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Foreign Policy: What message are you trying to get across about Africa?

Gareth Penny: Africa is a continent that is on the move. It’s easy if you look at a lot of journals or newspapers to get a one-sided view of what is happening, but in fact there is a lot on the ground that is extremely positive. It’s a continent that is growing a lot faster than North America or Europe, and there are very significant opportunities, particularly in natural resources, but beyond that in telecommunications and a whole range of other industries.

Why is it important that De Beers tells that story? We’ve been doing business in Africa for 120 years. We’ve got 19 mining operations and 17 of them are in Africa. We’ve got a business model that we’re happy to share with others in that hope that it acts as a stimulus. At the end of the day, if the continent is successful, that helps our business as well.

FP: Some development experts argue that celebrity advocates such as Bono and Bob Geldof are actually hurting Africa by portraying the continent as a basket case in desperate need of help. Do you think it’s harmful when aid groups lobby for outside assistance to Africa?

GP: They see a need and they’re trying to address it, and I think that’s admirable. But it’s not the way we would look at it. We’re a business. Our chairman has been vocal in promoting “trade not aid,” because we believe that the most effective long-term, sustainable way to help Africa is by building sound businesses and by working with governments to create a sound environment. I don’t think it’s an either/or. There’s an opportunity to provide support for education or HIV/AIDS. But I don’t think it’s a substitute for engaging on a business level.

FP: If I were a Western businessman thinking of investing in Africa, what advice would you give me?

GP: You’ve got a take a longer-term view, and for us it’s particularly acute. If we started exploring in Angola, we could be there for 10 years before we found something. It could take us another 10 years, or seven or eight years, to get the permitting process, to get all the infrastructure—roads, railways, water—everything else that we needed to establish a successful mine. And then it could take you the best part of 10 years before you’d recovered your capital. So, you could be looking at a 20-year-plus program. You’re going to be there for decades. And most of the mines that we’re involved with, the life might reach out to 50 years. So, it’s all about sustainability.

FP: What do you mean by “sustainability”?

GP: It means all the things you might imagine: protecting the environment and so on. But it’s got to go beyond that. It means working with communities. It means making sure that you have local management. It means you’ve got to address issues like HIV/AIDS. The kind of trucks that people are driving on our mines, they could cost a million dollars each. So, you’ve got to have people who are really qualified to have that kind of equipment. So, it’s benign self-interest. There are excellent returns to be made [in Africa], but it’s got to be participatory; it cannot be neocolonial.

FP: De Beers has extensive operations in Botswana, the world’s largest diamond producer. Many people cite the country as a model for Africa; it’s been one of the fastest growing economies in the world for 25 years now. What do other countries with natural resources—the Democratic Republic of the Congo (DRC), Angola—need to learn from Botswana?

GP: In 1966, Botswana was one of the five poorest countries in the world, and today, it’s a middle-income country. Some people say, “Ah, yes, but they have diamonds.” Well, yes, but how many other countries haven’t used natural resources in a beneficial way?

So what are the lessons? They are a democratic country. They have open and transparent government. They have rule of law, freedom of speech and association, active trade unions, and so on. They have very few foreign exchange limitations. It’s peaceful. There’s very low crime. Your property rights are safeguarded, which is very important because if you’re going to spend a lot of money doing exploration, you’ve got to be pretty confident that it’s not going to be taken away from you. So, it’s a country that’s open for business. And they’ve taken the revenue from the diamond business and channeled it extraordinarily effectively. It hasn’t been wasted on lavish, non-productive activity.

FP: Doesn’t geology make it harder to create sustainable diamond-mining operations in a country like Sierra Leone, where the diamonds are mostly on the surface, as opposed to Botswana?

GP: If diamonds are on the surface and they’re distributed across a wide area, it means that a much larger group of people can access them in a much more informal way—whereas all the diamonds in Botswana have been discovered at depth, and it requires sophisticated mining activity. But one can misconstrue that. However diamonds are found, there’s a requirement from the state to regulate as necessary. You’ve got to have things like the Kimberley Process, which has shown that even in places where you have lots of informal digging, you can still have a regulated environment. So, I think it’s more challenging but nevertheless doable.

FP: What did you think of the film Blood Diamond?

GP: Those events happened in the 90s, and as a response the industry had taken very significant measures from 2000 onwards, implementing the Kimberley Process and getting governments and civil society involved over a five-year period. Today, the diamond is the most regulated mineral in the world. Had that not happened, when the movie came out it would have been a very significant issue to face. So, when Oprah shined a spotlight on the diamond industry and went to Botswana and Namibia and filmed, the story was a pretty positive one, and it had no impact on our sales.

Gareth Penny is managing director of De Beers Group.