Zimbabwe Stock Exchange listed clothing giant, Edgars Stores Limited and Eagles Insurance have unveiled the Edgars Hospital Cash Insurance plan for its Zimbabwe customers.
“This is an insurance product that guarantees the Edgars Club member of cash pay-out after a certain period of hospitalisation,” Edgars Stores marketing executive Rumbidzai Dzimba.
The plan pays out $100 to adults and $50 to children for each day that they are hospitalised after 48 hours in hospital and a maximum payout per claim is $3000 per event and $6 000 per year.
Dzimba also said that Edgars was reinforcing its position in the market as the leading clothing retail giant by offering value to customers through this programme.
Edgars Stores Limited has 28 stores countrywide and it is a limited company incorporated and domiciled in Zimbabwe whose shares are publicly traded. Their core business is the retailing of clothing, footwear, textiles and accessories.
The Zimbabwe clothing giant was founded by Sydney Press, with the first Edgars store opening in second largest city of Bulawayo in 1946 and the company went public in 1974.
Diamonds boosting Botswana’s economy
For a week at a time, 10 times each year, around 80 sight holders (companies on the Diamond Trading Company’s list of authorized bulk purchasers of rough diamonds) from around the world converge, invitation only on the offices of the Diamond Trading Company of Botswana in Gaborone. At each of these ‘sights,’ De Beers sells around $600 million worth of rough diamonds.
In November 2013, after decades, the De Beers group of Companies moved their Diamond Trading Company operations centre from London, England to Gaborone, Botswana. The southern African country is a peaceful democracy with a stable economy and low levels of corruption, which makes it a very favourable destination in the eyes of De Beers. The cartel of companies dominates all segments of the $6 billion global diamond industry – procurement, rough diamond trading, manufacturing, cutting and polishing, and jewellery.
Diamonds are aggregated from all of De Beers’ international operations at these sights. They are evaluated, graded and packed into parcels that are presented to these preferred bulk rough diamond buyers, most of whom represent companies. Many sightholders come from Israel and Belgium, though the majority are from India. Sightholders undergo a strict process and contract agreement to be granted this elite status. In mid-March, De Beers appointed five new sightholders. Charles Siwawa, CEO of the Botswana Chamber of Mines, explained the process: “The poor diamonds are mixed in a parcel with the best diamonds, otherwise no one would buy the poor diamonds. You go into a special room, you view the parcels and then you make an offer for the entire parcel.”
According to Nimit Parikh, an Indian diamond buyer from Dia Exports Corporation in Mumbai, there is a whole “rule book”. He said: “De Beers comes to do an audit before you become a sightholder. It’s a prestige. It’s a board. It’s literally like you give in to the company.” Parikh started as an apprentice to a diamond manufacturer. He spent three years learning the trade and was certified as a diamond graduate at the Gemological Institute of America (GIA) in 2012.
Diamond buyers such as Parikh fly to the southern tip of Africa to buy diamonds from the designated few sightholders. “It’s very tough. It’s very competitive. People feel that there is a lot of glitz and glamour behind closed doors, but actually when you come on the other side of the door you realise that it is a very tough industry. It’s closely held,” he stated.
De Beers’ momentous move will possibly see the African country’s economy, 30 percent of which is based on the diamond mining sector, add even more carats to its procurement. In 2014, as part of the move, the Diamond Trading Company of Botswana began selling cut and polished diamonds as well. “We were at around 38 percent [of the world’s diamond supply], but it condensed since the recession in 2008, because that really affected the diamond mining sector,” said Siwawa. “We hope it will come back again because I know that just before the recession we produced the highest level of diamonds that we have ever produced in this country. I think we were closer to 33 million carats, since then we’ve gone down to 25 or 26 million.”
Botswana’s cutting and polishing industry is still young; the first factory was established in 1986. Siwawa predicts that in the next five to 10 years, once the industry matures, sightholders will cut and polish their diamonds, mount them into jewellery, and sell them directly from Botswana. But it is going to take a while, he said. “We won’t for once claim that just because De Beers has relocated to Gaborone that therefore we are experts at diamond cutting and polishing,” Siwawa said.
While cutting and polishing is more expensive in China than in India, Parikh said the quality of the finish is much higher. He attributes this to expertise. But in an industry where the profit margin is so small due to transparency and established pricing structures, one has to save every penny. Parikh will likely move his cutting and polishing operations back to India, if Botswana’s growing cutting and polishing arm does not offer a more economical alternative in coming years.
Botswana acknowledges the economic growth potential that each segment of the natural resource and its manufacture presents. The government offers several incentives to encourage companies to establish their diamond operations in the capital city. One is tax incentives; the other is the offer of free land in Diamond Park, a diamond industrial park. “I think there are well over 22 factories that have been established in the area in the past four to five years,” said Siwawa.
The country’s mining industry has identified the skills gaps and diamond-related qualification deficiencies. As a result, each year it offers 100 artisans a four-year scholarship to train in a certificate course at one of two government colleges in either Gaborone or Francistown. “In the next five to 10 years there will be more mines opening up in Botswana, so it will put a lot of pressure on our skills,” explained Siwawa, adding that they are training their own labour force in order to have sufficient skilled labourers when these mines open.
Parikh agrees that encouraging training in the local mining sector is a responsibility. “What drives Botswana is the mining economy, not the trading economy. The cutting economy is just developing. It’s fairly new and I think that creates a lot of jobs for the people here, which is why it should be encouraged,” he said. “The government should take measures to encourage it. In fact, across Africa, when you have a cutting unit in the sector, there are many advantages: your people gain employment, they learn a skill, you operate GDP for your country, and there is security in terms of lifestyle for the people.”
Diamond mining is capital intensive and costs increase the deeper companies have to mine. In Botswana, the industry directly employs around 10,000 labourers. Debswana Diamond Company – which is the world’s largest diamond producer in terms of value – has 6,000 employees. The country’s cutting and polishing sector employs another 3,000, with others scattered throughout the sector and across various companies.
Botswana intends to return diamond production to the 30 million carat mark in the near future and has already witnessed an improvement in the sector. But new challenges to the sector have emerged: synthetic diamonds. “With the technology that is available now, you can produce perfect diamonds in the lower range. The technology has not moved yet to the bigger diamonds, so the competition is there with the smaller sized diamonds of less than 0.5 carats,” said Siwawa. “It’s like any duplicate or copy, it’s not natural,” said Parikh. “It bares the same chemical properties, the same physical properties, there is no change in terms of look, lustre, nothing, but at the same time it’s not natural, it’s lab grown and that difference will always be there.”
Synthetic diamonds are cheaper and their limitless supply will attract new customers, those who are unwilling to pay for natural diamonds. Parikh predicts that there will be two parallel markets: one for natural and another for synthetic diamonds. De Beers has begun to brand and market natural diamonds, so as to maintain its stronghold over the sector. The Forevermark is given to a natural, untreated and responsibly sourced De Beers diamond.
Neither does De Beers associate itself with conflict diamonds – or blood diamonds as they have come to be known. The group of companies has ceased operations in African countries, such as Angola, as a result. In 2003, the United Nations established the Kimberley Process Certification Scheme to prevent conflict diamonds from entering the mainstream rough diamond market. “We, as the country, have to market ourselves as conflict-free and blood-free, we have done that exercise and continue to do it,” explained Siwawa. “Maybe [conflict diamonds] have dampened the diamond market slightly because now you have to ask yourself if the diamond you are buying is a conflicted diamond or not. Whereas in the past you just went out to buy a diamond, you didn’t have to ask because you are already streamlining the number of people who can buy diamonds.”
Debswana is a long-standing, 50-50 partnership between the Botswana government and De Beers. It is a relationship that has been the envy of many other governments for some time. In terms of royalties, the government has the upper hand. Well aware of the value of the natural resource and the manufacturing sector that it supports, Botswana is not looking to nationalise assets. “The partnership that we have with De Beers is a very good one. It gives us the upper hand but at the same time, we don’t want to get involved in the running of the operations because our specialty is governance issues. So the running of the mine must be undertaken by the companies themselves,” said Siwawa.
There are two other diamond producers in the country. Boteti Mining in Karowe is a local company under Lucara Diamond Corporation, which is Canadian. Firestone Diamonds’ operations are currently under care and maintenance, possibly due to the price drop during the most recent recession years. Gem Diamonds is an England-based global diamond business currently in exploration phase within Botswana. Siwawa predicts that Gem Diamonds’ first production is likely to begin in May of this year.
De Beers has been accused of price fixing by purchasing and stockpiling diamonds in order to control supply, this despite the growth of new markets and demand. “[Botswana’s] natural market all along has been the United States, Japan and Europe, but there is a bigger market that is opening for diamonds, that’s China,” Siwawa said. “The Chinese have now gone into this huge expansion in their economy where you see more disposable income and you’re seeing a lot more people moving from the working class to the middle class. That is perhaps where our market is going to move to be able to satisfy the market.”
Botswana is prudently managing its most precious natural resource in a structured manner, and it looks likely that the country’s diamond sector will continue to sparkle brightly in the coming decades. “From the figures that I have seen, diamond mining will continue in Botswana for another 50 years,” Siwawa said. “The thing to do is to tackle the artificial diamond production. You know you can’t fight it, but I think you have to be smart about it and see that natural diamonds prosper against the artificial ones. (VENTURES AFRICA)[eap_ad_4]