Technological Innovation and
Export Diversification through
the Development of DiamondProcessing Capabilities in
Botswana’s Diamond Cutting
and Polishing Industry
Dr. Letsema Mbayi
27th August 2014
FES/BIDPA/UB Conference
The Government’s Ambitious Plan
• Transform the country into a Diamond Centre by developing
downstream capabilities in:
• Cutting and Polishing
• Trading
• Jewellery Manufacturing
• Ancillary services
• To achieve this the government signed ground breaking agreements
with DeBeers in 2005 and 2012 to help establish a downstream
industry
• Local rough diamond sales
• Independent sales window
• 20 cutting and polishing companies have been licensed in Botswana
• Receive rough diamond allocations on a number of conditions,
including that they train locals with cutting and polishing skills
The Cutting and Polishing Skills
• Diamonds are cut and polishing using a series of steps,
• maximum light reflection and refraction, giving polished diamonds their
sparkle
• Traditionally the skills are craft skills
• Learnt over long apprentices
• Tacit knowledge was crucial in the craft
• Technological revolution that started industry in the 1980s
• has changed the nature and mix of skills used in cutting and polishing
process.
• From tacit to codified knowledge
• Technologies like laser, computer numerically controlled (CNC) machines
and computer-aided design (CAD) have
• increased accuracy and improved the quality of the polished diamonds
• Knowledge codification has simplified the skills needed by production
workers and simultaneously enhanced the skills required in machine
maintenance.
The Current Development of
Diamond-Processing Capabilities in
Botswana
• All cutting centres built capabilities by transferring skills
from expatriates to locals
• Government provides general skills (basic education)
• Firms are providing industry and firm-specific skills mainly
through on-the-job training
• There are plans for the provision institutional training
– To reduce the firms’ costs of training
– Create more local knowledge on the downstream
industry (regulators, service providers)
– But the current level of institutional training is still very
low
Botswana’s Opportunity
• Since Botswana is a latecomer to the industry,
• provided the scope for it to leapfrog to the most efficient
technologies
• aiding the country’s ability to build diamond-processing capabilities
• State-of-the-art factories using the latest technologies in the industry
• These technologies are making firm training for production jobs more
efficient since less tacit knowledge needs to be transferred to workers
during training
• Generally the firms were impressed with how quickly training was
taking place amongst locals for production jobs but the
development of maintenance skills was less satisfactory
• Weakness in institutional training is affecting the country absorptive
capacity for the new technologies
• Maintenance skills
• Related technical skills
The Changing Composition
of Diamond Exports
6000
US($) Millions
5000
4000
3000
2000
1000
0
2003
2004
2005
2006
2007
2008
Rough
Polished
2009
2010
2011
2012
2013
Policy Implications
•
•
•
•
Yes technology does mean that potentially less jobs are created
But you build more competitive industries faster
Competitiveness is crucial for a latercomer to any industry
Technology needs to be seen as a good thing and not just a threat to job
creation
• Leapfrogging
• Policies needs to support technological absorptive capacity in new industries
• Training
• Technological acquisition
• Policies also need to encourage global firms to play an active role locally in
technological development
• Through the innovation hub – policy coherence
• Innovate technologies that are more relevant to the local conditions
• BUT issues of productivity need to be addressed with separate policies
• e.g. Benchmarking
Thank you