Business
Botswana: A country rises from sleepy backwater to global diamond hub
A sleepy African city is rapidly being turned into a major global trading center.
After decades of just mining rough diamonds, Botswana’s capital Gaborone now cuts, polishes and sells the precious stones itself.
Most people may be unable to find Gaborone on a map, but it is becoming a regular destination for global diamond traders and that is changing the economy.
This dusty, low-rise city is being transformed, as high-rise apartments and hotels are constructed and businesses bet it will mean a boost for them.
Diamond-related companies are setting up factories in anticipation of the global mining giant De Beers relocating its sales business to Gaborone from London. Resulting in US$6 billion worth of diamond trades taking place, attracting buyers from around the world and positively impacting the local economy.
Okavango Diamond Company, a local company has already held an auction. A new diamond park has been built to host spin-off businesses.
One of them – a branch of an Indian firm called Shrenuj – has recently opened and is making jewellery partly using Botswana’s diamonds.
“We can source rough diamonds in Botswana,” the manager, Kim Lenni, says. “It made sense for us to open a jewellery factory. We’re able to supply the local market and the US from Botswana.”
Other companies – totally unrelated to diamonds – say they’re also seeing a jump in business.
Abel Monnakgotla, who runs a local transport company, AT&T, has 50 buses and runs routes to neighboring South Africa and Namibia.
He has now invested in new, minibuses and says he is earning money by ferrying diamond traders around.
“We have diversified. We have gone into car rentals and airport shuttles,” he says.
“Most of the benefit has previously been at a macro level – infrastructure, roads. But as entrepreneurs we haven’t had a direct benefit. We will now benefit directly.”
There are some broader concerns about the country’s readiness. There are no direct flights to Gaborone from Europe or the United States, meaning journeys to the country have to go through another African city, usually Johannesburg.
A regular rolling program of power cuts means hotel guests may be forced to shower in the dark and cafes unable to boil water. However, the issue of inadequate infrastructure is being rapidly addressed.
Alex Monchusi from the Chamber of Commerce says many businesses are not yet ready to take advantage of the new diamond work.
“It is very similar to a country winning the right to host the Olympic Games – you’ve got a big opportunity to host it at world standards, but you have little resources to do it, not much time to do it.”
The government, though, is confident any problems will be fixed, and it will mean a big difference.
Eric Molale, the Cabinet Secretary, says the diamond move is “a once in a lifetime opportunity” for Botswana. “The ultimate objective of the government is to create a diamond pipeline that is value adding to the nation – not just mine and sell.”
Source: BBC