20 November 2012

Zimbabwe: Unity Important in Harnessing Diamonds for the Nation


Last week, on November 14, doing a review of the inaugural Zimbabwe Diamond Conference which was held on Monday and Tuesday, this writer expressed distress at how Zimbabwe had not shown unity of purpose at such a crucial indaba. Hosting such a landmark conference would have presented an opportunity for the national leaders to present a united and formidable face to the world diamond stakeholders that descended on a Zimbabwe that had been vilified, lynched and defamed with respect to its diamonds.

"Diamond is a national asset," was the argument, "to which everyone in the country has been looking up to.

"It is contributing so much revenue and has trumped other mining sub-sectors. And where were Prime Minister Morgan Tsvangirai and Ministers of Economic Planning, Industry, and Finance?"

These three key individuals' conspicuous absence was mortifying, to the extent that they had an alibi of attending the launching of the Medium Term Plan.

Which MTP, to all intents and purposes, can never be a mutually exclusive affair to the extractive activity of diamond mining?

As fate would have it, the following day after the diamond conference op-ed, on November 15, Finance Minister Tendai Biti presented his 2013 National Budget.

What would strike one the most in the presentation of the budget was the centrality that diamonds occupied in the whole budget statement, when Minister Biti, conveniently or otherwise, was not part of the proceedings in Victoria Falls. In the budget statement, Biti mentions the word "diamond(s)" a total of 55 times, the same number with "economy" or its corollaries, making diamonds and Zimbabwe's economy near synonyms.

The word "mining" (and that includes diamond mining) comes up 74 times while "agriculture", true to the elementary school knowledge that Zimbabwe's economy is agriculture-based, appears 42 times.

One of the times that Minister Biti mentions diamonds is when he calls for the lifting of sanctions on Zimbabwean diamonds, which would have made much more perfect sense had he made that brave and well-placed call at the diamond indaba.

Mining and agriculture are about the foremost economic activities in Zimbabwe, minus the calamities that have befallen the latter, which is in part not unattributable to Minister Biti himself.

It might be useful to demonstrate how Minister Biti in particular and the nation at large relate to diamonds.

In the budget statement, Minister Biti makes the following major points:

l Mineral exports rose by about 230 percent over the 2009-2011, inclusive of diamonds (20 percent) on the back of improved production at Marange Diamond Fields, which trend will continue in 2013.

l Revenue under-performance, particularly with regards to diamond dividends, forced Minister Biti to review the 2012 Budget from US$4 billion to US$3,6 billion and non-performance of anticipated non-tax revenue, mainly diamonds, made Budget implementation even more difficult;

l Zimbabwe does not enjoy the benefits of a "normal fiscal diamond" which, besides own domestic revenues and savings from efficiency, affords a country deficit financing and access to external resources in the form of Official Development Assistance, and Foreign Direct Investment

  •  Pressure from expenditures related to the Referendum and Elections, as well as uncertainties shrouding diamond revenues, pose threats for possible and further reduction of the capital development Budget.
  •  Scope for value addition has already been identified in mining and agricultural commodities, including diamonds
  •  Zimbabwe is now the world's fifth largest producer of diamonds by volume after Russia, Botswana, the Democratic Republic of Congo and Canada.
  • Government is to develop a Legal Framework to guide exploration, production and management of diamond proceeds in order to guarantee long-term positive benefits to the country.
  •  It is important that there is transparency around diamonds.
  •  That there be enforcement of the 100 percent Government ownership of diamonds and immediate separation of diamonds mining from marketing activities; and promotion of value addition.
  • The policy of ensuring that the ZMDC or any other future Government Diamonds Agency has 50 percent shareholding in existing diamond mining houses/companies, including in Anjin, will be pursued.
  •  All forms of sanctions against the marketing of Zimbabwe diamonds be lifted.

From this presentation, it is clear that diamonds are the lifeblood of Zimbabwe's economy.

They will be so for some foreseeable future.

What beckons now is how the relevant authorities are going about exploiting these gems for the benefit of the people of Zimbabwe.

Former South African President Thabo Mbeki had a good piece of advice when he counselled against some elites -- call them fat cats -- eating this godsend on behalf, rather than with the majority.

That is but a small window.

The bigger story is on the setting up of technical and legal environments that allow the exploitation of the resource for the greater good of the country.

It is critical that the authorities are putting on measures to this end, in the name of guidelines to exploration, production and management as well as Government agency in ventures. Government also seeks 100 percent ownership of diamonds, which is quite an incredible statement from Minister Biti , whose party has not been so inclined to such nationalisation.

(But then, the likes of MDC-T policy chief and economist Eddie Cross have always had something up their sleeves. Did he not suggest something like this not so long ago?)

The issue of transparency needs to be addressed sufficiently as lack of the same has been blamed for leakage and kinds of stories, cock-and-bull or not, to discredit Zimbabwe's diamonds.

The challenge then becomes: how does the country move forward on this and other issues when the left hand does not know what the right hand will be doing?

A certain quarter in Government feels and fears that once it reveals the diamond market, the same information will be used by another quarter as blood to be smelled by the sharks like OFAC (does that not sound a trifle vulgar?), the US' sanctions-enforcing arm.

So, if the Finance Minister, and his MDC-T colleagues, who have been accused of crafting and otherwise abetting sanctions against Zimbabwe, including on diamonds, are serious on transparency what guarantees do Zimbabwe have that the information will not be sold out?

Perhaps acting against national interest as such lobbying, snitching and otherwise defeating the enjoyment of Zimbabwe's diamond, should be legislated against.

This presents another opportunity.

If sanctions against Zimbabwe are worded in such a manner that projects Zimbabwe at war with those who imposed the sanctions, why does Zimbabwe not craft its own counter-sanctions laws?

Minister Biti is a lawyer: can he not be trusted to craft a law that declares that the United States, the EU, Canada, Australia and such the like, "present an extraordinary and continuing threat to the national interest of Zimbabwe", by slapping this innocent country with heinous sanctions?

This law should also contain measures by Zimbabwe to police the extraction, marketing and value addition of diamonds as well as measures against those who work against the national enjoyment of diamonds.

In essence, the latter will be called saboteurs.

Zimbabwe's diamonds are forever.

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