Africa may be a source of fabulous wealth, but the money never stays long: soon enough it ends up in London or New York, or a Zurich bank account. Which makes the move by De Beers, a global diamond firm, to relocate its head office from the United Kingdom to Botswana all the more remarkable.
By the end of this year De Beers will have moved its entire corporate structure from a tasteful, upmarket London address to earthier surrounds in Gabarone, the sleepy capital of landlocked Botswana.
In doing so, it transfers a US$6.5 billion (Dh23.87bn) a year business from the heart of capitalism to an economic backwater many of its clients hardly even know exists.
"It is a groundbreaking business move that will change the history of Southern Africa. It will bring international sales, as well as aggregation and supply chain functions, to Botswana by the end of 2013," Varda Shine, the chief executive of De Beers' Diamond Trading Company, which handles the company's sales, told a news briefing in Gaborone earlier this year.
In doing so, De Beers will execute the largest-ever corporate investment in Africa. The company is the world's largest diamond producer and marketer, accounting for almost half the global trade.
But it has long been the complaint of major producing nations such as Botswana, that stones are shipped out raw, with value-adding cutting, polishing and setting taking place elsewhere.
Israel, for instance, is one of the world's top diamond exporters, even though the country does not have a single mine on its soil. Belgium, Antwerp, London, Delhi, and increasingly Dubai, are also significant processors of quality stones, whereas Botswana, the mines of which produce a third of annual production, trails far behind.
The reason companies head north are many; economic and political uncertainty to investor-unfriendly laws. South Africa places severe restrictions on capital repatriation, which means investors can't always get their money out when they need it.
In total, the World Bank estimates sub-Saharan Africa has lost more than $700bn in capital flight since 1970, a sum that far surpasses the region's external debt outstanding of about $175bn.
As for De Beers, the company de-listed from London and Johannesburg bourses in 2001. It dominated the diamond trade to the extent that its executives were barred from entering the United States, where the company was labelled an unfair monopoly.
De Beers is now 85 per cent owned by Anglo American - another African mining company that emigrated to the FTSE in the 1990s, and the Botswana government, which holds about 15 per cent of the company.
With deep-pocketed backers, it has no need to raise capital. But this is not to say this won't change. By moving to Gaborone, De Beers has all but turned its back on the traditional financial pipeline. It will also have to leave behind half of its corporate staff, many who are reportedly going to quit rather than follow their employer to a city hardly known for its sparkling cosmopolitan lifestyle.
Still, De Beers' move is expected to help transform an economy that depends as heavily on diamonds as Abu Dhabi once did on oil. Several Indian banks have already reportedly opened offices in Gaborone; so has Tiffany & Co, one of the world's leading luxury brands.
And 10 times a year, De Beers holds its sightholder auctions, which major diamond dealers must attend if they are to have stock.
Already, diamond firms in Dubai, Tel Aviv, India and Antwerp are looking for office space in the city. Hopes are also high that cutting and polishing firms will also want to set up in the country.
The influx of skills and demand for services are expected to assist with the government's long-cherished goal of diversification and beneficiation. As with the UAE, Botswana is hoping it can use the wealth buried in its soil to transform itself into a modern economy.
It is an experiment being closely watched. Should Botswana succeed, other African countries will begin pressing for companies that mine the earth to bring more to the continent than digging equipment.
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