Zimbabwe’s disappearing diamond wealth
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.