Tuesday, May 11, 2021

Sightholders complaining of low productivity, high production costs in Botswana

A few short years after the relocation of the Diamond Trading Centre headquarters to Botswana, sightholders are already complaining about high production costs and low productivity in the country.

“They said there are high production costs. They said productivity is lower in Botswana. When they talk of productivity, they said its the number of days worked in Botswana. You know that in Botswana in a year, 230 days are worked as opposed to India and other places where they have 280 days,” said the Minister of Minerals, Energy and Water Resources, Kitso Mokaila, in reference to his ministry’s engagement with the sightholders.

Production costs were an issue even before DTC relocated to Botswana: it is cheaper to cut and polish diamonds in India and the Far East than it is here. Whereas it cost a minimum of US$10 per carat to cut and polish a diamond in India last year, the cost was US$60 in Botswana.

The situation notwithstanding, De Beers says in its 2014 Diamond Insight Report, that the trend of growth in low-cost traditional manufacturing locations in Asia has recently started to reverse and that Botswana will be among new destinations for diamond cutting and polishing jobs.

The De Beers report says that in the new order, “producer countries are gaining share on the back of government policy, despite higher costs than traditional manufacturing locations”, “old cutting locations [Belgium, the United States, Israel and South Africa] have lost share of manufacturing following migration first to low-cost locations [India and the Far East] and subsequently to producer countries.” Botswana is in the latter category.

While the government would be hard put to argue against the point about production costs, it is challenging the one about productivity.

“We have engaged on this because these companies take Jewish leave or Indian Christmas. So, the issue of days should not be a big issue. But we have had discussions with them in terms of what could be done to increase the number of days,” said Mokaila, adding later that in terms of efficiency, it has been proven that Batswana workers are as good as their international competitors. “It is just a question of the number of holidays we have.”

Interestingly, while the minister may want to contest the point about Botswana having too many holidays, there is a view among other people in the international business community that such is the case. One of the findings in a report of a study conducted on behalf of the British High Commission in Gaborone by a South African consultancy called Imani Development (International) is that Botswana has “too many holidays.”

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