A new report has cast doubt over the much-publicised relocation of the headquarters of De Beers’ sales and marketing arm from London to Gaborone because the development has not led to more Batswana becoming business owners in this potentially lucrative field.
Compiled by the United Nations Conference on Trade and Development (UNCTAD), the document is titled “National ICT Review and Ecommerce Strategy for Botswana” and was launched recently. It states that in 2013, De Beers took major steps to support diamond beneficiation and establish Botswana as a major diamond trading centre by relocating all of its rough diamond sales activities and trading operations from London to Gaborone.
“Competition in the diamond trading business is fierce, especially from other diamond hubs such as Dubai, which hosts a number of prominent jewellery manufacturers, retailers and traders that support the diamond business,” the report says and adds that diamond beneficiation also takes place in South Africa.
The document says since the move of the De Beers operation to Gaborone, Botswana has been building up the diamond beneficiation industry, focusing particularly on building up its cutting and polishing industry and attracting international rough and polished diamond traders to strengthen Gaborone’s position as an international diamond trade hub.
“While the industry is still growing, a combination of factors related to the global economy and fluctuations in diamond prices in the second half of the 2000s has made it challenging for Botswana to establish a lower cost base for diamond processing and to compete successfully in the market, especially with countries with low diamond processing costs,” the report says.
It notes: “As of 2019, there also appear to be indications that the number of Botswana citizens who aspire to work in the cutting and polishing industries has been low.”
The report says mastering the skills of diamond cutting is a lengthy process requiring investment of at least six months of costly and closely monitored training. “This has posed cost and human resource challenges for diamond cutting businesses seeking to grow their workforce of skilled diamond cutters,” it asserts.
“Though still in the early stages, there are concerns that the beneficiation drive has not led to more Batswana becoming business owners in this potentially lucrative field. The lack of skills among Batswana appears to be a barrier to Botswana’s greater participation in the beneficiation industry.” The drafters of the document also found that the COVID-19 crisis accelerated the diamond industry’s transition to digital technologies, with use of e-auctions to run global sightholder sales auctions for rough diamonds.
“Furthermore, the integration of ICTs and e-commerce in the form of an e-platform that brings together key stakeholders and players in the beneficiation industry and jewellery-making industry could be beneficial for growing the industry and helping to boost business and trade in diamond support services and jewellery creation,” the UNCTAD document says. Towards reform, the report says the e-platform can host e-learning on the arts of diamond cutting and polishing to spread expertise and skills development and build a flourishing community of artisans.
In a related matter, the document says public e-procurement can have both pros and cons in terms of driving business. Since the government is the country’s largest employer, in the absence of a vibrant private sector, government contracts can play a role in driving business in Botswana.
However, it warns that unless private sector business opportunities arise, there is a risk of Botswana’s business sector becoming over-dependent on public sector procurement over time. This can have the effect of disincentivising development of competitiveness among Botswana businesses.
“After providing the initial impetus for business, weaning businesses off public contracts and moving them toward other types of contracts would be an important step forward in fostering a sustainable private sector,” the document says.
It notes that in countries with a robust entrepreneurial culture, e-commerce can often lead to a rapid increase in the number of business-to-consumer (B2C) e-commerce retailers. This can lead to an increase in e-commerce uptake by engaged consumers, which in turn can incentivise further entrepreneurship. By leveraging this dynamic, the UNCTSD document says, there is an opportunity to create a virtual cycle, helping to drive growth of the private sector and further diversification.
