Press Release
Friday, October 10, 2008
OPIC BOARD APPROVES $250 MILLION TO DEVELOP DIAMOND CUTTING AND POLISHING IN BOTSWANA
WASHINGTON, D.C. – The Board of Directors of the Overseas Private Investment Corporation (OPIC) approved a $250 million guaranty facility to help Botswana develop its newly-established diamond cutting and polishing industry. A key objective of OPIC’s guaranty facility is to develop a vibrant and robust lending market for this new industry.
OPIC will provide the guaranty to a company sponsored by Lazare Kaplan International Inc., a U.S.-based publicly traded company, which in turn will pass on the guaranty to participating banks. ABN AMRO has already been approved by OPIC as a participating bank and is expected to establish a subsidiary in Botswana. Other banks operating in Botswana will also have an opportunity to join the facility, subject to OPIC’s approval. Participating banks will provide loans to Botswana-based diamond cutting and polishing companies.
Specifically, the facility will enable diamond manufacturing companies in Botswana to access long-term capital to finance the purchase of rough diamonds for processing, and facilitate the development of a financial sector to support development of a cutting and polishing sector in Botswana.
The facility, which will accelerate the establishment of a viable diamond distribution and manufacturing sector within Botswana, is projected to leverage the country’s diamond resources by increasing employment by more than 3,000 new skilled jobs.
The development of the diamond cutting and polishing sector is a priority for the Botswana government. Botswana is the world’s leading producer of gem-quality diamonds, and diamond production generates approximately 80 percent of the country’s foreign exchange. Historically, however, manufacturing of Botswana’s rough diamond output has been processed through London and Antwerp.
In response, the government has implemented a diamond ‘beneficiation’ program designed to increase Botswana’s role in cutting and polishing. Success of the program will depend on the availability of debt capital. Diamond beneficiation is also expected to have multiplier effects in sectors such as construction, insurance and jewelry, and to generate local job opportunities.
“Botswana generates more than one-quarter of the world’s gem-quality diamonds, but to this point has not been able to take advantage of those segments of diamond production which add value: cutting and polishing,” said OPIC President and CEO Robert Mosbacher, Jr. “This project will directly facilitate the development of a sustainable diamond cutting, polishing and distribution operation in the country, in the process generating thousands of skilled jobs. OPIC is pleased to work with a U.S. company on a project with so many positive developmental benefits.”
The Honorable Baledzi Gaolathe, Minister of Finance of Botswana, welcomed the project and expressed his appreciation for all the work done at OPIC to bring it about. “This facility will provide the much-needed specialized financing of the diamond industry and will also contribute to the deepening of Botswana’s financial sector,” he said.
Maurice Tempelsman, Chairman of Lazare Kaplan International, Inc., said, “LKI is pleased to work with OPIC, the Government of Botswana and qualified financing institutions in encouraging the development of a sustainable diamond polishing industry in Botswana. The beneficiation policy undertaken by the Government of Botswana will add value, create employment for skilled craftsmen and attract investors in other support sectors.”
OPIC was established as an agency of the U.S. government in 1971. It helps U.S. businesses invest overseas, fosters economic development in new and emerging markets, complements the private sector in managing risks associated with foreign direct investment, and supports U.S. foreign policy. Because OPIC charges market-based fees for its products, it operates on a self-sustaining basis at no net cost to taxpayers.
OPIC’s political risk insurance and financing help U.S. businesses of all sizes invest in more than 150 emerging markets and developing nations worldwide. Over the agency’s 35-year history, OPIC has supported $177 billion worth of investments that have helped developing countries to generate over $13 billion in host-government revenues and create over 800,000 host-country jobs. OPIC projects have also generated $71 billion in U.S. exports and supported more than 271,000 American jobs.