|Botswana must exploit Chinese market - Envoy|
Botswana's troubled diamond industry could find solace in the Chinese market where prices and demand are expected to remain relatively stable, Chinese ambassador to Botswana Ding Xiaowen has said.
Speaking in an interview with Business Today, the Chinese envoy said on Friday that Botswana should actively try and penetrate the Chinese market as the traditional markets such as United States of America (US), Europe and Japan are wilting in the wake of the global recession.Because of the economic downturn, diamond exports are expected to drop by over 50 percent, leaving a huge hole in the national treasury, which has been heavily dependent on diamond revenues for a long time.
Ambassador Ding says that that although China has been affected by the crunch, the impact has been minimal compared to other developed countries. As a result, the demand for commodities like diamonds has not plummeted that much.
"In as much as the economic crisis is a global phenomenon, which China cannot be immune to, the impact of the crunch on the economy is very low. Although we have been affected by the same bug that most people are suffering from, we have not been infected.
"Young couples in China are still getting married and I do not see them postponing their weddings for too long because of the recession.
"The diamond industry should seize this opportunity and open up more trade channels."
It is estimated about 10 million people get married annually in China, and they spend an astonishing 250 billion Yuan (about 25 billion euros) in the process.
The ambassador, who would be leaving his post this month and heading back to Beijing, also expressed his optimism about the Botswana economy, saying the impact of the credit crunch on Botswana was being exaggerated.
"It is not that there has been a total collapse in the demand for diamonds from the end-buyers, couples can wait may be a few months for their wedding ceremony, but they cannot postpone for two or three years.
"The future may seem bleak at the moment only because the market players have adopted a wait-and-see attitude. The diamond dealers are waiting for the miners to cut their prices and the producers are also not willing to sell at the low prices and are stockpiling or slowing down production until prices improve. The consumer, on the other hand, cannot wait forever and a compromise will have to be reached some where along the chain. This is why I believe the diamond industry will rejuvenate soon and the future is not so bad for Botswana," said Ding.
He said that the only problem is that Botswana is a small economy and therefore chances of catching the global bug are slightly higher though the country is sitting on a healthy amount of foreign exchange reserves, which per capita, are among the highest in the world.
Last Monday, Finance and Development Planning minister Baledzi Gaolathe told Parliament in his Budget Speech that that Botswana has over P72 billion in foreign reserves, which translate to a 28-month import bill cover.
Gaolathe shrugged off orthodox textbook economics and announced an expansionary budget, which will release at least P10 billion into the economy as part of a stimulus package to tackle the global economic crisis.
Last November, the Chinese government availed a US$586 billion stimulus package, which includes massive expenditures on the infrastructure development, China's Xinhua news agency said.
The money will be spent over the next two years to partly finance low-income housing, and technological innovation.
(Mmegi, 10 February)