When Namibia Diamond Trading Company (NDTC) appointed its then board chairperson Shihaleni Ndjaba to become CEO, it raised eyebrows and allegations of patronage.
Today, the 50/50 joint venture company between the Namibian government and De Beers is deemed one of the success stories in business. Ndjaba tells Toivo Ndjebela how this came about.
Toivo Ndjebela (TN): You’ve been NDTC CEO since 2008. How has the journey been?
Shihaleni Ndjaba (SN): The journey has been from small to big because when NDTC was created, we started it from scratch. There were no running systems in place. A lot has since happened. We have taken a lead in creating and enhancing diamond beneficiation in Namibia which has led to the creation of jobs and the transfer of diamond cutting and polishing skill and sorting and evaluation of diamonds. We now have more experience than before because we are dealing with a world renowned giant like De Beers. The benefits are too many to list here.
TN: Can you expand on the issue of diamond beneficiation? What does it entail?
SN: In general, NDTC’s function is to sort value and distribute diamonds mined by Namdeb’s land operations and De Beers Marine that collectively put their diamonds into Namdeb Holdings. We take leadership in enhancing diamond beneficiations, which means deriving benefits from our natural resources. We have entered partnerships between us and our contracted clients, called sightholders. We avail Namibian diamonds to them. They then have to enhance value addition, which creates jobs and skills for Namibians.
TN: How many of the sightholders are Namibian?
SN: When we opened up the window for local distribution of diamonds the reason was to move away from 100 percent export of Namibian diamonds by De Beers. A policy intervention was done by our government jointly with De Beers to set aside an amount of diamonds to be distributed locally. We didn’t have people in Namibia who did diamond cutting and polishing. When this window opened, we had to rely on foreign expertise and because we are an open economy, we had players from India, Israel, USA , Belgium and other places who came to set up factories here. We had no option but to let them operate here, but on our terms. They are obliged to employ locals and avail stakes to Namibian partners, who are now getting experience in running diamond factories. Apart from having Namibians being technically empowered, there are also Namibian shareholders. This is how locals are benefiting.
TN: What happens then?
SN: Well, we require them to polish those diamonds locally. After that, the sightholders are at liberty to export. There is no market here for polished diamonds. The participation of Namibians enhances skills transfers and jobs. There are also countless indirect benefits such as transport, insurance, banking and security – which are all provided locally. NDTC declared dividends to government and it is those dividends that are used to build our beautiful roads and other infrastructure. Those are all benefits.
TN: How are sightholders selected?
SN: We have stringent vetting conditions. We look at your financial strength, because diamonds are very expensive. To buy diamonds from us, you need cash. We also look at your marketing channels globally. We don’t want people selling our diamonds before they add value.
TN: How do you police sightholders in making sure that diamonds sold to them are indeed polished locally and therefore contributing to intended beneficiation?
SN: We are battling a bit in that regard. We are not a regulator. The ministry of mines gives them export permission and a certificate that testifies the origins of the diamonds to ensure the stones were acquired ethically. We provide good liaison and cooperation with the ministry in this regard. I’ll tell you the truth, we look at the statistics and see that there are some diamonds being exported without being processed here. If you do not demonstrate that all your diamonds were processed here, we’ll penalise you by giving you fewer diamonds in the next round because it means your factory here does not have the capacity to deal with large volumes. It’s a difficult area to control.
TN: Does NDTC observe provisions of the Kimberley Process that stems the flow of conflict diamonds?
SN: The Kimberley Process covers the whole flow of diamonds globally. When we buy diamonds from the mining houses it has to be documented and when we sell it to the industry it also has to be documented. When they are exported a certificate is issued to document the origin of the diamonds. Today’s consumers of diamond products are ethically conscious. A diamond ring or diamond necklace is based on love and emotions. People want, first, to buy real diamonds and, secondly, diamonds that have been acquired ethically. So we have to adhere to all these processes.
TN: You served as the NDTC’s board chairman and went straight from there to becoming CEO. It was quite a controversy. In hindsight, do you think your appointment as CEO was a wise decision?
SN: I think that’s a chapter that’s long passed. Government appointed me as chairman and the same government saw, in their wisdom, that based on my skills and expertise I should become the CEO. I’d rather like to be judged on what I have achieved here and whether it was a wise decision appointing me as CEO.
TN: What would you then say has been your notable achievements over the past nine years?
SN: When we started with the development of this industry, we had small factories and therefore fewer jobs. We had a lot of expatriate staff. Today we have more Namibians because over the period they acquired more skills. Namibians are now even in managerial positions in those factories. We never had all this at the beginning. We’ve had global financial crises, but we kept the company afloat and active. We remain one of the leading players in the Namibian economy and our work has helped people maintain their families and acquire houses and so forth.
TN: What is the business model of NDTC?
SN: The sightholders buy our diamonds. Under the current arrangement, 85 percent of diamonds is sold to De Beers and 15 percent is sold to Namdia. We also have an arrangement where 85 percent that De Beers buys, we get a portion from that for local beneficiation. We use a contract system. We give sightholders a three-year contract. For those years they have a specific allocation that they buy from us. Companies get varying volumes of diamonds depending on their financial strengths and production capacities. On a yearly basis, we determine the ITO (intention to offer), which pertains to the amount bought per year. This is determined by a number of things, including how you performed during the previous year. It’s a model that is globally praised. Other companies do auctions, but there is no guarantee in auctions. To be on a NDTC contract is a real privilege. All you need to have is an operating factory in Namibia. We made it a point that the cutting and polishing must be done in Namibia, although some say it’s expensive doing it here. But we prevent them doing it elsewhere because then it would defeat the beneficiation objective.
TN: What, in terms of functions and mandates, is the difference between NDTC and Namdia?
SN: I think by now you understand what NDTC does. When diamonds come from the mines, they have no value. We put value on them. Namdia does not do that. They do not touch diamonds that come directly from the mines. Our relationship with them is that – under the agreement – Namdia is a company that is established to deal with rough diamonds, not polished ones. For them to meet their mandate, they need rough diamonds and that they must buy those from us.
TN: Diamonds seem to be the only mineral Namibia is reaping fair benefits from. What example can other extractive industries learn from the 50/50 arrangements that Namibia and De Beers have?
SN: Namdeb and De Beers Marine were exporting all their diamonds before the 50/50 arrangement came into being. There was always profit being made, by Namdeb, then called CDM. But now the profits are shared equally between the government and De Beers. Apart from dividends, there are also foreign exchange earnings for the country, GPD contribution and other benefits. So it was really good that government came up with this policy intervention.