Partnership Focus: De Beers expanding local economic opportunity through Beneficiation
In 1969, DeBeers went into a 50/50 joint venture with the government of Botswana to tap the country’s rich diamond resources. That joint venture, Debswana, is now the largest non-government employer in the country, employing approximately 6,300 people, 93% of them local. Diamonds account for 76% of Botswana’s export revenue, 45% of government revenue, and 33% of GDP.
However, the Debswana partners knew that the potential for local economic impact was even greater – an attitude increasingly shared in the international community and among diamond consumers. They aspired to see more value added to rough diamonds locally in Botswana through the growth and diversification of a domestic diamond manufacturing industry.
In 2007, DeBeers and the government of Botswana set up another joint venture – the Diamond Trading Company Botswana (DTCB) – to catalyse the development of a local downstream diamond trading and manufacturing industry. DTCB sells rough diamonds to local diamantaires for cutting, polishing, and sales. DTCB now sells US$450 million worth of rough diamonds to 16 local diamantaires, which are typically part of larger international groups. Among them, these companies have invested more than US$160 million and created 3,000 jobs. They have also created opportunities for support companies to set up shop and create additional jobs in areas such as security, transportation, technical support, insurance, and diamond banking. For instance, the Gemological Institute of America is building a grading laboratory in the Diamond Technology Park in Gaborone, which will shorten the time it takes for manufacturers to get their stones graded – which they would otherwise have to do overseas. Similarly, the Antwerp Diamond High Council is setting up a technology and skills support center. The diamond industry is highly dependent on technology for sorting and manufacturing, and building local technological capacity is fundamental to its success in Botswana.
DTCB, the government, and the diamantaires are all playing critical roles in the development of a local diamond trading and manufacturing industry in Botswana. While DTCB sorts, values, and sells rough diamonds, the government is investing in infrastructure, training, security, and efficient import- export clearance systems. At the same time the diamantaires are bringing skills and technologies for polishing, as well as strong routes to market that offer good prices.
As a for-profit joint venture, DTCB provides a vehicle for DeBeers and the government of Botswana to collaborate to achieve shared goals, balancing their interests along with those of the diamantaires and other downstream players on whose success the whole industry depends.
The Partnership Agenda
Given the levels of investment required of all parties, it will take time to generate returns – but returns
are an integral part of the vision. Only a profitable local diamond trading and manufacturing industry will generate jobs, entrepreneurial opportunities, and wealth over the long run. Achieving profitability
will require the government to improve the business operating environment; banks to provide working capital at more competitive rates; industry associations to develop skills to reduce the overall cost of manufacturing diamonds
in Botswana; and companies to market those diamonds effectively.
Success will also require the industry to maintain a shared vision for its development. DeBeers and the government of Botswana are well- placed to serve as anchors, with more than 40 years in business together, but all industry stakeholders must be involved to ensure that priorities are being addressed and progress is being monitored. These stakeholders recognise that they are interdependent, which lays the foundation for setting shared objectives. Going forward, expanding and improving dialogue will be key.