How Zim­babwe squan­dered its di­a­mond riches

The Sunday Independent - - LEADER -

JUST a year be­fore its cit­i­zens couldn’t find ba­sic food items in their stores in 2007 and were lit­er­ally starv­ing, Zim­babwe made the largest di­a­mond find in re­cent his­tory. The Marange fields were so flush with al­lu­vial di­a­monds that within six months there were 35 000 lo­cals sift­ing for them. Be­hind the backs of the ma­raud­ing se­cu­rity forces, peo­ple were stuff­ing di­a­monds into tur­keys, hid­den pock­ets, and any other cav­i­ties they could.

But just two years later, the gov­ern­ment launched “Op­er­a­tion Never Re­turn” to drive out in­for­mal min­ers from the Marange fields us­ing bru­tal meth­ods such as 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 fil­ter­ing into the lo­cal econ­omy in 2006 and 2007, the econ­omy of the coun­try was so dev­as­tated that find­ing ba­sic food items to buy was al­most im­pos­si­ble. Store shelves were empty, the prices of ba­sic items rock­eted, and Zim­bab­weans were flood­ing into South Africa by the thou­sands.

How did Zim­babwe squan­der such a rare chance to re­vive its be­lea­guered econ­omy? In 2011, the Min­is­ter of Mines es­ti­mated that Marange could gen­er­ate $2 bil­lion (R26bn) 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, and how or­di­nary Zim- bab­weans were de­nied.

De­spite Zim­babwe quickly be­com­ing one of the top five di­a­mond pro­duc­ers in the world af­ter Rus­sia, the Demo­cratic Re­pub­lic of Congo and Botswana, Zim­bab­weans con­tin­ued to starve, face an un­em­ploy­ment rate of 80%, en­dure col­laps­ing in­fra­struc­ture, and a coun­try with­out cash flow. The most stun­ning of­fi­cial ad­mis­sion from the pol­icy es­tab­lish­ment came last year 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 than through for­mal di­a­mond min­ing ar­range­ments.”

As Global Wit­ness has ex­posed, the rea­son for­mal di­a­mond min­ing did not see prof­its fil­ter­ing back into the so­ci­ety is be­cause the five main di­a­mond com­pa­nies which were given li­cences to mine the Marange fields were al­legedly si­phon­ing off the prof­its ei­ther to the Cen­tral In­tel­li­gence Or­gan­i­sa­tion, the Zim­babwe De­fence In­dus­tries, for­mer se­cu­rity force chiefs, or as­so­ciates of Pres­i­dent Robert Mu­gabe.

Mu­gabe has tried to claim that pri­vate com­pa­nies in­volved “robbed Zim­babwe” as his gov­ern­ment had an­tic­i­pated prof­its worth $15bn from Marange, although only $2.5bn has been re­ceived from ex­ports since 2010. But of that $2.5bn that the state earned, only $300 mil­lion 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 50% of the com­pa­nies li­cenced to mine, and the re­spon­si­bil­ity for se­lect­ing and over­see­ing the pri­vate part­ners.

Of the five main min­ing com­pa­nies, Kusena is en­tirely owned by the Zim­babwe Min­ing De­vel­op­ment Cor­po­ra­tion (ZMDC), and was set up by the CIO as a source of off-the-books fi­nanc­ing. Then there is An­jin min­ing in which the Zim­babwe De­fence In­dus­tries has a 40% stake. Ji­nan min­ing is another, and is con­sid­ered an ex­ten­sion of An­jin that is 50% owned by the ZMDC. Mbada Di­a­monds has op­er­ated one of the largest min­ing con­ces­sions in Marange, and its own­ers hide be­hind a web of com­pa­nies. Global Wit­ness has un­cov­ered that the com­pany is owned by re­tired Air Force Chief Robert Mh­langa, who is a close as­so­ciate of Mu­gabe.

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

The tragedy 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 when suf­fer­ing was at an all time high. Sec­ond, mem­bers of the se­cu­rity es­tab­lish­ment will seek to in­flu­ence the out­come of next year’s elec­tion to fur­ther en­trench their con­trol over the di­a­mond in­dus­try.

Needed now are steps to­ward par­lia­men­tary over­sight of the op­er­a­tions of the ZCDC, and greater trans­parency con­cern­ing the rev­enue flows as­so­ci­ated with the di­a­mond in­dus­try.

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