.4) (1.83) (2.5) (4) Note: The score for the cross-cutting theme is the average of the scores of the underlying topics (which are in effect indicators since the topics for cross-cutting themes do not have indicators). The topic score is the average of the scores of questions that comprise the topic. The color coding is the same as in the matrix (Figure 2). Intervals for scoring performance are as follows: n Very low (1.0-1.75); n Low (>1.75-2.50); n High (>2.50-3.25); and n Very high (>3.25-4.0), where a higher score corresponds to better governance and capacity. 26 BOTSWANA MINING INVESTMENT AND GOVERNANCE REVIEW priorities. The way that the GRB has harnessed diamonds companies are involved in the exploration, mining, for development through partnership with the private manufacturing, and trading of diamonds. Although sector is particularly interesting, given the tendency of the GRB pays 50% of capital for equity ownership in African governments in post-colonial years to focus on Debswana, it receives 80.8% of profits. state-led development. The partnership between the GRB and De Beers has enabled government to take advantage of The long term relationship with De Beers has evolved what industry does best: sourcing and mining diamonds, over time – both locally in Botswana, and internation- creating a viable global market and developing demand ally through the GRB’s shareholding in Debswana’s focused strategies. Through this partnership, government parent company, De Beers Société Anonyme (DBsa). has been able to grow the economy, create employment Following low international demand for diamonds in and secure significant levels of revenue throughout the the 1980’s, Debswana accumulated a significant stockpile diamond value chain. of diamonds. De Beers bought the stockpile when the market grew stronger, paying partly by cash and The GRB put in place a number of measures over the partly through shares of DBsa. The GRB thus initially years that reduced the danger of “Dutch Disease” that has became a 5% owner of global De Beers, then in 2001 afflicted many resource-rich countries. These initiatives De Beers delisted and the GRB took a total of 15% were central to the success of its effective management of interest in the global company. In 2006 the Diamond diamond revenue. Trading Company Botswana was launched, creating more than 3000 new local manufacturing jobs in • A revenue stabilization fund was introduced in 1970 the country.23 to account for revenue fluctuations and to store budget surpluses. Through its joint venture operations with De Beers, the GRB (represented by the Bank of Botswana) has • International reserves were allowed to accumulate been granted a seat on the Board of Directors of DBsa. and the national currency, the Pula, was pegged This advantageous position gave the GRB access to to a basket of currencies to prevent rapid currency high-level information about the international diamond appreciation. market and other important insights into the global diamond industry. • A sovereign wealth fund was created as an offshore investment vehicle for diamond revenues (the In 2011 an agreement was negotiated that transferred aforementioned “Pula Fund”). the sorting and marketing of Botswana’s diamonds to Gaborone, Botswana. The relocation of these functions To explain the significance of the diamond resource in from London to Gaborone was effected in 2013 and Botswana and the GRB’s governance decisions around represented a significant transfer of professionals, skills, its development, it is instructive to present a brief equipment and technology. The move secured a new chronology of historical events. Botswana has managed 10-year contract for the sorting, valuing and sales of to secure revenues from diamonds that has sustained a diamonds from Debswana’s mines by DTC Botswana, rapid economic growth rate for half a century through a and transferred the sorting, aggregation and sale of more combination of capitalizing on historical fluctuations in than $6 billion of annual rough diamond sales to the the diamond market, and on its long-term relationship office in Gaborone. The deal allows Botswana to sell 10% with De Beers, arguably the most powerful and influen- of its production directly to the local market. This has tial diamond company worldwide. been one of the most successful examples of a country successfully beneficiating raw mineral resources and De Beers and the GRB currently maintain a portfolio retaining optimal value and profits. of four companies in Botswana – De Beers Holdings, Debswana, Diamond Trading Company Botswana and Although the GRB has a healthy level of fiscal savings De Beers Global Sightholder Sales. Combined, these and international reserves, the anticipated decline in 23 Information on De Beers’ involvement in Botswana is sourced from: http://www.debeersgroup.com/botswana/en/who-we-are/de-beers-in-botswana.html 27 3 OVERVIEW OF MInGov FINDINGS Government of Anglo American Botswana 15 50% of dividends % De Beers 80.8% of profits Corporate taxes Investments De Beers Societe Anonyme (Lux) 50% 50% ~10% of Debswana revenue DTC Botswana 50% 50% Joint Control diamond production by 2030 has meant that govern- decision to keep the negotiation process around contracts ment is focusing strongly on diversification efforts. It for diamond mining (and large integrated projects) has introduced an economic stimulus initiative and is confidential and secretive. Government negotiates the being supported by international donors in its efforts to terms and conditions of these agreements, including the develop the SSME sector of the economy. The comments percentage of ownership stake it will purchase. These presented earlier in this document relate to the low level contracts are not published and even the Auditor General of capacity within the local supplier development topic are is not allowed to audit these agreements. A more open applicable in this context. process, including published contracts, would assist Botswana in becoming a more transparent and account- In addition to its 50% stake in the country’s largest able jurisdiction. Further, a “Freedom of Information” diamond operation, Debswana, the GRB has the option Act would provide a “de jure” instrument that the public to acquire up to 15% paid working interest of all other could use to access this type of information. diamond projects (as well as other minerals).24 Despite the positive success story of development through One of the major issues of contention expressed by diamond mining, the only theme out of the MInGov review different stakeholder groups in Botswana (including some of the Botswana minerals value chain that scored “low” government institutions) concerns the government’s instead of “high” was Accountability and Inclusiveness. It 24 Botswana Mines and Minerals Act, 1999; 40.(1) a. 28 BOTSWANA MINING INVESTMENT AND GOVERNANCE REVIEW would seem that this ranking reflects concerns that have indigenous people from ecologically sensitive areas. It been raised by civil society, some industry members and is not surprising that rural populations feel somewhat ministries involved with land and other socio-economic marginalized in the face of the GRB’s determination to issues. Concerns raised by these stakeholders have focused maintain the level of mining revenues from diamonds on the lack of meaningful public forums where various that has supported the country’s prosperity to date. land use options, including mining, can be debated and considered at national and local levels. There are Botswana is highly urbanized, with almost 60% of the complaints that due to the decades of successful devel- 2.2 million population living in urban areas. The rest opment led by Botswana diamonds, the GRB has of the population is spread out over a large landmass.25 become somewhat myopic, failing to take into account This means that the cities, Gaborone and Francistown other potential income generating activities, such as in particular, are resident to the highest numbers of eco-tourism. This single-minded focus on diamonds also educated people, the best standard of living and the most may have resulted in environmental values taking a back high-paying, professional-level government and private seat to industrial development. An open process around sector occupations. However, mining takes place in rural a national land use framework would allow for a more areas and the people living in these areas feel disenfran- fulsome debate around the viability of one economically chised and cut off from the powerful government and generating use of land versus another. political base resident in the country’s capital. Therefore, it is not surprising that the disconnect between these two The GRB is aware that a number of developmental realities in Botswana accounts for the low indicators on weaknesses exist and these have been articulated government accountability and transparency in terms of throughout this report, but include problems such as how decisions on mining activity (and particularly the a wide disparity of income levels and displacement of secrecy around diamond mine development) are made. 25 Botswana has a very low rural population density of 3.9% (roughly four people live in one square kilometre). 29 4 STAKEHOLDER PRIORITIES 4 STAKEHOLDER PRIORITIES Stakeholders who participated in in-Botswana inter- other permits required throughout the lifecycle views were asked to indicate topics from among those of the mine. This concern relates to the high staff on the matrix that are priorities, in their view, for sound turnover and the lack of experienced personnel as governance of the mining sector in Botswana, including well as to insufficient coordination of permitting for attracting investment to the sector and to facilitate (i.e. the EIA approval can lag behind the awarding the sector’s development impact. Stakeholders were of an exploration or mining license). Government requested to identify their top five priorities. is concerned about weaknesses in sector manage- ment arising from insufficient resourcing, industry The results of this prioritization are shown below, for all pressure, and potential lowering of Botswana’s stakeholder groups combined (Figure 7). Similar figures country risk profile as a good destination for mining for three stakeholder groups (government, mining investment. Civil society’s concern about sector industry and civil society) are in Annex 1, Figures 4-6. management and intragovernmental coordination The figure shows the importance that stakeholders attach mostly involves the lack of transparency in contract to review topics, the larger the size of a topic “cell”, the negotiations; and in how decisions about land use more important it is regarded for sound sector govern- are made that invariably favour the mining sector. ance and investment; the color key is used throughout this report and is explained in Figure 2.26 • There are three more overlapping topics that have been identified as priority areas by governments, Points that stand out from stakeholder priorities at a CSO and Industry representatives: Community value chain stage and theme level include: Consultation and Environmental and Social Impact Management, Policies to Mitigate Environmental • The top shared priority by all three stakeholder and Social Impact and Human Health. It is inter- groups is Sector Management and Intragovern- esting that all three stakeholder groups have mental Coordination. However, each group has identified the area of community and environ- somewhat different reasons for naming this as a top mental impacts from mining as a priority area. This priority. Industry is concerned about government likely refers to the lack of a “de jure” framework management capacity and “de jure” weaknesses for managing community consultation, except as regarding processing times for applications and it exists under the EIA Act, 2011. It appears that all 26 Stakeholders indicate their priority topics from a list of the 30 topics in the matrix. Weighted scores (see, the MInGov Methodology document on the World Bank’s website) are grouped within their respective value chain stage or cross-cutting theme, the size of each topic representing its weighted value: the larger the topic and theme/value chain is portrayed, the greater the priority assigned to it by stakeholders. The color of individual topics is as it appears on the matrix which indicates the performance of topics (and not, for example, the performance of them from the stakeholder perspective). 30 BOTSWANA MINING INVESTMENT AND GOVERNANCE REVIEW stakeholders recognise that more attention needs to There is a very clear process of compensation for be given to the social aspects of mining, particularly. displacement of land or economically generated activities implemented by Land Boards and Tribunals; • The industry appears to need more guidance in however, it is true that there is contention around terms of CSR, given that there is high community amounts of compensation charged for various forms expectation around benefit sharing; and civil of land (cattle grazing, etc.) and its products. This is an society has certainly called out for greater local issue that is broader than the mining sector and needs development around mining projects. This is an to be considered within a land management/land use ideological issue for the GRB as it does not want to strategy. More “de jure” guidance on resettlement burden the mining sector with legislated community would improve the rankings for the topic of Policies development requirements; and secondly, it funda- for Management of Social and Environmental Impacts. mentally believes that it is the government’s role to Regarding ASM, there is a small artisanal mining provide basic services, local economic development, population in Botswana that is mostly involved with etc. through revenue partly derived from the mining sand and gravel mining. This does not appear to be a sector’s tax payments. large or contentious mining sub-sector in Botswana. • CSO stakeholders emphasize more strongly than • Unsurprisingly, government and industry stake- government that Accountability of Processes, holders identify Skills and Human Capital Compensation, Resettlement and Artisanal and Availability as a leading priority, while CSOs do Small scale Mining Voice is of vital significance, not include it in their priority list. As has been especially considering its low performance. Industry noted elsewhere in this report, the government is stakeholders have not identified the topic as a priority. sometimes forced to hire inexperienced people to It should be noted that civil society’s mandate in occupy positions of responsibility within the mining general is to increase accountability of government, and related regulatory ministries. This impacts the and to ensure that communities and marginalised capacity of the ministries to oversee and monitor segments of society have a “voice” in their society. mining operations to ensure proper implementation Therefore, it is not surprising that this topic was the of environmental, safety and other regulations. With priority for CSO stakeholders. competition from industry’s higher compensation packages, government can find it difficult to attract In Botswana, there is a strong centralised govern- and retain sufficient skills. Industry is worried about ment with highly developed capacity throughout the impending local content regulations where it the national government. There is a traditional would be forced to procure locally (without sufficient system of consultation that links the national level supplier capacity) and to hire locally when special- of government down to the “kgotla” or village level ised mining skills, and work experience in some of on development issues and decisions. However, these highly technical areas are not available. because there is a somewhat “top down” approach to gathering feedback from local areas, mechanisms • Industry and CSO stakeholders have two overlap- to ensure a two-way consultative process may be ping priorities – Budget Transparency and lacking. Hence, communities may feel that they have Accountability, and Public Integrity and Business provided insufficiently considered input into economic and Investment Environment. Both of these topics development policies and strategies that may affect reflect the relatively lower score across the stages them. Government does provide its socio-economic under the theme of Accountability and Inclusive- priorities in the National Development Plans, however, ness. All stakeholders want greater openness around and may believe that this is sufficient response to budget allocation decisions and for government to input gathered from the public. Civil society and some undertake a more iterative process of consultation other stakeholders interviewed indicated that the around spending priorities. Industry will always be consultative process tends to be “one way” and not concerned about the political risk assessment of a iterative. This likely accounts for the concerns of civil jurisdiction and needs to ensure a high degree of society regarding the process of consultation and the safety and minimized risk of investment accountability of government within those processes. to shareholders. 31 4 STAKEHOLDER PRIORITIES • Civil society is the only stakeholder group that has mining investment. Industry needs to have a strong named Political Stability, Human Rights, Employ- regulatory system that is well managed, staffed ment Equity and Environmental Transparency, appropriately and resourced sufficiently. Otherwise, Control of Corruption, Mining Taxation and State there will be project delays and uncertainty around Owned Enterprise Financial Management, and mineral tenure. Civil society has called for more Public Financial Management Regulation, Including openness and transparency around license allocation Revenue Sharing as priority areas. Again, these to increase accountability and public participation in priorities reflect the business of civil society as an the sector. advocate body that strives for better openness and transparency in government as well as more social • As expected, industry stakeholders give further protection around human rights, etc. priority to topics related to overall improved business climate, capacity building and infrastruc- • The government’s priorities mostly overlap with ture, i.e. Leveraging Infrastructure, Local Supplier those of other stakeholders, with the exception Development, Tax policy, Instruments and State of Openness, Transparency and Independence of Owned Enterprise Rules, and Mining Infrastructure. Licensing Process and Clarity and Harmonization of Sector Rules. Government wants the licensing Figure 5 indicates in visual form where stakeholder system to reflect positively on the industry experi- priorities overlap to better understand areas of possible ence, as it knows this is a key aspect of mineral interest, as described above. governance that affects the country risk factor for 32 BOTSWANA MINING INVESTMENT AND GOVERNANCE REVIEW Figure 5: Overlap between Stakeholder-selected Priorities Intersection of No. of Shared Topics (Shared Priorities) Stakeholders Priorities n Community Consultation and Environmental and Social Impact Management CSOs n Human Health Government 4 Industry n Policies to Mitigate Environmental and Social Impact n Sector Management and Intragovernmental Coordination n Accountability of Processes, Compensation, Resettlement and Artisanal and Small- CSOs 2 scale Mining Voice Government n Development Planning Government n Cadastre, Geodata, License and Tenure Management 2 Industry n Skills and Human Capital Availability CSOs n Budget Transparency and Accountability, and Public Integrity 2 Industry n Business and Investment Environment n Cadastre, Geodata, License and Tenure Management Government 2 n Skills and Human Capital Availability n Political Stability n Mining Taxation and State Owned Enterprise Financial Management CSOs 5 n Public Financial Management Regulation, Including Revenue Sharing n Control of Corruption n Human Rights, Employment Equity and Environmental Transparency n Leveraging Infrastructure n Local Supplier Development Industry 4 n Tax policy, Instruments and State Owned Enterprise Rules n Mining Infrastructure Government CSOs 2 2 5 4 2 2 4 Industry 33 Figure 6: Stakeholder-selected Priorities (All Stakeholders) Economic Environment Local Impact Revenue Distribution and Management Business and Investment Skills and Human Capital Policies to Mitigate Budget Transparency and Environment Availability Environmental and Social Impact Accountability, and Public Integrity Management Effectiveness Public Financial Management Regulation, Budget Implementation and Macrofiscal Community Consultation and Human Rights, Including Revenue Sharing Environmental and Employment Equity and Social Impact Management Environmental Transparency Macro- Revenues Diversity and economic Stability Stability of National Contracts, Licenses and Exploration Mining Infrastructure National Growth Political Taxation and Human Health and Savings Openness, State Transparency Environment Participation and Independ- ence of Mining Taxation and Operations Licensing State Process Owned Enterprise Financial Control of Corruption Management Rules for License Allocation and Cadastre, Geodata, License Geographical and Tenure Management Data Collection Tax policy, Instru- Sustainable Development ments Sector Management and Political Stability and State Owned Intragovernmental Coordination Enterprise Leveraging Infrastructure Rules Accountability of Processes, Mining Tax Adminis- Risk Clarity and Harmonization of Sector Rules Compensation, Resettlement and (Diversification) tration and Artisanal and Small-scale Local Supplier Expropriation Investment Promotion State Owned Enter- and Tax Policy Mining Voice Development Planning Development prise Governance Predictable Mining The Figure 6 treemap reflects the importance of each MInGov topic for stakeholders, the size of the rectangle is proportionate to its importance as a priority for stakeholders. Colors reflect MInGov scores and remain unchanged from Figure 2 34 4 STAKEHOLDER PRIORITIES BOTSWANA MINING INVESTMENT AND GOVERNANCE REVIEW 5 CONCLUSIONS AND ACTION POINTS 5.1 Conclusions • Delays in approvals for exploration and mining (especially renewals) licenses are restricting the Botswana has been a notable example of where a small, industry’s ability to conduct activities with certainty poor, landlocked country achieving Independence some of tenure. There is inadequate resourcing of this 50 years ago has reached an upper middle-income status function in the Department of Mines and a lack of from resource-based growth and development. Botswana legislated timeframes for application processing. remains an attractive mining investment destination with large remaining diamond resources and undeveloped coal and other mineral resources, however, the country will • The lack of an on-line and interactive mining need to intensify its diversification efforts to offset the cadastre means that investors cannot source eventual decline of its diamond reserves and associated information easily on available mineral rich land in mineral revenue. Botswana must ensure that it remains Botswana; nor can other users have an up-to-date a desirable destination for international investment into status of concession holders and their details. This the further development of its diamonds, base metals, decreases transparency around land allocation for uranium, gold, natural gas and coal resources. To improve mineral development. on its already high country risk rating and continue to attract FDI into the mineral sector, Botswana should pay • Geological data is insufficiently robust as the attention to the human rights, social and environmental geological survey does not always receive complete aspects of mining development, to ensure that all its people geological information from company reports. This benefit from mineral resource development. bureaucratic bottleneck appears to be caused by lack of sufficient staff to monitor the submission The following are areas where governance of the mining of exploration and mining reports and to ensure sector could be improved: compliance when companies fail to submit these. Exploration and Mining Administration Environmental Protection, Social Issues and Human Rights • The mining regulatory framework is out-dated as the current Mines and Minerals Act was passed • The environmental legislation (EIA Act 2011) is in 1999; further, there have never been regula- not sufficiently strong to ensure that the public tions drafted to bring effect to this Act. While have access to relevant information regarding there is a Mineral Investment Policy, there is no the potential impacts of a mining project; and are comprehensive mineral policy that deals with all clearly entitled to participate in a public hearing socio-economic, environmental and commercial process regarding EIAs and throughout the issues related to mining development. lifecycle of the mine (post-EIAs). There is insuffi- cient focus on ensuring that issues of biodiversity 35 5 CONCLUSIONS AND ACTION POINTS and mine closure are specifically included in an Currently, the distribution of mineral revenue is not EIA. The level of understanding of environmental reaching the poorest segments of society, resulting issues throughout the general population could be in a high level of rural poverty and a high disparity improved through environmental awareness and of income between wealthy and poor. education efforts. • The contract negotiation process for diamond • There is insufficient policy, legislative or procedural mining and integrated projects is “closed” and guidance for companies to follow when they are confidential. Contracts are not published, nor are required to resettle and compensate communities they available to the Auditor General for auditing. displaced by mining activities. A more detailed This process lessens the ability of public watchdogs framework is required around these issues so that and the public generally to hold government to industry gains social acceptance for its mining account. In an open and transparent kind of mining projects, and individuals are not left without alter- administration regime, the public would be able to native land or other compensatory assets, especially have access to information on the development of in remote areas where there is no cash based the country’s most important natural resources. economy. • Companies are not required to contribute to 5.2 Action points corporate social development initiatives through a national CSR policy for the extractive sector in Areas for action by government and other stakeholders Botswana, which may include a requirement for are apparent from this review. Based on the views of the a negotiated company-community development main stakeholder groups – government, industry and agreement. While large companies that have a civil society – the review provides a shared view of the significant level of government participation such status mining governance. as Debswana have extensive CSR programming, some smaller, less visible companies are not always Six low-hanging fruit actions that government could take contributing to local socio-economic in the near to medium term are: development. • Update the Mines and Minerals Act, 1999 to reflect • The current Local Content policy and Citizen’s modern best practises in mineral regulation. There Empowerment Act have not been applied to the are currently no regulations accompanying this mining sector in a way that meets both govern- Act and these should be drafted to accompany a ment and industry objectives. This has resulted new Act. As a precursor to a revision of the Act, a in a low development of local suppliers of goods mineral policy should be developed that includes a and services to the mine; and a shortage of certain wide range of stakeholder input at the national and mining skills that has not been developed locally. local levels. • Companies are increasingly noting that the govern- • Increase the Department of Mines’ human resource ment’s focus on local hiring (even in the face of capacity in licensing; in geo-data collection and an absence of certain mining skills); has resulted in management; and introduce an interactive mining difficulty sourcing specialised mining skills outside cadastre. the country if these are not available locally. • Publish mining contracts (large scale diamond and • There is no legislated mineral revenue sharing integrated projects) and subject them to audit by formula or mechanism from the national level to the Auditor General. mining affected areas. While Botswana pursues a policy of equitable development, there may be • Strengthen the Environmental Impact Assessment advantages to ensuring that the communities Act 2011 to ensure a stronger element of public suffering the negative impacts from mining also participation, accessibility of EIAs, and a required benefit specifically from mineral development. iterative process throughout the life cycle of the 36 BOTSWANA MINING INVESTMENT AND GOVERNANCE REVIEW mine; a separate but related policy should be • The country should consider developing a protected developed around resettlement and compensation areas strategy that would remove certain ecolog- that reflects best practise (for example relevant ically sensitive land from mineral exploration or World Bank Guidelines). Introduce environmental development. awareness programmes at the high school and tertiary levels where appropriate. • Increase intra-governmental coordination so that timing of various types of mine permitting is • Develop a national CSR policy for the extractive coordinated; and to ensure that there is a “whole of sector – there are a number of different models government” approach to land use, consideration of including the Canadian CSR Strategy for the EI mining compared to other socio-economic activities Sector and the Mozambique National CSR policy such as eco-tourism, and other opportunities for for the extractive sector. The Africa Mining Vision economic diversification. implementation plan also provides guidance on this issue. Should the policy contain a requirement for • Consider the Africa Mining Vision’s recommendation a mining company-community development plan, that a portion of mineral revenue be returned to there are also a number of models currently demon- local government (through to communities) where strating international best practise in this area. They mining has negatively impacted on the people and include the World Bank Community Development natural resources of a particular area. Agreement template, the South African Social and Labour Plan, the Canadian Impacts and Benefits Agreements, etc.; emphasis needs to be on inter- 5.2.1 Recommended Follow-up Points by ventions that are sustainable, based on the specific Value Chain Stage and Theme stage of the mining lifecycle, and negotiated with appropriate stakeholders. Below is a list of the key follow-up points broken down by Value Chain Stage and Theme. • Develop a local content strategy specifically targeted toward the mining sector – this should Contracts, Licenses and Exploration Value Chain Stage have participation by the industry and ensure that industry needs are met as well as government local- • Improve legislative framework: Review current ization objectives. mining legislation and update; include timeframes for processing exploration and mining applica- Somewhat more challenging or longer-term actions tions; create regulations to accompany a revised would include: mining act. • Create a freedom or access to information Act to • Increase transparency around diamond and other ensure public access to all relevant government large-scale mining contracts: Publish mining information. contracts negotiated on a case-by-case basis with government and allow the Auditor General to audit • Consider an initiative to improve transparency in these. the sector and create a forum to allow for on-going dialogue between government, civil society and • Strengthen Institutional Response: Provide industry stakeholders; stronger institutional service regarding industry needs for security of tenure including: better • Develop a national land use policy and strategy that human resource capacity to ensure quicker has the input of a range of civil society, community, turnaround times for exploration and mining appli- industry, academic, government, traditional author- cations; and implementation of a fully functioning ities, etc. stakeholders. It should include a process mining cadastre that is interactive and includes for public input into government decisions on land details on all mining concessions currently active use, and determine if mining is always the prefer- in Botswana. able option. 37 5 CONCLUSIONS AND ACTION POINTS • Improve collection and management of geo-data: installing a Procurement Management Office in Improve collection and compilation of geo-data for each Ministry to address weaknesses in the public a more complete geological database; establish procurement system clear roles on who collects, compiles and shares data; increase human resource capacity in Licensing • Refine guidelines for distribution of revenue Section to monitor company reports on compliance from national to local levels: Consider returning with work plans and submit geological data to a portion of mineral tax revenue to those commu- the Geological Survey Department; and complete nities most negatively impacted by mining process of turning the Geological Survey into a (including resettled populations). parastatal27 to make it more focused on its mandate to provide geological information/mapping. Local Impact Value Chain Stage Operations Value Chain Stage • Provide greater mining sector contribution to local economic development: Provide guidance • Ensure security of tenure: Provide sufficient to companies to respond to community devel- human resource capacity to process exploration opment issues: 1) Develop a national CSR permit renewals on a timely basis and monitor Policy for the EI sector that could include a these for compliance. prescribed framework for some sort of site-spe- cific community development agreement; and • Improve intra-ministerial coordination: Coordi- 2) Provide a local content policy tailored to the nate timeframes of permitting required for mining mining sector and implement this in consultation such as the EIA; ensure that there is a “whole of with the mining sector. government” approach to mine development so that competing land use values (such as mining in • Increase accountability of government to protect nature reserves, etc.) are resolved. the environment: Amend the EIA Act 2011 to include stronger provisions on public participa- • Reduce negative impacts of mining develop- tion; access to information; requirements around ment: Provide clearer guidelines on the process of protection of biodiversity and mine closure displacing people from land required for mining planning. Ensure that environmental management purpose, including provision of fair compensation courses are included in the delivery of geoscience valuations for different types of land and products. and mining engineering courses at tertiary level. Taxation and State Participation Value Chain Stage • Pay greater attention to human rights issues: Botswana should consider signing the U.N. • Provide greater transparency around mining tax Voluntary Principles on Security and Human payments and receipts: Consider implementing Rights; this would signal better accountability and systems to improve disclosure of disaggregated raise the country’s mining investment political data on mining tax paid by companies and receipt risk rating; it would provide a framework for of these by government. addressing human rights issues regarding develop- ment of mining projects. Revenue Distribution and Management Value Chain Stage Cross Cutting Themes • Better expenditure controls on creation of public • Encourage Public-Private Sector Partnerships: infrastructure: Improve procurement on large Provide a legislative framework for PPP with regard scale infrastructure projects: Complete process of to mining related infrastructure (transportation, 27 During the World Bank Botswana MInGov validation meeting of August 11, 2016, it was confirmed that the Geological Survey had become a parastatal as of December 2015 and first key appointments were made during the first quarter of 2016. It is now called the Botswana Geoscience Institute. 38 BOTSWANA MINING INVESTMENT AND GOVERNANCE REVIEW water, energy, telecommunications, etc). • Increase mining linkages downstream: Provide • Address health issues, especially in the youth: greater support to the development of local Accelerate efforts to ensure that HIV antiretroviral suppliers of goods and services in the mining medication reaches a greater percentage of the industry; include investment incentives as part of population through improved medical facilities – the package to encourage mining companies to especially in remote areas of the country. procure locally. 39 ANNEX 1 THE BOTSWANA MInGov DATA COMPENDIUM A ANNEX 1 THE BOTSWANA MInGov DATA COMPENDIUM Table of Contents TABLE 1: Themes, Value Chain Stage, Topics, Indicators and Information Source . . . . . 41 TABLE 2: Theme Scores . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 TABLE 3: Value Chain Stages Scores . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 TABLE 4: Topic Score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 TABLE 5: Indicator Scores . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 TABLE 6: Question Scores . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 FIGURE 1: Topic Scores (Max-Min Chart) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 FIGURE 2: Indicator Scores (Max-Min Chart) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 FIGURE 3: Stakeholder Prioritisation, Government . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 FIGURE 4: Stakeholder Prioritisation, Cso . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 FIGURE 5: Stakeholder Prioritisation, Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 40 41 Table 1: Themes, Value Chain Stage, Topics, Indicators and Information Source INFORMATION SOURCE : 314 Questions VALUE CHAIN STAGE THEME (7) TOPIC (36) INDICATOR (64) (5) Secondary In-country Primary (132) (61) Interview (121) A1.1 Clarity of rules for license allocation, conversion and transfer 10 0 0 A1, Rules for license al- A1.2 Geological data collection rules 1 0 0 A. Policy, Legislation location and geological and Regulation data collection A1.3 Modern mining cadastre 1 0 0 A1.4 License approval and review timeframes 4 0 0 B1, Openness, B1.1, Openness and transparency of licensing process 5 0 3 B. Accountability and transparency and Inclusiveness independence of 1. Contracts, Licenses licensing process B1.2 Independence of licensing authority 1 1 and Exploration BOTSWANA MINING INVESTMENT AND GOVERNANCE REVIEW C1.1, Collecting geological information 2 0 7 C1.2, State of mapping and geological exploration 4 1 1 C1, Cadastre, geodata, C1.3, Mining cadastre effectiveness 2 0 8 C. Institutional Capacity license and tenure and Effectiveness C1.4, Allocating licenses effectively 0 0 7 management C1.5, Transferability of licenses 0 0 2 C1.6, Managing licenses effectively 0 0 9 A2.1 Clarity of legislation, rules and timeframes 3 0 0 A. Policy, Legislation A2, Clarity and harmoni- A2.2 Harmonization of legislation and government coordination 3 0 0 and Regulation zation of sector rules A2.3 Provisions for artisanal and smallscale mining 4 0 0 2. Operations B2, Accountability of B2.1, Access to land, compensation and resettlement 3 0 2 processes, compensa- B. Accountability and tion resettlement and B2.2 Access and accountability of mining legislation and processes 2 0 2 Inclusiveness artisanal and small scale mining voice B2.3 Artisanal and small-scale mining voice representation 1 0 1 INFORMATION SOURCE : 314 Questions VALUE CHAIN STAGE THEME (7) TOPIC (36) INDICATOR (64) (5) Secondary In-country Primary (132) (61) Interview (121) C2.1, Timeframes for approvals 0 0 2 C2, Sector management C. Institutional Capacity 2. Operations and intra-governmental C2.2, Intra-governmental coordination 1 0 3 and Effectiveness coordination C2.3 Support to artisanal and small-scale mining 2 0 4 A3.1, Tax policy and instruments 9 0 0 A3, Tax policy, instru- A. Policy, Legislation ments and state owned A3.2 Rules for auditing, base erosion and profit shifting 6 0 0 and Regulation enterprise rules A3.3 State owned enterprise governance rules 2 0 0 3. Taxation and State B3, Mining taxation and B3.1, Accountability of mining taxation 2 0 2 B. Accountability and Participation state owned enterprise Inclusiveness financial management B3.2, State owned enterprise financial management 3 0 2 C3, Mining tax C3.1, Mining tax administration 2 1 13 C. Institutional Capacity administration and and Effectiveness state owned enterprise governance C3.2, State owned enterprise governance 1 0 4 A4, Public financial A4.1, Public financial management and revenue sharing 3 0 1 A. Policy, Legislation management regulation, and Regulation including revenue sharing A4.2, A4.2 Macrofiscal management rules and stabilization 1 0 0 B4, Budget transparency B4.1, Budget transparency and accountability 0 1 0 B. Accountability and and accountability, and 4. Revenue Distribution Inclusiveness public integrity B4.2, Public investment integrity 4 0 1 and Management C4.1, Budget implementation 0 7 2 C4, Budget implemen- C. Institutional Capacity tation and macrofiscal C4.2, Large-scale public investment 0 0 6 and Effectiveness management effective- ness C4.3 Macrofiscal management and revenue stabilization 0 0 2 effectiveness 42 ANNEX 1 THE BOTSWANA MInGov DATA COMPENDIUM 43 Table 1: Themes, Value Chain Stage, Topics, Indicators and Information Source (continued) INFORMATION SOURCE : 314 Questions VALUE CHAIN STAGE THEME (7) TOPIC (36) INDICATOR (64) (5) Secondary In-country Primary (132) (61) Interview (121) A5.1 Community impact, consultation and corporate social 3 0 0 responsibility A5, Policies to mitigate A. Policy, Legislation environmental and and Regulation A5.2 Rules for environmental and social impact management 12 0 0 social impact A5.3 Rules for financial sureties for decommissioning 1 0 0 B5, Human rights, B5.1, Human rights and employment equity 6 0 5 5. Local Impact B. Accountability and employment equity and Inclusiveness environmental transparency B5.2, Environmental and social impact transparency 1 0 1 BOTSWANA MINING INVESTMENT AND GOVERNANCE REVIEW C5, Community C5.1 Impact and community consultation 0 0 5 consultation and C. Institutional Capacity environmental and C5.2 Environmental and social impact management effectiveness 0 0 9 and Effectiveness social impact management C5.3 Effectiveness of sureties for decommissioning 0 0 1 D1, Business and D1, Business and investment environment 0 9 0 investment environment D2, Mining infrastructure D2.1, Mining infrastructure 0 5 0 D3. Diversity and stabili- D. Economic D3.1, Diversity and stability of national revenues 0 2 0 N.A. ty of national revenues Environment D4, Macroeconomic D4.1, Macroeconomic stability 0 3 0 stability D5, Economic growth D5.1, Economic growth and savings 0 3 0 and savings INFORMATION SOURCE : 314 Questions VALUE CHAIN STAGE THEME (7) TOPIC (36) INDICATOR (64) (5) Secondary In-country Primary (132) (61) Interview (121) D6, Skills and human D6.1, Skills and human capital 1 6 0 D. Economic capital N.A. Environment D7. Human health D7.1, Human health 0 3 0 E1, Expropriation risk E1.1, Expropriation risk 2 4 0 E2, Political stability E2.1, Political stability 0 3 0 N.A. E. Political Environment E3, Predictable mining E3.1. Predictable mining and tax policy 1 0 2 and tax policy E4, Control of corruption E4.1, Control of corruption 0 1 0 F1, Development planning F1.1, Development planning 5 0 5 F2, Local supplier F2.1, Local supplier development 4 2 4 development F. Sustainable N.A. Development F3, Investment promo- F3.1, Investment promotion (diversification) 3 0 2 tion (diversification) F4, Leveraging F4.1, Leveraging infrastructure 4 0 2 infrastructure M1, Geological M1.1, Geological prospectivity 0 3 0 prospectivity A. Policy, Legislation M2, Mining foreign direct N.A. M2.1, Mining foreign direct investment 0 1 0 and Regulation investment M3, Significance of state M3.1, Significance of state participation 4 0 0 participation 44 ANNEX 1 THE BOTSWANA MInGov DATA COMPENDIUM 45 Table 1: Themes, Value Chain Stage, Topics, Indicators and Information Source (continued) INFORMATION SOURCE : 314 Questions VALUE CHAIN STAGE THEME (7) TOPIC (36) INDICATOR (64) (5) Secondary In-country Primary (132) (61) Interview (121) M4, Significance of M4.1, Significance of mining revenue 0 2 0 mining revenue M5, Budget share of M5.1, Budget share of mining revenue 0 2 0 A. Policy, Legislation mining revenue N.A. and Regulation M6, Economic and employment share of M6.1, Economic and employment share of mining 3 2 0 mining BOTSWANA MINING INVESTMENT AND GOVERNANCE REVIEW Descriptive Topics No. Questions (Primary Source) X.1, Licenses and Exploration—descriptive information 3 X.2, Mining Policy, Law and Regulations—descriptive information 5 X.3, Mining Tax Policies and Tax Instruments—descriptive information 9 X.4, Public Financial Management and Revenue Sharing—descriptive information 5 X.5, Environmental and Social Impact Management—descriptive information 4 X.6, Sustainable Development—descriptive information 3 ANNEX 1 THE BOTSWANA MInGov DATA COMPENDIUM Table 2: Theme Scores Themes Max Min Average A Policy, Legislation and Regulation 4.00 1.00 2.54 B Accountability and Inclusiveness 4.00 1.00 2.58 C Institutional Capacity and Effectiveness 4.00 1.00 2.93 D Economic Environment 4.00 1.00 2.78 E Political Environment 4.00 3.00 3.96 F Sustainable Development 4.00 1.00 2.93 M Mining Sector Importance 4.00 1.00 3.11 Table 3: Value Chain Stage Scores Value Chain Max Min Average 1 Contracts, Licenses and Exploration 4.00 1.00 2.37 2 Operations 4.00 1.00 2.69 3 Taxation and State Participation 4.00 1.00 2.91 4 Revenue Distribution and Management 4.00 1.00 3.21 5 Local Impact 4.00 1.00 2.23 46 BOTSWANA MINING INVESTMENT AND GOVERNANCE REVIEW ANNEX 1 THE BOTSWANA MInGov DATA COMPENDIUM Table 4: Topic Score Value Chain Stage Topic Max Min Avg. Rules for License Allocation and Geological Data Collection 4.00 1.00 2.44 Contracts, Licenses and Openness, Transparency and Independence of Licensing Process 4.00 1.00 1.75 Exploration Cadastre, Geodata, License and Tenure Management 4.00 1.00 2.92 Clarity and Harmonization of Sector Rules 4.00 1.00 2.33 Operations Accountability of Processes, Compensation, Resettlement and Artisanal and Smallscale Mining Voice 4.00 1.00 3.01 Sector Management and Intragovernmental Coordination 4.00 1.00 2.74 Tax policy, Instruments and State Owned Enterprise Rules 4.00 1.00 2.58 Taxation and State Partici- Mining Taxation and State Owned Enterprise Financial Management 4.00 1.00 2.78 pation Mining Tax Administration and State Owned Enterprise Governance 4.00 1.00 3.38 Public Financial Management Regulation, Including Revenue Sharing 4.00 1.00 3.50 Revenue Distribution and Budget Transparency and Accountability, and Public Integrity 4.00 1.00 3.13 Management Budget Implementation and Macrofiscal Management Effectiveness 4.00 1.00 3.01 Policies to Mitigate Environmental and Social Impact 4.00 1.00 1.83 Local Impact Human Rights, Employment Equity and Environmental Transparency 4.00 1.00 2.25 Community Consultation and Environmental and Social Impact Management 4.00 1.00 2.62 Economic Environment Business and Investment Environment 4.00 2.00 2.86 Economic Environment Mining Infrastructure 3.00 2.00 2.60 Economic Environment Diversity and Stability of National Revenues 4.00 1.00 2.50 Economic Environment Macroeconomic Stability 4.00 2.00 3.33 Economic Environment National Growth and Savings 4.00 3.00 3.67 Economic Environment Skills and Human Capital Availability 4.00 2.00 2.86 Economic Environment Human Health 2.00 1.00 1.67 Political Environment Expropriation Risk 4.00 3.00 3.83 Political Environment Political Stability 4.00 4.00 4.00 Political Environment Predictable Mining and Tax Policy 4.00 4.00 4.00 Political Environment Control of Corruption 4.00 4.00 4.00 Sustainable Development Development Planning 4.00 2.50 3.40 Sustainable Development Local Supplier Development 2.50 1.00 1.83 Sustainable Development Investment Promotion (Diversification) 4.00 4.00 4.00 Sustainable Development Leveraging Infrastructure 4.00 1.00 2.50 Mining Sector Importance Geological Prospectivity and Potential 4.00 2.00 3.00 Mining Sector Importance Foreign Direct Investment in Mining 3.00 3.00 3.00 Mining Sector Importance State Participation in Mining 4.00 1.00 2.50 Mining Sector Importance Significance of Mining Revenues 3.00 2.00 2.50 Mining Sector Importance Budget Share of Mining Revenues 4.00 4.00 4.00 Mining Sector Importance Economic and Employment Share of Mining 4.00 3.00 3.67 47 ANNEX 1 THE BOTSWANA MInGov DATA COMPENDIUM Figure 1: Topic Scores Indicator 1.0 - 1.75 >1.75 - 2.50 >2.50 - 3.25 >3.25 - 4.0 Rules for License Allocation and Geological Data Collection Openness, Transparency and Independence of Licensing Process Cadastre, Geodata, License and Tenure Management Clarity and Harmonization of Sector Rules Accountability of Processes, Compensation, Resettlement and Artisanal and Smallscale Mining Voice Sector Management and Intragovernmental Coordination Tax policy, Instruments and State Owned Enterprise Rules Mining Taxation and State Owned Enterprise Financial Management Mining Tax Administration and State Owned Enterprise Governance Public Financial Management Regulation, Including Revenue Sharing Budget Transparency and Accountability, and Public Integrity Budget Implementation and Macrofiscal Management Effectiveness Policies to Mitigate Environmental and Social Impact Human Rights, Employment Equity and Environmental Transparency Community Consultation and Environmental and Social Impact Management Business and Investment Environment Mining Infrastructure Diversity and Stability of National Revenues Macroeconomic Stability National Growth and Savings Skills and Human Capital Availability Human Health Expropriation Risk Political Stability Predictable Mining and Tax Policy Control of Corruption Development Planning Local Supplier Development Investment Promotion (Diversification) Leveraging Infrastructure Geological Prospectivity and Potential Foreign Direct Investment in Mining State Participation in Mining Significance of Mining Revenues Budget Share of Mining Revenues Economic and Employment Share of Mining 48 49 Table 5: Indicator Scores Theme Value Chain Stage Topic L5 Indicator Max Min Avg. A1.1 Clarity of Rules for License Allocation, Conversion and Transfer 4.00 1.00 3.25 A1.2 Geological Data Collection Rules 4.00 4.00 4.00 Policy, Legislation and Rules for License Allocation and Regulation Geological Data Collection A1.3 Modern Mining Cadastre 1.00 1.00 1.00 A1.4 License Approval and Review Timeframes 2.50 1.00 1.50 Openness, Transparency and B1.1 Openness and Transparency of Licensing Process 4.00 1.00 2.50 Accountability and Independence of Licensing Inclusiveness Process B1.2 Independence of Licensing Authority 1.00 1.00 1.00 Contracts, Licenses and Exploration C1.1 Collecting Geological Information 4.00 1.00 2.82 C1.2 State of Mapping and Geological Exploration 4.00 1.67 3.23 BOTSWANA MINING INVESTMENT AND GOVERNANCE REVIEW C1.3 Mining Cadastre Effectiveness 2.50 1.00 1.75 Institutional Capacity and Cadastre, Geodata, License and Effectiveness Tenure Management C1.4 Allocating Licenses Effectively 4.00 3.40 3.84 C1.5 Transferability of Licenses 4.00 4.00 4.00 C1.6 Managing Licenses Effectively 4.00 1.00 1.90 A2.1 Clarity of Legislation, Rules and Timeframes 2.50 1.00 1.50 Policy, Legislation and Clarity and Harmonization of Regulation Sector Rules A2.2 Harmonization of Legislation and Government Coordination 4.00 2.50 3.00 A2.3 Provisions for Artisanal and Smallscale Mining 2.50 2.50 2.50 Accountability of Processes, B2.1 Access to Land, Compensation and Resettlement 4.00 1.00 2.86 Accountability and Compensation, Resettlement Inclusiveness and Artisanal and Smallscale Operations B2.2 Access and Accountability of Mining Legislation and Processes 4.00 2.50 3.16 Mining Voice B2.3 Artisanal and Smallscale Mining Voice Representation 0.00 0.00 .. C2.1 Timeframes for Approvals 4.00 1.00 2.50 Sector Management and Institutional Capacity and Intragovernmental C2.2 Intragovernmental Coordination 4.00 1.00 2.30 Effectiveness Coordination C2.3 Support to Artisanal and Smallscale Mining 4.00 2.50 3.43 Theme Value Chain Stage Topic L5 Indicator Max Min Avg. A3.1 Tax Policy and Instruments 4.00 1.00 3.00 Policy, Legislation and Tax policy, Instruments and A3.2 Rules for Auditing, Base Erosion and Profit Shifting 4.00 1.00 3.00 Regulation State Owned Enterprise Rules A3.3 State Owned Enterprise Governance Rules 2.50 1.00 1.75 Taxation and State Mining Taxation and State B3.1 Accountability of Mining Taxation 4.00 1.00 2.25 Accountability and Participation Owned Enterprise Financial Inclusiveness Management B3.2 State-Owned Enterprise Financial Management 4.00 2.50 3.30 Mining Tax Administration C3.1 Mining Tax Administration 4.00 1.00 3.08 Institutional Capacity and and State Owned Enterprise Effectiveness Governance C3.2 State-Owned Enterprise Governance 4.00 2.33 3.67 Public Financial Management A4.1 Public Financial Management and Revenue Sharing 4.00 1.00 3.00 Policy, Legislation and Regulation, Including Revenue Regulation Sharing A4.2 Macrofiscal Management Rules and Stabilization 4.00 4.00 4.00 Budget Transparency and B4.1 Budget Transparency and Accountability 3.00 3.00 3.00 Accountability and Accountability, and Public Inclusiveness Revenue Distribution Integrity B4.2 Public Investment Integrity 4.00 1.75 3.25 and Management C4.1 Budget Implementation 4.00 1.00 3.29 Budget Implementation and Institutional Capacity and Macrofiscal Management C4.2 Large Scale Public Investment 4.00 1.00 2.50 Effectiveness Effectiveness C4.3 Macrofiscal Management and Revenue Stabilization Effectiveness 4.00 2.50 3.25 A5.1 Community Impact, Consultation and Corporate Social Responsibility 2.50 1.00 1.50 Policies to Mitigate Policy, Legislation and Environmental and A5.2 Rules for Environmental and Social Impact Management 4.00 1.00 3.00 Regulation Social Impact A5.3 Rules for Financial Sureties for Decommissioning 1.00 1.00 1.00 Human Rights, Employment B5.1 Human Rights and Employment Equity 4.00 1.00 2.00 Accountability and Local Impact Equity and Environmental Inclusiveness Transparency B5.2 Environmental and Social Impact Transparency 4.00 1.00 2.50 C5.1 Impact and Community Consultation 4.00 1.75 2.67 Community Consultation and Institutional Capacity and Environmental and Social C5.2 Environmental and Social Impact Management Effectiveness 4.00 1.00 2.58 Effectiveness Impact Management C5.3 Effectiveness of Sureties for Decommissioning 0.00 0.00 .. 50 ANNEX 1 THE BOTSWANA MInGov DATA COMPENDIUM 51 Table 5: Indicator Scores (continued) Value Chain Stage L5 Indicator Max Min Avg. D1.1 Business and Investment Environment 4.00 2.00 2.86 D2.1 Mining Infrastructure 3.00 2.00 2.60 D3.1 Diversity and Stability of National Revenues 4.00 1.00 2.50 Economic Environment D4.1 Macroeconomic Stability 4.00 2.00 3.33 D5.1 National Growth and Savings 4.00 3.00 3.67 D6.1 Skills and Human Capital Availability 4.00 2.00 2.86 D7.1 Human Health 2.00 1.00 1.67 E1.1 Expropriation Risk 4.00 3.00 3.83 BOTSWANA MINING INVESTMENT AND GOVERNANCE REVIEW E2.1 Political Stability 4.00 4.00 4.00 Political Environment E3.1 Predictable Mining and Tax Policy 4.00 4.00 4.00 E4.1 Control of Corruption 4.00 4.00 4.00 F1.1 Development Planning 4.00 2.50 3.40 F2.1 Local Supplier Development 2.50 1.00 1.83 Sustainable Development F3.1 Investment Promotion (Diversification) 4.00 4.00 4.00 F4.1 Leveraging Infrastructure 4.00 1.00 2.50 M1.1 Geological Prospectivity and Potential 4.00 2.00 3.00 M2.1 Foreign Direct Investment in Mining 3.00 3.00 3.00 M3.1 State Participation in Mining 4.00 1.00 2.50 Mining Sector Importance M4.1 Significance of Mining Revenues 3.00 2.00 2.50 M5.1 Budget Share of Mining Revenues 4.00 4.00 4.00 M6.1 Economic and Employment Share of Mining 4.00 3.00 3.67 ANNEX 1 THE BOTSWANA MInGov DATA COMPENDIUM Figure 2: Indicator Scores Underlying Indicators 1.0 - 1.75 >1.75 - 2.50 >2.50 - 3.25 >3.25 - 4.0 Clarity of Rules for License Allocation, Conversion and Transfer Geological Data Collection Rules Modern Mining Cadastre License Approval and Review Timeframes Openness and Transparency of Licensing Process Independence of Licensing Authority Collecting Geological Information State of Mapping and Geological Exploration Mining Cadastre Effectiveness Allocating Licenses Effectively Transferability of Licenses Managing Licenses Effectively Clarity of Legislation, Rules and Timeframes Harmonization of Legislation and Government Coordination Provisions for Artisanal and Smallscale Mining Access to Land, Compensation and Resettlement Access and Accountability of Mining Legislation and Processes Artisanal and Smallscale Mining Voice Representation Timeframes for Approvals Intragovernmental Coordination Support to Artisanal and Smallscale Mining Tax Policy and Instruments Rules for Auditing, Base Erosion and Profit Shifting State Owned Enterprise Governance Rules Accountability of Mining Taxation State-Owned Enterprise Financial Management Mining Tax Administration State-Owned Enterprise Governance Public Financial Management and Revenue Sharing Macrofiscal Management Rules and Stabilization Budget Transparency and Accountability Public Investment Integrity 52 BOTSWANA MINING INVESTMENT AND GOVERNANCE REVIEW Figure 2: Indicator Scores (continued) Underlying Indicators 1.0 - 1.75 >1.75 - 2.50 >2.50 - 3.25 >3.25 - 4.0 Budget Implementation Large Scale Public Investment Macrofiscal Management and Revenue Stabilization Effectiveness Community Impact, Consultation and Corporate Social Responsibility Rules for Environmental and Social Impact Management Rules for Financial Sureties for Decommissioning Human Rights and Employment Equity Environmental and Social Impact Transparency Impact and Community Consultation Environmental and Social Impact Management Effectiveness Effectiveness of Sureties for Decommissioning Business and Investment Environment Mining Infrastructure Diversity and Stability of National Revenues Macroeconomic Stability National Growth and Savings Skills and Human Capital Availability Human Health Expropriation Risk Political Stability Predictable Mining and Tax Policy Control of Corruption Development Planning Local Supplier Development Investment Promotion (Diversification) Leveraging Infrastructure Geological Prospectivity and Potential Foreign Direct Investment in Mining State Participation in Mining Significance of Mining Revenues Budget Share of Mining Revenues Economic and Employment Share of Mining 53 Figure 3: Stakeholder prioritisation, Government Taxation and Operations Economic Environment Local Impact State Participation Mining Tax Admin- istration and State Owned Enterprise Governance Mining Taxation and State Owned Enterprise Financial Management Community Consultation and Clarity and Harmonization of Sector Rules Environmental and Social Impact Management Tax policy, Instru- ments and State Mining Voice Owned Enterprise Rules Artisanal and Small-scale Accountability of Processes, Compensation, Resettlement and Skills and Human Capital Human Health Availability Business and Human Rights, Sector Management and Intragovernmental Coordination Investment Macroeconomic Employment Equity and Environment Stability Policies to Mitigate Environmental Transparency Environmental and Social and Savings Diversity and Stability Impact National Growth of National Revenues Mining Infrastructure Contracts, Licenses and Exploration Sustainable Development Political Revenue Distribution Investment Environment and Management Promotion (Diversification) Budget Implementation and Mac- rofiscal Management Effectiveness Control of Corruption Leveraging Infrastructure Budget Transparency and Accounta- Political Stability Openness, Transparency bility, and Public Integrity and Independence of Predictable Mining and Tax Policy Licensing Process Cadastre, Geodata, License Local Supplier Rules for License Allocation and Public Financial Management Regu- and Tenure Management Development Planning Development Expropriation Risk Geographical Data Collection lation, Including Revenue Sharing Note: The Figure 3 treemap reflects the importance of each MInGov topic for stakeholders, the size of the rectangle is proportionate to its importance as a priority for stakeholders. Colours reflect MInGov scores. 54 ANNEX 1 THE BOTSWANA MInGov DATA COMPENDIUM 55 Figure 4: Stakeholder prioritization, CSO Local Impact Political Revenue Distribution and Environment Management Expropriation Risk Community Consultation and Political Stability Environmental and Social Impact Management Budget Transparency and Accountability, and Public Integrity Policy Budget Implementa- Public Financial Management Regulation, Human Rights, tion and Macrofiscal Including Predictable Mining and Tax Employment Management Revenue Sharing BOTSWANA MINING INVESTMENT AND GOVERNANCE REVIEW Control of Corruption Effectiveness Equity and Policies to Mitigate Environmental Environmental and Social Impact Transparency Economic Environment Sustainable Development Macro- Revenues Operations Diversity and economic Stability Stability of National Mining Infrastructure Development Planning Skills and Business and National Human Investment Investment Growth and Capital Promotion (Di- Human Health Environment Savings Availability versification) Accountability of Processes, Compensation, Resettlement Development Local Supplier and Artisanal and Small-scale Mining Voice Leveraging Taxation and State Participation Infrastructure Mining Tax Admin- istration and State Owned Enterprise Governance Contracts, Licenses and Exploration Openness, Transparency and Independence of Licensing Process Tax policy, Instru- Clarity and Harmonization of Sector Rules ments and State Sector Management and Mining Taxation and State Owned Enterprise Financial Owned Enterprise Rules for License Allo- Cadastre, Geodata, Intragovernmental Coordination Management Rules cation and Geographical License and Tenure Data Collection Management Figure 5: Stakeholder prioritization, Industry Economic Environment Local Impact Operations Business and Investment Environment Sector Management and Community Consultation Intragovernmental Coordination and Policies to Mitigate Environmental and Environmental and Social Accountability of Skills and Human Capital Social Impact Management Impact Processes, Compensa- Human Health Availability tion, Resettlement and Clarity and Artisanal and Small-scale Harmonization of Human Rights, Employment Equity and Environmental Mining Voice Sector Rules Diversity and Sta- Transparency bility of National Revenues Contracts, Licenses and Exploration Taxation and State Macroeconomic Participation Mining Infrastructure Stability National Growth and Savings Cadastre, Geodata, License and Tenure Management Sustainable Development Tax policy, Instruments and State Owned Openness, Transparency and Independence of Licensing Process Enterprise Rules Rules for License Allocation and Geographical Data Collection Mining Tax Admin- Mining Taxation istration and State and State Owned Owned Enterprise Enterprise Finan- Development Planning Revenue Distribution and Budget Imple- mentation and Governance cial Management Management Macrofiscal Management Effectiveness Political Environment Control of Corruption Political Stability Public Financial Management Budget Transparency and Regulation, In- Predictable Mining and (Diversification) cluding Revenue Investment Promotion Leveraging Infrastructure Local Supplier Development Accountability, and Public Integrity Expropriation Risk Tax Policy Sharing 56 ANNEX 1 THE BOTSWANA MInGov DATA COMPENDIUM BOTSWANA MINING INVESTMENT AND GOVERNANCE REVIEW Table 6: Question Scores Question Data Question Interpretation Score Number Source 1. Contracts, Licenses and Exploration A. Policy, Legislation and Regulation A1 Rules for License Allocation and Geological Data Collection A1.1 Clarity of Rules for License Allocation, Conversion and Transfer To what extent are the procedures for the allocation of exploration Good practice 1 rights detailed, laid out in law and regulations, and compatible with Primary 4 in place relevant legislation? To what extent are the procedures for the allocation of mining Good practice 2 rights detailed, laid out in the law and/or regulations, and Primary 4 in place compatible with relevant legislation? To what extent does the legislation impose clear limits to the Good practice 3 discretionary powers of the authority in charge of awarding Primary partially in 2.5 exploration licenses? place To what extent are limits to the discretionary powers of the Good practice 4 Primary 1 authority in charge of awarding mining licenses laid out in the law? not in place To what extent are exceptions to the First Come, First Served Good practice 5 Primary 4 principle allowed? in place In the law, to what extent does a company that holds an exploration Good practice 6 license (and is in compliance with license conditions) have an Primary 4 in place automatic prior right to apply for a mining lease in that area? Good practice According to the law, to what extent do license holders have the 7 Primary partially in 2.5 freedom to transfer their licenses to eligible companies place To what extent are sanctions for non-performance by companies Good practice 8 Primary 4 regarding licenses prescribed in the regulations? in place To what extent are mining contracts allowed to be used to Good practice 9 Primary 4 supersede the provisions of prevailing laws? in place Good practice To what extent is it defined in law which government body 10 Primary partially in 2.5 negotiates and approves mine development agreements? place A1.2 Geological Data Collection Rules In the law, to what extent are exploration companies required to Good practice 11 regularly report quantitative operational information, including Primary 4 in place geological information, to the GSD or mining authority? A1.3 Modern Mining Cadastre Is the establishment and operation of a mining cadastre provided Good practice 12 Primary 1 for in the law? not in place 57 ANNEX 1 THE BOTSWANA MInGov DATA COMPENDIUM Question Data Question Interpretation Score Number Source A1.4 License Approval and Review Timeframes Good practice According to regulation, to what extent is there a clear timeframe 13 Primary partially in 2.5 for the allocation of licenses? place Data not In the law, to what extent is there discretion in the speed of 14 Primary available or not .. approval for license applications? applicable To what extent does the regulation ensure that applications not Good practice 15 Primary 1 meeting criteria are rejected as opposed to remain pending? not in place To what extent is the timeframe for approval of exploration work Good practice 16 Primary 1 programs set out in regulations? not in place B. Accountability and Inclusiveness B1 Openness, Transparency and Independence of Licensing Process A1.1 Openness and Transparency of Licensing Process To what extent is the information required for license applications Good practice 17 Primary 4 easily accessible? in place To what extent do the regulations require that the reasons for Good practice 18 Primary 4 license application denial be communicated to the applicant? in place Good practice To what extent does the legislation detail a transparent process for 19 Primary partially in 2.5 license cancellations? place In practice, when licenses are cancelled to what extent are the In-country Meeting its own 20 reasons communicated to the license holder in an accurate, 4 Interview goal complete and timely fashion? To what extent are mining contracts required to be made publicly Good practice 21 Primary 1 available in the law? not in place In-country Not meeting its 22 To what extent are mining contracts made publicly available? 1 Interview own goal To what extent does the legislation contain barriers to the Good practice 23 disclosure of license and contract information, such as state secrecy Primary 1 not in place laws? Working To what extent does the government publish key details for each towards In-country 24 license such as the license holder, duration of license and license meeting its own 2.5 Interview type? goal, but less than half way 58 BOTSWANA MINING INVESTMENT AND GOVERNANCE REVIEW Table 6: Question Scores (continued) Question Data Question Interpretation Score Number Source B1.2 Independence of Licensing Authority In the law, to what extent is the authority in charge of awarding Good practice 25 licenses for exploration and mining independent from the mining Primary 1 not in place ministry? Data not To what extent is the authority in charge of awarding licenses for In-country 26 available or not .. exploration and mining independent from the mining ministry? Interview applicable C. Institutional Capacity and Effectiveness C1 Cadastre, Geodata, License and Tenure Management C1.1 Collecting Geological Information To what extent is there a government website that describes what Good practice 27 national geological information is available and at what cost (if not Primary 4 in place free)? To what extent is there a library with current national geological Good practice 28 information maintained by the Geological Survey Department Primary 4 in place (GSD) or a similar organization? Working In practice, how reliably are exploration companies delivering the towards In-country 29 required operational information, including geological information, meeting its own 2.5 Interview to the GSD or mining authority? goal, but less than half way To what extent does the Geological Survey Department (GSD) or In-country Meeting its own 30 similar organization collect geological information in an accessible 4 Interview goal library? More than half To what extent does the Geological Survey Department (GSD) or In-country way towards 31 similar organization store geological information from companies in 3.1 Interview meeting its own a confidential manner? goal More than half To what extent does the Geological Survey Department (GSD) or a In-country way towards 32 similar organization make use of the geological data collected from 3.25 Interview meeting its own companies to improve understanding of geological prospectivity? goal Working To what extent does the Geological Survey Department (GSD) or a towards In-country 33 similar organization make use of the geological data collected from meeting its own 2.5 Interview companies to monitor compliance with licenses? goal, but less than half way To what extent is the Geological Survey Department (GSD) or In-country Not meeting its 34 1 similar organization staffed with well-trained professionals? Interview own goal To what extent is the Geological Survey Department (GSD) or In-country Not meeting its 35 1 similar organization appropriately financially resourced? Interview own goal 59 ANNEX 1 THE BOTSWANA MInGov DATA COMPENDIUM Question Data Question Interpretation Score Number Source C1.2 State of Mapping and Geological Exploration Data not What proportion of the country’s land has been licensed for 36 Primary available or not .. exploration? applicable To what extent is the licensed ground being serviced by active In-country Not meeting its 37 1.67 exploration? Interview own goal Is there a country-wide geological map (usually at scale Good practice 38 Primary 4 1:1,000,000, 1:2 000 000, 1: 1 500 000)? in place What proportion of the country is covered at scale of 1:250,000 or Good practice 39 Primary 4 similar (e.g. 1:200 000)? in place What proportion of the country is covered at scale of 1:100,000 Good practice 40 by geological maps or similar (for example, 1:100,000, 1:62,500, Primary partially in 2.5 1:50,000)? place 41 Quality of geological database - Fraser Institute Secondary Top 75%+ 4 C1.3 Mining Cadastre Effectiveness To what extent are the mining cadastre rules being correctly In-country Not meeting its 42 1 implemented and information is accessible to the public? Interview own goal To what extent does the relevant legislation or guidelines provide Good practice 43 for a map component to record license boundaries in the Primary 1 not in place cadastre? Working towards To what extent is the topographic map for the cadastre In-country 44 meeting its own 2.5 compatible with GPS systems? Interview goal, but less than half way Working towards In practice, are there boundary disputes between license holders In-country 45 meeting its own 2.5 due to the ambiguity of boundaries? Interview goal, but less than half way Data not In-country 46 To what degree is the mining cadastre up-to-date? available or not .. Interview applicable Data not To what extent is the mining cadastre used to support the In-country 47 available or not .. management of licenses? Interview applicable Data not To what extent does the cadastre system ensure that license In-country 48 available or not .. information (including boundaries) cannot be tampered with? Interview applicable 60 BOTSWANA MINING INVESTMENT AND GOVERNANCE REVIEW Table 6: Question Scores (continued) Question Data Question Interpretation Score Number Source Data not To what extent is the computerized cadastre system operating In-country 49 available or not .. without major technical problems? Interview applicable Data not If there is a decentralized cadastre system in place, to what extent 50 Primary available or not .. is there a clearance requirement from central office? applicable In practice, if there is a decentralized cadastre system in place, to Data not In-country 51 what extent is a clearance from the central office required before available or not .. Interview issuing a license? applicable C1.4 Allocating Licenses Effectively To what extent are the procedures for the allocation of exploration In-country Meeting its own 52 3.5 rights laid out in the legal framework followed in practice? Interview goal To what extent are the procedures for the allocation of mining In-country Meeting its own 53 4 rights laid out in the legal framework followed in practice? Interview goal To what extent are limits to discretionary power in the award of In-country Meeting its own 54 4 exploration licenses followed? Interview goal To what extent are limits to discretionary powers in the award of In-country Meeting its own 55 4 mining licenses followed? Interview goal To what extent is there a preference for local companies or In-country Meeting its own 56 producers in the allocation process of exploration or mining 3.4 Interview goal licenses? To what extent is it clear which government body (or bodies) In-country Meeting its own 57 4 negotiates and approves mining contracts? Interview goal To what extent do license cancellations or denied applications In-country Meeting its own 58 4 result in appeals? Interview goal C1.5 Transferability of Licenses In practice, if a company holds an exploration license and is in compliance with license conditions, to what extent does that In-country Meeting its own 59 4 translate into an automatic priority in obtaining a mining lease in Interview goal that area? In practice, are license holders able to transfer their licenses to In-country Meeting its own 60 4 eligible companies? Interview goal 61 ANNEX 1 THE BOTSWANA MInGov DATA COMPENDIUM Question Data Question Interpretation Score Number Source C1.6 Managing Licenses Effectively To what extent are the legislated timeframes for license In-country Not meeting its 61 1.75 application and allocation followed? Interview own goal Data not To what extent is the cadastre system mostly free of long-standing In-country 62 available or not .. pending applications? Interview applicable In the case of FCFS (First Come, First Served), to what extent are In-country Meeting its own 63 4 applications time-stamped as they are received? Interview goal Working towards To what extent are the sanctions regarding licenses for In-country 64 meeting its own 2.5 non-performance by companies enforced? Interview goal, but less than half way To what extent are the timelines for deciding on exploration and/ In-country Not meeting its 65 or mining rights applications compatible with the timelines of 1 Interview own goal other required permits? Data not To what extent is the timeframe for the approval of exploration In-country 66 available or not .. work programs followed? Interview applicable To what extent is the unit managing the monitoring of licenses In-country Not meeting its 67 1.15 staffed appropriately to perform its duties? Interview own goal To what extent is the unit managing the monitoring of licenses In-country Not meeting its 68 1 receiving an adequate operational budget to perform its duties? Interview own goal Data not In practice, how long does the approval for exploration license In-country 69 available or not .. applications take? Interview applicable 2. Operations A. Policy, Legislation and Regulation A2 Clarity and Harmonization of Sector Rules A2.1 Clarity of Legislation, Rules and Timeframes To what extent do regulations cover all relevant mining procedures Good practice 70 (exploration, license issuance, work programs, mines inspection, Primary partially in 2.5 health and safety, explosives, emergency, mine closure, etc.)? place To what extent is the timeframe for the approval of mine Good practice 71 Primary 1 development plans set out in the regulations? not in place To what extent is the timeframe for the approval of extensions of Good practice 72 Primary 1 mining operations set out in the regulations? not in place 62 BOTSWANA MINING INVESTMENT AND GOVERNANCE REVIEW Table 6: Question Scores (continued) Question Data Question Interpretation Score Number Source A2.2 Harmonization of Legislation and Government Coordination Working towards To what extent is mining sector legislation consistent with other 73 Primary meeting its own 2.5 relevant legislation? goal, but less than half way To what extent are legislation or inter-ministry arrangements Good practice covering natural resource issues that may be affected by 74 Primary partially in 2.5 mineral rights (e.g., land use, water, forests and nature reserves) place well defined to minimize overlaps or gaps? How clearly does mining or other legislation assign roles and Good practice 75 responsibilities between government ministries/agencies in the Primary 4 in place mining sector? A2.3 Provisions for Artisanal and Smallscale Mining Data not To what extent is there a regulation in place that allows the 76 Primary available or not .. formalization of artisanal and small-scale miners? applicable Good practice To what extent is artisanal and small-scale mining legally 77 Primary partially in 2.5 recognized in the mining law or regulations? place Data not To what extent do the laws and regulations allow for artisanal and 78 Primary available or not .. small-scale and industrial mining activities to coexist? applicable Data not To what extent are there detailed laws and regulations to settle 79 Primary available or not .. disputes between ASM and other mining activities? applicable B. Accountability and Inclusiveness B2 Accountability of Processes, Compensation, Resettlement and Artisanal and Smallscale Mining Voice B2.1 Access to Land, Compensation and Resettlement Does the holder of a mineral right have guaranteed access rights Good practice 80 to (surface) land, or does this need to be negotiated with Primary 4 in place landowners (or users) separately? Is there an established procedure following Equator Principles for Good practice 81 Primary 1 the resettlement of communities displaced by mining activities? not in place Working To what extent does the government enforce the legal towards In-country 82 requirements to resettle communities affected by mining meeting its own 2.5 Interview activities? goal, but less than half way 63 ANNEX 1 THE BOTSWANA MInGov DATA COMPENDIUM Question Data Question Interpretation Score Number Source Is there an established procedure for the payment of Good practice 83 compensation to landowners (and/or users) when exploration and Primary 4 in place mining activities interfere with their activities? More than half To what extent does the government enforce the legal In-country way towards 84 requirements of mining companies to compensate people affected 2.8 Interview meeting its own by mining activities? goal A2.3 Provisions for Artisanal and Smallscale Mining To what extent are the key laws and regulations governing mining Good practice 85 operations available from a single and up-to-date online Primary 4 in place government source? To what extent does the legislative branch carry out an oversight In-country Meeting its own 86 role regarding the mining sector beyond the consideration and 3.63 Interview goal approval of legislation? In the law, is there a domestic process to appeal decisions by Good practice 87 mining authorities that is outside and independent of the mining Primary partially in 2.5 ministry? place Working towards To what extent is this independent domestic appeal process able In-country 88 meeting its own 2.5 to challenge decisions by mining authorities? Interview goal, but less than half way A2.3 Provisions for Artisanal and Smallscale Mining Data not Is there a non-state association that represents artisanal and 89 Primary available or not .. small-scale miners? applicable To what extent do artisanal and small-scale miner associations Data not In-country 90 participate in the monitoring, advocacy and enforcement of their available or not .. Interview property rights? applicable C. Institutional Capacity and Effectiveness C2 Sector Management and Intragovernmental Coordination C2.1 Timeframes for Approvals To what extent is the timeframe for the approval of a mine In-country Meeting its own 91 4 development plan followed? Interview goal To what extent is the timeframe for the approval of an extension of In-country Not meeting its 92 1 a mining operations followed Interview own goal 64 BOTSWANA MINING INVESTMENT AND GOVERNANCE REVIEW Table 6: Question Scores (continued) Question Data Question Interpretation Score Number Source C2.2 Intragovernmental Coordination Working How common are conflicts between government towards In-country 93 ministries/agencies over the roles and responsibilities assigned for meeting its own 2 Interview the mining sector? goal, but less than half way To what extent are there formal mechanisms for sharing Good practice 94 information between government agencies closely working on Primary 4 in place mining (MOUs, intra-governmental working groups)? Working To what extent is there regular sharing of information between towards In-country 95 government agencies that have regulatory responsibilities for the meeting its own 2.2 Interview mining sector? goal, but less than half way To what extent are there instances where mineral rights conflict In-country Not meeting its 96 with other legislation on natural resources (e.g., on land use, water, 1 Interview own goal forests or nature reserves)? C2.3 Support to Artisanal and Smallscale Mining Data not Is there a dedicated unit within the Ministry dealing with artisanal 97 Primary available or not .. and small scale mining? applicable Good practice To what extent is support provided by government to artisanal 98 Primary partially in 2.5 and small scale miners concerning technical or business skills? place To what extent is the government effectively using a dispute Data not In-country 99 resolution system dedicated to ASM to tackle disputes between available or not .. Interview artisanal and small scale mining and other mining activities? applicable Data not In practice, are there instances of coexistence of ASM and In-country 100 available or not .. industrial mining activities? Interview applicable To what extent are artisanal and small-scale miners legally allowed In-country Meeting its own 101 4 to operate? Interview goal To what extent is artisanal and small-scale mining taking place In-country Meeting its own 102 3.79 under formalized procedures? Interview goal 65 ANNEX 1 THE BOTSWANA MInGov DATA COMPENDIUM Question Data Question Interpretation Score Number Source 3. Taxation and State Participation A. Policy, Legislation and Regulation A3 Tax policy, Instruments and State Owned Enterprise Rules A3.1 Tax Policy and Instruments Is it clear in the law which government agencies have the authority Good practice 103 Primary 4 to collect taxes and payments from resource companies? in place To what extent are taxes from mining required by law to be placed Good practice 104 Primary 4 in the national treasury? in place Does the legislation prescribe rates, formulas and bases for the Good practice 105 Primary 4 main elements of the fiscal regime? in place Good practice To what extent are there well-defined provisions for the 106 Primary partially in 2.5 renegotiation or review of fiscal terms? place To what extent does the mining or investment legislation provide Good practice 107 clear rules on the types of tax incentives that can be granted to Primary 1 not in place large investors? To what extent does the fiscal regime ensure that the Good practice 108 government has an adequate minimum revenue stream in all Primary 4 in place production periods? To what extent does the mining fiscal regime include progressive Good practice 109 Primary 4 fiscal instruments? in place Good practice To what extent are there clear rules in the tax code or regulations 110 Primary partially in 2.5 for the following payment processes: place Does the government have a simplified tax collection system for Good practice 111 Primary 1 ASM? not in place A3.2 Rules for Auditing, Base Erosion and Profit Shifting According to regulations, to what extent are regular tax, cost or Good practice 112 physical audits required to be conducted of small-scale operators Primary 4 in place and large mining companies? Is there a legal provision providing for an arm’s-length principle Good practice 113 Primary 4 for regulation of transfer-pricing practices? in place To what extent are there clear documentation requirements to Good practice 114 Primary 4 demonstrate compliance with transfer pricing rules? in place To what extent are there clear procedures for using advanced Good practice 115 Primary 1 pricing agreements to limit transfer pricing? not in place 66 BOTSWANA MINING INVESTMENT AND GOVERNANCE REVIEW Table 6: Question Scores (continued) Question Data Question Interpretation Score Number Source Is there an annual disclosure requirement for related party Good practice 116 Primary 1 transactions? not in place To what extent do the legal provisions limit the risk from thin Good practice 117 Primary 4 capitalization? in place A3.3 State Owned Enterprise Governance Rules To what extent does law or regulation require mining sector SOEs Good practice 118 to adhere to good corporate governance when examining the Primary partially in 2.5 Board’s composition? place Where the mining SOE engages in quasi-fiscal activities, to what extent are the roles and responsibilities of the SOE to provide Good practice 119 Primary 1 subsidies or social expenditures (quasi-fiscal activities) clearly set not in place out? B. Accountability and Inclusiveness B3 Mining Taxation and State Owned Enterprise Financial Management B3.1 Accountability of Mining Taxation To what extent are changes to mining tax legislation done through Data not In-country 120 a consultative process that is timely, meaningful, comprehensive available or not .. Interview and transparent? applicable Does the country disclose through EITI or another disclosure Good practice 121 Primary 1 process, details of mining revenues? not in place Are government officials with a role in the oversight of the mining Good practice 122 sector required to disclose information about their financial Primary 4 in place interests in any extractive activity or project? To what extent do government officials with a role in the oversight In-country Not meeting its 123 of the mining sector disclose information about their financial 1.75 Interview own goal interests in any extractive activity or project? B3.2 State-Owned Enterprise Financial Management If there are State Owned Enterprises (SOEs) in the mining sector, Good practice 124 Primary 4 do such SOEs have a legal obligation to publish financial reports? in place To what extent do mining sector SOEs publish annual financial In-country Meeting its own 125 4 reports? Interview goal Good practice Are mining SOEs subject by law to annual audits by an 126 Primary partially in 2.5 independent external auditor? place In practice, are annual audits of mining SOEs undertaken by an In-country Meeting its own 127 3.5 independent external auditor? Interview goal Good practice Do mining SOEs have to follow internationally recognized 128 Primary partially in 2.5 accounting standards? place 67 ANNEX 1 THE BOTSWANA MInGov DATA COMPENDIUM Question Data Question Interpretation Score Number Source C. Institutional Capacity and Effectiveness C3 Mining Tax Administration and State Owned Enterprise Governance C3.1 Mining Tax Administration To what extent does the taxation authority issue guidance notes or Good practice 129 Primary 4 interpretations? in place Working towards To what extent are the bases on which taxes are levied subject to In-country 130 meeting its own 2.5 disputes between companies and government? Interview goal, but less than half way To what extent, are tax, cost or physical audits of mining In-country Meeting its own 131 4 companies conducted systematically? Interview goal To what extent are the timing of physical audits and cost audits of In-country Not meeting its 132 1 mining companies coordinated? Interview own goal In-country Not meeting its 133 To what extent are transfer pricing rules enforced in practice? 1.75 Interview own goal More than half To what extent are there regular audits for transfer pricing of In-country way towards 134 related party transactions and advanced pricing rules for regularly 3.25 Interview meeting its own occurring transactions? goal Data not To what extent are the advanced pricing rules followed for In-country 135 available or not .. regularly occurring transactions? Interview applicable More than half To what extent are there regular audits of companies following In-country way towards 136 3.25 thin capitalization rules? Interview meeting its own goal Does the tax administration have a large taxpayer unit/office or Good practice 137 Primary 4 one specialized in natural resources/mining? in place Working towards To what extent is the unit specialized in taxation of natural In-country 138 meeting its own 2.5 resources/mining staffed appropriately to carry out its activities? Interview goal, but less than half way Working towards To what extent, is the unit specialized in natural resources/mining In-country 139 meeting its own 2.5 receiving appropriate funding to carry out its mandate? Interview goal, but less than half way Effectiveness in the collection of tax payments—Public Higher 50%- 140 Secondary 3 Expenditure and Financial Accounting (PEFA) indicator 75% 68 BOTSWANA MINING INVESTMENT AND GOVERNANCE REVIEW Table 6: Question Scores (continued) Question Data Question Interpretation Score Number Source In practice, are taxes and payments only collected by the In-country Meeting its own 141 4 mandated agencies? Interview goal In practice, are taxes from mining only placed in the national In-country Meeting its own 142 4 treasury? Interview goal In-country Meeting its own 143 To what extent are the fiscal terms in the law followed? 4 Interview goal Working towards To what extent are the terms for investment incentives in the law In-country 144 meeting its own 2.5 followed? Interview goal, but less than half way C3.2 State-Owned Enterprise Governance To what extent do mining sector SOEs have a board with: independent expert members with private sector experience, In-country Meeting its own 145 4 separate positions of chair and chief executive officer, and a board Interview goal of a reasonable size? Good practice 146 Is there an internal audit department within mining SOEs? Primary 4 in place In practice, does the internal audit department of mining SOEs In-country Meeting its own 147 4 review the effectiveness of internal controls annually? Interview goal To what extent do mining SOEs follow the role (including any In-country Meeting its own 148 4 subsidies or social expenditures) set out for them? Interview goal Working towards To what extent, are mining SOEs or state equity partners honoring In-country 149 meeting its own 2.33 their financial obligations? Interview goal, but less than half way 4. Revenue Distribution and Management A. Policy, Legislation and Regulation A4 Public Financial Management Regulation, Including Revenue Sharing A4.1 Public Financial Management and Revenue Sharing Are arrangements for resource revenue sharing between central Good practice 150 Primary 1 and sub-national governments defined by legislation? not in place Are ministries required to undertake procurement plans for Good practice 151 Primary 4 infrastructure projects according to the laws and regulation? in place In the regulation, to what extent is it clear when and how yearly Good practice 152 budget allocations to sub-national governments should be Primary 4 in place disbursed? 69 ANNEX 1 THE BOTSWANA MInGov DATA COMPENDIUM Question Data Question Interpretation Score Number Source A4.2 Macrofiscal Management Rules and Stabilization Data not Does the law provide for a fund to protect budget expenditures In-country 153 available or not .. from revenue volatility using savings or other funds? Interview applicable Good practice 154 Are there macrofiscal rules in place to stabilize the budget? Primary 4 in place B. Accountability and Inclusiveness B4 Budget Transparency and Accountability, and Public Integrity B4.1 Budget Transparency and Accountability Higher 50%- 155 Open Budget Index - Open Budget Survey Secondary 3 75% B4.2 Public Investment Integrity To what extent is there well-publicized, detailed and up-to-date Good practice 156 Primary 4 strategic guidance for public investment decisions? in place Are public investment projects required to be evaluated after Good practice 157 completion by an independent auditor according to the laws and Primary partially in 2.5 regulation? place To what extent are completed public investment projects In-country Not meeting its 158 1.75 evaluated by an independent auditor? Interview own goal Are the assets and liabilities of mining sector SOEs included in the Good practice 159 Primary 4 public sector balance as reported by the Ministry of Finance? in place Are the assets and liabilities of the natural resource fund Good practice 160 included in the public sector balance as reported by the Ministry of Primary 4 in place Finance? C. Institutional Capacity and Effectiveness C4 Budget Implementation and Macrofiscal Management Effectiveness. C4.1 Budget Implementation Budget cycle (performance of key systems, processes, and institu- 161 Secondary Top 75%+ 4 tions)—PEFA indicator 162 Control of expenditures—PEFA indicator Secondary Top 75%+ 4 To what extent do subnational governments receive their budget In-country Meeting its own 163 4 allocations in a full and timely manner? Interview goal 164 Robust budget classification system—PEFA indicator Secondary Low 25%-50% 2 Comprehensiveness of information included in budget 165 Secondary Top 75%+ 4 documentation – PEFA indicator 70 BOTSWANA MINING INVESTMENT AND GOVERNANCE REVIEW Table 6: Question Scores (continued) Question Data Question Interpretation Score Number Source Data not Extent of unreported extra-budgetary expenditure – PEFA 166 Secondary available or not .. indicator applicable 167 Multi-year perspective in fiscal planning – PEFA indicator Secondary Lowest 25% 1 Data not To what extent, does the government follow the rules established In-country 168 available or not .. by resource revenue sharing legislation? Interview applicable In this country, how efficiently does the government spend public 169 Secondary Top 75%+ 4 revenue? – WEF GCI C4.2 Large Scale Public Investment In practice, is there an established process for screening public investment project proposals for consistency with government In-country Meeting its own 170 4 policy and strategic guidance, and to what extent does the Interview goal government follow it? Working towards To what extent does the government use a formal cost benefit In-country 171 meeting its own 2.5 appraisal process for public investment project proposals? Interview goal, but less than half way To what extent are the project appraisals of public investment In-country Not meeting its 172 1 projects undertaken by an external agency or expert? Interview own goal To what extent do ministries prepare procurement plans for major In-country Meeting its own 173 4 public investment projects in key sectors? Interview goal To what extent are there regular cost over-runs on major public In-country Not meeting its 174 1 investment projects in key sectors? Interview own goal Working towards Are there often delays in project completion relative to the initial In-country 175 meeting its own 2.5 estimated time on major public investment projects in key sectors? Interview goal, but less than half way C4.3 Macrofiscal Management and Revenue Stabilization Effectiveness Working towards To what extent is the fund to protect budget expenditures from In-country 176 meeting its own 2.5 revenue volatility working? Interview goal, but less than half way In-country Meeting its own 177 To what extent does the government follow its macrofiscal rules? 4 Interview goal 71 ANNEX 1 THE BOTSWANA MInGov DATA COMPENDIUM Question Data Question Interpretation Score Number Source 5. Local Impact A. Policy, Legislation and Regulation A5 Policies to Mitigate Environmental and Social Impact A5.1 Community Impact, Consultation and Corporate Social Responsibility To what extent is there a requirement for extensive, timely, Good practice 178 well-informed community stakeholder consultation with affected Primary partially in 2.5 communities before the commencement of mining operations? place In the law, to what extent are community development Good practice 179 Primary 1 agreements required for mining operations? not in place Is there a national policy on corporate social responsibility (CSR) Good practice 180 Primary 1 that applies to mining? not in place A5.2 Rules for Environmental and Social Impact Management In the law, is there a requirement for companies to submit plans on Good practice 181 Primary 4 managing and mitigating the environmental impact of operations? in place In the law, is there a requirement for companies to submit plans on Good practice 182 managing and mitigating the socio economic impacts of Primary 4 in place operations? In the law, are company plans to manage and mitigate the social Good practice 183 and environmental impacts of operations subject to review by an Primary partially in 2.5 inter-ministerial committee? place In the law, are there clear rules on fees and timeframes for submitting, approving and updating environmental and social Good practice 184 Primary 4 impact assessments (or other key environmental and social impact in place related documents such as EMMPs)? In the law, is an environmental and social impact assessment (or Good practice 185 similar) required before a mining license/lease can be granted or Primary 4 in place as a condition to begin operations? Good practice In the law, are there requirements in place on managing the 186 Primary partially in 2.5 environmental and social impact of closure of mine sites? place Is there a policy or regulation that protects biodiversity on a mine Good practice 187 Primary 1 site? not in place Is there a regulation that enables biodiversity off-setting for a Good practice 188 Primary 1 mine site? not in place Good practice In the law and regulations, is there a simplified environmental 189 Primary partially in 2.5 permit or impact assessment for artisanal and small-scale mining? place 72 BOTSWANA MINING INVESTMENT AND GOVERNANCE REVIEW Table 6: Question Scores (continued) Question Data Question Interpretation Score Number Source In the law, does the agency or ministry responsible for Good practice 190 environmental protection have a say in the approval of exploration Primary partially in 2.5 rights? place Is an agency independent from the mining authorities responsible Good practice 191 Primary 4 for environmental protection and rehabilitation? in place In the law, is there a grievance and complaints mechanism defined Good practice 192 Primary 4 in the environmental regulations? in place A5.3 Rules for Financial Sureties for Decommissioning Does legislation require the posting of environmental bonds or Good practice 193 similar financial assurance methods to cover the cost of Primary 1 not in place environmental rehabilitation post-mining? B. Accountability and Inclusiveness B5 Human Rights, Employment Equity and Environmental Transparency B5.1 Human Rights and Employment Equity Good practice Is government implementing the African Charter for Human 194 Primary partially in 2.5 Rights? place Is the state’s duty to protect human rights (Pillar I of the UN Good practice 195 Guiding Principles on Business and Human Rights, UNGP) Primary partially in 2.5 implemented through a National Action Plan? place Is the government a signatory to the Voluntary Principles on Good practice 196 Primary 1 Security and Human Rights (VPSHR)? not in place Data not In practice, if government is a signatory to the VPSHR, to what In-country 197 available or not .. extent is it monitoring VPSHR implementation? Interview applicable In practice, does the government require companies to carry out In-country Not meeting its 198 1.5 human rights due diligence as part of the licensing process? Interview own goal Good practice 199 Is there an independent Human Rights Commission? Primary 1 not in place Data not To what extent is the Human Rights Commission adequately In-country 200 available or not .. staffed to facilitate a grievance and complaint mechanism? Interview applicable To what extent is the Human Rights Commission receiving an Data not In-country 201 adequate budget to facilitate a grievance and complaint available or not .. Interview mechanism? applicable Good practice Are there adequate government rules to promote employment 202 Primary partially in 2.5 equity? place 73 ANNEX 1 THE BOTSWANA MInGov DATA COMPENDIUM Question Data Question Interpretation Score Number Source To what extent is an institution mandated to ensure consistent In-country Meeting its own 203 4 compliance with employment equity rules? Interview goal Does the government recognize indigenous peoples on its Good practice 204 territory and their rights in relation to mining (free, prior and Primary 1 not in place informed consent)? B5.2 Environmental and Social Impact Transparency Are environmental and social impact assessments (or other key Good practice 205 environmental and social impact related documents required such Primary 4 in place as EMMPs) required to be made public? To what extent are environmental and social impact assessments (or other key environmental and social impact related documents In-country Not meeting its 206 1 required such as EMMPs) made public in a way accessible to Interview own goal affected communities? C. Institutional Capacity and Effectiveness C5 Community Consultation and Environmental and Social Impact Management C5.1 Impact and Community Consultation Working To what extent do mining companies consult with affected towards In-country 207 communities in a timely, meaningful, informed, comprehensive and meeting its own 2.2 Interview transparent manner? goal, but less than half way To what extent are comprehensive community development In-country Not meeting its 208 1.75 agreements negotiated prior to mining operations? Interview own goal To what extent does the agency or ministry responsible for In-country Meeting its own 209 environmental protection have a say in the approval of mining 4 Interview goal rights? Working towards To what extent are operating mining companies setting aside In-country 210 meeting its own 2.5 funds for mine closure? Interview goal, but less than half way More than half To what extent do government and mining companies collaborate In-country way towards 211 2.88 in the planning and implementation of CSR activities? Interview meeting its own goal C5.2 Environmental and Social Impact Management Effectiveness To what extent is the institution tasked with monitoring and In-country Not meeting its 212 1.43 enforcing environmental regulations staffed appropriately? Interview own goal 74 BOTSWANA MINING INVESTMENT AND GOVERNANCE REVIEW Table 6: Question Scores (continued) Question Data Question Interpretation Score Number Source Working To what extent is the institution tasked with monitoring and towards In-country 213 enforcing environmental regulations receiving appropriate funding meeting its own 2 Interview to carry out its task? goal, but less than half way To what extent are environmental requirements enforced In-country Not meeting its 214 systematically through inspections and penalties for 1.75 Interview own goal non-compliance? More than half To what extent is a grievance and complaints mechanism used In-country way towards 215 to challenge decisions by the agency monitoring environmental 3.25 Interview meeting its own regulation? goal Working To what extent are company plans to manage and mitigate the towards In-country 216 social and environmental impacts of operations reviewed by meeting its own 2.5 Interview government? goal, but less than half way To what extent does the government approve environmental and social impact assessments (or other key environmental and social In-country Not meeting its 217 1 impact related documents required such as EMMPs) according to Interview own goal fees and timeframes in the regulation? To what extent are environmental and social impact assessments (or similar) carried out and approved before a mining license/ In-country Meeting its own 218 4 lease/operating permit is granted as a condition to begin Interview goal operations? More than half To what extent are mining companies submitting plans on In-country way towards 219 mitigating biodiversity impacts that are free standing annexes to 3.25 Interview meeting its own environmental and social impact assessments? goal To what extent is the government monitoring compliance with In-country Meeting its own 220 4 environmental requirements for artisanal and small-scale miners? Interview goal C5.3 Effectiveness of Sureties for Decommissioning Data not To what extent are the funds for mine closure and environmental In-country 221 available or not .. rehabilitation kept in an escrow account or bond or similar entity? Interview applicable D. Economic Environment D1 Business and Investment Environment D1.1 Impact and Community Consultation 222 Starting a business – Doing Business indicators Secondary Low 25%-50% 2 Higher 223 Dealing with construction permits – Doing Business indicators Secondary 3 50%-75% 75 ANNEX 1 THE BOTSWANA MInGov DATA COMPENDIUM Question Data Question Interpretation Score Number Source Higher 224 Getting credit – Doing Business indicators Secondary 3 50%-75% 225 Enforcing contracts – Doing Business indicators Secondary Low 25%-50% 2 How would you rate the level of efficiency of customs procedures 226 Secondary Top 75%+ 4 (related to the entry and exit of merchandise)? – WEF GCI How burdensome is it for businesses to comply with governmental 227 administrative requirements (e.g., permits, regulations, reporting)? Secondary Low 25%-50% 2 – WEF GCI Perceptions index measuring effectiveness of civil law system – 228 Secondary Top 75%+ 4 World Justice Project (WJP) Data not Average number of procedures required to start a foreign 229 Secondary available or not .. subsidiary – World Bank Investing Across Borders applicable Data not Average number of days required to start a foreign subsidiary – 230 Secondary available or not .. World Bank Investing Across Borders applicable D2. Mining Infrastructure D2.1 Mining Infrastructure Higher 231 Quality of roads – WEF GCI Secondary 3 50%-75% 232 Logistics Performance Index – World Bank Secondary Low 25%-50% 2 Extent of infrastructure (for example transport, telephony, and Higher 233 Secondary 3 energy) – WEF GCI 50%-75% Higher 234 Quality of the railroad system – WEF GCI Secondary 3 50%-75% Quality of port facilities, or port accessibility in case of landlocked 235 Secondary Low 25%-50% 2 country – WEF GCI D3. Diversity and Stability of National Revenues D3.1 Diversity and Stability of National Revenues 236 Trend in level of non-extractive revenues over 5 years – IMF GFS Secondary Top 75%+ 4 237. Variation of domestic revenues in real terms over 5 years – 237 Secondary Lowest 25% 1 IMF WEO D4. Macroeconomic Stability D4.1 Macroeconomic Stability 238 Five-year cumulative inflation – IMF WEO Secondary Low 25%-50% 2 76 BOTSWANA MINING INVESTMENT AND GOVERNANCE REVIEW Table 6: Question Scores (continued) Question Data Question Interpretation Score Number Source 239 Credit rating – Standard and Poor's Secondary Top 75%+ 4 Five-year average total debt service to gross national income 240 Secondary Top 75%+ 4 (GNI) – World Bank WDI D5. National Growth and Savings D5.1 National Growth and Savings Five-year cumulative gross domestic product (GDP) growth – Higher 241 Secondary 3 IMF WEO 50%-75% 242 Five-year total average debt to GDP – IMF WEO Secondary Top 75%+ 4 243 Five-year average adjusted net savings – World Bank WDI Secondary Top 75%+ 4 D6. Skills and Human Capital Availability D6.1 Skills and Human Capital Availability Higher 244 Perception of the availability of labor/skills – Fraser Secondary 3 50%-75% 245 Gross tertiary education enrolment rate – WEF GCI Secondary Low 25%-50% 2 246 Quality of math and science education – WEF GCI Secondary Low 25%-50% 2 Higher 247 Attraction and retention of talented nationals – WEF GCI Secondary 3 50%-75% Is there a post-secondary school, college or university providing Good practice 248 Primary 4 curriculum for mining sector development? in place Higher 249 Mean years of schooling – Human Development Index Secondary 3 50%-75% Higher 250 Expected years of schooling – Human Development Index Secondary 3 50%-75% D7. Human Health D7.1 Human Health 251 Life expectancy at birth – Human Development Index Secondary Low 25%-50% 2 Death caused by communicable diseases and maternal, prenatal, 252 Secondary Low 25%-50% 2 and nutrition conditions (percentage of total) – WB WDI 253 Prevalence of Human Immunodeficiency Virus (HIV) - WB WDI Secondary Lowest 25% 1 77 ANNEX 1 THE BOTSWANA MInGov DATA COMPENDIUM Question Data Question Interpretation Score Number Source E. Political Environment E1 Expropriation Risk E1.1 Expropriation Risk Transfer and convertibility risk, force majeure - OECD country risk 254 Secondary Top 75%+ 4 classification 255 Expropriation risk – Delcredere Ducroire Secondary Top 75%+ 4 256 Protection of property rights, including financial assets – WEF GCI Secondary Top 75%+ 4 Is the country signatory to the International Center for the Good practice 257 Primary 4 Settlement of Investment Disputes (ICSID) Convention? in place Does the country provide in its domestic law for the international Good practice 258 Primary 4 arbitration of foreign investment disputes? in place Higher 259 Protecting investors – Doing Business indicators Secondary 3 50%-75% E2. Political Stability E2.1 Political Stability 260 Political stability – WGI Secondary Top 75%+ 4 Order and security (control of crime, civil conflict, and 261 Secondary Top 75%+ 4 violence) – WJP Security Situation (includes physical security due to the threat of 262 attack by terrorists, criminals, guerrilla groups, etc.) – Secondary Top 75%+ 4 Fraser Institute E3. Predictable Mining and Tax Policy E3.1 Predictable Mining and Tax Policy Data not How frequently and to what extent were the main features of the 263 Primary available or not .. fiscal regime changed in the past five years? applicable To what extent are the fiscal terms for mining generally stable over In-country Meeting its own 264 4 time or are there ad hoc changes? Interview goal In-country Meeting its own 265 To what extent is the mining legislation generally stable over time? 4 Interview goal 78 BOTSWANA MINING INVESTMENT AND GOVERNANCE REVIEW Table 6: Question Scores (continued) Question Data Question Interpretation Score Number Source E4. Control of Corruption E4.1 Control of Corruption 266 Control of corruption – WGI Secondary Top 75%+ 4 F. Sustainable Development F1 Development Planning F1.1 Development Planning To what extent is there a current multi-year national Good practice 267 Primary 4 development plan? in place Does the current multi-year national development plan have a Good practice 268 Primary 4 section on the mining sector as a driver for development? in place More than half Is the multi-year national development plan on track to meet its In-country way towards 269 3 targets? Interview meeting its own goal More than half To what extent are plans to leverage the mining sector as a driver In-country way towards 270 of development within the national development plan being 3 Interview meeting its own implemented? goal Good practice Does the country undertake spatial development plans that 271 Primary partially in 2.5 leverage mining and investment locations? place Working towards To what extent are the plans to develop mining regions within the In-country 272 meeting its own 2.5 national development plan meeting the targets set? Interview goal, but less than half way Good practice 273 Is the national development plan publicly available? Primary 4 in place To what extent, did an informed and meaningful national In-country Meeting its own 274 consultation take place during the preparation of the national 3.75 Interview goal development plan? Good practice 275 Is the mining development policy publicly available? Primary 4 in place More than half To what extent did an informed and meaningful national In-country way towards 276 consultation take place during the preparation of the mining 3.25 Interview meeting its own development policy? goal 79 ANNEX 1 THE BOTSWANA MInGov DATA COMPENDIUM Question Data Question Interpretation Score Number Source F2. Local Supplier Development F2.1 Local Supplier Development Good practice Are local content requirements for goods and services within the 277 Primary partially in 2.5 mining value chain accessible to the public? place Has the government sought the views of a wide range of In-country Not meeting its 278 stakeholders in preparing the local content policy for goods and 1 Interview own goal services within the mining value chain? Good practice To what extent do local content regulations for goods and services 279 Primary partially in 2.5 within the mining value chain target specific value pools? place In practice, are the local content regulations for goods and In-country Not meeting its 280 services in the mining sector targeting an adequate value pool 1 Interview own goal based on country capacity? Good practice Do local content regulations within the mining value chain have 281 Primary partially in 2.5 clear timeframes? place Working towards To what extent is there support for companies in attaining local In-country meeting its 282 2.5 content targets? Interview own goal, but less than half way Good practice Is there within government an enforcement mechanism for local 283 Primary partially in 2.5 content regulations? place Data not In practice, is there a designated institution monitoring the In-country 284 available or not .. progress of local content policy implementation? Interview applicable 285 Quality of local suppliers for the mining sector – WEF GCI Secondary Lowest 25% 1 286 Number of local suppliers – WEF GCI Secondary Lowest 25% 1 F3. Investment Promotion (Diversification) F3.1 Investment Promotion (Diversification) Good practice 287 Are there no or low tariff on import of capital equipment? Primary 4 in place 80 BOTSWANA MINING INVESTMENT AND GOVERNANCE REVIEW Table 6: Question Scores (continued) Question Data Question Interpretation Score Number Source Are there no or low tariff (or non-tariff barriers) on raw material Good practice 288 Primary 4 exports? in place Good practice 289 Is there an Investment Promotion Agency? Primary 4 in place To what extent is the investment promotion agency adequately In-country Meeting its own 290 4 staffed to fulfill its mandate? Interview goal To what extent is the investment promotion agency receiving In-country Meeting its own 291 4 adequate funding to fulfill its mandate? Interview goal F2. Leveraging Infrastructure F2.1 Leveraging Infrastructure To what extent do regulations allow for sharing of transport Good practice 292 Primary 4 infrastructure associated with resource extraction? in place Working towards Are there examples of shared infrastructure in the transport sector In-country 293 meeting its own 2.5 related to resource extraction? Interview goal, but less than half way To what extent do regulations allow for sharing of energy Good practice 294 Primary 4 infrastructure? in place In-country Not meeting its 295 Are there examples of shared infrastructure in the energy sector? 1 Interview own goal Is there a law that encourages the private financing of Good practice 296 Primary 1 infrastructure? not in place Good practice Is a governmental unit responsible for negotiating the private 297 Primary partially in 2.5 finance of infrastructure? place M. Mining Sector Importance M1 Geological Prospectivity and Potential M1.1 Geological Prospectivity and Potential 298 Mineral resource wealth – World Bank Secondary Top 75%+ 4 Higher 50%- 299 Best Practices Mineral Potential Index – Fraser Institute Secondary 3 75% Exploration spending relative to production value – ICMM / SNL 300 Secondary Low 25%-50% 2 Metals & Mining 81 ANNEX 1 THE BOTSWANA MInGov DATA COMPENDIUM Question Data Question Interpretation Score Number Source M2. Foreign Direct Investment in Mining M2.1 Foreign Direct Investment in Mining Higher 301 What is the share of mining FDI as % total FDI in the country? Secondary 3 50%-75% M3. State Participation in Mining M3.1 State Participation in Mining Good practice 302 What is the extent of state participation in the mining sector? Primary 4 in place Data not 303 What are the main type of state participation in the mining sector? Primary available or not .. applicable Data not 304 What is the SOE or state equity share in mining projects? Primary available or not .. applicable What is the total revenue (turnover) of mining sector SOEs and Good practice 305 income from state equity in mining companies as a percentage of Primary 1 not in place GDP? M4. Significance of Mining Revenues M4.1 Significance of Mining Revenues Government revenues from mining as a percentage of sector 306 Secondary Low 25%-50% 2 revenues—IMF/National statistics Government revenues from mining as a percentage of total GDP— Higher 307 Secondary 3 IMF/National statistics 50%-75% M5. Budget Share of Mining Revenues M5.1 Budget Share of Mining Revenues Total mining revenues as a percentage of total government budget 308 Secondary Top 75%+ 4 expenditure—IMF GFS or EITI Data not Mining revenues for subnational governments as a percentage of 309 Secondary available or not .. subnational budgets—National statistics applicable M6. Economic and Employment Share of Mining M6.1 Economic and Employment Share of Mining Data not 310 What is the number of ASM miners? Primary available or not .. applicable 82 BOTSWANA MINING INVESTMENT AND GOVERNANCE REVIEW Table 6: Question Scores (continued) Question Data Question Interpretation Score Number Source Good practice 311 How many local mining supply companies exist? Primary partially in 3 place Mining employment as percentage of total labor force—National 312 Secondary Top 75%+ 4 statistics Data not What is the total SOE employment as a percentage of the mining 313 Primary available or not .. labor force? applicable 314 Mining sector as percentage of GDP—National statistics Secondary Top 75%+ 4 83 www.worldbank.org/mingov