The impact of the global financial crisis on the diamond supply chain : Namibia as a case study
Thesis (MBA)--University of Stellenbosch, 2010.
Revenue derived from the sales of diamonds contributes significantly towards economic growth, with a GDP share of about 10 per cent. A significant decline in diamond revenue will therefore affect economic growth and contributes negatively to the socio-economic upliftment of the Namibian nation. A case in point was the effects of the global financial crisis on the diamond industry. This study aims to analyse the impact of the global financial crisis on the diamond industry supply chain in the Namibian context. The supply chain analysis involves the studying of the whole chain from the mining of the ore into the chain to the delivering of the rough diamond to the cutting and polishing factories. The main sectors involved in the supply chain are the supply sector which is involved in the extracting of the ore from open-cast, underground, alluvial and sea-bed mines, processing the ore into rough diamonds ready for sorting. The processing sector is involved with maximising the value by undertaking valuations and sorting, which determine the price that is paid for the stones and the presentation sorting which is the process whereby diamonds are prepared for sale in line with clients’ polished requirements. The demand sector is involved in the sales and marketing of the rough diamonds. The following areas have been focused on to analyse the sectors: 1. The market competitiveness, using Porter’s 5-force analysis. 2. A SWOT analysis to determine internal and external environments of the respective sectors. 3. Trend reviews of the activity in each sector for the years 2000–2009. 4. The causes and the responses to the impact of the global financial crisis on each of the sectors. The aim of the analysis is to create a deeper insight into the forces and the impact these forces are having on the rough diamond supply chain. The research revealed that the 2007–2009 global financial crisis had a negative impact on the levels of diamond production in Namibia and also on the economic growth and the living standards of a number of retrenched workers. The study further reveals that despite the negative effects of the global financial crisis, there are positive signs of economic recovery and employment creation.