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19 june 2017

osman_abdulsattar_xx.jpgTanzanite, a rare blue/purple gem, was discovered in the Merarani Hills of Manyara Region in northern Tanzania in 1967, a few miles from Arusha and Mount Kilimanjaro.

It is used as a gemstone and of late Tanzanians are manufacturing quality jewellery as witnessed by our African Bureau Editor Mathew Nyaungwa during the Arusha Gem Show.

However, in as much as this is an interesting development, most Tanzanians are said to be finding it difficult to afford jewellery made from a gemstone, which is only found in their country.

Gem Tanzanite owner Osman Abdulsattar told Rough & Polished on the sidelines of the show early May that they had decided to make jewellery made of light (low quality) tanzanite and silver for the local market, to allow low income earners in the country get tanzanite for their engagement ceremonies.

Below are the excerpts of the interview.

What do you specialise in as Gem Tanzanite?

Gem Tanzanite is a retailer of tanzanite jewelleries and almost all Tanzanian gemstones like rubies, sapphire, red garnet, rhodolite, etcetera. However, we mostly focus on tanzanite because it’s a mineral that is rare in the world. We are producing our own jewellery with tanzanite stones. We produce jewellery for both local and international buyers. Local buyers consume engagement rings, which are made of yellow and white gold together with tanzanite, but the design goes a little bit to show our African style while foreign buyers like different designs.

What is the level of demand for engagement rings by locals?

Demand for engagement rings is in smaller stones. Local people ask for lower prices due to budget constraints. Only a small percentage of customers are demanding higher prices but 70-80 percent are demanding lower prices.

What is the average price for a ring?

A ring with a tanzanite stone costs up to $300 excluding value added tax (VAT) for engagement ring which comes to TS600, 000 – TS900, 000. But since we include VAT most Tanzanians cannot afford. Whenever we sell tanzanite jewellery the tax authorities demand VAT.

What is the local VAT on goods?

It’s 18 percent.

So, you are saying that makes it expensive for ordinary Tanzanians to buy locally-manufactured jewellery?

Yes, most Tanzanians, who are low income earners, will not afford the price when VAT is included. So they are asking us for low valued stones like red garnets instead of tanzanite and gold. They are also asking for zircon, which is a glass. When they speak to us, we can see that they are interested in tanzanite, but they cannot afford so what we try to do is we advise them to buy lower quality tanzanite, which is a lighter colour.

How much is a light tanzanite ring?

With VAT included its roughly $300, but whenever they get into the store they all want to go for the dark colour. Everybody wants something better, but they cannot afford. However, we have to do something at least each Tanzanian should have an engagement tanzanite ring.


What is the level of demand for tanzanite jewellery from foreign buyers?

We have tourists and diplomatic people who buy our products and they have a good experience in the tanzanite stone and mostly when they come into our store they know exactly what they are going to buy in terms of colour and clarity so we try to do our best and we are getting a good market from them, whenever they are here in Tanzania.

But the same problem happens again in terms of rules and regulations. We are charging them VAT, but until a year ago they were getting refunded their Vat. These days there is no refund and that is a problem. Whenever customers come they ask can we get a refund at the airport and we say no! We now have many gemstone dealers and on top of that some dealers are VAT registered and other not, so they sell at lower prices than us who are registered.

Which foreign markets are you targeting?

We have a retail store and we have a lot of visitors for example Russians, Americans and Britons. We are also getting buyers from Arab countries like UAE, Turkey and Saudi Arabia.

Where do you source your rough tanzanite?

The rough stones are being sourced from dealers in Arusha and Dar es Salaam. Most of the time we buy the rough stones, cut and polish them based on demand from our customers, as well as the shape and colour they want. So, we have to take an order and then go ahead with the cutting. Sometimes we are buying stones that are already cut from the dealers all from the brokers, who are dealing directly with the dealers and they come to us and get some commission. We buy 50 percent cut stones and 50 percent rough stones.

Do you also stockpile rough stones?

We keep a small stock. 75 percent of the stones we have are cut stones ranging from oval, pear, triangle and heart shapes. However, the most shapes on demand are pear and oval shapes. So those that are not much on demand we keep rough stones to make specifications for the customers when they come asking for heart shapes and triangles for example.

So, the government introduced a minerals policy that imposed a ban on the shipping of rough tanzanite weighing 1 gram and above. Did you benefit from this policy?

This was a good [move] because we are getting an opportunity to add value of the gemstones ourselves, for example, before the ban, our local customers used to go to gem fairs in Thailand and came back showing us their tanzanite saying, ‘we got them at a better price than you are selling here’. So, they were right. Rough stones are auctioned here and foreign buyers are not paying VAT only charges on export permits etcetera, yet locals are paying VAT. So, do you think my price will be better or that of the foreign buyer will be better?

So, that’s why I have been telling them (officials) since 2015 to try and remove the VAT on tanzanite only. On diamonds and other stones, we can pay VAT, but not on tanzanite, which is very known and famous in the world as only sourced in our country. This will allow Tanzanians to buy tanzanite without [much difficulty]. They can include royalties, director fee, provisional tax, workers’ compensation, no problem but VAT should be removed on tanzanite stones and you will see locals doing much better in value addition than other countries.

What else are you producing apart from rings?

We make necklaces, earrings, bracelets, bangles, and African maps. We use yellow gold and tanzanite when manufacturing our jewellery as well as silver gold. If you cannot afford to buy a jewellery in gold and high quality tanzanite, we are making silver with lower quality tanzanite so the same applies with rings. If you get an engagement ring in gold and tanzanite for $300 the same tanzanite size, you can also buy a light colour tanzanite in silver for $100 or lower.
Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished


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