The Botswana diamond cutting industry that has been subdued to the global economic crisis is about to get some support from the USA government through its Overseas Private Investment Corporation (OPIC), to the tune of US $ 250 million, sources said Friday afternoon.
The Botswana government’s special economic committee was informed Wednesday that Lazare KaplanÔÇöthe USA cutting and polishing outfitÔÇöalongside the yet to be established world’s biggest diamond bank, ANB AMRO, are sponsoring a move that would see over P 1 billion cash being guaranteed by Barack Obama’s administration. ANB AMRO is a well experienced bank in diamond financing currently operating in 46 countries and is attributable to 40 percent of the world’s diamond financingÔÇölargely at the down-stream.
“The deal is not yet finalized; what is remaining is for our lawyers to sign the contract but, before that is done , the OPIC people have to come here to do some due diligence,” head of Botswana’s Lazare Kaplan, Alfred Dube, said.
The special facility from the American government is aimed at propping up the Botswana investment, which is 75 percent guaranteed by that government while 25 percent will be met by the local investors. The money is available to all 16 sight-holders in the country.
“Indeed, we have been talking to OPIC in terms of supporting the down-street market. And mind you, this is the first time for this to happen. That is why it has taken us over two years,” he said.
The USA market is key to the diamond industry as to consume 50 percent of the world jewelry produced and Botswana, being the king rough producer, is now graduating to the level of cutting, polishing and jewelry production.
The news comes at a time when ANB AMRO, the world’s largest diamond divisionÔÇö Fortis, wholly-owned by Dutch government ÔÇô has applied for two banking licences. One is for local diamond support while the other one is for regional banking support through the International Financial Service Centre. At the special economic committee meeting held Wednesday, Dube and Moris Tempelsman, the president of Lazare Kaplan based in New York, presented the proposed special facility.
“We think there is a greater urgency for this than before, because we do not know how many ( of the cutting and polishing diamond industries will survive,” Dube added.
The move is expected to safe up to 3000 jobs in Botswana which are currently hanging on the balance since the global economic crisis made an impact internationally since the third quarter of last year.
The jobs were created out of the lust for economic diversification and the grand plan of beneficiation in the producer countries.
Botswana, along side with other two southern African major diamond producing countries, namely, Namibia and South Africa are already exercising the beneficiation process that started two years ago.
The main beneficiaries among the local commercial banks are likely to be Stanbic, Standard Chartered Bank and to some extent Barclays bank who are already sponsoring some of the cutting and polishing activities.