Financial Partnership to Provide Access to Credit for Botswana's Cutting and Polishing Industry
July 25, 2016
(OPIC)
Loan will anchor supply chain in country catalyzing local economic growth
Gaborone, Botswana - The Overseas Private Investment Corporation (OPIC), the
U.S. Government’s development finance institution, today signed a $125 million
loan guaranty which will help Botswana develop its diamond industry in a
sustainable manner that will promote local job creation and diversified economic
growth. Historically, diamonds mined in Botswana and elsewhere would be sorted,
marketed and manufactured in other countries. Bringing these value-adding
functions into Botswana has been a priority of the country’s Government, and the
guaranty will help provide the financial underpinnings for this economic
development strategy to succeed. The $125 million represents the first tranche
of a broader $250 million OPIC loan guaranty program for these purposes.
OPIC signed the $125 million loan guaranty with Barclays Bank of Botswana, a
subsidiary of Barclays Africa Group Limited, together with Lazare Kaplan
International (LKI) acting through its subsidiary Botswana Finance LLC. The
agreement will establish a revolving framework facility in which OPIC will share
the credit risk.
“This project will provide critical support to an industry that is central to
Botswana’s economy and a key source of job creation,” said James Polan, OPIC
Vice President of Small and Medium-sized Enterprise Finance. “Bringing the
larger supply chain into Botswana will have a huge impact in local communities
across the country.”
This project aims to facilitate further lending to diamond manufacturing and
polishing companies with operations in the Republic of Botswana. This will
support economic diversification by providing cutting and polishing companies in
Botswana with access to long-term financing, as well as develop the country’s
financial sector. Given the critical importance of the diamond industry to their
economies, Botswana and other southern African countries have implemented local
beneficiation policies that require additional economic benefits to be derived
from their diamond resources. Access to finance is an essential component of the
development of the diamond manufacturing sector.
Barclays Bank of Botswana is the first lender under the broader $250 million
loan guaranty program, and additional lenders may join the program in the
future. This tripartite partnership reflects Barclays Bank of Botswana’s
commitment to the local diamond industry alongside OPIC’s commitment to economic
development and LKI’s longstanding record of investment in Botswana. This
OPIC-supported loan will make it easier and more efficient for the local cutting
and polishing facilities to borrow money locally, and add value to the supply
chain in Botswana by creating employment opportunities and growth to this
sector.
Reinette Van Der Merwe, Managing Director of Barclays Bank of Botswana, says it
was imperative that Barclays finds a sustainable way to grow lending to the
sector. “Diamonds have transformed Botswana’s economy from the poorest country
in the world before independence to one of the fastest growing economies.”
Leon Tempelsman, President of LKI stated “We are honoured to be associated in
this undertaking with partners as strong as Barclays and OPIC, who not only hold
the highest standing in capital markets but share our vision of the diamond
industry: one which supports constructive economic growth in the countries and
communities where it operates, and adheres to the utmost standards of
accountability and integrity. We commend both OPIC and Barclays for this
substantial commitment to the next stage of development and diversification of
the economy of Botswana, a nation which has been a beacon of good governance and
responsible stewardship of minerals resources, and which we have been proud to
be associated with as an investor and friend, for some four decades.”
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