GABORONE, Botswana - The world's largest producer of diamonds wants more bang for its bling.

A company launched earlier this month will market and sell about 15 percent of Botswana's diamonds to manufacturers who have set up cutting and polishing factories in the southern African country. Very little diamond polishing and cutting, which increases a diamond's value by 50 percent, has been based in southern Africa.

"For the citizens of Botswana it will bring increased employment and training opportunities," said President Festus Mogae, who steps down today. "It will provide government with significant revenue stream to finance further development. It will also raise our global profile."

The new Diamond Trading Company of Botswana is expected to sell $375 million in rough diamonds this year and $550 million by 2010 to 16 manufacturers.

"What we are embarking on is nothing less than one of the largest transfers of skills and commercial activity to Africa ever seen," said De Beers chairman Nicky Oppenheimer. "The diamond industry's center of gravity is shifting and tonight we see it shifting here."

All sorting and valuing of diamonds produced in Botswana by Debswana, a joint venture between De Beers and Botswana's government, will be now done at the new $83 million plant in the capital, Gaborone.

De Beer's managing director Gareth Penny said the initiative will create about 3,000 jobs and it is estimated that the value of economic activity stemming from the rough diamonds sold will be about three percent of all Botswana's GDP while about $6 billion worth of uncut gemstones will pass through the new building.

The company jointly owned De Beers and the Botswana government is part of a regional move to ensure mineral-rich countries benefit more from their natural resources.

A similar diamond trading company was set up last year between the Namibian government and De Beers. Last month South Africa established the State Diamond Trader, which will acquire 10 percent of locally produced diamonds for resale on the local market.

Southern Africa accounts for more than 40 percent of the world's rough diamond output - Botswana alone has 22 percent of the market, worth about $3.5 billion a year.

Yet Botswana, a country almost the size of France or Texas with a population of about 1.8 million, has an unemployment rate of about 20 percent. Nearly a quarter of the population lives on $1 a day and about a quarter of the population is HIV positive, putting even more pressure on the economy.

Kabo Ramatludung, a 23-year-old training as a cutter in Gaborone, had been selling puppies to earn money. Diamonds offer a better future, said Ramatludung, who has a younger sister to look after, and no parents.

If he passes his six-month training period, he will be given a job.

Diamonds "are so bright and attractive. I always wanted a chance to work them," Ramatludung said, the light glinting off his fake diamond earring.

Traditionally diamonds have been cut and polished in centers such as Antwerp, Belgium, and Tel Aviv, Israel. But increasingly less cutting is done in Europe, with lower cost centers opening up in India and China.

With higher labor costs, southern Africa was not seen as competitive and there was initial resistance by the diamond industry to regional governments' calls to bring more of the diamond industry to the source.

However, governments have insisted. Two years ago, when it came time for De Beers to re-negotiate its mining licenses in Botswana, one of the conditions was to help develop local processing industries.

With new technologies making processing diamonds less labor intensive, local operations are more viable now.

New York-based Martin Rapaport, whose Diamond.Net is a leading source on diamond trading and pricing, said the idea of sorting and processing in Botswana is excellent, "but the question is: Can Botswana cut diamonds cost effectively?"

Unable to compete with India which processes high volumes of smaller stones, Botswana will have to find its niche in the cutting and polishing of larger stones, which will not need the expertise of European cutters.

Kaushik Mehta's company Eurostar Diamond Traders, whose clients include luxury jewelry store Tiffany's, began cutting and polishing diamonds in Botswana a year ago. The company, which also employs about 10,000 people in India and China, has created about 500 jobs in Botswana and invested heavily in training and transferring skills.

"The government wants to take advantage of God's gift to this land," Mehta said. "And we benefit by expanding our business."