Zimbabwe’s dis­ap­pear­ing di­a­mond wealth

GLOBAL Spot­light

Sunday Tribune - - NEWS&VIEWS -

AYEAR be­fore Zim­bab­weans couldn’t find ba­sic food items in their shops and were starv­ing in 2007, the largest di­a­mond find in re­cent his­tory was made in the coun­try.

The Marange fields were so flush with al­lu­vial di­a­monds that within six months 35 000 peo­ple were sift­ing for them. But just two years later, in 2008, the govern­ment launched “Op­er­a­tion Never Re­turn” to drive in­for­mal min­ers out of the Marange fields, us­ing dogs and he­li­copter gun­ships.

The in­ten­tion was to ex­ert greater con­trol over the prof­its for the ben­e­fit of the po­lit­i­cal and mil­i­tary elite. The wind­fall from the great di­a­mond find for or­di­nary Zim­bab­weans liv­ing on the poverty line was over.

But even with the prof­its from al­lu­vial di­a­monds fil­ter­ing into the lo­cal econ­omy in 2006 and 2007, the econ­omy was so dev­as­tated that find­ing ba­sic food items to buy was al­most im­pos­si­ble.

How did Zimbabwe squan­der such a rare chance to re­vive its be­lea­guered econ­omy through the Marange di­a­mond prof­its? In 2011, the Min­is­ter of Mines had es­ti­mated that Marange could gen­er­ate $2 bil­lion a year in rev­enue.

Well, the an­swers can be found in a ground-break­ing re­port re­leased this week by Global Wit­ness, which tracks who prof­ited from the di­a­mond rev­enue and how or­di­nary Zim­bab­weans were de­nied the ben­e­fits of the great­est di­a­mond wind­fall in re­cent mem­ory.

De­spite Zimbabwe quickly be­com­ing one of the top five di­a­mond pro­duc­ers in the world – af­ter Rus­sia, the DRC and Botswana – Zim­bab­weans con­tin­ued to starve, face an of­fi­cial un­em­ploy­ment rate of 80% and en­dure col­laps­ing in­fra­struc­ture and a lack of cash flow.

The most stun­ning of­fi­cial ad­mis­sion from the Zim­bab­wean pol­icy es­tab­lish­ment came from Fi­nance Min­is­ter Patrick Chi­na­masa, who said in his 2016 bud­get state­ment: “There was a greater eco­nomic im­pact from di­a­monds dur­ing times of un­con­trolled al­lu­vial pan­ning govern­ment had an­tic­i­pated prof­its of $15bn from Marange, al­though only $2.5bn has been re­ceived from ex­ports since 2010.

And of the $2.5bn the state earned, only $300mil­lion was ac­counted for in pub­lic ac­counts, ac­cord­ing to Global Wit­ness.

While there may have been dis­crep­an­cies be­tween what pri­vate com­pa­nies re­ceived and what went to the trea­sury, the govern­ment owns half of the com­pa­nies li­censed to mine in Marange and has the re­spon­si­bil­ity for se­lect­ing and over­see­ing the pri­vate part­ners.

Of the five main min­ing com­pa­nies op­er­at­ing in Marange, Kusena is en­tirely owned by the Zimbabwe Min­ing Devel­op­ment Cor­po­ra­tion (ZMDC) and was ini­tially set up by the CIO as a source of off-the-books fi­nanc­ing.

Then there is An­jin, in which the Zimbabwe De­fence In­dus­tries has a 40% stake.

Ji­nan is an­other of the big five and is con­sid­ered an ex­ten­sion of An­jin, which is 50% owned by the ZMDC.

Mbada Di­a­monds has op­er­ated one of the largest min­ing con­ces­sions in Marange and its own­ers are hid­den be­hind a com­plex web of com­pa­nies. Global Wit­ness has un­cov­ered that the com­pany is owned by re­tired air force chief Robert Mh­langa, a close as­so­ciate of Mu­gabe’s.

More re­cently, the govern­ment has tried to merge the di­a­mond in­dus­try into the Zimbabwe Con­sol­i­dated Di­a­mond Com­pany (ZCDC) and re­fused to re­new the li­cences of Marange com­pa­nies. The share­hold­ers of the ZCDC are largely the same cast of char­ac­ters in Mu­gabe’s in­ner cir­cle.

The tragedy of the story is twofold. One is that so much rev­enue which could have been put to­wards lift­ing peo­ple out of poverty was squan­dered by the po­lit­i­cal and mil­i­tary elite. Sec­ond is that mem­bers of the se­cu­rity es­tab­lish­ment will seek to in­flu­ence the out­come of next year’s elec­tion to en­trench their con­trol of the di­a­mond in­dus­try.

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