ODC is yet to make its mark
Todd Majaye | Friday June 30, 2023 09:59
It is important and quite befitting that the shareholders on the government side, i.e. us the populace, get full understanding of its activities, in terms of the management of this resource, towards ensuring that it gives the best returns to the nation.
For 54 years Batswana have had no access to the international diamond markets, including more than ten years after some of us laid our necks on the guillotine for it, and advocated for the reservation of a percentage of diamonds for independent marketing. The result of this intervention was the setting up of ODC.
The rationale for the minimum of 10% of our diamonds for independent marketing was primarily to afford the government access to the pulse of the international market, as checks and balances against the prices De Beers paid for our diamonds. Further to that the rationale was to use the ODC vehicle as a beneficiation tool for citizen empowerment to enable citizen participation in the industry, with a resultant positive effect on employment creation. It was an opportunity for the government to have a diamond entity that it fully controlled and, execute in line with its socio economic development objectives.
Disappointingly, ODC has not lived to its expectations since inception. I have searched and searched to pinpoint what ODC achieved since then, in line with the overall beneficiation objectives. I found none except the recent partnering with Rapaport on the branding initiative and the Dubai sales expedition, though out of sync with the real diamond beneficiation terminal objectives.
Basically, since inception ODC remained on maintenance mode – no progressive ideas for improvement, no sound citizen empowerment plans, no quality clients, no market analysis, nor market prices fetched that were different to De Beers SSV prices, no brand and no direction etc. It has proved unable to understand the diamond markets because of unqualified leadership whose employment criteria was nepotism motivated than merit. It is only not long time ago that ODC went out to test the markets, but still, losing the focus of the rationale for diamond beneficiation.
At a personal level, as a stakeholder and shareholder who advocated for the setting up of the facility, I tried to help ODC with some practical ideas that could have advanced its beneficiation aspects and reason for being, but hit against a steel wall. The driver of the boat seemed not to have any clue of what the bigger picture was supposed to be. ODC clients’ long list lacked the qualities needed for a diamond supplying company of its magnitude, an indication of lack of touch with the global networks.
The fault however, does not lie with the individual concerned but with the recruitment process and the board that was empowered to give strategic direction, but could not. But then the board was equally lost for lack of understanding of the trade. It had no capacity to direct the ODC affairs towards the desired end state that justifies its reason of being. So, what we basically had was the blind leading the blind.
I am sorry to be this outright, but this is a national issue and a national asset that belongs to all of us, that we are talking about here, an issue that touches people’s lives and national wellbeing.
There is a domino effect here and that is the civil service culture of work, which does not understand profit to justify the salaries earned. It is a culture where people gamble with the functional activities of the government to secure positions for their friends, families, tribesmen/women, gender, political affiliates etc, with no regard for merit.
President Masisi came and increased the allocation to 25%, which was a good step, but then the diamond sales became problematic, not because of COVID, but for lack of industry networks in its legions. Then came the current ODC management headed by a former permanent secretary with some knowledge in the administrative and regulatory aspects of the industry, as well as mining, but no practical core downstream industry competencies, which forms ODC core functions.
With a stockpile it had difficulties in selling because of legions of inherent technical weaknesses, ODC took the Dubai route to go market the diamonds. They came back with all glee and pomp telling the nation how they made a lot of money in Dubai. That was a virtually once-off trade deal that came on a good day. They were certainly oblivious of the fact that the next sales might be a disappointment as measured against the first one, as it indeed happened. Furthermore, it is not clear if the money made was gross or net, but one may want to know how much went to foreign consultants that assisted them to do the sales in Dubai and how much was left in Dubai for the Dubaians as host of the sales, let alone all the expenses of travelling to Dubai and the upkeep thereof.
There was nothing wrong for ODC to display its diamonds at the Dubai exchange for viewing and sales taking place at home during the COVID pandemic. There was a good reason for that to do with travel. There was nothing wrong in signing MOU’s for synergising in the promotion of the diamond industry in both countries, although I do not see how, as they are competitors.
I do not see how UAE will promote Botswana’s diamond industry, but I can see clearly how Botswana will promote the UAE diamond industry. It is already doing so. There is nothing wrong in testing external markets once in a while, to compare with ODC local sales, but the whole rationale for the diamond beneficiation we fought for, was to bring Dubai buyers to Botswana, not the other way round. The money generated in Dubai was supposed to be made at home through the same Dubai buyers (outside ODC regular clients), with all the spin-offs accruing to this country. That is, if ODC had functioned with vision and understanding of the broader meaning of diamond beneficiation.
International markets can be anywhere in the world. In this case we are talking of Botswana being such a market centre that determines global prices just like Dubai does, or much better because we have the diamonds, the enabling systems like favourable exchange controls, zero export taxes and other incentives. And as well, we house De Beers’ aggregation centre, which on its own (with all things being equal) affords us the necessary clout that has affinity with the creation of a global diamond centre. Kokona ngayi kanti bakwedu? Where are the difficulties? There is no pride in rejoicing at being a newly welcomed and endorsed member of the Dubai Exchange community, when as a major diamond producer Botswana should be having its own diamond exchange to welcome Dubai, which produces no diamonds.
The schoolchildren-like glee that was expressed and broadcasted all over was not commensurate with the intentions of benchmarking, with the view to have those views and sales here. As I have said, I have no quarrel with ODC management having taken that step only as a relief measure to offload its stockpile, while building a solid diamond trading centre locally as the beneficiation drive dictates. But, I have issues with a country that squanders all the opportunities given it by God for lack of insight and inability to compete in the global arena with all the resources at its disposal.
Las Vegas
The objectives of the trip to Las Vegas seem sound as a networking endeavour, and indeed a good improvement since ODC inception. However, we expected to hear more solid news than the signing of partnership with Rapaport as the headline news. If one looks at ODC’s past failures, and in this case a poor clientele base, one would have expected as headline news from Las Vegas, the ODC management telling us of how many quality clients of De Beers sightholders’ level, they registered with as ODC preferred customers for its rough sale. The global market has legions of them, and they would have been a sizable number at the Las Vegas fair. Fairs like those offer an opportunity to tread on uncharted waters, which needs proactive approach and good flexible marketing traits for networking. “Networking” in the language of the industry. I know there is a language barrier here, but it needs to be there.
While the signing of a partnership with Martin Rapaport is not contested, and the branding desirable, that was not as urgent as finding new clients for ODC. I also do not understand why the signing of a partnership was done in such a haste. From the way it looks, the Rapnet Green Star is a new project that was only launched at the Las Vegas fair. Should ODC not have taken time to evaluate and test it before rushing to signing the partnership agreement? As it seems, ODC seems to have been the first client to sign this partnership. Just because Rapaport is a name in the industry, does not mean all its innovations succeed. That is why due diligence is always a major factor in business. Here it was overzealousness again akin to that of Dubai. We call it ‘apparent effectiveness’. It is good to be proactive and innovative in the establishment of systems and processes that add value to your organisation’s overall objectives, but it has to be done methodically and systematically, as informed by a good performance record, and in this case, the Green Star technology., The idea of branding ODC diamonds on its own is a good and welcome idea.
Since De Beers brought in diamond aggregation from three other countries, Botswana stopped there, in terms of having African governments and independent miners’ diamonds traded in Botswana. No effort was made to market Botswana diamond centre aspiration in Africa except an attempt at Zimbabwe, whose route was opened by an ordinary citizen. But still nothing came out of it. If De Beers had not brought these other countries’ diamonds, not a single foreign diamond would ever have been traded in Botswana. As it is, Botswana has no enabling systems that are conducive to the building up of a diamond centre. There is no roadmap in print that can be seen. No diamond policy in place, maybe in draft form but nothing one can take home and read. I am saying this because several times I asked the senior ministry staff for these two pillars of diamond trading success and there was nothing. It was a long stone throw for one honest permanent secretary to admit they had nothing available after a persistent request for them.
We are still far backwards in the industry development with no enabling systems and processes in general. ODC specific, it is not only the personnel aspect, but its systems and processes, including mediocre diamond technology, and of a greater concern the structural make up of its core function, particularly in relation to the nature of diamonds it gets from DTCB. Diamond intelligence sources already are of the view that the Okavango Blue will sell at far much less than the price it was bought for. There is a lot of work to be done here and overall.
We have a president who seems to mean well for the industry development and country’s wellbeing. We also have a minister of diamonds who is equally committed to the nation in this regard. This tells me the problem is not at a political, but at administrative level. I am saying this out of first hand engagements with these stakeholders, not from my head.
Although productivity is a big Botswana problem, things went south the day Bulela Ditswe was declared for civil servants to get involved in business and earn government salary at the same time.
Now, someone will have to do a serious vacuum cleaning to return our civil service to where it used to be.
*Majaye is a veteran of the mining industry