A ‘tarrific’ opportunity for Botswana

Mbongeni Mguni | Tuesday September 9, 2025 17:02

India, which accounts for 90% of cutting and polishing activities in the industry, presently has one of the highest tariffs for entry to the US at 50%, while another major centre China, has equally been hit at about 30%.

Other diamond centres such as Belgium, the United Arab Emirates and Israel, all have a range of tariffs from 17% down to 10%, while Botswana is set at 15%.

Analysts say with Indian firms dominating the cutting and polishing sector in Botswana, an opportunity presents itself to expand their capacity in the country, which is the only producer within the global list of diamond centres.

Gaborone has an opportunity to realise its long-held dreams of becoming the global centre for natural diamonds, rising in importance above rivals such as Antwerp, Dubai and Tel Aviv.

Late last month, Reuters in India reported that diamond manufacturers in that country were looking for options to reduce the impact of the U.S tariffs on their operations, amidst factory closures.

According to Reuters, some bigger players in that country’s industry plan to shift part of their operations to countries like Botswana.

'We are in a wait-and-watch mode until the end of August but may increase production in Botswana if this continues,' Hitesh Patel, managing director of Dharmanandan Diamonds, was quoted as saying.

The company’s local subsidiary, Dharm Cutting Works, has been active in Botswana for years and is counted amongst the nearly 40 or so cutting and polishing companies active in the country.

Botswana Diamond Manufacturers Association chair, Siddarth Gothi, told Mmegi that between 20 and 25 diamond cutting factories in the country originate from India. He said there was an expectation that firms based in India could try and increase their capacity in Gaborone given the difference in tariffs applied by the U.S.

On the benefits of establishing in Botswana closer to the source, he said this was about “the availability of the right goods at the right pricing”.

“The only current barrier is the unavailability of productive skilled labour and restrictions on work permits for expats,” he said.

Gothi expects that the potential renewal of the African Growth and Opportunities Act (AGOA) trade arrangement between the continent and the U.S will also spur more of the US moving to Botswana.

Situated near the airport in a large area specifically set aside with incentives for them, the country’s diamond cutting and polishing firms employ more than 3,000 locals and are seen as a potential area of growth for the sector.

The firms offer young unskilled citizens the opportunity to be trained in the industry and rise from the factory floor to more specialised positions.

One firm, Stargems, founded by Indian diamantaire Shailesh Javeri, has been offering free training to citizens in cutting and polishing, with hundreds taking up the offer and gaining employment.

Analysts at home are seeing potential in the current turmoil affecting diamonds.

“Is there not an opportunity, given that Botswana is tariffed at a lower rate, for Botswana to do the polishing, the retail, and then export directly the finished product to the US,” said Ninety One head of investments, Alphonse Ndzinge at a panel last week. “I know they've been trying to do that for some time now, but maybe this does give us that springboard, that impetus to really develop along the value chain, maybe. “So, it's a good point, but the experts, I'm sure, are seized with that.”

However, in the reorganisation and restructuring of the diamond world due to tariffs, Gaborone’s rivals such as Antwerp, Dubai and Tel Aviv, are far more established and capitalised.

In fact, many of the Indian origin firms presently in Botswana also have offices, frequently larger, in Gaborone’s rivals.

However, Botswana has a trump card in the competition due to an agreement government secured with De Beers to ensure that prospective firms settling in Botswana would receive higher allocations from the diamond giant.

De Beers maintains an exclusive list of buyers for its rough diamond auctions and the promise is that those firms willing to relocate and establish in Botswana would have a larger piece of the pie.

The cutting and polishing firms operating in Botswana are largely De Beers sightholders who took advantage of this provision.

In 2022, then De Beers’ CEO, Bruce Cleaver, explained the incentives offered and added that this was part of the group’s efforts to increase the value accruing to Botswana.

“We have worked with our sightholders who increasingly embrace the fact that the kinds of goods that are capable of being cut and polished in Botswana, De Beers will not sell to anyone who exports them,” he told Mmegi at the time. “It’s an incentive and it says if you want those goods from us, you will have to cut and polish in Botswana. “It’s been a symbiotic relationship and we agree with government’s aspirations that as much value as possible, in a natural resource that ultimately will run out, must be kept in the host country.”

For much of the industry, the fluidity of decision making around tariffs by the Trump administration means major decisions such as relocations or investments in capacity, are difficult to make.

The industry is in a prolonged downturn, with the cost of capital rising for many players. Risk is being weighed much more carefully and many players, especially those in the midstream in India, are adopting a wait-and-see approach as negotiations continue with the Trump administration.

Major players such as De Beers have joined forces with industry organisations such as the National Diamond Council to lobby for zero tariffs on diamonds into the U.S.

“We pulled various players across the diamond industry pipeline under the Natural Diamond Council and petitioned to Washington for diamonds to be exempt from tariffs since America does not mine diamonds itself,” De Beers Executive Vice - President, Diamond Trading, Paul Rowley told Mmegi recently. 'The way tariffs work for goods such as diamonds is that they become an income tax for American citizens because at the end of the day it’s the customer who will pay for these additional costs.”

Rowley added that it was early days yet to say whether reorganisation or a re-drawing of distribution lines was taking place in the global diamond industry.

'For now, we can't say for sure whether there will be a change to trade routes for diamonds because negotiations are still on-going and it's hard to predict what will happen with the tariffs,' he said.

Other countries are seeing opportunities in the tariffs, gaining market share in the U.S against their export rivals. According to Ninety One director, Jeremy Gardiner, Vietnam has used its lower tariff to the U.S to snap up more market share for its laptops away from China, while the Indians had done the same to China with smartphones to the U.S, before the 50% tariff hit.

“Tariffs have thrown so many spanners in the works that countries have to look at different ways of doing things with all these different tariffs,” he said in Gaborone last week. “If you can do things and export straight to America, it would be a good thing.”