Avi Krawitz: Botswana Needs to Gain Independence From Diamonds

Opinion piece
30/11/2015 14:57

Diamond industry analyst Avi Krawitz writes for Rapaport News that, "Fifty years on from independence, Botswana still finds itself in desperate need of improvements in its economic diversity. Its unsustainable reliance on diamonds is the reason why." The country's economic success story over the last fifty years is almost entirely attributable to the development of its diamond industry, but over-dependence on diamonds - last year the industry contributed 33% of Botswana's GDP - leaves it vulnerable to a downturn in the market, such as we have seen in 2015. "As much as the government benefited during the growth years, the decline in diamond demand and prices has depressed its budget and will likely lead to a deficit in 2015/16", writes Krawitz, and its effects will likely linger for a good while. Consequently, it seem obvious that Botswana needs to diversify its economy to gain independence from diamonds. How to do so, however, is less obvious.

Krawitz further reports that a healthy, sustainable diamond industry must serve as the backbone for investment. This requires profitable rough diamond production, but how to achieve this a subject of much current debate. What no one is talking about, says Krawitz, is the need for Botswana’s rough and polished diamond sectors to "be its own catalyst to gain a competitive edge", which he suggests could be solved by "developing a strong ‘Made in Botswana’ diamond brand ... selling purely Botswana-mined rough," and cutting and polishing it there. This seems to suggest that Botswana needs greater independence from De Beers as well. Furthermore, with beneficiation currently faltering, it begs the question as to how Botswana could manage the enormous cost and challenge of establishing and maintaining a brand when even the most established luxury brands are finding it difficult to stay relevant ... all while the goverment is entitled to only 15% of Debswana diamond production.