The Southern African region has been warned to address productivity issues in the diamond downstream industry or face losing out to India, which is one of the world’s largest cutting centres.
The three Southern African Development Community (SADC) member countries: Botswana, Namibia and South Africa have been having labour and costs issues as they try to use the resources to create employment in their respective economies.
Prof Roman Grynberg argued in his latest article on diamond beneficiation in the region that governments in Southern Africa require a real reassessment.
“It is necessary to negotiate with workers and trade unions on the productivity issue. If agreements are not reached, and solutions are not found, the potential benefits of diamond beneficiation will be permanently lost to India,” he said.
He revealed that the Industrial Policy in Africa has helped to create infant industries but has rarely, if ever, had sufficient focus on the boring, expensive and “unsexy” issue of nurturing the industry to become globally competitive.
“The unfortunate response of some policymakers to low productivity and stunted development in this industry is to look for more value-added activities, such as jewellery-making, rather than doing the hard graft of addressing productivity issues in the cutting and polishing industry,” Grynberg added.
“There are no simple answers to raising productivity and becoming internationally competitive, but, if successful, it is an activity that could create employment for tens of thousands of workers in Southern Africa.”
It is said that there are 800 000 cutters in India and in Botswana only 3 750 with the difference between the two countries stems largely from the productivity of workers.
In its 2014 Diamond Insight Report, De Beers said that the cost of cutting in 2013 ranged from $60 to $120 a carat in Botswana whereas in India the range varies from $10 to $50 a carat.
“In working the smaller diamonds, Botswana is six times more expensive than India and for the larger more expensive stones Botswana is almost three times as expensive as India,” he revealed.
“The reasons for these cost differences are: low productivity, low cost of ancillary services, and the difference in the number of working days in a year ÔÇô 232 in Botswana as opposed to more than 280 days in India. As a result, Botswana is limited to cutting stones of one carat rough and above.”