Okavango Diamond Company (ODC) a company that uptakes 15 % of Debswana rough diamonds for sorting, polishing and valuing has joined hands with the Gemological Institute of America (GIA) to tell the story of Botswana‘s most valuable mineral resource.
Diamonds are the anchor of Botswana’s economy contributing more that 30 % to the country’s Gross Domestic Product. The diamonds sector is also the largest contributor to the country’s mineral revenue and consequently the largest foreign income earner. ODC’s rough diamonds supplier, Debswana is also the country’s largest single private sector employer. Only Government employs more people than Debswana.
As a pilot initiative, GIA has selected and evaluated ODC rough diamonds for its M2M program, also to be auctioned at this year’s July Spot Auction. M2M is a digital platform that brings together GIA’s unique ability to scientifically match rough diamonds to the resulting polished gems with information from each step in the value chain that tells the compelling story of a diamond’s journey. Having completed another pilot phase of the program, GIA has processed thousands of rough diamonds ranging from one carat up to more than 100 carats.
Okavango Diamonds says the M2M program will create a platform for the company, its value chain stakeholders and customers to share and relay the message enshrined in the story of proud heritage and history of Botswana's diamonds. “This will provide a unique platform to share with the world the positive contributions of this valuable resource in the lives of people, clear positive socio-economic impacts of Botswana’s diamond will be deliberated on in this platform for view by the entire world, in turn profiling Botswana even more,” said ODC Managing Director Marcus Ter Haar. The ODC Boss was also quoted noting that the move was an important step in confirming diamond provenance, “We anticipate this to benefit our customers, retailers and ultimately consumers,” he said.
Ter Haar further observed that this pilot undertaking will also afford ODC customers a chance to appreciate how to confirm and distinguish Botswana Diamonds from other M2M rough stones. “Botswana Diamonds are amongst the few and very scarce high value precious stones, so this platform actually exposes us and avail this information to the Global uptake further boosting our business,” added Te Haar. Okavango Diamond Company observes that the program will provide the consumer with assurance that their polished diamond is natural and has been sourced from an ethical producer country where diamonds continue to make a profound impact on the livelihoods of its citizenry.
“Consumers are exhibiting greater interest in the origin of the diamonds they purchase. The M2M program allows the retailer and ultimately the consumer, to trace the journey of a polished stone, adding to its story at each point along the value chain,” Te Haar said. The M2M program also allows for the individual characteristics of a polished stone, and its unique journey, to be shared with consumers using mobile application and smart card technology, together with traditional grading reports.
“We are very pleased to welcome ODC to M2M as part of this pilot,” said Tom Moses, GIA executive vice president and chief laboratory and research officer. “Dozens of retailers and several manufacturers are signed up, and we continue to engage the majority of diamond producers as part of the initiative,” he said.
The GIA M2M program is a new digital storytelling platform, “An innovative way to combine scientific information with engaging content to involve your customers in the fascinating story of their diamond. Ensure they know the facts they need to make an informed purchase, while connecting on a deeper level with the romantic journey of their diamond,” said Moses.
Breakthrough in research allows GIA to match a polished diamond to its original rough by using scientific markers, bringing transparency to the natural diamond supply chain. In addition, the M2M mobile app provides detailed information about diamond formation, grading, and the jewelry creation process. Components of the service include a smartcard with RFID technology, a mobile app available through all major app stores and a customizable book at an additional cost.
This century is always looking at improving new super high speed technology to make life easier. On the other hand, beckoning as an emerging fierce reversal force to equally match or dominate this life enhancing super new tech, comes swift human adversaries which seem to have come to make living on earth even more difficult.
The recent discovery of a pandemic, Covid-19, which moves at a pace of unimaginable and unpredictable proportions; locking people inside homes and barring human interactions with its dreaded death threat, is currently being felt.
Member of Parliament for Kanye North, Thapelo Letsholo has cautioned Government against excessive borrowing and poorly managed debt levels.
He was speaking in Parliament on Tuesday delivering Parliament’s Finance Committee report after assessing a motion that sought to raise Government Bond program ceiling to P30 billion, a big jump from the initial P15 Billion.
Government Investment Account (GIA) which forms part of the Pula fund has been significantly drawn down to finance Botswana’s budget deficits since 2008/09 Global financial crises.
The 2009 global economic recession triggered the collapse of financial markets in the United States, sending waves of shock across world economies, eroding business sentiment, and causing financiers of trade to excise heightened caution and hold onto their cash.
The ripple effects of this economic catastrophe were mostly felt by low to middle income resource based economies, amplifying their vulnerability to external shocks. The diamond industry which forms the gist of Botswana’s economic make up collapsed to zero trade levels across the entire value chain.
The Upstream, where Botswana gathers much of its diamond revenue was adversely impacted by muted demand in the Midstream. The situation was exacerbated by zero appetite of polished goods by jewelry manufacturers and retail outlets due to lowered tail end consumer demand.
This resulted in sharp decline of Government revenue, ballooned budget deficits and suspension of some developmental projects. To finance the deficit and some prioritized national development projects, government had to dip into cash balances, foreign reserves and borrow both externally and locally.
Much of drawing was from Government Investment Account as opposed to drawing from foreign reserve component of the Pula Fund; the latter was spared as a fiscal buffer for the worst rainy days.
Consequently this resulted in significant decline in funds held in the Government Investment Account (GIA). The account serves as Government’s main savings depository and fund for national policy objectives.
However as the world emerged from the 2009 recession government revenue graph picked up to pre recession levels before going down again around 2016/17 owing to challenges in the diamond industry.
Due to a number of budget surpluses from 2012/13 financial year the Government Investment Account started expanding back to P30 billion levels before a series of budget deficits in the National Development Plan 11 pushed it back to decline a decline wave.
When the National Development Plan 11 commenced three (3) financial years ago, government announced that the first half of the NDP would run at budget deficits.
This as explained by Minister of Finance in 2017 would be occasioned by decline in diamond revenue mainly due to government forfeiting some of its dividend from Debswana to fund mine expansion projects.
Cumulatively since 2017/18 to 2019/20 financial year the budget deficit totaled to over P16 billion, of which was financed by both external and domestic borrowing and drawing down from government cash balances. Drawing down from government cash balances meant significant withdrawals from the Government Investment Account.
The Government Investment Account (GIA) was established in accordance with Section 35 of the Bank of Botswana Act Cap. 55:01. The Account represents Government’s share of the Botswana‘s foreign exchange reserves, its investment and management strategies are aligned to the Bank of Botswana’s foreign exchange reserves management and investment guidelines.
Government Investment Account, comprises of Pula denominated deposits at the Bank of Botswana and held in the Pula Fund, which is the long-term investment tranche of the foreign exchange reserves.
In June 2017 while answering a question from Bogolo Kenewendo, the then Minister of Finance & Economic Development Kenneth Mathambo told parliament that as of June 30, 2017, the total assets in the Pula Fund was P56.818 billion, of which the balance in the GIA was P30.832 billion.
Kenewendo was still a back bench specially elected Member of Parliament before ascending to cabinet post in 2018. Last week Minister of Finance & Economic Development, Dr Thapelo Matsheka, when presenting a motion to raise government local borrowing ceiling from P15 billion to P30 Billion told parliament that as of December 2019 Government Investment Account amounted to P18.3 billion.
Dr Matsheka further told parliament that prior to financial crisis of 2008/9 the account amounted to P30.5 billion (41 % of GDP) in December of 2008 while as at December 2019 it stood at P18.3 billion (only 9 % of GDP) mirroring a total decline by P11 billion in the entire 11 years.
Back in 2017 Parliament was also told that the Government Investment Account may be drawn-down or added to, in line with actuations in the Government’s expenditure and revenue outturns. “This is intended to provide the Government with appropriate funds to execute its functions and responsibilities effectively and efficiently” said Mathambo, then Minister of Finance.
Acknowledging the need to draw down from GIA no more, current Minister of Finance Dr Matsheka said “It is under this background that it would be advisable to avoid excessive draw down from this account to preserve it as a financial buffer”
He further cautioned “The danger with substantially reduced financial buffers is that when an economic shock occurs or a disaster descends upon us and adversely affects our economy it becomes very difficult for the country to manage such a shock”