Chrispin Inambao
14 November 2008
Windhoek — The devastating world financial crisis is affecting most businesses in some way and diamonds, one of the country's economic mainstays is no exception.
Anne-Nora Lameck, Namdeb's senior communications officer, stated yesterday: "The diamond industry is no exception to this current downturn. Namdeb will be impacted in the short term and our environment will continue to be challenging and unpredictable."
"As a major contributor to the Namibian fiscus, Namdeb is fortunate to have two strong shareholders, the Government of Namibia and De Beers, both of whom are committed to the long-term success and sustainability of our business," she said in a media release.
"We are already facing some serious challenges, as no company with an international business market such as Namdeb is immune," further said the communications officer.
Lameck noted that banks have gone out of business, stock markets have crashed, commodity prices have fallen sharply - and the share prices of major mining companies have seen rapid decline as a result, while major consumer markets are now in recession.
The effects of the economic meltdown are "likely to be deep and long".
"The diamond business will be impacted in the short-term and our environment will continue to be challenging and unpredictable," she said, adding that, "Consumers will probably reduce discretionary expenditure, impacting jewellery sales."
Another concern raised by Lameck was that retailers will probably reduce inventory levels and that high debt levels in the cutting centres will affect the cash flow of cutters.
"We need to recognise that the world has changed around us and take action now to ensure we have a future. In this regard, as a responsible company, Namdeb is assessing many options and scenarios in an effort to best respond to this financial crisis," she noted.
"Namdeb's actions will be taken in consideration of ensuring that the consequences of our decisions will have minimal negative impact on our employees, communities and the country at large. All staff members of Namdeb have been informed of this situation, as well as the measures being contemplated to mitigate the impact," she said.
Namdeb a fifty-fifty venture between the Namibian Government and the Oppenheimer family-run De Beers accounts for a significant chunk of revenue to the national fiscus.
For example diamond sales in the best years such as 2006 amounted to N$5.3 billion (US$738 million) a 34 percent increase compared to N$3.9 billion generated in 2005.
In that year after tax stood at N$305 million compared to N$122 million the year before.
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