The “discovery” of Marange alluvial diamonds in 2006 brought high hopes of a meteoric rise in Zimbabwe’s troubled economy.
The consequent commercial mining operations, as well as the setting up of a government of national unity, boosted the prospect of a quick economic recovery.
Five years on since the “discovery” of Marange gems, questions are being asked on whether the country is “any better with diamonds”?
Zimbabwe’s economy had been on a free fall since 2000 with inflation at some point reaching dizzy heights.
Officials were forced in 2009 to abandon the worthless Zimbabwe dollar in favour of the U.S dollar, the South African Rand, Botswana Pula, the Euro and the British Pound.
The dollarisation of the economy brought some relief to locals who had endured a life of deficit, as shops started to re-stock, while fuel (or gas) became available at most service stations.
Prices of basic commodities that vacillated every day stabilised as inflation was reduced to a single digit.
Despite all these positive changes most ordinary Zimbabweans are still struggling to make ends meet and those that thought life with diamonds will be better are getting frustrated given the snail pace of recovery.
Whoever told Zimbabweans that diamonds were a magic wand to their economic troubles must have made a serious mistake.
Even if they were, an overnight change in a country that went through a decade of a downward economic trajectory could have been delusional.
The challenges that Zimbabwe went through (or still going through) in Marange were telling.
It started with the government revoking a claim that African Consolidated Resources (ACR) held over Marange following De Beers’ exit.
Despite a challenge in court, Harare went on to grant mining licences to Mbada Diamonds and Canadile Miners (now Marange Resources), which formed partnerships with the state-owned Zimbabwe Mining Development Corporation (ZMDC).
The government also battled with artisanal miners that had invaded the area following the 2006 diamond rush.
Its security personnel were later accused of perpetrating gross human violations as they drove out illegal diamond miners from the fields.
2009, the year Mbada and Canadile Miners (now Marange Resoucres) are believed to have started serious production, saw the Kimberley Process suspending exports from Marange citing leakages and abuse of human rights.
The trade embargo dealt a serious blow on the exports of Marange diamonds, although some of the gems were secretly sold.
With huge campaigns to discredit Marange diamonds, it was difficult for the country to have major breakthroughs in its clandestine diamond sales, therefore, forcing it to stock-pile the gems.
KP only allowed - last June - diamonds mined by Mbada Diamonds and Marange Resources (formerly Canadile Miners), while gems from other miners, including Anjin remained suspended.
Anjin, which is a joint venture between the Zimbabwean army and AFECC of China, said recently that it had stockpiled over one million carats of diamonds.
The other issue that deterred diamond revenue from boosting the ailing Zimbabwe economy, in cases, where diamonds were sold with or without KP’s blessings, was transparency.
“Wherever rough diamonds exist and are not managed transparently and openly, they become a major source of suspicion, conflict and national dislocation,” said Finance Minister Tendai Biti in his Mid-Term Budget Review Statement.
“There are times when resources, instead of being a blessing, can become a curse.”
He said the country exported 716 958,50 carats between January and June 2011 from Marange but only $103,9 million was accounted for.
He said then that despite the huge production at Marange, no payment had been received by Treasury for income earned between January and June 2011.
“It is therefore, imperative and urgent that the government concludes its work on the Diamond Revenue Bill. This Bill will create a proper legal framework dealing with the audit trail of all diamond revenue, its sharing and distribution, as well as Zimra (Zimbabwe Revenue Authority) at both production and marketing levels,” Biti said.
Some reports quoted Biti as saying that $300 million from diamond sales had not been accounted for.
However, mines minister Obert Mpofu denied claims that no diamond revenue had been remitted to the treasury.
"We are not surprised by the inflammatory remarks made by Minister Biti. At first he was denying receiving money from diamonds, now here he is, confirming that he received more than $174 million. A further $27 million was also remitted to Treasury recently from the Zimbabwe Minerals Development Corporation. We are and we will not be shaken by his sentiments, for we now know his double-dealing. We have been remitting all the diamond proceeds according and we have records to prove it," Mpofu said.
That aside, it would be foolhardy to think that the few hundreds of millions that Zimbabwe had accrued from the diamond mines, would become an over-night panacea to the country’s economic malice.
No, it does not work like that.
Until recently, Botswana, a major diamond mining player, had been experiencing a budget deficit crisis, as a result of poor diamond trading since 2009 when the global economic recession was at its toll.
This was the same time that Marange diamonds came on the international market, albeit, banned. What makes one think that Zimbabwe could have boosted its fortunes at a time others complained of poor diamond prices?
Zimbabwe has a long way before its diamonds start contributing towards economic growth in a big way.
The country should first fully comply with KP’s minimum standards for the trade embargo on the remaining firms to be lifted.
The issue of transparency should be high on the agenda, to avoid any leakages that are prejudicing the government of millions of dollars in revenue.
A South African diamond consultant, Keith Lapperman who spoke at a Mining Indaba in Harare last August said that Zimbabwe lost $500 million worth of diamonds through smuggling syndicates in 2010.
The Reserve Bank of Zimbabwe also estimated in 2009 that at least $1,2 billion had been lost per annum through black market trade of minerals.
If these figures are not an exaggeration, it is quite a dire situation that needs an urgent solution.
Zimbabwe should also establish cutting and polishing centres to promote value addition of its diamonds rather than exporting rough gems.
Apart from boosting revenue derived from diamonds, value addition will also result in employment creation in a country with an unemployment rate of 90 percent, according to unofficial figures.
Put simple, diamonds alone are not a cure to Zimbabwe’s economic troubles and it takes a whole lot of factors to achieve that.
For instance, economic policies of grab and take that are being espoused by Harare will only do harm rather than help the dire state of the economy.
Zimbabwe has several other minerals such as platinum and gold that can help the economy prosper again.
Surely, it is the mining industry at large, not diamonds alone that can turn around the economic fortunes of Zimbabwe again.
Mathew Nyaungwa, Rough&Polished
