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Blom Urges Joint Effort to Mend South Africa Trade

Close cooperation will help reverse slowdown in cutting sector, says WFDB president.
Feb 18, 2019 9:33 AM   By Rapaport News
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 World Federation of Diamond Bourses (WFDB) president Ernie Blom has called for the industry and government to collaborate and rebuild South Africa’s diamond trade following massive downsizing of the industry.

“The diamond sector worldwide has flourished when close cooperation between government and industry prevails,” Blom said last week, following an address by Gwede Mantashe, the country’s minister of mineral resources, at the annual Investing in African Mining Indaba conference.

The South African diamond industry has been on a downward spiral, Blom said, noting the number of cutters and polishers had dropped from 4,500 a few years ago to fewer than 300 in 2019. Some 800 licensed jewelry manufacturers operate in the country today, as opposed to 3,200 in 2008.

In an open letter to Mantashe, Blom pointed out that despite the minister’s comments that the red tape associated with processing operating licenses was the main obstacle the industry faced, many other issues have impacted the country’s diamond trade.

There are six other major problems, according to Blom. One issue surrounds the complex rules associated with beneficiation — a method of adding economic value to a country through the creation of jobs in other parts of the trade. There is also a lack of clear communication between the government and industry members in terms of policy, Blom notes.

Additionally, the trade deals with tax structures that favor importers, meaning that approximately 80% of diamonds and jewelry sold in the country are imported. He also cited overregulation of the industry, lack of access to necessary funding, and rampant crime, which stops consumers from buying jewelry and prevents proprietors from opening new stores.

These problems are in direct contrast with international competitors, whose governments are working together with the industry, Blom said, pointing to India, China, Korea and Israel.

“Looking at the road ahead, it is my sincere belief that if the government and the industry work together to develop a thriving local diamond-and-jewelry platform, we will not only create employment, but also handsome financial benefits for South Africa,” Blom said. “We have many case studies from around the world that have been implemented abroad, and this could form the basis of a brand-new joint strategy for the local market.”

The South African Ministry of Mineral Resources had not responded to requests for comment from Rapaport News at press time.

Image: WFDB president Ernest Blom. (Laurent Boeki)
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Tags: Blom, Department of Mineral Resources, Ernie Blom, Gwede Mantashe, Investing in Africa Mining Indaba, Minister of Mineral Resources, Rapaport News, WFDB, World Federation of Diamond Bourses
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