Diamonds anchor P679m trade surplus

MBONGENI MGUNI
Staff Writer | Wednesday January 9, 2013 00:00

Merchandise imports have outweighed exports since late 2008, as the global financial crisis eroded the values of key exports, while government's support of the economy through the period raised imports. Prior to August last year, only two surpluses had been recorded since September 2008, once in June 2010 and again in June 2011.

Preliminary Statistics Botswana figures released last week indicate that the swing back to trade surpluses that began in August 2012, persisted in October influenced mainly by diamond exports and a generally flat import bill.For the month, Statistics Botswana estimated rough and polished diamond exports at P4.3 billion, down from P6.6 billion in September. Even with the 35 percent drop, October diamond exports still accounted for 87 percent of total exports which were estimated at P4.9 billion.

The October diamond export figure also represented the rectification of a statistical anomaly stemming from months before. 'September 2012 is believed to carry cumulative exportation of rough diamonds from July 2012 as there were no exports of the same during July and August 2012,' a Statistics Botswana brief reads.

The data agency, however, also pinpointed strong polished diamond exports as having contributed to the latest trends in the trade balance. 'Exports show a high rise as of May 2012 and this is mainly attributed to increased exports from diamond processing companies,' the agency said.

October's surplus was also influenced by lower diamond import figures, which dropped to P50.6 million from P120.9 million in September. Imports of the precious stones trended south in 2012 from a high of P1.2 billion in May.

The downtrend, as explained by Statistics Botswana, is mainly due to a reconfiguring of research methodology to account for De Beers' movement of diamond aggregation activities from London to Gaborone. 'The relocation of (De Beers') Diamond Trading Company from London to Gaborone, would lead to diamonds from the rest of the world being sent to Botswana for pooling together, re-valuation and exporting to various countries that need diamonds for processing or manufacturing purposes,' the data agency explained.

'As these diamonds from the rest of the world are not intended for consumption in Botswana or do not add to the stocks of Botswana, they do not form part of Botswana foreign trade, unless if they are later sold to Botswana diamond polishing companies. As a result, no influx of diamond imports should be expected.'

However, Statistics Botswana stressed it was still reviewing the treatment of the new rough diamonds coming to Botswana under the De Beers/government deal. A complete revision of diamond trade figures and consequently, trade balance figures is expected soon.

'The hiccups in diamond trade, caused by the relocation of Diamond Trading Company from London to Gaborone have not been fully resolved,' the agency said.'Discussions are continuing as to how best to resolve the issue and the next issue of International Merchandise Trade Statistics monthly digest is expected to carry a complete revision of diamond trade from July 2012.'

Under a deal reached between government and De Beers, Botswana is evolving into the hub for the pooling together, revaluation and distribution of rough diamonds from all De Beers' mines to various global buyers.