Brief on the European Union and its support to economic deversification in Selebi Phikwe
Brief on the EU and its support to economic diversification in Selebi-Phikwe 19/10/2016
In 1991 a loan agreement between the European Investment Bank (EIB) and the Government of Botswana (GOB) for supporting the diversification of the mining sector in Selebi-Phikwe was approved for an amount of EUR 21 650 000 under an agreement under the 6th European Development Fund (EDF). The government lent the funds onto BCL and Tati mines in Selebi-Phikwe and Francistown respectively. The support was critical for the survival of the mining sector at that time. The EU further supported the sector under the succeeding EDF 7 and 8 programmes (support totalling over EUR 60 000 000).
Because of the EU support, the BCL and Tati mines undertook further exploration and found additional resources of copper and nickel, which helped the mines to become sustainable. The mines made repayments for the loans into the Sysmin Re-employment Account (REA). In 2008 the GOB asked EU to convert the loan into a grant. Whatever funding that was recuperated from the mines was put into that account to be used for the diversification of the economy of Selebi Phikwe. A Memorandum of Understanding (MoU) between GOB and the European Union Delegation (EUD) governing the use of these funds was signed in January 2011. At the time of the signature of the MoU the REA re-employment account had around 638 million BWP to spend.
SPEDU, the regional economic diversification unit, is overseeing the diversification of the region and can use the REA account with the blessing of the Ministry of Investment, Trade and Industry (MITI), the National Authorizing Office (NAO) in the Ministry of Finance and Economic Development and the EUD in Botswana.
SPEDU has been implementing activities based on the original MoU of 2011. In the MoU a number of priority projects are listed, among them the expansion of the Selebi Phikwe Technical College, the establishment of a Mining Museum and Research Centre, an Acid Capture Plant, tourism infrastructure around Letsibogo Dam and infrastructure related to a horticulture processing plant and packaging house. However, since 2011, some of the listed priority projects have been overtaken by events. For example, as long as the TVET colleges elsewhere in the country are utilized only to 40% it does not make sense to expand the college in Selebi-Phikwe further.
With regard to the Acid Capture Plant, there was a pre-feasibility study for it in 2011, funded by the EIB. It concluded that there are not any bankable possibilities to go further with the project without a significant infrastructure investment from the Government. An Elemental sulphur plant, which was also looked into as an option, is linked with the mine still being in operation.
A review of the MoU was foreseen four years after the signing, if the funds had not been spent by that time. The MITI, NAO and EUD are therefore in the process of reviewing the MoU, as not many funds have been spent to date. SPEDU has developed a list of projects on how to spend the funds at its disposal, but at the moment, the EU and the NAO/MITI have not taken a stand on their proposals pending the revision of the MoU. It is planned that the review of the MoU would also bring in expertise from other regions that have had to undergo major economic transitions, due to their main industry, such as a mine for example, shutting down. Hopefully, the review will therefore be in a position to give advice on what route to take to reform the economy of Selebi Phikwe.
The EU Delegation remains committed to supporting Botswana in its effort to diversify its economy and increase investment under its future, albeit more limited funding support to Botswana.