Wednesday, October 27, 2021

Botswana ‘clueless on its diamonds partner’s tactics’

The government of Botswana does not have a clue on the technology that its partner De Beers uses despite their high level of engagement and lengthy partnership which has produced an imbalance. 

This challenge, among others, was presented by the Acting Coordinator of the Diamond Hub Botswana Khumo Mogaetsho at the 2016 Diamond Conference that took place last week in Gaborone. 

Mogaetsho observed this in her presentation delivered on the topic of public/private partnerships and regional collaboration with the particular view of strengthening the links of the value chain. The theme of the conference was “Beyond tomorrow ÔÇô preparing the diamond sector for the future”. 

Mogaetsho first elaborated on the benefits that the long-standing arrangement had produced, assisted mainly by the two being able to negotiate terms. She also highlighted that the policy conduciveness relating to prospecting forms the basis of partnerships, which the government has demonstrated to investors. She observed a dependency syndrome of Botswana on De Beers as its technical partner and the lack of the country’s experience, technical expertise and the limited participation in the diamond value chain. 

In terms of the value chain she said that Botswana’s involvement was limited to mining and processing and least participation in other areas. 

In an interview with Sunday Standard on the subject of increasing the participation of Batswana in the diamond value chain, Mogaetsho stated the intention of government in achieving that but, however, pointed it out as a key challenging area. She said that it needed the effectiveness of partnerships and collaborations to start rolling as it was not easy. 

She believes that to participate in the diamond business one needs skills, technical expertise, access to funding and access to rough diamonds. In explaining the difficulties of the processes she said that gaining skills took years as they are dependent on appropriate training institutions; that because of the risks involved in the diamond business access to financing does not come easy and also that it is hard to build relationships with people to sell the diamonds to. As it stands government’s enablement regarding participation in diamond business processes remains at a very minimal level. 

Mogaetsho said that the Ministry of Minerals, Green Technology and Energy Security realised the need to urge government to sell the idea of development finance institutions (DFIs) such as Citizen Entrepreneurial Development Agency (CEDA), Botswana Development Corporation (BDC) and National Development Bank (NDB) to venture into financing the mineral industry. 

She identified the participation of DFIs in financing mineral development as a good starting point. She also mentioned that partnership with entrepreneurial organisations such as Local Entrepreneurial Authority (LEA) to provide educational programmes on the diamond business processes as another step in the right direction. 

Mogaetsho cited the benchmarking exercise that government engaged in at Chile where it found a very good initiative termed Inami which provides established small and medium enterprises with diamond technical expertise for free. She said the same could be done for Batswana as a take-off in increasing participation. Unlike in Chile, however, Botswana does not have an established base of local small and medium enterprises involved in the diamond business, which perhaps may be the first starting point for government: to promote entrepreneurship in the diamond sector. 

Mogaetsho said that the Ministry was currently reviewing the mineral policy to identify the challenges and achievements and whether they would be a need to re-craft the strategy. 

Shirley Webber, Head of Natural Resources at Barclays Bank South Africa, when presenting on the subject of sustainable financing for the diamond industry, mentioned that the challenge that the banks encounter is the difficulty in understanding diamond pricing. This attests to the stringency alluded to regarding financing in the diamond industry as the banks first have to appreciate the risks involved.

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