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African countries challenged to create value chains

Date

22 Jul 2019

Renowned Namibian economist of the Economic Association of Namibia, Klaus Schade, has thrown his weight behind growing debate that diamond producing countries in Africa need to create sustainable value chains from their resources that will in turn be conveyor belts for employment creation.

Schade concurs that such a move will boost revenue generation for African governments and comes in the wake of Namibia assuming the chairmanship of African Diamond Producing Countries (ADPC).

“Namibia for instance, has attracted investment into diamond cutting and polishing activities that created additional skills and jobs and generated more tax revenue for the government. Additional value is also captured through the Namibia Diamond Trading Company and NamDia,” he said in an interview with The Southern Times.

“However, we need to explore further value addition opportunities for instance in the jewelry industry to create more skills and employment opportunities there, not only in the actual production of jewelry, but in particular in the design,” said Schade.

He said African stood to optimise earnings from its diamonds if a viable value addition policy was put in place to cut down on exporting of diamonds in their raw form.

So far Namibia and Botswana, through their partnership with DeBeers, have been the model for maximum beneficiation where their gems are mined, cut and polished in their countries before being auctioned.

“African countries can reap more benefits from the natural resources not only through adding value to raw materials, which sometimes might not be economically viable, but through so-called backward linkages by producing more inputs, goods and services, locally that are required to extract minerals. The Namibian uranium industry, for instance, uses sulphuric acid produced at the copper smelter as a by-product in the production process,” said Schade.

“Besides creating more job opportunities, extending domestic backward linkages will help saving scarce foreign exchange reserves that would have otherwise been spent on the importation of goods and services, while adding value to commodities will increase the export value and hence result in higher foreign exchange earnings.”

According to a statement released by Namibia’s Minister of Mines and Energy Tom Alweendo, the Democratic Republic of Congo (DRC), Angola, South Africa rank in the top 10 diamond producing countries in volume and value.

Alweendo said the Kimberly Process Certification Scheme suggests that the most expensive diamonds are produced by Cameroon, Namibia, Sierra Leone, South Africa and Lesotho, with a value ranging from US$300 to more than US$500 per carat, in comparison to the global average value of US$315 per carat.

He said the revenue from diamond activities can be channelled towards building of educational and health institutions, improving road network infrastructure and meeting other pressing social-economic needs.

Information from the Mines and Energy Ministry also shows that African diamond producing countries came together in Luanda, Angola in 2006 to establish a forum to harmonise policies and legislations governing diamond resources among others.

The meeting came after the realisation that diamond resources are one of the main contributors to their social-economic development, thus the Association of Diamond Producing Countries (ADPA) was established.

Since its establishment, ADPA ordinary meetings for Council of Ministers have been held under the chairmanships of Angola, South Africa and Guinea, with Namibia taking over the chairmanship in 2019.

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