GABORONE – The US government has guaranteed a $125-million loan that will be used to strengthen Botswana’s localised diamond cutting and polishing industries in order to create more jobs and contribute to economic growth.

In a statement released on Tuesday, US overseas development financier Overseas Private Investment Corporation (OPIC), said the two governments signed the loan guarantee on July 25 in Gaborone. The money will be disbursed by Standard Bank Botswana.

The institution said the funding is the first tranche of a $250-million fund that would help capitalise local cutting and polishing companies to ensure that gem sorting, marketing and manufacturing functions are done locally.

"Bringing these value-adding functions into Botswana has been a priority of the country’s Government, and the guaranty will help provide the financial underpinnings for this economic development strategy to succeed. The $125-million represents the first tranche of a broader $250-million OPIC loan guaranty program for these purposes.

"OPIC signed the $125 million loan guaranty with Barclays Bank of Botswana, together with Lazare Kaplan International (LKI) acting through its subsidiary Botswana Finance LLC. The agreement will establish a revolving framework facility in which OPIC will share the credit risk. This project will provide critical support to an industry that is central to Botswana’s economy and a key source of job creation," said James Polan, VP of the OPIC Small and Medium-sized Enterprise Finance Scheme.

OPIC said such support would help diversify the mining-based economy and develop the country’s financial sector given the critical economic role played by the diamond industry. LKI President Leon Tempelsman hailed the tripartite funding initiative saying it would directly support constructive economic growth in Botswana.