Wednesday, March 11, 2009

Special Feature – Interview of H.E. the President Lt. Gen. Seretse Khama Ian Khama by the Financial Times Newspaper (Part 1)

Republic of Botswana (10/3/09): TAUTONA TIMES no 6 of 2009
The Weekly Electronic Press Circular of the Office of the President “Democracy, Development, Dignity and Discipline”

D. Special Feature – Interview of H.E. the President Lt. Gen. Seretse Khama Ian Khama by the Financial Times Newspaper (Part 1):

Please find below a transcript of Part 1 of a 26/3/09 interview of H.E. the President by the Financial Times newspaper. FT= "Financial Times", IK= "Ian Khama":

FT Introduction:

Since he became Botswana’s president last April, Ian Khama has made a name for himself as a hyperactive reformer at home and an outspoken statesman abroad. To his backers, he is the man who stood up to Robert Mugabe, the autocratic president of neighbouring Zimbabwe. To his detractors, Mr. Khama is prepared to trample his opponents and rule by presidential fiat to advance a personal agenda of “discipline”. A former army chief who trained at Sandhurst, the UK’s elite military academy, Mr. Khama is the son of Botswana’s founding president and a British aristocrat. Tom Burgis, the FT’s Johannesburg correspondent, interviewed him on February 26 2009, the day before his 56th birthday, amid the military paraphernalia of his Gaborone office.

Interview Transcript

FT - I suppose the place to start, Mr. President, is just to look at the bold facts that have been emerging in recent days. We had, in your own finance minister’s budget, a prediction of diamond revenue down by 50 per cent, and yesterday we had Debswana [Botswana’s joint venture with De Beers] closing its mines. Diamonds are 80 per cent of your foreign exchange; about 30 per cent of gross domestic product. The people who read this interview are going to be looking to you and wondering how on earth you can mitigate a crisis in a sector that is so crucial to your economy.

IK - Yes, there is no doubt we are facing a huge challenge. One of the reasons, the main reason is because we have been very dependent on revenues from minerals, especially diamonds ever since they were found in the seventies. Taking that into account, fortunately over the years, we have taken a deliberate decision to build up foreign exchange reserves precisely to meet circumstances like we are now facing. Our foreign exchange reserves must give us about; I think it’s about 28 months of import cover.

FT - You’ve got about $9.2 billion.

IK - About that in US dollars. It’s about 70-plus million pula. And that, as I said, covers about 28 months of import cover. Our economy, our local economy, is very dependent, the private sector, on government spending still and it is for that reason why we took a decision to go with the extent of the deficit we are going to have this coming financial year, from April 1, because we didn’t want to harm the local economy at all.

So we have, more or less, maintained government spending this year. In fact, it’s probably even a bit higher on the recurrent budget than it was last year, for that reason. And we will, therefore, be drawing on some of our reserves to tide us over this period.

FT - Do you have any idea how much you are going to spend out of those reserves?

IK - No, because we are going to also look at the possibility of borrowing if we get favourable borrowing terms.

FT - In the capital markets?

IK - Yes. Because the advantage of doing that is that when you do borrow, you can also invest that in the short term. And the thing is that if, in future, we ever have this problem again, and the ability to borrow is not there, then you are entirely dependent on your foreign reserves. So it would be a balance between borrowing, as I said, if we get favourable rates, and usage of the reserves. The other thing is we don’t know, of course, and nobody seems to know, how long this economic downturn is going to last. But if the predictions one is hearing about now, that we may start coming out of it towards the end of this year, then we expect that if we have a deficit again, as we are likely to in the next financial year, it would be less. And these downturns, if they are for relatively short periods of a couple of years, then the kind of deficit we have put in place, we can certainly manage.

FT - But Stephen Lussier from De Beers, in Cape Town two weeks ago, said that De Beers doesn’t expect the diamond market to pick up before Christmas 2010. And on the other side of that, you are considering borrowing, but you’ve got Standard and Poor’s and the other agencies looking very closely at your sovereign credit rating. Is there a worst case scenario than that? Are you planning, as well, for a longer term downturn?

IK - Yes, indeed. That would always have to be in the plan because, as I say, the situation is so volatile. We work on six year cycles, our plans. We have national development plans, as I said, which go for six years. We are currently in the plan period which we call NDP 9, and are going into NDP 10. NDP 10 was supposed to start this coming financial year, 2009/2010, but we decided that we should really start implementing it from next year because you can’t plan anything when you don’t really know what your revenue earnings are going to be. I think later this year, in the next few months or so, things will become clearer as to what that will be. And then we will be able to know whether we’re in for a long term recession or not. Now, should that be the case, then unfortunately you’re going to then have to ensure that we then plan for much, much smaller deficits, or even balanced budgets. But then the outcome of that will mean that what we are putting into the local economy is going to be reduced and then we’re going to start seeing what’s happening in other economies of retrenchments and people going out of work. Currently, the most recent study we’ve done, it’s only our mineral sector which are likely to face lay-offs. But in the rest of the economy, we’ve gone through them – the banking, retail sector and so on – there are no plans that we are aware of, in the private sector, to lay off people, which is an indication that our spending is what is going to help sustain them through this period.

FT - Botswana is often talked about as the model of an African country, or a lower-or-middle income country anywhere, that is commodity-dependent and which has managed that well. Do you think that you remain an example of how resource-dependent countries should manage their resources?

IK - Indeed. We wouldn’t want to prescribe to anybody how they run their economies but if anybody was willing to come here and benchmark and learn from what we have done, I think they would find that our model is one they could take into consideration, to adopt for themselves. There may be others, but certainly it has stood us well. And just coming back to the point you mentioned about De Beers and them looking at the upturn at the end of 2010, we had the worst case scenario which was in November last year, when we didn’t sell any diamonds whatsoever. But that was because the site-holders, as they are called, the people who come in and buy up the diamonds from the Diamond Trading Centre and then sell on to the rest of the industry, the jewellers and what have you, they usually are dependent on getting credit for up to about three months, to come in and buy the diamonds and then sell them. And at that time, in November, when this thing really hit us hard worldwide, the financial institutions were not lending, as you are aware. And therefore, at that time, they were not able to access credit to be able to come in and buy up our diamonds. But since then, there have been some sales and we expect there to be sales gradually increasing. I don’t know what De Beers was saying was whether by 2010, it will be back to the level it was before the downturn or whether they are saying it’s only in 2010 that they are starting to see sales coming in again. My expectation is that we will, as we are, be making sales this year, but not to the same extent as before. And maybe by the end of 2010, they will be back to where they were originally.

FT - De Beers has obviously taken pretty drastic measures, it seems particularly in Botswana. Mr. Lussier was saying that the pain of cutting production will be shared across the whole De Beers group. In Botswana, everything is closed for 50 days. Some of those mines won’t re-open this year. [De Beers Botswana boss] Sheila Khama, who we saw last week, is talking about the possibility of retrenchments. We see this 600 job figure yesterday. As a 50-50 partner in Debswana, are you in agreement with those drastic steps they’ve taken to try and address their global market?

IK - I can only talk for Debswana, not De Beers. Debswana is a 50-50 partnership between us and De Beers, so all the decisions that are made about the mines in this country is with the full knowledge and input of this government. So any decisions that were taken on lowering the production by removing 40 per cent from the production once the mines start operating again, it was done with us.

FT - It will be 40 per cent for the rest of the year taken out of production?

IK - 40 per cent taken out, yes. And we expect the main mines to be back in operation at the middle of April. So yes, there may be one or two of the smaller ones, because you have to understand that when those small mines that we are talking about – and they are small – we knew the deposits were there in the past. The problem was that it was not economically viable to mine. But as diamond prices increased, so they became viable. So obviously they would be the first ones to be moth-balled when there’s a problem like this. But the other ones are going to be in operation, as I said, from the middle of April. The plan is for now that we would start, but when they do start production, it will be 40 per cent down.

FT - When do you, as the government, hope to see production returning to full capacity?

IK - I can’t answer that. You can’t answer that. Nobody can answer that. As I said, the situation is so volatile. Our main markets are the United States, Japan and Europe, in that order. And as you know, those are the hardest hit at the moment.

FT - The other thing that marks out Botswana as a commodity producer was this attempt to bring more of a value addition into the country: to have the cutters and polishers here and also to move the De Beers aggregation operations here, at least 3,000 jobs that are apparently arriving. That process, as I understand it, is in a bit of trouble, as are one or two of the diamond cutters and polishers. Can you just describe how you can keep that afloat through this crisis?

IK - Well, those are independent entities, private sector operations. And that is just something that we are talking to them about, that if they need us to assist them as a government in trying to keep them afloat, we can look at that. And as I said, it’s something that we are monitoring. But there is no doubt that they are also going to be affected. And it’s unfortunate that, at a time when we were starting to move ourselves from just being a producer to wanting to start engaging all the downstream activities, that this situation should hit us. Because again, we are not just talking about, we were not just looking at the downstream activities, being polishing and cutting, but also things like diamond banking. We were looking at grading laboratories and that type of thing, and even people here being able to start their own jewellery production. So we were looking at the entire spectrum across the board. We expect it to be a temporary hiccup, but all our plans remain in place to achieve that. We’ve got it under the name of a diamond hub, making Botswana a diamond hub, and we have a co-ordinator who is full-time doing that. And all those plans are going ahead.

FT - But haven’t they been delayed?

IK - I don’t think so. I haven’t heard that any of the people who were intending to come in and set up have since pulled back to the same extent that some of the mining operations have been affected. I don’t have that information at my fingertips.

FT - But the aggregation side of things, is that going according to plan, the relocation of the aggregation facility?

IK - Yes, that’s going ahead.

FT - Because there was talk of differences of opinion about that and for tax purposes, De Beers was keen to keep some of those people in London. Is De Beers honouring those commitments?

IK - Yes, indeed.

FT - You seem fairly bullish on the prospects for recovery. Are you worried that a downgrade to your credit rating could be a crucial part of that plan that could go wrong?

IK - Well, the recent rating did downgrade us from stable to negative, as you are probably aware. That was mostly because of the size of the deficit. But as I said, we are still confident that we will be able to see this thing through. And of course, that is dependent on the fact that, indeed, towards the end of this year, we start seeing a recovery.

FT - If we could just move on then to the region. You have obviously been a very prominent player in the negotiations on the crisis in Zimbabwe next door. Do you think the unity government that we’ve got now, executive power shared in two places, shared between President [Robert] Mugabe and Prime Minister [Morgan] Tsvangirai, is that a government that can address and resolve the enormous problems in Zimbabwe?

IK - If you had asked me to put together a combination of people who could spell disaster, that would probably be the combination, based on the fact that the two have got, there is no love lost between them. And I think they are going to really struggle. So all one can really say is that I’m holding my breath and praying that it will work. As I say, when you see the combination of people involved there, when you know the background and the mentality of Mugabe and his party, they have been dragged, kicking and screaming, to this agreement. It is not because they wanted it or they are wanting to do it for the good of Zimbabwe and its people. Because if they had ever had the interest of Zimbabwe and its people, they wouldn’t have driven the country down to the sorry state that it is today.

FT - So what do you think its prospects are as a government? Do you see it unraveling? You are hoping and praying but what do you actually think will happen?

IK - It’s impossible to say. Really, it is, because even judging from the start, with people who were abducted or arrested in very strange circumstances, the deputy minister designate, [Roy] Bennett, being arrested as well, I just thought to myself, well, what else is new? That’s just what one would expect from them. Yesterday I heard there was another problem with a unilateral decision made by Mugabe appointing permanent secretaries without consulting the prime minister. It’s just an indication of why I have been very skeptical. I would be very pleasantly surprised if things do work out.

FT - But you’re not expecting that?

IK - I’m hoping it will be. I will not say I’m not expecting it to be because I think it is possible. I think it is possible. The reason why I think Mugabe and some of his colleagues are on board is because the situation had become so desperate for them. They were not displaying the type of arrogance that they were before when anybody tried to intervene, to bring about an improvement in the situation in that country. They are on their knees. And I think they can see that they have to do something and this is the only way out. So that’s why I say one is hoping that they won’t try to put up too many obstacles to the process and get things moving along.

FT - You were of course hosting Mr. Tsvangirai here. Isn’t there a danger that the MDC [Mr. Tsvangiria’s Movement for Democratic Change] have made a mistake here in going into a government with Mugabe still in power?

IK - Do you want me to give you my answer in public? President Mugabe has been in power 29 years, I think. That is just ridiculously long for any leader. I think 10 years for any leader [is enough], when you look around the world at some of the leaders. Take Tony Blair. He came in hugely popular. You remember how he left? You take John Howard, the Australian prime minister; he had done 11 years. And the Australian economy had done well during his time, but people had just had enough. So not only did his party lose, he also lost his seat. And I think that is the trend. With Mugabe, you can see it. If you look back, the first 10 years that he was president – prime minister and then became president – were probably the best years for him. After that, it was just a decline. Every year, and in more recent times, every day he has been in power, things have just gone from bad to worse. So I really think, in my own opinion that he should have, long ago, stepped down. He shouldn’t, in my opinion, be there now. He should have given over to somebody else in his party to take over the reins, and I just cannot believe what kind of legacy he thinks that he is going to leave for the country and what people will remember him for.

FT - But presumably, given what you’re saying about the odds against this government being effective, presumably that means you’re expecting the humanitarian crisis to get worse?

IK - I’m hoping it will get better. I’ve spoken to some of those in the donor community, that we would hope in this period, as much as we understand they are not ready to engage Zimbabwe with development assistance because they want to see first how things will pan out, but I’ve certainly said to them that now is the time to get more engaged with humanitarian assistance. And I’m hoping that they will. And I haven’t heard that they would be reluctant to do so. I think they are keen to do so. Removing all the impediments that they faced before, when they tried to get involved, and that now we will start seeing a turnaround in some of the crises, like they have with the cholera and everything like that. But then, coming back to that situation of Mugabe, the MDC, I think, agreed to let Mugabe stay on as President in the hope that it would be a demonstration of good faith on their part, knowing that he was so desperate to continue to stay in power, and that that would see some genuine moves on his part towards reconciliation.
But we didn’t see that. That’s why the agreement took almost five months before it came in place, because there was just, all we saw was bad faith and more bad faith on his part. So yes, in hindsight, obviously, they probably regretted that they had agreed to that. And that is why we have always called, as Botswana, for elections. We didn’t agree to this sharing of power, just like we didn’t agree to the Kenyan model either because we felt that what we need to do is to ensure, on the continent, that we have credible elections. And if a ruling party thinks it’s likely to lose, and then uses its position as a ruling party to manipulate the outcome of the election so that they can extend their term in power, is not the way to go. And therefore, this power-sharing thing is a bad precedent for the continent.

FT - But you were present at that meeting in January with the [Southern African Development Community, the regional bloc] heads of state when everybody thought that what was going to happen was that you would continue your stand that President Mugabe’s presidency wasn’t legitimate and, exactly as you’ve just said, elections were the answer. And then we had a deal between Mr. Tsvangirai and Mr. Mugabe. What happened in that summit?

IK - Let me remind you, what happened was that after the presidential election [the one-man run-off Mr. Mugabe staged last June], if you can call it that, and Mugabe was inaugurated as the president, we came out at that time and said we don’t recognize him as the president because those elections were a sham. And that was the position we took until the 15th September when the agreement was signed. So when the parties, the Zimbabwean parties, because it’s not for us to dictate what they should do … that was their agreement. So they said fine, we are signing and we are going to, as Zimbabweans, agree that Mugabe can be the president. So we said fine. If that is the agreement, and it was then supported by SADC, the [African Union] and the UN – because they had mediators there – they were all there in Harare. And so that turned the page for us. We will recognize Mugabe as the president. Consistently after that, when things were going wrong in that five month period, we were issuing press statements expressing our concern about the way things were going. And we were very near, just before the summit – I was going to say between you and I, but you are obviously going to put it out in your paper – but I had written to the president, the SADC chairman, [South African] President [Kgalema] Motlanthe, that we were about to go back to our position of now de-recognising Mugabe and any of his political appointees because we could see they were frustrating the process of implementing the agreement. And then the summit was called. So we went to that summit and I attended it, whereas I didn’t attend the previous one, because we didn’t recognize [Mr. Mugabe]. And we attended it in order to try to have a last ditch attempt to try and get this agreement back on its feet. And that was achieved.

FT - You wrote to President Motlanthe, as you say, and then you were persuaded to back the agreement that came out, even though there were still political detainees at the time, even though there was still this sharing agreement of Home Affairs and all the problems the MDC had been raising. Was there something that convinced you?

IK - No, no, no. What happened was that they then still attempted to get this power sharing agreement in place. You remember, he went to Harare to go and talk to the parties, and they failed. It was after that failed that they then called the summit. So when we were at the summit, they [SADC negotiators] said to us that, look, we went to Harare and these were the issues that they had put to the MDC. And the MDC had come up with their own issues which needed to be addressed. There were about five of them that they were unhappy with. So they felt, as the SADC summit, that those were the things that we should stand by. We, as Botswana, said no: we don’t agree with that. Let us bring in the MDC and hear from them and try to work our way around the issues so that we can find an accommodation. Because initially when we started in the summit, the MDC were not with us and I objected to that, right from the beginning. I said how can we sit here and talk without all the parties being here? And just having Mugabe there, I can’t see how we are going to make progress. So we attempted to talk around it, and this must have gone on for a couple of hours. And we weren’t going anywhere. The MDC were brought in, and the MDC came and told that fine, they did not agree with the position, why they didn’t agree. And I said unless we find an accommodation of the MDC’s point of view, there is going to be no agreement. Having Zimbabwe continue under the stewardship of Mugabe and [Zanu-PF, his party], we were just going to see that country becoming even more and more of a refugee camp.

FT - But it still is under the stewardship of Mugabe and Zanu.

IK - Yeah, I guess you’re right, when you read the agreement. But as I said, that is what they settled for. If it had been me in the MDC’s place, I would not have agreed to what is in there now. But as I said, I’m here, they are there. It is their country. It is their agreement and we must just give it support. That was the only thing that was on the table. Our plea and request for a re-run of that election was never ever an issue. It was never taken up. It was never agreed to. And we made it several times. And even today, we still think that would have been the best thing, to have a re-run of that election.

FT - Will there have to be another election before there’s a truly legitimate government in place?

IK - There’s going to be. That is the other thing I said. I said you can’t run away from an election. There is going to have to be an election at some stage, whether it’s in two years time or they allow this agreement to go on for its full term; it’s now almost a year now, so another four years under this interim arrangement. But at the end of the day, they’re going to have an election and where will we be then? Will we be better off, will the election be credible? We will wait and see.

FT - Turning to HIV/Aids here. We were talking to some health professionals the other night. They’re talking about studies that show 55-65 per cent rate among the adult population who have been diagnosed and advised to take ARVs [antiretroviral medication for HIV/Aids]. That is an astonishingly high number, but I see that there is a government figure more around 17 per cent and the national figure [from health agencies] is around 33-37 per cent. Where do you think the epidemic is?

IK - It is certainly not 55. It is closer to the 17 per cent. That is the prevalence in the country. At one stage when we looked at the number of people who were coming in and being tested, that was the only sample we had and those indications were around 30 per cent. But we have come to realize, over the years we have been doing this, that it’s obviously lower and it is dropping. The number of people we have now on ARVs – 97,000, almost 100,000. And our initial projections, when we first started this programme, were it could be around 110,000 people. So now we have been able to reach 97,000 and you can work that out on percentages when we have a population of about 1.8m people.

FT - And a final thing – unless there is anything else you wanted to say that we haven’t touched on?

IK - I wouldn’t know what you wanted me to say. I have always known the less I say to a journalist, the better.

FT - You have built a reputation as a democrat in a region with dubious credentials, but there are people who look at your military background, they look at the amount of directives you’ve issued direct from the presidency and they say: is this man committed to democracy? Are you keen to serve more than one term?

IK - That I haven’t decided and it is not my decision either. It would be the party. First of all you should understand that it was not my choice to enter politics. It has not been one of my career ambitions. I was quite happy in the military where I was and after that, before you ask, I was going to go into tourism and set up and run a couple of charities, which I did start. And I am still involved with it now. So that was what I intended to do. And then the former president [Festus Mogae] asked me to leave the military and come in and be his number two in politics. I always knew politics to be a dirty game, it had no attraction for me and now, being in politics, I can confirm it is a dirty game and I would never recommend it to anybody at all.

And if you say why am I still in politics, well I ask myself that question every day. But when you talk about directives, how else do you manage or lead without giving directives? So directives, a lot of them come after consultation, there is a cabinet and we make decisions that come out of cabinet. When I go around and have these public meetings, I get a sense of what people think we should be doing. I don’t just take it that because we have been given a five-year mandate to govern, that we can then go out and just do whatever we want to do, based on our manifesto. That things change in people’s lives on a day to day basis and it is important to go out and maintain contact with them. And in addition to having public meetings, in recent times I have also taken to, wherever I am on a weekend – like this weekend I will be somewhere else, last weekend I was somewhere else – I will, if I am driving around near a village or even in town, I did it here about two weeks ago, I will just pop in if I see some people sitting in the yard, I will just stop the vehicle, pop in and just go and talk to them and sit down with them and ask them how they are doing and they should share with me any problems they have. And we take their names, we take their phone numbers, come back to the office and then try to address the problems that they have given us. And I do that unannounced, the public meetings, they are announced, the people will come in to come and attend and you have all the paraphernalia that goes with it – the security and all the officials who would be there. But this other element I find also very useful because I’ll be just in one vehicle with maybe two other people and no one is expecting me and you just go along and ask them how life is.

IK - I am a bit of a health freak, I do a lot of exercise every day and I have a gym at home, I do one-and-a-half hours of gym in the morning and in the evenings I go and do sports, either football, volleyball, still do the military obstacle course and cycling. And in my free time I do quad biking and power shooting and caving.

FT - And in a sentence when you leave office, whenever that may be, “legacy” is a dreadful term but how do you want to leave Botswana different to how you found it?

IK - I think we are just building on a foundation, if we could just raise the standard of living of the people of the country. The characteristic I would like to leave here is based on the four Ds – Development, Dignity, Discipline and Democracy – and it is all those things, building towards that.
Like you I don’t want to use the word legacy because that is not what one should be trying to aim for. I think we are in a collective in trying to take Botswana to the next level and I am just part of the cog on the wheel in trying to achieve that. So all these other initiatives that I introduced last year are a step towards achieving that.

Copyright The Financial Times Limited 2009

No comments: