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South Africa has the biggest diamond mines in the world in terms of quantity of production. Despite the presence of mining activities in the country for the last one and half centuries, the diamond industry is poorly developed. This is due to the policies of successive governments that have ruled in South Africa. The apartheid regime did not take the plight of the local people seriously. Over years, foreign companies have been establishing in the country and have dominated the diamond industry. Much of the profits generated by the mining activities go to the rich individuals in the country and to foreign countries. The process of globalization of trade, technology, and the media amplifies the situation. Although diamond makes a significant portion of the gross national product, the scale of diamond mining in South Africa should contribute more to the national economy than it is doing currently (Castells et al. 94).
The world is currently experiencing the phenomenon of globalization at a progressively high rate. The concept of globalization can be idealized from several different perspectives. Technology is the most significant contributor to globalization. Modern communication systems have enabled people around the world to stay in touch such that the distance between people is no longer a barrier to communication. The issue of capitalism also affects the rate of globalization. Investors are committing their resources to any place in the world in order to realize profits. In this regard, prospective investors move from country to country establishing new business enterprises. The desire to counter the increasing competition in the global market drives these investors. Eventually, investors distribute their resources around the world such that there is no specific country in which they are localized. On the other hand, as the competition in the global market increases, the need to engage in constant advertising is also increasing.
South Africa is the wealthiest country in Africa. The country owes much of its wealth to the diamond mines at Kimberly near Johannesburg. Diamond mining began in the middle of the 19th century and has dominated much of South Africa’s economy. Due to the value of diamond trade in the country, it features as one of the world’s few producers of diamond in significant quantities. In several countries, there is a significant difference in the popularity of the local market and that of the foreign market among local traders. In contrast, the diamond trade in South Africa has a small local market and large international market (Castells et al. 105).
Diamond traders are focusing their effort on arresting the South African diamond supply. This is because it is the biggest source of diamonds in the world. The market boundaries between the international market and the national market are slowly dissolving. Consequently, the whole world has become a uniform market for South Africa’s diamonds. This globalization of diamond trade has several implications on the overall economy in South Africa. The success or failure of the market economies spells a similar fate for South Africa. In the recent global financial crises, South Africa felt a significant effect of the recession because the sale of diamond swas low. The country’s revenue was affected more negatively by the global recession than other countries with different forms of economy (Castells et al. 68).
Another problem of globalization brought by the sale of diamonds in South Africa is the widening gap between the poor and the rich. Much of the country’s revenue from the mines goes to the rich financiers of the trade and mining companies. The local people who provide non-skilled labor are not entitled to direct benefits from the diamonds. Their services are poorly paid, and they live in abject poverty. The consequences of the mass poverty are political instability and suppression of indigenous economy. In addition, the working conditions in the South African mines are deplorable. Many workers develop chronic ailments from inhalation of chemical waste or skin contact with mercury (Mathebe 25).
Evidently, South Africa is relying on diamond trade more that it should. This is causing financial insecurity for the country’s economy. The only solution to this problem is to diversify the economic base of the country. This means that South Africa must find another source of income other than diamonds, or create an alternative market other than the global market for its diamonds. The only other market for South Africa’s products is the internal market. However, it is difficult to shift the diamond trade from the global market to the local one. This is because diamond is not in much demand within South Africa. Consumers of the precious stones are only those who can afford luxury. Although the best solution to South Africa’s problem is to engage in production of the diamond while at the same time consuming a significant value of the diamond, the country is not in a position to consume diamond in large quantities. The only practical solution to the country’s problems is to look for an alternative source of income that can cushion South Africa from any global recession (Mathebe 19).
I would recommend that the country should change the manner in which it handles the production and export of diamonds. This should be aimed at channeling the income from the diamonds to the local population. This will mean that South Africa’s government will realize more earnings. It is important for South Africa to engage in diamond trade in a new dimension. Exporting raw diamonds to the external global market is causing an economic imbalance in South Africa. To avoid this, the country has to engage in consumption of diamond as much as it produces it. This will help in distributing resources in the population of the country. Employment deficit, which is a significant problem in South Africa, can be resolved through the consumption of the diamonds. The location of the diamond does not mean that local citizens must buy the diamond as the end user. Local consumption means establishing local manufacturing and processing industries that deal with diamonds (Williams 54).
The established industries should be engaged in the cutting and polishing of diamonds. This will lead to employment of more citizens in the diamond industry. In addition, industries using diamond for other purposes such as manufacture of tools could help create a more stable economy for South Africa. The current state of the diamond industry has been inherited from the colonial masters of South Africa. The colonial government was not interested in the welfare of the local people, who were the major contributors to the diamond industry. Foreign companies, which have been mining diamond for decades, continue to engage in economically oppressive activities in the industry. It is important for the legislature to enact laws that closely govern mining of diamond in South Africa (Levy 89). The laws should aim at protecting citizens working in the mines from exploitation.
In light of all the facts about the state of diamond industry in South Africa, it is evident that diamond mining is causing economic problems in South Africa rather than solving them. In addition, diamond mining and trade is a major contributor to the political instability in the existing democracy. Globalization of trade due to the free market is worsening the problem. The authorities do not seem to be doing enough to solve the problems posed by the current policies. However, the current state of affairs can be changed if the government adopts a new approach to the mining industry. South Africa must be more participative in the diamond industry to realize the maximum benefit of the trade.