93049 Policy Note 4 Skills Implications of Botswana’s Diamond Beneficiation Strategy The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development, its affiliated organizations, or those of the Executive Directors of the World Bank or the governments that they represent. Policy Note 4 Skills Implications of Botswana’s Diamond Beneficiation Strategy Outputs of the “Skills for Economic Growth and Diversification in Botswana” analytical work: Policy Note 1: “ Raising Botswana’s Human Resource Profile to Facilitate Economic Diversification and Economic Growth” Policy Note 2: “Labor Market Signals on the Demand for Skills” Policy Note 3: “Skills Needs of the Private Sector” Policy Note 4: “Skills Implications of Botswana’s Diamond Beneficiation Strategy” Summary Report Contents Acknowledgments vii Abbreviations and Acronyms ix Context of the Study 1 1. Overview 2 2. Motivation for Beneficiation in Botswana 2 3. History of Botswana’s Diamond Cutting and Polishing Industry 3 4. Skills Implications of the Cutting and Polishing Industry 4 5. Input-Output Simulation 5 6. Current Status of the Industry 5 7. Challenges of Skills and Job Creation 7 Conclusion and Policy Recommendations 7 References 9 Appendix 1: Assumptions and Formulas of the Input-Output Simulation Model 10 Formulas 11 Detailed Simulation Results—Change in Employment by Sector Appendix 2:  and Across Sectors 12 Figures Figure 1. Contribution to Gross Domestic Product of Different Economic Activities, 2000–2009 2 Figure 2. Composition of Government Revenue, 2000–2009 3 Figure 3. Projected Government Revenue from Diamonds, 2009–2029 3 Acknowledgments This Policy Note, and three others that address skills for eco- na; Peter Materu, Sector Manager; and Ritva Reinikka, Sector nomic diversification in Botswana, was prepared by Tazeen Director, HD Africa, provided overall guidance for the project. Fasih (Task Team Leader). Background papers and/or empir- Initial versions of the background papers were presented ical analysis for the set of notes were prepared by Sonali Bal- to key education stakeholders in Botswana at a workshop in lal, Kevin Macdonald, Letsema Mbaya, Professor Christopher December 2010. The workshop was co-organized by the Min- Mupimpila, Professor Nathan Okurut, Peter Orazem, and istry of Education and Skills Development (MoESD); critical Professor Happy Siphambe. input provided during the workshop helped shape the current Valuable comments on an initial draft of these notes were version of this note. received from Sajitha Bashir, Peter Darvas, Keiko Inoue, Nath- The World Bank is grateful for the support provided by alie Lahire, Maureen Lewis, Peter Materu, and Shwetlena Sa- MoESD, particularly by PS Mrs. Grace Muzila and DPS barwal. The peer reviewers were Wendy Cunningham, Amit Dr. Theo Mooko, at various phases of the preparation of this Dar, Raja Bentaouet Kattan, Zeinab Partow, Harry Patrinos, report. In addition, the author would like to thank officials of Jan Rutkowski, and Douglas Zinhua Zeng. Ruth Kagia, Coun- the MoESD and the Botswana Training Authority (BOTA) for try Director; Constantine Chikosi, Country Manager, Botswa- sharing valuable data and information. Abbreviations and Acronyms BOTA Botswana Training Authority DTCB Diamond Trading Company Botswana MoESD Ministry of Education and Skills Development NDP National Development Plan All dollar amounts in U.S. dollars unless otherwise indicated. Context of the Study Human development is one of the pillars of Botswana’s Coun- Resource Profile to Facilitate Economic Diversification and try Partnership Strategy with the World Bank (2009–13). The Growth” (note 1), “Labor Market Signals on the Demand for Country Partnership Strategy (CPS) is in line with Botswa- Skills” (note 2), “Skills Needs of the Private Sector” (note 3), na’s “Vision 2016,” which, in terms of human development, and “Skills Implications of Botswana’s Diamond Beneficiation envisions the transformation of Botswana to “an educated Strategy” (note 4). The key findings and recommendations of and informed nation” and to “a prosperous, productive and these four notes were then integrated into a short Summary innovative nation” as two key cornerstones of the strategy. In Report. line with these objectives, the World Bank with support from The first note assesses the strengths and weaknesses of the Ministry of Education and Skills Development (MoESD) Botswana’s education system (i.e., basic, technical and vo- embarked on analytical study entitled “Skills for Economic cational, and higher education) and recommends policy in- Growth and Diversification in Botswana.” The work is in- terventions to strengthen students’ acquisition of relevant formed by Botswana’s need to diversify its economy to facil- knowledge and skills. The second note examines both cur- itate stronger, more sustainable economic and employment rent labor and skills demand (based on available labor market growth and, concurrently, equip its workforce with a variety data) and expected skills demand (based on the government’s of skill sets that meet employer needs. economic strategies). On the basis of this analysis, the note The objective of the exercise is to provide the government offers recommendations on skills development and govern- of Botswana with concrete suggestions for policy interven- ment programs. The third note uses the findings of an em- tions that strengthen the skills base of the workforce and thus ployer-employee survey conducted in Botswana in 2010 to facilitate economic growth, diversification, and employment. identify skills needs and gaps from the viewpoint of the pri- The recommendations offered by this and the other notes that vate sector. The last note examines the skills implications of make up the study, are based on analyses of available data the government’s diamond beneficiation (processing) strate- and international best practices. Four policy notes were de- gy and suggests actions that can be undertaken to ensure that veloped, each of which touches on crucial aspects of strength- the nation’s skills base supports, rather than hampers, imple- ening the country’s skills base: “Raising Botswana’s Human mentation of the strategy. Skills Implications of Botswana’s Diamond Beneficiation Strategy | 1 1. Overview $550 million by the 16 aforementioned factories has the poten- tial to create over 6,000 indirect jobs in the country.2 Botswana is one of the most successful economies in Africa and The cutting and polishing industry is still in the develop- worldwide, but its rapid growth has depended on abundant nat- ment phase and needs a dynamic policy environment in order ural resources, particularly diamonds, which have been gener- to remain relevant at all stages of its development. Policies are ating nearly half of its fiscal revenues. Diamond revenues have needed in particular to: create industry-specific skills (with clear enabled the country to develop from one of the world’s poorest skills transfer targets, or deadlines), establish technology links countries to reach middle-income status. Historically, Botswa- between the diamond hub and the innovation sector, facilitate na’s diamonds have been exported as rough diamonds, with rough diamond trading, and expand the capacity of the Botswa- minimal value-added processing taking place in the country. na Training Authority (BOTA) to accredit cutting and polishing The government of Botswana is currently seeking to change this programs within industry factories. situation. To prepare the country for “life after diamond mining,” the Motivation for Beneficiation 2.  government has developed a new growth paradigm based on the creation of a skilled workforce, diversification of the economy, in Botswana and strengthening the private sector. Being aware that its growth strategy would need to change, in 1996 the government adopted Botswana’s diamond-led growth has resulted in an undiver- “Vision 2016,” a strategy document that envisions the transfor- sified economy dominated by diamond mining, with public mation of Botswana into “an educated, prosperous, productive, spending largely financed by diamond revenues. However, the and innovative nation.” country has managed to escape the “resource curse” because Translating this vision into concrete actions, the National De- the discovery of diamonds was bolstered by political stability, velopment Plan 9 (2003–08) focused on economic diversifica- mature democratic processes, good policies, and strong in- tion and labor-intensive growth, and the current plan (National stitutions that underpinned effective economic management Development Plan 10, 2009–2014) aims to enhance national for over four decades. Diamond revenues financed key infra- competitiveness by strengthening human resources and build- structure development, such as the building of roads, schools, ing a knowledge-based economy.1 Mineral beneficiation (pro- and hospitals, as well as the creation of an extensive welfare cessing)—specifically, diamond beneficiation—was declared system for a population of roughly 2 million (more than half a national policy in 2008 as part of the new growth paradigm. of which is urbanized). Through this process, the government aims to increase employ- ment and develop skills for downstream processing that will  ontribution to Gross Domestic Product of Figure 1. C ensure the sustainability of Botswana’s diamond industry when Different Economic Activities, 2000–2009 (percentage) actual diamond mining comes to an end over the next two de- cades. In short, the strategy seeks to have 15 percent of the coun- 100% try’s rough diamond output cut and polished locally. The cutting and polishing industry is more labor-intensive than diamond 90% mining and can remain sustainable even when raw diamond re- 80% sources have been depleted. This note examines the skills implications of the beneficia- 70% tion strategy, particularly those of diamond cutting and polish- ing. In addition to reviewing the government’s plans to develop 60% downstream activities and their implementation, the note offers 50% employment projections based on the potential success of dia- mond beneficiation efforts. For this purpose, an input-output 40% simulation is used to show how output linkages arising from the production of polished diamond exports will impact labor in 30% various sectors of the economy. The analysis is based on primary 20% data and information collected through interviews with relevant stakeholders in the diamond industry, as well as secondary data 10% from official sources. 0% The note suggests that in the last five years, Botswana has made 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 considerable progress in establishing a local cutting and polish- Agriculture Construction ing industry, but that the success of this industry depends on the Water and electricity Banks, insurance and business services creation of concomitant skills. By 2010, the industry had already Social and personal services Trade, hotels and restaurants created close to 3,000 direct jobs in 16 cutting and polishing fac- Manufacturing General government tories, in line with governmental targets. The input-output sim- Transport, post and telecommunications Mining ulation shows, that the output linkages arising from the input Source: Central Statistics Office (2008a). demands associated with processing rough diamonds, valued at 1 Additional goals of NDP 10 include enhancing well-being, social protec- 2 The $500 million figure is Botswana’s current target for its Diamond tion, security, transparency, and governance. Trading Company. 2 | Skills Implications of Botswana’s Diamond Beneficiation Strategy Although Botswana does mine other minerals (copper, The beneficiation strategy also includes facilitating services nickel, gold, and soda ash), diamonds represent over 90 per- to increase diamond products, trading activities, and the num- cent of all mineral revenues, which themselves contribute ber of downstream factories. The downstream industry will roughly 50 percent of all government revenues (figure 2). include “one-stop-shop” diamond cutting and polishing facto- ries; diamond jewelry manufacturing; rough and polished di- Figure 2. C  omposition of Government Revenue, amond trading centers; and the national Gemological Facility. 2000–2009 The downstream factories are expected to increase skills and (percentage) technology transfers, as indicated by the number of citizens that they employ and the level of industry competitiveness. Other Taxes 12.0% History of Botswana’s Diamond 3.  Non-Mineral Income Tax 14.4% Cutting and Polishing Industry Customs & Excise 23.0% Diamonds were discovered in Botswana by the DeBeers Mineral Revenue 50.6% Group of companies in the mid-1960s. Diamonds are mined through a 50-50 joint partnership by the DeBeers Group with Source: Central Statistics Office (2008a). the government known as the Debswana Mining Company. Since the early 1980s, the government has been eager to estab- However, Botswana’s diamond-led growth is under threat, lish a cutting and polishing industry to create more employ- as diamond revenues are expected to start decreasing in the ment opportunities in the sector. At the time, DeBeers did not next decade when open-cast mining will be replaced by un- support the government’s ambitions, arguing that cutting and derground mining. Unless there are major new raw diamond polishing activities were not economically viable in Botswana. discoveries, revenue from diamond mining will decline, at first Negotiations between the two partners led to the start of three slowly and then rapidly over the next two decades (figure 3). such factories between 1980 and 1990, but none ever reported In light of the approaching resource depletion, it is crucial a profit. that Botswana use its remaining diamond resources to foster Despite this failed attempt, lessons were learned and the economic growth and fiscal sustainability in the private sec- government continued to push DeBeers for beneficiation. Bo- tor. The government considers downstream beneficiation, or tswana’s real opportunity in this sphere came in 2005, when the local processing of diamonds, an opportunity for private DeBeers’ 25-year mining license was due for renewal. The sector growth that can create sustainable revenue for the gov- government made the renewal of its mining license for an- ernment. The beneficiation imperative will further local eco- other 25 years contingent on the company helping Botswana nomic development through the local cutting and polishing create a viable cutting and polishing industry. As a result of of diamonds, ensuring that a greater proportion of the value the new agreement, the Diamond Trading Company Botswa- derived from diamond exploitation stays “in country” and na (DTCB) was established in 2008. In order to help support benefits the country by increasing employment. The benefici- the new industry, DTCB is responsible for local sales and mar- ation strategy thus seeks to create downstream competencies keting of diamonds in the country. DeBeers funded the con- that can continue to be used when diamonds are no longer struction of the new DTCB building at a cost of $83 million. mined in Botswana. The new agreement specifies that DTCB’s rough diamond  rojected Government Revenue from Diamonds, 2009–2029 Figure 3. P 18000 16000 14000 12000 Revenue (P millions) 10000 8000 6000 4000 2000 0 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 Years Source: Government of Botswana (2008) Skills Implications of Botswana’s Diamond Beneficiation Strategy | 3 sales to the local manufacturing industry must be at least now looks at the skills implications of this nascent industry by $500 million a year, with the goal of creating over 3,000 jobs. evaluating its demand for direct and indirect labor, together After the new contract was signed, the government invited 16 with that of related activities. of the world’s most renowned cutting and polishing compa- nies to set up factories in Botswana and transfer cutting and Skills Implications of the Cutting and 4.  polishing skills to local laborers (table 1). The 16 companies, known as “sightholders,” are only assured rough diamond al- Polishing Industry locations on the condition that they hire and train local resi- dents. To date, these companies have invested in factories and This section is based on primary data obtained through inter- are training locals in cutting and polishing skills; by the end views with 10 of the 16 cutting and polishing factories, as well of 2008, they employed 3,178 people. Employment had de- as official secondary data. The skills implications of indirect creased to 2,489 at the end of the 2009 due to the impact of the job creation are evaluated using an input-output simulation global recession, but rose to around 3,250 in 2011 as the de- to show, how an increase in final demand associated with pol- mand for diamonds increased (Office of the President 2011). ished diamond production, will impact employment in other The office of the “diamond hub,” located in the heart of the industries that supply the cutting and polishing factories with diamond in Diamond Technology Park, supports the govern- various inputs. ment’s beneficiation policy. The office builds strategic allianc- Direct skills implications es, develops infrastructure, and works to create an enabling fiscal regime for the diamond industry. The office also houses To understand the direct skills implications of the new in- various ancillary businesses, including banks, logistics, gem- dustry, a brief description of the cutting and polishing pro- ology, and security brokerage firms. cess is needed. A diamond is cut and polished in a series of steps to prepare it for jewelry manufacturing. First, the rough Table 1. Botswana’s Cutting and Polishing Factories diamond is examined to determine the biggest or best shape that can be achieved. Once this is determined, the diamond is Company Origin marked and cut using either a saw or a laser machine. The next step is bruting, where two diamonds are rubbed together, ei- Dalumi Botswana Israel ther in a lathe-type machine or an automatic bruting machine, Diamond Manufacturing Belgium to create a girdle around the circumference. Finally, all facets Botswana are polished and finished. Cutting and polishing a diamond is Eurostar Botswana Belgium a long and exact process that requires patience and precision; H&A Cutting Works Botswana Thailand these skills are developed over time and experience plays a key Lazare Kaplan International (LKI) Israel role. An empirical examination of the Israeli diamond indus- Botswana try supports the argument that productivity and skills in the Leo Schachter Botswana Israel cutting and polishing industry are determined by experience (Levhari and Sheshiniski 1973). Motiganz Botswana Israel Pluczenik Botswana Belgium Technical and skilled jobs Rand Diamonds Botswana South Africa The cutting and polishing factories recruit locals who they Sherenuj India train to become markers, bruters, sawyers, diamond polish- South African Diamond South Africa ers, computer programmers, and laser operators. The local Corporation (SAFDICO) laborers recruited for technical and skilled jobs require a low Steinmetz Israel level education (standard 7 or form 3), good English com- munication skills, good eyesight, good dexterity, and a basic Suashish India knowledge of mathematics, physics, and computers. Technical Teemane Manufacturing Belgium expertise is gained through experience in the industry; there- Company fore low labor turnover is critical. Yerushalmi Bros Botswana Israel Professional jobs. Professional jobs are in upper and mid- Zebra Diamonds Belgium dle management. Some firms have foreign management staff, Source: Mbaya (2011). while others have local management staff. Supervisors are Note: The 16 companies include the 3 factories that were created during mainly expatriates; they are responsible for overseeing people the government’s previous failed attempt to establish a cutting and polish- working in technical, skilled, administrative, and entry-lev- ing industry. el positions. These experienced expatriates have previously worked in various positions in the industry in other diamond In the five years that followed the new agreement with De- centers around the world. They have technical and profes- Beers, Botswana made considerable progress in establishing a sional training and are guided by industry standards. Other local cutting and polishing industry. However, the most criti- professional positions are available in support services (e.g., cal part of the government’s plan is to develop the skills need- accountants, human resource specialists, office administra- ed by this industry and its related activities in order to create tors). The demand for support services varies with the size world-class downstream competencies. The success of the of the factories, where the labor force ranges from 60 to 400 industry hinges on the development of these skills. This note employees. 4 | Skills Implications of Botswana’s Diamond Beneficiation Strategy Table 2. Indirect Employment Effects of Diamond Cutting and Polishing Industry Banking, insurance, Wholesale/Retail Transport & All and business Manu- trade, hotel & communi- Water & sectors services facturing restaurant sector cations electricity New jobs 6,035 1,836 1,047 762 294 126 Change in employment (%) 1.7% 15.7% 3.5% 1.1% 3.8% 4.5% Professional & technical employees 816 268 132 109 43 17 Administrative & management employees 170 56 28 23 9 3 Clerical employees 496 163 80 66 26 10 Skilled manual employees 2,577 847 417 344 137 54 Unskilled employees 1,596 511 288 221 78 41 Mixed-income employeesa 379 0 101 0 0 0 Source: 1996–67 Labor Force Survey. Note: The Labor Force Survey of 1996–97 was used as the basis of these estimations because the input-output model incorporates the social accounting matrix of that year1996–97. Training in the factories is on the job, with experienced ex- Based on the model, skilled manual workers would benefit patriates responsible for teaching local employees the specific most from job creation, gaining 2,577 jobs, or 42 percent of tasks of the cutting and polishing process. Skills are firm-spe- total new jobs, while the sector that would benefit most is that cific and factories recruit highly skilled expatriates from their of banking, insurance, and business services (1,846 jobs, or 30 global operations, with the government assisting the firms to percent of all new jobs). obtain work permits. Caveats Indirect skills implications There are certain caveats to these job creation estimates. To understand the indirect skills implications associated with First, the Leontief function for labor, which reflects em- the production of polished diamonds, a brief review of the in- ployment-output elasticity, is valued at 1 for all sectors and puts of a typical cutting and polishing factory is needed. The the economy as a whole; in reality, however, this function cutting and polishing factories purchase a box of rough dia- is typically less than 1 and differs among sectors. Therefore, monds, called a “sight” box, once a month during the DTCB’s the assumption may lead to an overestimation of the num- “Sight Weeks.” The factories must hire a sight broker to facili- ber of new jobs created. Second, the simulation focuses only tate the purchase of these diamonds. It typically takes a factory on the production and not the income effects of the cutting 3 to 4 months to cut and polish the entire sight. During that and polishing industry. However, the income effects associat- time factories require manufactured inputs, such as diamond ed with increased household consumption, which result from glue and polishing wheels, water and electricity, security for the both direct and indirect job creation, will ripple through the premises, catering for the staff, general telecommunications, economy and increase demand for various goods and services. and insurance. They also require financing and transportation This increased demand may result in additional jobs in vari- for the rough diamonds once they have been purchased, and ous sectors. Not accounting for income effects may therefore again when they export those that have been polished. lead to an underestimation of the number of jobs created. The simulation also uses an unchanged value for productivity in 5. Input-Output Simulation Botswana. The next section provides a “reality check” on the estimates in table 2 by comparing the indirect and direct skills The input-output analysis detailed here focuses on the pro- implications of the input-output model with actual develop- duction effects of the diamond cutting and polishing indus- ments in Botswana’s cutting and polishing industry and relat- try and does not include the income effects. The focus on the ed activities. production side assumes that intermediate input demand and employment are endogenous, while final demand is exogenous. The modeling framework allows for an estimation of the conse- 6. Current Status of the Industry quences of an exogenous change in the economy, in this case, an increase in polished diamond exports. Supply linkages include As noted earlier, existing cutting and polishing factories in the development of ancillary firms that provide the cutting and Botswana were licensed on the condition that they train lo- polishing industry with necessary goods and services. (Details cal employees in cutting and polishing skills. The prerequisite of the model and its assumptions are provided in appendix 1.) for this process is the existence of high-quality training pro- The findings of the simulation show that demand for inputs grams. The Botswana Training Authority (BOTA) is respon- by the cutting and polishing factories has the potential to cre- sible for accrediting diamond cutting and polishing programs ate over 6,000 jobs across all sectors of the economy.3 for companies in the downstream industry. Yet till 2010, only three factories and the DTCB have accredited training pro- 3 See appendix 2 for specific employment calculations by sector. grams with BOTA (table 3). BOTA does not have figures for Skills Implications of Botswana’s Diamond Beneficiation Strategy | 5 the number of local employees who have completed or are Indirect job creation completing the accredited programs. In an interview with In addition to direct employment in the cutting and polishing ‘sightholders’, one factory noted that the costs of registering factories, the downstream beneficiation of diamonds has the programs for accreditation and the hassle of doing so are some spillover effects of creating opportunities for firms that either of the reasons that explain low registration numbers. contribute to the industry’s supply chain or work with com- panies that supply the industries with goods and services. The Botswana Training Authority (BOTA)— Table 3.  strategic thrust of the beneficiation strategy is to create oppor- Accredited Training Programs in Sector tunities for Batswana. However, the high degree of imported inputs in the process, barriers to entry in the supply chain, Company Accredited training programs and lack of industry-related skills render this a difficult goal DTCB Diamond Academy, Foundation Manufacturing to achieve. Gabarone Intermediate Manufacturing Imported inputs Pre-RTOP Advanced Manufacturing The input-output simulation was based on the assumption Rough Diamond Sorting and Valuing that the local economy is able to supply the industry with Eurostar Botswana Diamond Polishing all the goods and services required to produce polished di- amonds. However, the local economy currently supplies the SAFDICO Certificate in Diamond Processing industry mainly with catering, cleaning, and security services. Automatic Machine Polishing Manufactured inputs are being imported due to the lack of lo- Preparation cal suppliers. Although the government exempts import taxes Brillianteering on sightholders imported inputs, these firms still encounter Cross Work difficulties in importing, which impacts production timelines. Fancy Stone Making The servicing of equipment is also imported due to the lack of Sawing experienced local technicians. Depending on the type of ser- Teemane Manufacturing Diamond Polishing vicing required, the sightholders either take their machinery Diamond Training School, to South Africa or bring in technicians from India, Israel, or Serowe Belgium to work on it. In either case, firms incur considerable Source: Information provided by BOTA in 2010. costs to pay for the transport and visa requirements of these technicians. There is an opportunity here for Botswana to sup- Expatriate labor ply these much-needed skills, as all sightholders interviewed said that the local availability of technicians would improve Expatriate labor costs more than local labor, therefore the the efficiency of their production by decreasing costs and factories have a real incentive to ensure that skills transfers timelines. takes place as quickly and efficiently as possible. Based on in- terviews, the ratio of expatriates to locals at the end of 2009 Supply chain barriers to entry for the 7 factories that provided data on this topic ranged be- The supply chain of the cutting and polishing industry is char- tween 1 to 5 to 1 to 25 (table 4). The government hopes that acterized by high barriers to entry due to the closed nature over time, this ratio will increase further, with more Batswana of the diamond industry. Suppliers of knowledge-intensive replacing expatriates. services to the industry mainly consist of multinational com- panies that have existing relationships with sightholders in Expatriate-to-Local Ratios Table 4.  other cutting and polishing centers. Reputation and trust play for 7 Cutting and Polishing Factories a key role in determining who may participate in the supply chain. Currently in Botswana, ten suppliers of various knowl- Factory Ratio edge business services have been identified in the cutting and 1 1:10 polishing industry. All these companies operate in other cut- 2 1:50 ting and polishing centers and opened offices in Botswana to 3 1:21 provide their services to the factories of firms with which they have established business relationships. 4 1:21 The challenge created by high barriers to entry is exacerbat- 5 1:50 ed by the fact that the Botswana education system does not 6 1:20 produce any industry-specific skills for the industry, render- 7 1:25 ing local labor ill-equipped for positions in these multination- Source: Research conducted by author. al companies. Note: These ratios reflect employment figures obtained from the factories; the names of the factories are withheld out of competition concerns. 6 | Skills Implications of Botswana’s Diamond Beneficiation Strategy Table 5.  Identified Suppliers of Services to the Cutting Although the government supports work permits and visas and Polishing Industry for skilled workers in the industry to facilitate skills transfer to Batswana, the process of skills transfer should not be rushed. Company Business activities As mentioned above, skill development in the industry is a Brinks Transport/logistics long and precise path in which skills are perfected with expe- rience. Botswana needs to develop itself as a center of down- Malaca Amit Transport/logistics stream diamond industries as well as product aggregation and I Henning Brokers sales (Office of the President 2011). This goal will be reached Rothschild Brokers only when the country creates a brand name for itself as a pro- ABN AMRO Banking ducer of high-quality polished diamonds and jewellery. Standard Chartered Banking Rough diamond sales Stanbic Banking The diamond cutting and polishing factories in Botswana need Gemmological Institute of America Gem Certification an ongoing supply of the right diamonds in order to train work- AON Insurance ers and give them the necessary experience. Thus training is Marsh Insurance closely linked to the supply of rough diamonds. The sales and Source: Mbaya (2011). marketing arm of DTCB is responsible for determining the quantity and types of rough diamonds put into each factory’s box during Sight Weeks. The criteria used to determine indi- 7. Challenges of Skills and Job Creation vidual supply levels for each sightholder includes global com- petitiveness criteria (i.e., technical, marketing, and distribution The main objectives of the cutting and polishing factories are efficiency), as well as local criteria (i.e., skills development, job to increase polished diamond exports and create a sustainable creation, and local manufacturing). In addition, sightholders niche industry, which is one part of the country’s strategy for must satisfy certain other criteria, such as compliance with diversifying the economy away from mining. To date, Bo- DTCB’s Best Practice Principles. The process of determining tswana has had modest success in inviting well-known sight- each sightholder’s supply is overseen by a governance panel holders to participate in its downstream diamond processing comprising both government and DeBeers representatives in industry. This success is derived from its leverage as an origi- order to ensure fairness. The objectivity of the process has se- nating source of diamonds, as well as successful negotiations. rious implications for the viability of the local cutting and pol- The challenge is to now make the country competitive in the industry. ishing industry because the correct supply of rough diamonds The last figure reported on polished diamonds exports by is one of the key determinants of skills transfer in the industry. the diamond hub in 2008 stated that the DTCB supplied sight- holders with $300 million (1.8 billion pula) worth of rough Conclusion and Policy Recommendations diamonds that year, but that only $100 million (600 million pula) of polished diamonds were exported. There was thus a In the last five years, Botswana has made considerable prog- very large gap between rough diamonds sold locally and those ress in establishing a local cutting and polishing industry as polished and exported in 2008. This gap could indicate a num- part of its beneficiation strategy. To date, 16 cutting and pol- ber of bottlenecks in the manufacturing process of the nascent ishing factories, a government diamond office, and a Diamond industry, one of which could be lack of appropriate skills. By Technology Park that houses various ancillary businesses have June 2011, the annual sale of rough diamonds had increased been established. The industry has created close to 3,000 di- to $377 million; however, the relevant figure on polished dia- rect jobs in the 16 factories, a number in line with govern- mond exports was not publicly available at that time, so it is ment’s targets. A large proportion of these jobs are for local unclear whether the gap has decreased over time. workers who are being trained in technical and skilled jobs A number of challenges need to be overcome before Bo- in the factories. Skills transfer in these factories takes place tswana can become competitive in a market dominated by via on-the-job training provided by highly skilled expatriates. countries such as India and China, where the per-carat cost Training is directly linked to rough diamond allocations be- of processing diamonds is much lower. For instance, in China, cause trainees learn using real diamonds. the average cost of processing diamonds is $17 per carat and The input-output simulation conducted for this note shows in India, $10 per carat. In contrast, Botswana’s cost stands at that output linkages associated with $550 million in annual $35–60 per carat. In general, part of the higher cost relates to local rough diamond sales and the associated input demands the higher-quality product produced, but China also produces of cutting and polishing factories have the potential to create high-quality product and its lower cost is attributed partly to 6,000 indirect jobs in the Botswana economy. Almost half of its use of high technology and a readily available skilled work- these jobs would be for skilled manual workers, one-quarter force. for unskilled workers, and just over one-tenth for profession- Workforce development for the industry is clearly cru- al and technical workers. The sector that would benefit the cial for its sustainability. Skill needs range from expertise in most from ancillary job creation is that of banking, insur- cutting, bruting, and polishing, to the ability to operate and ance, and business services, in which 30 percent of all new maintain machinery and equipment used in the production jobs are expected to be created, followed by manufacturing process. (17 percent of all new jobs); the wholesale, retail trade, hotel Skills Implications of Botswana’s Diamond Beneficiation Strategy | 7 and restaurants sector (13 percent), transport and commu- in the polishing and final production of diamonds, the country nications (5 percent), and water and electricity (3 percent). cannot compromise on quality and cost effectiveness. Being a However, a large number of potential jobs are not being new entrant in the arena, it does not have an existing pool of realized due to high barriers to entry in the industry, lack labor to draw upon. Immediate skills gaps need to be filled of industry-specific skills in Botswana, and the high import rapidly by an international skilled labor force. At the same content of the industry. The diamond cutting and polishing time, the country needs to change the negative perception of industry remains in the development phase. Eventually, Bo- foreign workers. As shown in the input-output simulation ex- tswana should be able to create a niche in the world economy ercise, successful beneficiation can create a large number of in polished diamonds and jewelry making by developing a indirect jobs in the economy. In the short run, highly skilled globally competitive industry. The specific recommendations foreign labor is imperative for the success of the beneficiation use this goal as their starting point. strategy—at least until Botswana makes a name for its pol- ished diamond products. Policy recommendation #1: Accelerate training efforts The government needs to accelerate the creation of indus- Policy recommendation #3: Increase the number of try-specific skills for the cutting and polishing industry. A accredited training programs number of countries have experimented with developing in- The Botswana Training Authority (BOTA) needs to take an digenous diamond beneficiation industries with little success. active role in accrediting on-the-job training programs and Botswana holds the key to attracting investors because it has ensuring the quality of other training programs. Additional- its own diamond supply. Unless Botswana develops top-ti- ly, strong linkages need to be established between Botswana’s er skills in diamond polishing, cutting, and jewelry making, education and diamond hubs so that the demand for specific however, investment and polishing firms will exit the country skills are transmitted to the education sector, which in turn as soon as its supply of diamonds is depleted. should both strengthen the capacity of existing institutions The development of these skills is urgent. The recently es- to provide skills training and attract new training provid- tablished Odi University of Science and Technology is slat- ers, both local and international. Certain partnerships with ed to offer courses that develop these skills. In addition, the colleges in India are under discussion and should be imple- government needs to exploit its relationship with sightholders mented rapidly. and sponsor students in cutting and polishing training pro- grams in their factories outside the country. Industry-related Policy recommendation #4: Make diamond sales more skills creation should include technical skills training for the transparent repair and service of cutting and polishing equipment, as well The sales of rough diamonds and the export of polished dia- as apprenticeships in cutting and polishing. monds should be made more transparent. Currently, national accounts report polished diamond exports with rough dia- Policy recommendation #2: Simplify the process for monds exports, but local rough diamond sales are not report- importing skilled labor ed. In addition, policy makers need to carefully consider al- The process of importing skilled labor needs to be made less lowing local rough diamond trading among the polishing and cumbersome. At a stage when Botswana needs to make a mark cutting factories as a way of optimizing their rough allocations. 8 | Skills Implications of Botswana’s Diamond Beneficiation Strategy References Botswana, Republic of. MoFDP (Ministry of Finance and Levhari, D., and E. Sheshiniski. 1973. “Experience and Development Planning). 2009. National Development Productivity in the Israeli Diamond Industry.” Plan (NDP) 10. Volumes I and II. MoFDP, Gaborone. Econometrica 41(2): 239–53. . Office of the President. 2011. “President’s State of Mbaya, L. 2011. “Botswana – Identifying the Niche in the the Nation Address, November 7, 2011.” Office of the Global Economy.” Background paper prepared for the President, Gaborone. World Bank study, “Labor Market Signals of the Demand for Skills.” Gaborone. Kettle, P. (former Head of Beneficiation in Africa, DeBeers.) 2009. Personal interview, October 29, 2009, Gaborone. Pyatt, G., and J. Round. Eds. 1985. “Social Accounting Matrix: A Basis for Planning.” Washington, DC: Leontief, W. 1985. Input-Output Economics. New York: The World Bank. Oxford University Press. Skills Implications of Botswana’s Diamond Beneficiation Strategy | 9 Appendix 1: Assumptions and Formulas of the Input-Output Simulation Model The input-output table used for the analysis conducted for Tables A1.2 and A1.3 show the estimated composition of the this paper is constructed based on the input-output version costs of production required to produce polished diamonds, of Botswana’s 1996–97 Social Accounting Matrix. The crit- excluding the cost of purchasing rough diamonds and changes ical assumption is that Botswana’s technical structure has in final demand associated with the production of polished not changed significantly since 1996–97 and therefore the diamond exports (based on the composition of production input-output table still provides relevant information on the costs and the above-cited assumptions on polished diamond ratio of inputs to outputs in different sectors of the economy. production). The model also assumes a Leontief function for value added where value added is expressed as a fixed share of the level Table A1.2 Estimated Composition of Production Costs of output. Thus, the employment levels of different factors of (excluding rough diamonds) production are fixed in relation to output levels, resulting in a fixed employment-output ratio assumption. Labour 15% Sight brokers 3% Table A1.1 Value Addition in the Diamond Pipeline Security 5% Catering 0.5% Stage of global value chain % of original value Manufactured inputs 25% Producer selling value 100 Servicing of equipment 8% Sorting and valuing 115 Water and electricity 3.5% Cutting and polishing  127 Telecommunications 2% Polished dealing 133 Buildings and land 3% Jewelry manufacturing 166 Gem certification 20% Retail 320 Transport 5% Source: “Global Value Chains” webpage, Duke University website, Duke Insurance 10% University, Durham, North Carolina, http://www.duke.edu/web/soc142/ Source: Mbaya (2011). team7/Diamond%20Global%20Value%20Chain.htm (accessed Septem- ber 1, 2012). Table A1.3 Estimated Changes in Final Demand It is not possible to simply shock the economy with an exog- enous change in polished diamond exports because Botswa- Sector Pula (P) Millions na’s national accounts do not report a diamond manufactur- Mining 3.850 ing sector.4 Instead, assumptions needed to be made regarding Rough Diamonds 3.850 exogenous changes in final demand associated with the pro- duction of a certain value of polished diamond exports. The Government 5.544 following assumptions are made: Corporate Tax 5.544 Households 62.9244 • Annual local rough diamond sales are $550 million (3.85 billion pula)5 Labour 62.9244 Banking, Insurance & Business 192.96816 • Cutting and polishing adds 12 percent value to rough dia- Services monds6 Sight Brokers 12.58488 • Rough diamond purchases are 90 percent of the value of Gem Certification 83.8992 polished diamonds7 Security 20.9748 • Value added is $58,858,000 (462 million pula) and total polished diamonds exports are $549,094,000 (4.31 billion Insurance 41.9496 pula). Other production costs (excluding rough diamond Equipment Servicing 33.55968 purchases) are 10 percent of the value of polished diamonds Transport, Post & 29.36472 Telecommunications • Profit is 8 percent of the value added 8 Transport 20.9748 • Corporate tax is 15 percent of profits9 Telecommunication 8.38992 4 Polished diamond exports are aggregated with rough diamond exports Water and Electricity 14.68236 in the country’s national accounts. Retail Trade, Hotel, Restaurants 2.09748 5 These are the rough sales targets of DTCB. Catering 2.09748 6 Based on an estimates shown in table A4.1 below. 7 Estimate based on research in Botswana’s cutting and polishing industry. Manufacturing 104.874 8 Estimate based on an interview with Peter Kettle, a former DeBeers em- Manufactured Inputs 104.874 ployee with extensive experience in beneficiation in African countries. 9 The current corporate tax for the manufacturing sector in Botswana. Source: Mbaya (2011). 10 | Skills Implications of Botswana’s Diamond Beneficiation Strategy The increase in final demand for rough diamonds from the economy and does not take the changes in final demand from mining sector is not included in the simulation because the households into account. Although households are exogenous activities of the cutting and polishing industry do not result in in the model, it goes without saying that the employment an increase in mining production. Including rough diamonds created in the cutting and polishing industries will increase in the change in final demand would simply result in dou- household consumption, which will ripple throughout the ble counting. The simulation is on the production side of the economy, resulting in multiplier effects. Formulas Using matrix algebra, the changes in output and employment are calculated using the following formulas: Change in output: where is the change in output vector, is the final demand vector, is the Leontief Inverse, is the identity matrix, and is the coefficient matrix Change in employment: where is the change in employment vector and is the employment-output ratio/coefficient. Skills Implications of Botswana’s Diamond Beneficiation Strategy | 11 Table A.2.1 Input-Output Table | 12 Intermediate Final Demand Total Supply 1 2 3 4 5 6 7 8 9 10 11 Demand (Y) (X) Agriculture 1 42.03 1.52 270.10 0.04 0.00 0.33 0.02 0.06 0.08 149.71 2.50 466.4 354.62 821.0 Appendix 2:  Mining 2 0.01 0.70 0.86 26.09 13.75 0.05 0.00 0.87 0.02 1.30 0.00 43.7 7,576.23 7,619.9 Manufacturing 3 44.18 97.05 463.51 13.19 122.29 34.43 80.37 15.77 10.86 338.01 33.38 1,253.1 2,397.12 3,650.2 Water and Electricity 4 3.70 122.57 32.47 22.36 21.75 38.02 6.76 16.65 0.99 71.15 13.07 349.5 107.11 456.6 Construction 5 2.54 14.80 11.58 2.37 813.40 45.20 22.59 20.02 5.94 104.50 8.94 1,051.9 2,173.20 3,225.1 Trade, Hotels and Restaurants 6 1.23 6.76 14.45 5.62 37.51 28.93 11.13 22.27 0.87 108.10 8.47 245.3 285.59 530.9 Transport, Post & Telecommunications 7 10.34 47.42 51.79 6.70 60.26 175.56 17.15 42.07 3.70 327.75 28.81 771.5 330.88 1,102.4 Banking, Insurance & Business Services 8 4.86 40.59 49.90 12.71 50.63 204.56 30.11 43.52 9.74 131.85 27.15 605.6 708.59 1,314.2 Other 9 0.00 82.89 0.00 0.14 0.00 0.00 0.00 0.00 1.91 14.58 0.00 99.5 315.18 414.7 General Government 10 0.01 1.06 0.01 0.00 0.00 0.00 0.00 0.00 0.00 8.15 0.57 9.8 4,842.66 4,852.5 and Across Sectors Industry Social and Personal Services 11 8.30 4.77 25.83 5.47 70.78 9.31 68.62 13.96 3.29 15.88 43.29 269.5 772.53 1,042.0 Prof. & Tech Employees – Cit. F1 5.51 41.82 38.77 14.12 40.79 47.03 20.26 37.95 37.95 200.80 28.75 5,165.8 19,863.72 25,029.5 Prof. & Tech. Employees – Non-Cit. F2 0.81 10.86 10.73 2.25 17.52 17.71 10.96 17.66 17.66 23.92 39.24 Admin. & Mang. Employees – Cit. F3 1.15 8.73 8.09 2.95 8.51 9.81 4.23 7.92 7.92 41.90 6.00 Admin. & Mang. Employees – Non-Cit. F4 0.17 2.27 2.24 0.47 3.66 3.70 2.29 3.69 3.69 4.99 8.19 Clerical Employees – Cit. F5 3.35 25.40 23.55 8.58 24.77 28.56 12.30 23.05 23.05 121.94 17.46 Clerical Employees – Non-Cit. F6 0.49 6.59 6.52 1.37 10.64 10.76 6.65 10.73 10.73 14.53 23.83 Skilled Manual – Cit. F7 17.40 132.03 122.40 44.58 128.77 148.47 63.94 119.82 119.82 633.88 90.77 Skilled Manual – Non-Cit. F8 2.55 34.27 33.89 7.12 55.32 55.92 34.59 55.76 55.76 75.51 123.86 Labour Value Unskilled Employees F9 15.37 116.61 108.11 39.38 113.73 131.13 56.47 105.82 105.82 559.84 80.17 Skills Implications of Botswana’s Diamond Beneficiation Strategy Added Mixed Income F10 406.71 0.00 37.97 0.00 0.00 0.00 0.00 0.00 0.00 0.00 26.72 Gross Capital Net Operating Surplus F11 120.51 6216.51 381.33 24.76 541.42 1235.53 69.30 875.42 875.42 0.00 208.35 Formation Depreciation F12 27.68 312.60 130.50 170.94 79.94 97.85 295.10 200.52 200.52 801.18 46.47 Taxes on Products F13 12.31 42.53 224.05 7.51 141.27 38.55 37.23 24.17 24.17 152.19 23.75 Taxes on Production F14 2.33 2.26 16.69 0.00 1.40 0.98 2.67 0.83 0.83 0.00 0.57 Government Less Subsidies F15 -2.41 -0.06 -32.79 -0.04 -9.18 -2.90 0.00 -29.06 -29.06 0.00 -1.55 Other Countries Imports I8 50.28 168.12 1353.45 22.27 632.57 96.02 194.55 118.52 685.64 118.63 Detailed Simulation Results—Change in Employment by Sector Table A.2.2 Coefficient Matrix (A) 1 2 3 4 5 6 7 8 9 10 11 Agriculture 1 0.05 0.00 0.07 0.00 0.00 0.00 0.00 0.00 0.00 0.03 0.00 Mining 2 0.00 0.00 0.00 0.06 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Manufacturing 3 0.05 0.01 0.13 0.03 0.04 0.06 0.07 0.01 0.03 0.07 0.03 Water and Electricity 4 0.00 0.02 0.01 0.05 0.01 0.07 0.01 0.01 0.00 0.01 0.01 Construction 5 0.00 0.00 0.00 0.01 0.25 0.09 0.02 0.02 0.01 0.02 0.01 Wholesale/Retail Trade, Hotels and Restaurants 6 0.00 0.00 0.00 0.01 0.01 0.05 0.01 0.02 0.00 0.02 0.01 Transport, Post & Telecommunications 7 0.01 0.01 0.01 0.01 0.02 0.33 0.02 0.03 0.01 0.07 0.03 Banking, Insurance & Business Services 8 0.01 0.01 0.01 0.03 0.02 0.39 0.03 0.03 0.02 0.03 0.03 Other 9 0.00 0.01 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 General Government 10 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Social and Personal Services 11 0.01 0.00 0.01 0.01 0.02 0.02 0.06 0.01 0.01 0.00 0.04 Prof. & Tech Employees – Cit. F1 0.01 0.01 0.01 0.03 0.01 0.09 0.02 0.03 0.09 0.04 0.03 Prof. & Tech. Employees – Non-Cit. F2 0.00 0.00 0.00 0.00 0.01 0.03 0.01 0.01 0.04 0.00 0.04 Admin. & Mang. Employees – Cit. F3 0.00 0.00 0.00 0.01 0.00 0.02 0.00 0.01 0.02 0.01 0.01 Admin. & Mang. Employees – Non-Cit. F4 0.00 0.00 0.00 0.00 0.00 0.01 0.00 0.00 0.01 0.00 0.01 Clerical Employees – Cit. F5 0.00 0.00 0.01 0.02 0.01 0.05 0.01 0.02 0.06 0.03 0.02 Clerical Employees – Non-Cit. F6 0.00 0.00 0.00 0.00 0.00 0.02 0.01 0.01 0.03 0.00 0.02 Skilled Manual – Cit. F7 0.02 0.02 0.03 0.10 0.04 0.28 0.06 0.09 0.29 0.13 0.09 Skilled Manual – Non-Cit. F8 0.00 0.00 0.01 0.02 0.02 0.11 0.03 0.04 0.13 0.02 0.12 Unskilled Employees F9 0.02 0.02 0.03 0.09 0.04 0.25 0.05 0.08 0.26 0.12 0.08 Mixed Income F10 0.50 0.00 0.01 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.03 Net Operating Surplus F11 0.15 0.82 0.10 0.05 0.17 2.33 0.06 0.67 2.11 0.00 0.20 Depreciation F12 0.03 0.04 0.04 0.37 0.02 0.18 0.27 0.15 0.48 0.17 0.04 Taxes on Products F13 0.01 0.01 0.06 0.02 0.04 0.07 0.03 0.02 0.06 0.03 0.02 Taxes on Production F14 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Subsidies F15 0.00 0.00 -0.01 0.00 0.00 -0.01 0.00 -0.02 -0.07 0.00 0.00 Imports I8 0.06 0.02 0.37 0.05 0.20 0.18 0.18 0 0.29 0.14 0.11 Skills Implications of Botswana’s Diamond Beneficiation Strategy | 13 Table A.2.3 Leontief Inverse (I - A)-1 1 2 3 4 5 6 7 8 9 10 11 Agriculture 1 1.059 0.002 0.090 0.003 0.005 0.011 0.007 0.002 0.003 0.040 0.006 Mining 2 0.000 1.001 0.001 0.060 0.006 0.006 0.001 0.002 0.000 0.002 0.001 Manufacturing 3 0.068 0.017 1.155 0.041 0.065 0.130 0.092 0.022 0.033 0.095 0.044 Water and Electricity 4 0.006 0.017 0.012 1.055 0.013 0.092 0.010 0.016 0.004 0.020 0.016 Construction 5 0.006 0.004 0.007 0.011 1.342 0.144 0.032 0.025 0.021 0.036 0.015 Wholesale/Retail Trade, Hotels and 6 0.003 0.002 0.006 0.015 0.018 1.074 0.013 0.020 0.003 0.027 0.011 Restaurants Transport, Post & Telecommunications 7 0.016 0.008 0.021 0.024 0.035 0.383 1.026 0.042 0.012 0.082 0.035 Banking, Insurance & Business Services 8 0.010 0.007 0.021 0.039 0.032 0.447 0.038 1.045 0.027 0.044 0.035 Other 9 0.000 0.011 0.000 0.001 0.000 0.000 0.000 0.000 1.005 0.003 0.000 General Government 10 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 1.002 0.001 Social and Personal Services 11 0.013 0.002 0.012 0.016 0.034 0.055 0.069 0.016 0.010 0.012 1.047 Table A.2.4 Change in Output Change in Final Change in Output Percentage Change Demand (P 000) in Output Agriculture 1 0 10.31 1.26% Mining 2 0 1.37 0.02% Manufacturing 3 104.894 129.40 3.54% Water and Electricity 4 14.68236 20.53 4.50% Construction 5 0 7.19 0.22% Wholesale/Retail Trade, Hotels and Restaurants 6 2.09748 7.48 1.41% Transport, Post & Telecommunications 7 29.36472 42.08 3.82% Banking, Insurance & Business Services 8 192.96816 206.69 15.73% Other 9 0 0.04 0.01% General Government 10 5.544 5.56 0.11% Social and Personal Services 11 0 6.67 0.64% 349.55072 437.30 1.75% Table A.2.5 Overall Employment Change across all Sectors Initial Employment 345405 Increase in Employment 6035 Percentage Change 1.7% Source: From previous estimates. 14 | Skills Implications of Botswana’s Diamond Beneficiation Strategy Table A.2.6 Indirect Employment Effects by Skills in all the Sectors Increase in Labour Increase in % of Increase Value Added Employment (P millions) Prof. & Tech Employees – Cit. 10.00 572 9% Prof. & Tech. Employees – Non-Cit. 4.26 244 4% Admin. & Mang. Employees – Cit. 2.09 119 2% Admin. & Mang. Employees – Non-Cit. 0.89 51 1% Clerical Employees – Cit. 6.07 348 6% Clerical Employees – Non-Cit. 2.59 148 2% Skilled Manual – Cit. 31.57 1807 30% Skilled Manual – Non-Cit. 13.44 770 13% Unskilled Employees 27.88 1596 26% Mixed Income 6.62 379 6% Total 105.40 6035 100% Table A.2.7 Overall Employment Change in Banking, Insurance, and Business Services Sector Initial Employment 11737 Increase in Employment 1846 Percentage Change 15.73% Table A.2.8 Indirect Employment Effects by Skills in Banking, Insurance, and Business Services Increase in Labour Increase in % of Increase Value Added Employment (P millions) Prof. & Tech Employees – Cit. 5.97 183 10% Prof. & Tech. Employees – Non-Cit. 2.78 85 5% Admin. & Mang. Employees – Cit. 1.25 38 2% Admin. & Mang. Employees – Non-Cit. 0.58 18 1% Clerical Employees – Cit. 3.63 111 6% Clerical Employees – Non-Cit. 1.69 52 3% Skilled Manual – Cit. 18.84 578 31% Skilled Manual – Non-Cit. 8.77 269 15% Unskilled Employees 16.64 511 28% Mixed Income 0.00 0 0% Total 60.14 1846 100% Table A.2.9 Overall Employment Change in Manufacturing Sector Initial Employment 29530 Increase in Employment 1047 Percentage Change 3.54% Skills Implications of Botswana’s Diamond Beneficiation Strategy | 15 Table A.2.10 Indirect Employment Effects by Skills in Manufacturing Sector Increase in Labour Increase in % of Increase Value Added Employment (P millions) Prof. & Tech Employees – Cit. 1.37 103 10% Prof. & Tech. Employees – Non-Cit. 0.38 29 3% Admin. & Mang. Employees – Cit. 0.29 22 2% Admin. & Mang. Employees – Non-Cit. 0.08 6 1% Clerical Employees – Cit. 0.83 63 6% Clerical Employees – Non-Cit. 0.23 17 2% Skilled Manual – Cit. 4.34 327 31% Skilled Manual – Non-Cit. 1.20 90 9% Unskilled Employees 3.83 288 28% Mixed Income 1.35 101 10% Total 13.91 1047 100% Table A.2.11 Overall Employment Change in Transport and Communication Sector Initial Employment 7700 Increase in Employment 294 Percentage Change 3.82% Table A.2.12 Indirect Employment Effects by Skills in Transport and Communication Sector Increase in Labour Increase in % of Increase Value Added Employment (P millions) Prof. & Tech Employees – Cit. 0.77 28 10% Prof. & Tech. Employees – Non-Cit. 0.42 15 5% Admin. & Mang. Employees – Cit. 0.16 6 2% Admin. & Mang. Employees – Non-Cit. 0.09 3 1% Clerical Employees – Cit. 0.47 17 6% Clerical Employees – Non-Cit. 0.25 9 3% Skilled Manual – Cit. 2.44 89 30% Skilled Manual – Non-Cit. 1.32 48 16% Unskilled Employees 2.16 78 27% Mixed Income 0.00 0 0% Total 8.08 294 100% Table A.2.13 Overall Employment Change in Water and Electricity Sector Initial Employment 2805 Increase in Employment 126 Percentage Change 4.50% 16 | Skills Implications of Botswana’s Diamond Beneficiation Strategy Table A.2.14 Indirect Employment Effects by Skills in Water and Electricity Increase in Labour Increase in % of Increase Value Added Employment (P millions) Prof. & Tech Employees – Cit. 0.64 15 12% Prof. & Tech. Employees – Non-Cit. 0.10 2 2% Admin. & Mang. Employees – Cit. 0.13 3 2% Admin. & Mang. Employees – Non-Cit. 0.02 0 0% Clerical Employees – Cit. 0.39 9 7% Clerical Employees – Non-Cit. 0.06 1 1% Skilled Manual – Cit. 2.00 47 37% Skilled Manual – Non-Cit. 0.32 7 6% Unskilled Employees 1.77 41 33% Mixed Income 0.00 0 0% Total 5.43 126 100% Table A.2.15 Overall Employment Change in Wholesale/Retail Trade, Hotel, and Restaurant Sector Initial Employment 54156 Increase in Employment 762 Percentage Change 1.41% Table A.2.16 Indirect Employment Effects in by Skills in Wholesale/Retail Trade, Hotel, and Restaurant Sector Increase in Labour Increase in % of Increase Value Added Employment (P millions) Prof. & Tech Employees – Cit. 0.66 79 10% Prof. & Tech. Employees – Non-Cit. 0.25 30 4% Admin. & Mang. Employees – Cit. 0.14 17 2% Admin. & Mang. Employees – Non-Cit. 0.05 6 1% Clerical Employees – Cit. 0.40 48 6% Clerical Employees – Non-Cit. 0.15 18 2% Skilled Manual – Cit. 2.09 250 33% Skilled Manual – Non-Cit. 0.79 94 12% Unskilled Employees 1.85 221 29% Mixed Income 0.00 0 0% Total 6.38 762 100% Table A.2.17 Overall Employment Change in Agriculture Sector Initial Employment 2805 Increase in Employment 35 Percentage Change 1.23% Skills Implications of Botswana’s Diamond Beneficiation Strategy | 17 Table A.2.18 Indirect Employment Effects by Skills in Agriculture Increase in Labour Increase in % of Increase Value Added Employment (P millions) Prof. & Tech Employees – Cit. 0.64 4 12% Prof. & Tech. Employees – Non-Cit. 0.10 1 2% Admin. & Mang. Employees – Cit. 0.13 1 2% Admin. & Mang. Employees – Non-Cit. 0.02 0 0% Clerical Employees – Citizens 0.39 2 7% Clerical Employees – Non-Cit. 0.06 0 1% Skilled Manual – Citizens 2.00 13 37% Skilled Manual – Non-Cit. 0.32 2 6% Unskilled Employees 1.77 11 33% Mixed Income 0.00 0 0% Total 5.43 35 100% 18 | Skills Implications of Botswana’s Diamond Beneficiation Strategy