Sunday, December 3, 2023

Barclays announces plan to expand lending to the diamond sector

Barclays Bank Botswana has announced plans to finance the country’s diamond industry despite the economic uncertainty facing the industry. Barclays confirmed that over the past two and half years they have been evaluating and generating the right level of expertise in this industry and are comfortable with expanding its lending to the sector.

Barclays Head of Corporate and Investment and Banking Kgotso Bannalotlhe said the diamond polishing and cutting sector has fared very well despite the downturn last year. He stated that the bank only lends to the top diamond sight holders who have been through many cycles of commodity downturns. He also revealed that that none of their clients in this portfolio defaulted despite a tough first half of 2015.
“We take comfort in the De Beers Best Practice Principles (BPP) which are bringing the financial transparency required which indicates to us we can build a robust and sustainable business financing this sector,” said Bannalotlhe.
Asked on the diamonds deals which are said to be risky at the moment as the buyers are consuming less, especially the bigger stones which were previously purchased by the Chinese, he stated that as of the last few sights at the beginning of this year they have seen a recovery in prices so they believe the worst is behind them. He added that their clients have been through these cycles before and understand the adjustments required.  
“Like all lending transactions, credit risk remains but we do ensure that we are financing top diamond sightholders with a credible track record of many years in the industry,” Bannalotlhe stated.
Bannalotlhe also said Barclays finances the working capital requirements from stock purchase through the cutting and polishing phase before the eventual sale, adding that the sales proceeds will be used to repay the loans.  
He said central to how they see themselves as a Corporate and Investment Bank is the desire to play a meaningful role in supporting those entities making a difference in the Botswana economy because it is the ambitions of these companies that change lives. 
“We perceive ourselves as a development partner to Botswana contributing to growth. The clients we are financing have gone through many iterations of the commodity cycle and survived. They are tried and tested and have deep expertise in this industry,” he said.
Barclays Botswana MD Reinette Van Der Merwe spoke about the journey they undertook as a bank, and how far they have gone in supporting the sector, adding that to-date the manufacturing portfolio is over 20 percent of their total asset book.

“Botswana government has been driving the diamond beneficiation seeking to create a world class Diamond Hub which will chiefly transfer skills and provide employment to Batswana, this is evident through the relocation of the sales function from London to Botswana which further led to a number of factories being set up in Botswana,” said Van Der Merwe.

She also confirmed that 2015 was a very challenging year for the diamond industry adding that the industry’s unwavering support and resilience forged ahead.


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