Following a positive start to the year, the global impact of COVID-19 and the subsequent restrictions on the movement of both people and goods has had a major impact on wholesale demand for both rough and polished diamonds, and consumer demand for diamond jewellery, De Beers has indicated.
Briefing the media via a virtual platform on Thursday, Executive Vice President Diamond Trading, Paul Rowley and Executive Vice President- Corporate Affairs, David Prager gave a business update on the operations of the world leading diamond producing company, by value and volume.
“While lockdowns are now beginning to ease in some countries, a return to ‘normal’ activity appears some way off, as other countries have yet to see a peak, and concerns of further waves of infection persist,” said Rowley.
Rowley said the Covid-19 pandemic has been a challenge in the sense that it has affected the world in an unprecedented manner, having an overarching international impact, affecting multiple industrial sectors as well as impacting the entire value chain of mining business, from mine to retail.
“Unlike previous economic shocks, Covid-19 has a combination of health, social and economic challenges and considerations. International responses have led to difficulties not only with demand conditions, but several other factors,” Rowley told Botswana media.
“Such a challenge requires a unique response, traditional approaches to business are ineffective. A range of considerations must be balanced with commercial activity. Flexibility and adaptability are key.”
CONSUMER DEMAND IN KEY MARKETS DURING PANDEMIC
The United States lockdown has led to severely reduced consumer demands in the market representing around half of De Beers’ global demand. “Some States in the US are now relaxing lockdown restrictions but most stores remain closed and demand heavily impacted,” he said.
“Meanwhile China, which is the second biggest market for lockdown restrictions severely impacted retail sales in second largest global market. Most stores are now open again. Consumers returning are encouraging signs, but still below former levels.”
In India the ongoing lockdowns across the country continue to have a significant impact on demand. With the vast majority of the world’s diamonds being cut and polished in India, the lockdown there saw midstream demand grind almost to a halt.
Restrictions on international travel and shipping also saw trading activity dry up in key centres. Mines across the world have seen operations paused or stopped.
There are questions regarding whether some operations will return at all after the pandemic. With those mines that are operating, there remain significant logistical challenges and operations are at a reduced level, Rowley indicated.
Direct impact on De Beers Jewellers retail outlets as result of store closures and consumer demand impact, resulting in indirect impact through the value chain as impact on consumer demand ripples through pipeline. Forevermark business has been impacted as jeweller partners were impacted by store closures and consumer demand.
Meanwhile there has been a substantial impact on rough diamond sales; Sight 3 not held in light of logistical challenges related to lockdowns in Botswana, South Africa and India while Sight 4 was only attended by local beneficiation Sightholders as international customers were unable to travel.
Operations across the globe impacted due to requirements to implement different working practices and procedures to keep our people safe but mines are now operating again, albeit at reduced levels.
DE BEERS RESPONSE: FLEXIBILITY IS KEY
In response to the Covid-19 which has affected De Beers’ business, the mining giant has committed to implementing changes to regular customer commercial arrangements including; 100 percent deferrals, additional buybacks, extended sales windows beyond Sight Weeks.
De Beers will also work with partners in government to see how the company can generate revenue when international customers are unable to travel. The group considers focusing on viewings in other centres as a temporary measure
The company will also move to reduced global production guidance by 7m carats to reflect demand and support long-term value as well as refocusing and repurposing marketing plans to reflect changing situation – timing, targeting, product types and messaging.
On Thursday, company leadership indicated that it is impossible to provide a detailed outlook as so much depends on the progress of the virus and government responses. “However, early indications from places that have reopened suggest demand can recover quite quickly,” said Rowley.
De Beers said despite the challenges, the company continues to make major investments across the diamond value chain to ensure the industry’s continued success during these unprecedented times
The mining giant is making investments in production capacity expansion, rough diamond distribution efficiency, as well as downstream consumer marketing campaigns.
The company said it will be leading the recovery and reinforcing how diamonds will continue to have a key role to play in people’s lives after the lockdowns through our consumer engagement activities. “We are focused on returning to business as usual in our Botswana home as soon as is possible,” said Prager
During the questions and answers, De Beers declined to reveal the extent of financial losses during the imposed lockdown in key markets but indicated that the impacts were devastating across all business streams.
De Beers is 85 percent owned by Anglo American and 15 percent owned by the Government of the Republic of Botswana. De Beers’ two primary mines in Botswana, Jwaneng and Orapa represent 92% of the nation’s diamond output by value, with Jwaneng Mine being the most valuable diamond mine in the world.
As the preparations for the Botswana Democratic Party (BDP) congress are about to kick off, reports on the ground suggest that the party’s Deputy Treasurer Jackdish Shah will not defend the position in August as he contemplates relocation.
According to sources, the businessman who joined the BDP Central Committee in 2015 at the 36th Congress held in Mmadinare is ready to leave the party’s politburo. It is said he long made up his mind not to defend the position last year. A prominent businessman, Shah, when he won the position to assist Satar Dada in 2015 was expected to improve the party’s financial vibrancy. By then the party was under the leadership of Ian Khama.
According to close sources, Shah long decided not to contest because he has fallen out of favour with the party leadership. It is said he took the decision after some prominent businessmen who are BDP members and part of football syndicate decided to push him out and they used their proximity to President Mokgweetsi Masisi to badmouth him hence the decision.
“The fight at the Botswana Football Association (BFA) and Botswana Football League (BFL) has left him alone in the desert and some faces there used their close access to the President to isolate him,” said a source. Media reports say, Shah does not see eye to eye with BFA President MacLean Letshwiti who is also Masisi’s buddy hence the decision.
BFL Chairman Nicholas Zackhem is said to be not in good terms with Shah, who at one point Chaired the then Botswana Premier League (BPL). “He is seriously considering quitting because of what is unfolding at the team (Township Rollers) which is slowly not making financial gains and might be relegated and he wants to sell while it is still worth the investment,” said a highly placed source.
Shah is a renowned businessman who runs internet providing company Zebra net, H &G, game farm in Kasane, cattle farm in Ghanzi region and lot of properties in Gaborone. He also has two hotels in USA, his advisors have given him thumbs up on the possible decision of relocating provided he does not sell some of the investments that are doing well.
Asked about whether he will be contesting Shah could not confirm nor deny the reports. It is said for now it is too early as a public decision will have to be taken after the national council meeting and prior to the national congress. “As a BDP Central Committee member he cannot make that announcement now,” a BDP source said.
BDP is expected to assemble for the National Council during the July holidays while the National Congress is billed for August. It is then that the party will elect a new CC members. The last time BDP held elective congress was at Kang in 2019. The party is yet to issue writ.
The government has failed to implement some commitments and agreements that it had entered into with unions to improve conditions of public servants.
Three years after the government and public made commitments aimed at improving conditions of work and services it has emerged that the government has ignored and failed to implement all commitments on conditions of service emanating from the 2019 round of negotiations.
In its position paper that saw public service salaries being increased by 5%, the government the government has also signalled its intention to renege on some of the commitments it had made. “Government aspires to look into all outstanding issues contained in the Labour Agreement signed between the Employer and recognised Trade Union on the 27th August 2019 and that it be reviewed, revised and delinked by both Parties with a view to agree on those whose implementation that can be realistically executed during the financial years 2022/23, 2023/24 and 2024/25 respectively,” the government said.
Furthermore, in addition to reviewing, revising and de-linking of the outstanding issues contained in the Collective Labour Agreement alluded to above and taking on a progressive proposal, government desires to review revise, develop and implement human resource policies as listed below during the financial year 2022/23,2023/24,2024/25
They include selection and appointment policy, learning and development policy, transfer guidelines, conditions of service, permanent and pensionable, temporary and part time, Foreign Service, expatriate and disciplinary procedures.
In their proposal paper, the unions which had proposed an 11 percent salary increase but eventually settled for 5% percent indicated that the government has not, and without explanation, acted on some of the key commitments from the 2019/2020 and 2021/22 round of negotiations. The essential elements of these commitments include among others the remuneration Policy for the Public Service.
The paper states that a Remuneration Policy will be developed to inform decision making on remuneration in the Public Service. It is envisaged that consultations between the government and relevant key stakeholders on the policy was to start on 1st September 2019, and the development of the policy should be concluded by 30th June 2020.
The public sector unions said the Remuneration Policy is yet to be developed. The Cooperating Unions suggested that the process should commence without delay and that it should be as participatory as it was originally conceived. Another agreement relate to Medical Aid Contribution for employees on salary Grades A and B.
The employer contribution towards medical aid for employees on salary Grades A and B will be increased from 50% to 80% for the Standard Option of the Botswana Public “Officers’ Medical Aid Scheme effective 1st October 2019; the cooperating unions insist that, in fulfilling this commitment, there should be no discrimination between those on the high benefit and those on the medium benefit plan,” the unions proposal paper says.
Another agreement involves the standardisation of gratuities across the Public Service. “Gratuities for all employees on fixed term contracts of 12 months but not exceeding 5 years, including former Industrial class employees be standardized at 30% across the Public Service in order to remove the existing inequalities and secure long-term financial security for Public Service Employees at lower grades with immediate effect,” the paper states.
The other agreement signed by the public sector unions and the government was the development of fan-shaped Salary Structure. The paper says the Public Service will adopt a best practice fan-shaped and overlapping structure, with modification to suit the Botswana context. The Parties (government and unions) to this agreement will jointly agree on the ranges of salary grades to allow for employees’ progression without a promotion to the available position on the next management level.
“The fan-shaped structure is envisaged to be in place by 1st June 2020, to enable factoring into the budgetary cycle for the financial year 2021/22,” the unions’ proposal paper states. It says the following steps are critical, capacity building of key stakeholders (September – December 2019), commission remuneration market survey (3 months from September to November 2019), design of the fan-shaped structure (2 to 3 months from January to March2020) and consultations with all key stakeholders (March to April 2020).
The unions and government had also signed an agreement on performance management and development: A rigorous performance management and reward system based on a 5-point rating system will be adopted as an integral part of the operationalization of the new Remuneration System.
Performance Management and Development (PMD) will be used to reward workers based on performance. The review of the Performance Management System was to be undertaken in order to close the gaps identified by PEMANDU and other previous reports on PMS between 1st September 2019 and 30th June 2020 as follows; internal process to update and revise the current Performance Management System by January 2020.
A job evaluation exercise in the Public Service will also be undertaken to among others establish internal equity, and will also cover the grading of all supervisory positions within the Public Service. Another agreement included overtime Management. The Directorate of Public Service Management (DPSM) was to facilitate the conclusion of consultations on management of overtime, including consideration of the Overtime Management Task Team’s report on the same by 30th November 2019.
A public health expert, Dr Edward Maganu who is also the former Permanent Secretary in the Ministry of Health has said that unlike many who are expressing shock at the population census growth decline results, he is not, because the 2022 results represents his expectations.
He rushed to dismiss the position by Statistics Botswana in which thy partly attributes the low growth rates to mortality rates for the past ten years. “I don’t think there is any undercounting. I also don’t think death rates have much to do with it since the excessive deaths from HIV/AIDS have been controlled by ARVs and our life expectancy isn’t lower than it was in the 1990s,” he said in an interview with this publication post the release of the results.
Preliminary results released by Statistics Botswana this week indicated that Botswana’s population is now estimated to be 2,346,179 – a figure that the state owned data agency expressed worry over saying it’s below their projected growth. The general decline in the population growth rate is attributed to ‘fertility’ and ‘mortality’ rates that the country registered on the past ten years since the last census in 2011.
Maganu explained that with an enlightened or educated society and the country’s total fertility rate, there was no way the country’s population census was going to match the previous growth rates. “The results of the census make sense and is exactly what I expected. Our Total Fertility Rate ( the average number of children born to a woman) is now around 2.
This is what happens as society develops and educates its women. The enlightened women don’t want to bear many children, they want to work and earn a living, have free time, and give their few children good care. So, there is no under- counting. Census procedures are standard so that results are comparable between countries.
That is why the UN is involved through UNFPA, the UN Agency responsible for population matters,” said Maganu who is also the former adviser to the World Health Organisation. Maganu ruled out undercounting concerns, “I see a lot of Batswana are worried about the census results. Above is what I have always stated.”
Given the disadvantages that accompany low population for countries, some have suggested that perhaps a time has come for the government to consider population growth policies or incentives, suggestions Maganu deems ineffective.
“It has never worked anywhere. The number of children born to a woman are a very private decision of the woman and the husband in an enlightened society. And as I indicated, the more the women of a society get educated, the higher the tendency to have fewer children. All developed countries have a problem of zero population growth or even negative growth.
The replacement level is regarded as 2 children per woman; once the fertility level falls below that, then the population stops growing. That’s why developed countries are depending so much on immigration,” he said.
According to him, a lot of developing countries that are educating their women are heading there, including ourselves-Botswana. “Countries that have had a policy of encouraging women to have more children have failed dismally. A good example is some countries of Eastern Europe (Romania is a good example) that wanted to grow their populations by rewarding women who had more children. It didn’t work. The number of children is a very private matter,” said Maganu
For those who may be worried about the impact of problems associated with low growth rate, Maganu said: “The challenge is to develop society so that it can take care of its dependency ratio, the children and the aged. In developed countries the ratio of people over 60 years is now more than 20%, ours is still less than 10%.”
The preliminary results show that Mogoditshane with (88,098) is now the biggest village in the country with Maun coming second (85,293) and Molepolole at third position with 74,719. Population growth is associated with many economic advantages because more people leads to greater human capital, higher economic growth, economies of scale, the efficiency of higher population density and the improved demographic structure of society, among many others.