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The Marketplace magazine September-October 2019 issue

Ethiopian project provides opportunities in gemstones

By Katie West


4 minute read

Ethiopia is an emerging economy with the potential to become an economic powerhouse in East Africa. It is also home to one of the largest opal reserves in the world. The country has deposits of over 40 coloured gemstones including aquamarine, jasper, agate, amethyst, emerald and more.

Since the discovery of the opal in the mid-1990s, Ethiopia has become the second-largest exporter of opals after Australia. Most of them are destined for China and India.

But the Ethiopian gemstone industry faces a challenge — the gap between the skills required on the job and the actual skills possessed by employees. This is a common problem across many industries throughout the continent.

Ethiopia gemstone value chainMetasebia Asfaw

The World Bank has noted that the skills gap in Sub-Saharan Africa is a critical issue for governments to tackle in order to boost innovation and technology. This critical gap in Ethiopia spans all demographics. The groups most affected are women and youth.

Finding suitably skilled workers is a problem facing the gemstone and lapidary sectors.

A lapidary is a person who cuts, polishes, or engraves gems, or is a dealer in precious or semiprecious stones.

Lapidaries are an integral part of the gemstone supply chain. In Ethiopia, they face many challenges due to the lack of technical training, qualified laborers or local demand for their regionally sourced gemstones. Although awareness of Ethiopia’s gemstone sector has grown internationally, in country, it remains virtually unknown. As a result, perceiving gemstones as a potential commodity and new market opportunity is a relatively new concept.

Countries like India, China and Sri Lanka have been mining for gemstones for centuries. This new understanding of the gemstone industry’s potential has left Ethiopia in a rush to catch up with the growing international industry.

 

Rough cut gemstonesRough-cut and polished gemstones


“As the gemstone sector grows, there is so much potential for jobs,” says Aderaw Dagnew, MEDA’s gemstone expert.

“Right now, Ethiopia has a very large, underemployed youth population. The gemstone sector has the potential to create many jobs for this demographic and it can also bring in foreign currency and development to the country.”

MEDA might have a solution to the problem: helping to strengthen the gemstone value chain in Ethiopia through a Canadian grant program and investing in the technical training colleges that teach lapidary skills.

MEDA connects to the Ethiopian gemstone industry through its EMERTA (Ethiopians Motivating Enterprises to Rise in Trade and Agri-business) project.

The project aims to increase agri-business performance, medium and small enterprise business performance while improving the business and policy environment in the northern Amhara region of Ethiopia by training lapidary experts, filling the skill gap and supporting government policy reform.

 

Lapidary student at one of the technical training schools in EthiopiaLapidary student at technical college supported by MEDA
This is no small task.

In Ethiopia, the value chain might look something like this:

A miner, usually a man, harvests opals and other semi-precious stones with little more than a pick-axe. He lacks equipment and proper training. He is exposed to significant health and safety risks. His motivation is usually survival, not profit.

He is often part of a miner’s association, which sells the stones to a broker. These brokers often make inflated profits due to the miners’ lack of awareness about the true value of rough stones and a limited number of potential buyers.

The lapidaries buy the stones from the broker. They then cut, polish, engrave, set and sell the gemstones.

“It is important to note that many of Ethiopia’s gemstones leave the country in their rough form to have their value addred elsewhere,” said Thomas McCormack, MEDA’s field project manager in Ethiopia. “Therefore, the full potential of the stones is not realized in the country.”

Bunna Bank is a credit union that makes credit accessible to small lapidary firms.

MEDA has invested $560,000 USD in Bunna and shares risk with the bank. Currently, the bank has approved 43 loans with the average loan being 430,700 Birr (about $14,944 USD) and the largest being 500,000 Birr ($17,349 USD). The funds for this investment are supported by private MEDA donors around the world.

The EMERTA program, which is funded by Global Affairs Canada, also facilitates grants to entrepreneurs. These grants are focused on EMERTA’s three key sectors: rice, vegetables and gemstones.

Metasebia Asfaw hopes to receive a grant from the program. Asfaw is the founder and general manager of Lalibela Gemstones and Jewelry, a small lapidary business in city of Lalibela in northern Ethiopia.

Asfaw is a serial entrepreneur who owns multiple businesses in Lalibela, including the Mountain View Hotel. Last year, he learned about the potential of the gemstone sector and decided that he wanted to expand his entrepreneurial efforts into the lapidary sector. He launched a small business with several faceting machines, which are used to cut, shape and polish the stones.

In 2018, he heard about MEDA and their grant program for entrepreneurs. He decided to apply for a grant with the hopes to use it to buy more lapidary equipment, safety supplies and hire additional staff members. He hopes to provide training to them through MEDA’s workshops facilitated by local lapidary college programs.

Asfaw is passionate about creating opportunities. He currently has three staff members working for him in his lapidary business. As he expands, he hopes to hire more workers — especially women.

“In Ethiopia, many women stay home to care for their families,” he said. “This is important, but I also think they should come work with us. We will provide them with training and a viable income that will help them support their families,” he says.

The gemstone sector is a challenging space to work in. With MEDA supporting intermediaries like Bunna Bank, providing grants through the Canadian government and technical training to fill the lapidary skills gap, the gemstone sector in Ethiopia has the potential to bring foreign currency to the country and employ a burgeoning youth population. As the lapidary value chain develops, Ethiopia is poised to expand their gemstone sector to the international market. ◆

Katie West is a communications coordinator in MEDA’s Waterloo office, responsible for the MEDAZINE e-publication and MEDA’s social media channels.