Credit Crunch Causes Diamond Industry To Slide Causing Problems For Namdeb

Ever since the credit crunch crossed the globe in October of last year countries around the world have been waiting with baited breath to see how they will be affected; across the western world Iceland has gone bankrupt, England is officially in recession and one million people in North America have lost their jobs and now developing countries are starting to feel the bite of the crisis. Here in Namibia the most obvious and potentially damaging impact has been on the diamond industry. Across the globe diamond prices have slumped in the last 4 months as the amount of income spent on luxury items all but disappears and now the lack of demand is effecting members of the diamond industry from India to Israel, from Dubai to China.

Sales: Following the credit crunch the diamond industry saw a rapid fall in sales; between August and December the prices of diamonds fell by 13% due to a total lack of demand for polished and uncut diamonds. The slide is reported to be the largest in 4 years and has cost the jewellery industry thousands of dollars.

Polishing: As a result of the lack of demand for diamonds and other jewellery, gem production and polishing industries across the globe have also taken a tumble. In India over 100,000 people have been laid off following the global slowdown causing a voluntary ban on importing rough diamonds from overseas to be polished. As the majority of roughs come from Africa this ban has led directly to a slump in diamond exports from the dark continent.

Mining: Across Africa diamond mining has been impacted by the credit crunch- from Botswana to South Africa, but it is here in Namibia that we are feeling the shockwaves; since December Namdeb has begun to retrench, first closing Elizabeth Bay Mine over the holiday period and then reducing the number of workers in each of its mines. Several people right here in Lüderitz have lost their jobs and many more are still waiting to find out if they will remain in employment.

As the global recession continues it becomes more and more apparent how dependent countries like Namibia are on overseas investors. Is this economic link beneficial to the country by giving it the opportunity to further develop or is it a damaging relationship which  can lead to an entire market collapse?