Economic Accounting of Mineral Resources in Botswana

This case study quantifies the major physical and monetary trends in resource stocks for major minerals in Botswana, where the mining sector has been the largest contributor to GDP and government revenues for the past 35 years as well as a major source of export earnings. The report presents a framework for mineral accounts and applies it to five major minerals mined in Botswana—diamonds, copper-nickel, coal, soda-ash, and gold—for the period 1994–2014. Specifically, it provides estimates of the rent generated as well as the national mineral wealth and depletion. This study, therefore, represents a contribution to the broader assignment of calculating national wealth, on which there is currently very little information available in Botswana. From a sustainable development perspective, it is important to track changes in national wealth over time, especially in mineral economies since mineral extraction can easily lead to a diminution of national wealth. 

While Botswana has received widespread praise for the way in which it has converted mineral rents to fiscal revenues and invested them in education, health care, and other forms of assets, the study finds that the peak of the economic contribution of minerals appears to have passed and the economic importance of minerals is likely to decline in future. In particular, it reports that mineral (resource) rents are declining in real terms and in relation to GDP. It is, therefore, important to recognize that economic diversification and policy changes will be required in response to these changing circumstances.

As a result of this work, the Government of Botswana has established a system and built its capacity to calculate resource rent and to value mineral assets reliably and regularly. In particular, Statistics Botswana is now carrying out annual valuations of produced capital stock at the level of the economy and for mining. 

This report is part of an ongoing project under the Wealth Accounting and Valuation of Ecosystem Services (WAVES) global partnership being implemented by the Government of Botswana and the World Bank. More broadly, this report forms part of Botswana’s efforts to prepare a broader range of sectoral and macroeconomic statistics in line with the System of Environmental-Economic Accounting (SEEA), an extension of the conventional System of National Accounts (SNA) used for the compilation of conventional macroeconomic data.