Ten years after developing the Diamond Technology Park (DTP), a world class infrastructure that consolidated the diamond industry in a secure location and a key platform that would turn out to be the bedrock of Botswana’s fledging diamond trading, cutting and polishing activities, Safdico Botswana sees the next decade as the period the country can innovate and diversify services to transform itself into a true international diamond centre matching the likes of India, Dubai, Antwerp and Israel.
In this tete a tete, Safdico International Resident Director, Rutang Moses recaps to BusinessWeek the successes and challenges encountered since the launch of the DTP in 2009 and expounds on the company’s plans to become a key catalyst of the next growth phase of the diamond industry downstream activities.
BusinessWeek: Please take us through how the idea of developing DTP was conceived?
Moses: I must say it was a leap of faith by my shareholders to invest in this diamond centre at a time when the drastic effects of the last financial crisis were at their peak and investors were skeptical particularly about the diamond industry which is highly dependent on trends in the global economy.
At that time government’s vision was very clear that the country needed to fully participate in downstream activities such as diamond trading and expand operations in the cutting and polishing industry. Safdico decided to align itself with this vision through building of infrastructure that would facilitate the creation and growth of downstream activities in a secure and efficient environment.
BusinessWeek: Would you say the decision to put up the DTP has paid off?
Moses: I think it’s there for everyone to see how the DTP has facilitated the growth of the industry. We house diamond trading, mining and manufacturing companies including ancillary businesses and the Botswana Police Satellite. Our tenants are blue chip diamond companies such as the Okavango Diamond Company (ODC), a rough diamond marketing company that is the Botswana Government’s initiative to sell its own rough diamonds sourced from Botswana outside of the De Beers Sightholder sales channels.
Some of our tenants such as Lucara Diamond have established a vibrant diamond trading businesses while the presence of companies such as Gemmological Institute of America has eliminated the need for our cutting and polishing clients to send their polished stones to South Africa or the USA for grading.
The DTP attracts substantial Foreign Direct Investment (FDI) to Botswana, contributes 25% employment of the total diamond industry secondary market and has placed Botswana on the international diamond technology map.
BusinessWeek: In the past 10 years, the industry also faced many challenges as we saw in 2015 within the cutting and polishing industry. Which challenges stand out as the biggest for the company and the industry in the past 10 years?
Moses: Besides investing in the DTP, Safdico established a diamond manufacturing company, Safdico Botswana, with a world-class cutting and polishing factory which has been operating in Botswana for over 10 years. We have seen the industry grow to a blossoming vibrant sector offering over 3,500 jobs to Batswana. However, over the last five years we’ve also witnessed some factory closures and industry retrenchments which indicated challenges due to various factors such as rough and polished diamond price volatility, global demands for polished diamonds and more stringent bank credit policies which resulted in less credit availability to manufacturers.
BusinessWeek: Critics still say diamond downstream industries are not profitable in Botswana and international companies are only here to secure supply for their global operations from De Beers. What’s your take on this and what do you think needs to be done to improve viability?
Moses: Challenges facing the diamond downstream are not unique to Botswana. These challenges are global and players in this industry not only operate in Botswana, but have subsidiaries in other international diamond centres such as Antwerp and Tel Aviv. We are convinced that Botswana has huge potential to compete with mature diamond centres and become a true international diamond centre.
Botswana is a credible, well-respected diamond domicile known for its stability. It is one of the very first working democracies in Africa and could become a respected hub for other African diamond producers.
BusinessWeek: Now that the infrastructure is in place and some companies are operating, where do you see further growth coming from for the Botswana industry?
Moses: We see growth in the industry being driven by remodelling how we operate our businesses. We have seen successful centres around the world offering a hybrid of services rather than concentrating on the mainstream businesses of cutting and polishing.
We believe the future of the local industry is to create a centre for both rough and polishing trading to complement cutting and polishing activities. In addition, there is scope for fiscal incentives such as those being provided by the newly established Special Economic Zones (SEZA) to create an enabling environment to lure investments in these activities.
Opportunities can also be created by providing support to new ventures that provide ancillary services to the mainstream diamond businesses. I don’t see any reason why we should be importing the tools we use for cutting and polishing stones from faraway places.
We can manufacture these products here and not only save foreign exchange but also create jobs. As Safdico, we have proven experience and expertise in this industry of over 30 years in various international centres and are committed to leveraging our local operations to support the creation of an international diamond centre in Botswana.
BusinessWeek: Government has strongly spoken out about citizen and women empowerment as well as skills transfer. What has Safdico done in this line?
Moses: Safdico is alive and committed to Botswana citizens and women empowerment and its challenges. We are fully committed to the issues you raised although we are always looking for ways of improving. However, we acknowledge that the Botswana Government, De Beers, DTP and its tenants, including the diamond industry at large have been making strides to include capable women in key leadership positions.
From 2010 (until 2016) I served as Chief Executive Officer & Director of both Safdico International Limited’s two subsidiaries Safdico Botswana and Diamond Technology Park, head hunted from the banking industry when the industry was almost fully dominated by males. This has filtered down even to our factory workers where we have a good balanced ratio of women versus. men.
My success in the role was due to the shareholders’ commitment to transfer skills to me to ensure I deliver and execute its strategic agenda. In particular our Group CEO/Owner, Brian Gutkin took time to handhold me and teach me all the facets of the business.
This is the advice I would like to pass to any young entrepreneurs that are aspiring to join this industry. The key is to fully inform yourself about how this line of business operates as you will be competing with companies that have generations of knowledge on how to run the business.
To this end, as Safdico we have committed to mentor Botswana’s youth entrepreneurs seeking to venture into diamond industry as a sustainable long term business and to create jobs. We have appealed to the government to offer us at least five licensed youth diamond companies to mentor.
BusinessWeek: Safdico International Limited (the holding company of the whole Safdico Group) is domiciled in Mauritius. What does your role now as Resident Director for Safdico International mean for Safdico in Botswana?
Moses: Safdico Group believes in Botswana’s future as an international diamond centre. Therefore, following my role as Safdico Botswana’s first local woman CEO and now its Group Resident Director representing Safdico Group’s interests in Botswana includes collaborating closely with various stakeholders such as SEZA to explore opportunities to turnaround the diamond industry and drive commercially sustainable strategic initiatives that will attract FDI through the DTP.
It also includes enhancing local beneficiation as well as contributing towards Botswana becoming a true international diamond trading centre.