Zimbabwe has everything to gain from Kimberly Process Membership - Part 3 of 3

This is the last installment of a three part series covering Zimbabwe's Diamond mining and the controversy around it.Officially Zimbabwean diamonds make up a small percentage — approximately 0.4% — of the World diamond trade, according to an industry group, the World Diamond Council.In recent weeks, it has become clear that blood diamonds funding murder, forced labor, rape, and political oppression in Zimbabwe are reaching global consumer markets labeled as “conflict-free.” Zimbabwe is reluctantly engaging the Kimberly Process to certify the Diamonds as "conflict free" to allow the country to get maximum benefits from its Diamond resources.Uncertified diamonds end up on the black market and the proceeds usually end up in the underground economy whilst the nation remains poor.

It is important that Zimbabwe becomes part of the Kimberly Process (KP) as this will aid in accountability and accurate statistical data collection of the quality and quantity of diamonds mined.Most countries that comply with the Kimberley Process also adhere to the World Diamond Council's System of Warranties. This safeguard requires sellers and suppliers to provide written guarantees that say their diamonds aren't tied to war efforts based on their "personal knowledge." This process is critical in isolating ill-gotten diamonds.

Largely due to China and India , demand for diamonds is recovering after an earlier collapse and prices have recovered as China's population has urbanised and becomes more affluent young women have happily latched onto the old marketing adage that "diamonds are forever".This has created a huge opportunity for nations such as Zimbabwe who can supply the World market to meet that demand.

Human Rights Watch has been watching Zimbabwe's diamond trade for a while.“The police and military have been given access to Marange’s mineral wealth at a time when the government has struggled to pay their wages,” reads the HRW report. “Human Rights Watch’s research suggests that revenue from the gems has also enriched senior ZANU-PF [President Robert Mugabe’s Zimbabwe African National Union – Patriotic Front] officials and provided an important revenue stream for the Reserve Bank of Zimbabwe, which has underwritten some military operations.”

The KP is made up of three types of groups: member states, representatives of the diamond industry and human rights organizations. These groups try to work together to ensure that consumers know that the diamonds they purchase are not funding violence or causing grave human rights violations.Zimbabwe's diamond industry is still in its infancy and would require the assistance offered by KP in terms of setting up systems and mechanisms that ensure transparency in the diamond extraction chain.This chain will assist in tracking proceeds such that local communities benefit from the diamonds.

Currently most of the communities around Chiadzwa remain poor despite being the source of the diamonds and without any prospects of ever being developed.This problem is directly related to lack of accountability and diamond smuggling which could be minimized by the KP membership.

Udi Shintal, director-general of the Israel Diamond Manufacturers Association, said it was important to keep Zimbabwe in the process.

“The problem won’t be solved if Zimbabwe exits the process, they will just move to operating on the black market. Such a move would harm other diamond miners in the country [Zimbabwe] that are in compliance with the process. It is important to find a balance,” he said.

India and Belgium trade in diamonds although not producing much themselves. Zimbabwe should take advantage of its current position as centre of attraction and use this position to secure a secure place on the diamond business.The best option would be for Zimbabwe to accept responsibility and move toward compliance by itself and work towards developing other related areas such as jewellery manufcturing.

Zimbabwe should focus on finding niches within the downstream aspects of the diamond industry to add more value to its economy.Once the country starts trading in the rough diamonds it will have the flow of diamonds from all over the world. This will assist Zimbabwe to develop into an important diamond trade centre.


Acknowledgements and Sources
- African Diamond Council ,
- Kimberly Process ,
- Partnership Africa Canada
- World Diamond Council
- GMRI Capital Research

This article appears as courtesy of GMRI Capital ( http://www.gmricapital.com ) prepared for 3MG MEDIA

Gilbert Muponda is a Co-Founder of 3MG Media - ( http://www.3mgmedia.ca ) . He can be reached at;

Email: gilbert@gilbertmuponda.com . Skype ID: gilbert.Muponda

Twitter ; http://twitter.com/gmricapital

Facebook ; http://www.facebook.com/muponda

Phone: 1-416-841-5542

Zimbabwe has everything to gain from Kimberly Process Membership - Part 2 of 3

Officially Zimbabwean diamonds make up a small percentage -- approximately 0.4% -- of the World diamond trade, according to an industry group, the World Diamond Council.However there are reported leakages which indicate Zimbabwe maybe producing 10 times more diamonds than what is recorded. In 2009, Zimbabwe earned $20 million from the sale of diamonds.Independent estimates suggest Zimbabwe produces diamonds worth between US$ 50 million to $ 400 million per month.Income of this magnitude presents Zimbabwe with an opportunity to transform itself from a poor country to a medium to high income nation.Diamond and other mineral wealth must be properly be accounted for and invested in building infrastructure and a financial base.

It is important for Zimbabwe's diamonds to be certified conflict free.This will allow the nation to trade freely and put proper systems and mechanisms to stop all leakages,smuggling and other unacceptable activities that have become normal.

Human rights groups claim the diamonds have been an important source of revenue for the military top brass and for President Mugabe's Zanu-PF party.Ahead of a possible election in 2011 all diamonds must be accounted for and not be abused by one political party to finance and fuel election violence."Sometimes they take all [the stones] and leave you with bus fare only," one miner, who asked to be identified only by his first name, Eric, said of the government soldiers in an interview. "We can't even protest, because they have their guns pointing." This indicates the level of lawlessness which has become normal in Chiadzwa and the Province since the diamond rush began

An investigative team for the Kimberley Process Certification Scheme, responsible for policing conflict diamonds drafted a damning and stinging report after a visit to Zimbabwe mid 2009 .The team found evidence of killings and forced labor at diamond fields in the east of the country, among other human-rights violations, according to a copy of the final report available on the internet.

After earlier resistance Mines ministry Permanent Secretary Thankful Musukutwa on march 16 2010 appeared before Parliament's Committee on Mines in a closed-door session to answer questions about official joint ventures with private firms developing the controversial Marange diamond projects.The parliamentary hearings were set up to probe the two firms' activities in Chiadzwa, where there are still reports of forced labour,human rights abuses and diamond smuggling. The firms have taken over mining the claim from the UK based African Consolidated Resources (ACR), which holds the legal title to mine there.

The appearance by Mr Musukutwa though not under the best of conditions is an important step in the process to make the diamond mining process more transparent and accountable to the people of Zimbabwe.It is unacceptable that communities remain poor whilst they possess and produce diamonds.Zimbabwe's diamonds must be used to set up a Zimbabwe Sovereign Wealth Fund."A Sovereign Wealth Fund (SWF) is a state-owned investment fund composed of financial assets such as stocks, bonds, real estate, or other financial instruments funded by foreign exchange assets. These assets can include: balance of payments surpluses, official foreign currency operations, the proceeds of privatizations, fiscal surpluses, and/or receipts resulting from commodity exports. Sovereign Wealth Funds can be structured as a fund, pool, or corporation."This is what Zimbabwe should be exploring and setting up to properly manage the diamond wealth.Several nations have been transformed just by the discovery of natural wealth.In the gulf region several Emirates have managed to transform their economies in the middle of the desert into bustling financial services and real estate centres of the world.All through the discovery of one resource - oil.Zimbabwe can easily do the same with the Diamonds

The two state selected diamond mining companies, which have been mining the controversial Chiadzwa fields, could face a stern parliamentary reprimand for avoiding two consecutive parliamentary hearings on their activities.Whilst reports suggest they could be arrested it must be analysed why do they appear as if they have something to hide?

The directors of the mining ventures, Canadile Mines and Mbada Investment (joint ventures between the government's Zimbabwe Mining Development Corporation (ZMDC) and South African investors) reportedly failed to appear for a scheduled meeting with the Parliamentary portfolio committee on mining on Monday 15 March 2010. This attitude must change.The individuals involved need to know their responsibilities and expectations on them to act in a manor that encourages Zimbabwe's efforts in being accepted as anormal country within the community of nations.Refusal to appear before parliament will do more harm than good as it feeds into reports that Zimbabwe's diamond mining is now privatized by a few politicians and senior military personnel.

It is imperative for Zimbabwe to embrace the Kimberly process and get assistance on gathering statitical data on the quantities of the diamonds being mined.It has been widely reported that Zimbabwe Revenue Authority has deployed several officers in the Chiadzwa diamond field area.Again this is a positive step but it requires guidance and expertise offered by the Kimberly Process.



Acknowledgements and Sources
- African Diamond Council ,
- Kimberly Process ,
- Partnership Africa Canada
- GMRI Capital Research

This article appears as courtesy of GMRI Capital ( http://www.gmricapital.com ) prepared for 3MG MEDIA

Gilbert Muponda is a Co-Founder of 3MG Media - ( http://www.3mgmedia.ca ) . He can be reached at;

Email: gilbert@gilbertmuponda.com . Skype ID: gilbert.Muponda

Twitter ; http://twitter.com/gmricapital

Facebook ; http://www.facebook.com/muponda

Phone: 1-416-841-5542

Zimbabwe has everything to gain from Kimberly Process Membership - Part 1 of 3

According to statistics obtained by GMRI Capital, Africa is the richest continent for known diamond reserves and mining, accounting for more than half of the world's production but sadly diamonds have brought suffering in communities around them. Diamonds have recently been discovered in eastern Zimbabwe.The diamond discovery has brought widespread reports and allegations of human rights abuses leading to Zimbabwe's diamonds being labeled blood diamonds. Blood diamond (also called a converted diamond, conflict diamond, hot diamond or a war diamond) refers to a diamond mined in an unstable area and usually sold to finance an insurgency,war,rebellion and involve human rights violations.It is important for Zimbabwe to avoid being labeled as a supplier of blood diamonds and this is best done by co-operating with the Kimberly Process (KP). Zimbabwe needs KP to help develop institutional capacity to handle the newly discovered diamonds and aid transparency.

Zimbabwe's participation in the KP will result in greater transparency in the gathering of statistical data on the true output of the diamonds coming out of Marange Diamond fields.Currently reports suggest ZANU -PF has replaced Zimbabwe dollar printing with Diamond looting as one way to finance its operations.These are serious allegations which can be addressed by inviting the KP to verify the activities and goings. The recent out burst by both President Mugabe and Minister of Mines Mpofu that Zimbabwe will pull out of the KP only make these allegations sound genuine and legitimate.The KP pull-out threats are very unwise and sound very familiar since ZANU -PF once uniletarally pulled Zimbabwe out of the Commonwealth over peer review pressures.


The Kimberley Process Certification Scheme imposes extensive requirements on its members to enable them to certify shipments of rough diamonds as ‘conflict-free’.It has 49 members, representing 75 countries, with the European Community and its Member States counting as an individual participant. KP members account for approximately 99.8% of the global production of rough diamonds.The scheme is only a soft law as such, it is not legally binding on the participating countries.Countries cannot be subject to criminal legality.The KP is essentially a self-enforced mechanism based on peer review system similar to a club of individuals with same interests.The process was established in 2003 to prevent diamond sales from financing conflicts and human rights abuses.

In recent times the world diamond industry has been driven by a network of secrecy and sophisticated levels of corruption.Smuggling is also rampant in the industry, making the global diamond trade one of the largest black markets globally. Diamond smuggling intensifies violence and instability in communities where diamonds are found.This has been the case in D.RC.,Sierra Lione,Liberia and now Chiadzwa.There is greater need for transparency and the involvement of the Reserve Bank of Zimbabwe brings more questions than answers since the central bank is now more known for looting private foreign currency accounts and ruining the Zimbabwe dollar.

Recent studies conducted by Human Rights Watch show that police officers deployed in Zimbabwe’s fields to end illicit diamond smuggling were actually responsible for the harassment, torture, beatings and killings of artisanal miners and Zimbabwe locals. (Link http://www.reuters.com/article/idUSLQ67185420090626).These reports further cast shadows over the country's young diamond industry and makes KP membership imperative.


The smuggling of diamonds reduce the amount of money being re-invested into diamond-producing communities, depriving the government of legitimate tax revenues ( Link - http://www.news24.com/Content/Africa/Zimbabwe/966/32dfb62f92f14aefb4a0ac1b4b15c8c4/05-04-2007-07-50/Zim_loses_$400m_in_diamonds ). Reports indicate Zimbabwe could be losing anything between US$ 50 million to US$ 400 million per month from smuggled diamonds and leakages.These leakages must be stopped and revenue channeled proper state Treasury coffers.This is money that could be used to create the Zimbabwe Sovereign Wealth Fund (ZSWF).


In other African countries KP involvement has increased the revenues of poor governments, and helped them to address their countries’ infrastructural development needs and challenges. For instance, some $125 million worth of diamonds were legally exported from Sierra Leone in 2006, compared to almost none at the end of the 1990s.http://www.pacweb.org/programs-resources-e.php.Curently Zimbabwe's diamond earnings are almost negligable despite reportedly having one of the largest diamond reserves in Africa.This indicates leakages,smuggling and non-accountability which must be addressed.

Republic of the Congo was removed from KP because it was unable to properly account for the origin of its gems, most of which were believed to have come from the neighboring Democratic Republic of the Congo.The country faced UN sanctions in 2004 because despite having no official diamond mining industry, the country was exporting large quantities of diamonds, the origin of which it could not detail - http://www.nationaljewelernetwork.com/njn/content_display/diamonds/e3idc28e6611ea5f0a80a32173f4a8fed07.This is similar to early reports that Zimbabwean diamonds were being smuggled and certified as SouthAfrican diamonds.

The major producing countries are Democratic Republic of Congo (formerly Zaire), Botswana (which produces more than 28%), South Africa, Angola, Namibia, Ghana, Central African Republic, Guinea, Sierra Leone, and Zimbabwe. Greed, on the part of corrupt politicians, governments and private companies involved in the diamond trade, has caused a significant portion of the political turmoil experienced in many of the African diamond producing countries. History has shown that the trade in these illicit stones has fuelled decades of devastating conflicts in countries such as Angola, Cote d'Ivoire, the Democratic Republic of the Congo and Sierra Leone. (http://www.zimbabwejournalists.com/story.php?art_id=3399&cat=1)

According to the Kimberly Process website "The Kimberley Process Certification Scheme (KPCS) imposes extensive requirements on its members to enable them to certify shipments of rough diamonds as ‘conflict-free’ and prevent conflict diamonds from entering the legitimate trade. Under the terms of the KPCS, participating states must meet ‘minimum requirements’ and must put in place national legislation and institutions; export, import and internal controls; and also commit to transparency and the exchange of statistical data. Participants can only legally trade with other participants who have also met the minimum requirements of the scheme, and international shipments of rough diamonds must be accompanied by a KP certificate guaranteeing that they are conflict-free."

The KP does not concern itself with other human rights abuses including child labor, state sanctioned violence, and worker exploitation and poverty.- http://www.nytimes.com/2006/12/29/world/americas/29diamonds.html?_r=1.This makes the process a partial solution to the problem.The other part is for Government leaders to be accountable to the communities from which these diamonds have been discovered.Many areas which have discovered these diamonds remain poor and under develop0ed.There are no schools,clinics ,hospitals and other basic infrastructure or clean running water.Chiadzwa remains poor and underdeveloped.

The Government of the Northwest Territories of Canada (GNWT) also has developed a unique and effective certification program. They offer a Government certificate on all diamonds that are mined, cut, and polished, in the Northwest Territories of Canada. Each diamond is also laser inscribed and recorded in a database. To obtain this certificate one must cut and polish the diamond in the NWT.This is a lesson which other diamond producing countries such as Zimbabwe can adopt and ensure that the diamond wealth is properly used to uplift the country and not to finance a political party or unjust self enrichment for a few politicans.

The KP implementation is monitored through ‘review visits’ and annual reports as well as by regular exchange and analysis of statistical data between member states.This allows weaker states to adopt sytems and measures which stronger and more established members would have built and developed of the years.

Zimbabwe should be encouraged to remain in the KP which is recognized as an effective conflict-prevention instrument to promote peace and security.The KP has helped stabilise weak and volatile countries and facilitated their development though proper accountability of the diamonds mined and exported.The KP system will help create proper auditing channels backed by statisistics to avoid a few individuals privatizing what is supposed to be a national resource and common heritage monopolized along political lines.

Acknowledgements and Sources
- African Diamond Council ,
- Kimberly Process ,
- Partnership Africa Canada
- GMRI Capital Research

This article appears as courtesy of GMRI Capital ( http://www.gmricapital.com ) prepared for 3MG MEDIA

Gilbert Muponda is a Co-Founder of 3MG Media - ( http://www.3mgmedia.ca ) . He can be reached at;

Email: gilbert@gilbertmuponda.com . Skype ID: gilbert.Muponda

Twitter ; http://twitter.com/gmricapital

Facebook ; http://www.facebook.com/muponda

Phone: 1-416-841-5542

Zimbabwe should avoid another ESAP experiment

Recently there have been calls for Zimbabwe to seek debt forgiveness and try to access IMF and World Bank Highly Indebted Poor Country (HIPC) facilities.Whilst such calls may appear reasonable and justifiable Zimbabwe needs to think long and hard before throwing itself further into IMF and World Bank engineered structures and schemes.If not careful Zimbabwe could end up worse off by swallowing these Bretton Woods prescriptions.Zimbabwe must not seek debt forgiveness but rather debt re-scheduling and use its resources wisely like Diamonds and platinum to repay its debt.

This way the country will build credit line faciltities and move away from donor dependence syndrome which has become a challenge for most African nations.Zimbabwe's economic model must be driven by a vision to be strong and independent without relying on donors or lenders whether Chinese or Western.The difference is the same.They have their interests not Zimbabwe's.

Most Zimbabweans would remember ESAP popularly known as Extended Suffering for African People.This was the IMF and World Bank backed Economic Structural Adjustment Programme in the early 1990s.This programme was much publicized and implemented in a way that devastated many Zimbabwean industries such as textiles which suffered from market flooding with cheap Chinese goods and underpriced second hand clothes destroying Zimbabwe's industrial base.


The HIPC Initiative was launched in 1996 by the IMF and World Bank, with the aim of "ensuring that no poor country faces a debt burden it cannot manage.Assistance is conditional on the national governments of these countries meeting a range of economic management and performance targets." Since then, the international financial community, including multilateral organizations and governments have worked together to reduce to sustainable levels the external debt burdens of the most heavily indebted poor countries.

Many critics have attacked HIPC as a program designed by creditors to protect creditor interests, leaving countries with unsustainable debt burdens even upon reaching the decision point.This so because for a country to achieve HIPC status it has to meet several targets and some of these require adjustments which could result in social programmes suffering and unrealistic budget targets being imposed.Zimbabwe is a resource rich nation and should focus on properly accounting for its wealth and resources in a manner that creates wealth plus service its debt.

The focus on seeking debt forgiveness only will result in the country becoming donor dependent,weak and poor.As a matter or priority and national economic security Zimbabwe needs to embrace the Kimberly Process which can help the country handle its newly found diamond wealth.This wealth can then be wisely used to build a solid financial base and create jobs.

By late 2009, the HIPC program had identified 40 countries (29 of which are in Sub-Saharan Africa) as being potentially eligible to receive debt relief.Some of the countries include Ghana,Somalia and Ivory Coast.Some of the countries in this list have been classified as poor for a very long time.Despite subscribing to IMF and World Bank policies they remain poor and struggling.Which leads to the question can a country really succeed and develop using IMF and World Bank ideas and structures?In economic circles its a well known saying that never mis-manage your economy to such an extent that you ever end up needing the IMF or World Bank.

"In 2005, to help accelerate progress toward the United Nations Millennium Development Goals (MDGs), the HIPC Initiative was supplemented by the Multilateral Debt Relief Initiative (MDRI). The MDRI allows for 100 percent relief on eligible debts by three multilateral institutions-the IMF, the World Bank, and the African Development Fund (AfDF)-for countries completing the HIPC Initiative process."

For a country be considered for HIPC Initiative assistance, a country must fulfill the following four conditions:

A) be eligible to borrow from the World Bank's International Development Agency, which provides interest-free loans and grants to the world's poorest countries, and from the IMF's Extended Credit Facility, which provides loans to low-income countries at subsidized rates.

B) face an unsustainable debt burden that cannot be addressed through traditional debt relief mechanisms.

C) have established a track record of reform and sound policies through IMF- and World Bank supported programs

D) have developed a Poverty Reduction Strategy Paper (PRSP) through a broad-based participatory process in the country.

The HIPC is particularly not trusted in most poor and developing nations because the IMF and the World Bank do not cancel any debt until the completion point, leaving countries under the burden of their debt payments while they struggled to institute the suggested structural reforms. In addition the Economic Structural program conditions often undermined poverty-reduction efforts as they are insensitive to other poverty fighting measures and programs designed to combat such challenges as AIDS,Orphans,Provision of clean water and general measures to fight disease.

Since the Gideon Gono induced hyper inflation nightmare days Zimbabwe may become easy prey for Lenders such as the IMF and World Bank and join programs that are not well thought out.The key for Zimbabwe is to take stock of its resources and other assets such as human resources including exiled Zimbabweans to come up with a home grown recovery process whilst incorporating some of the ideas which may come from bodies like the IMF and the World Bank.The critical part is to avoid approaching these Institutions without our own plan.Zimbabwe should draw up the plan and then seek input from IMF and World Bank rather than the other way round.

This article appears as courtesy of GMRI Capital ( www.gmricapital.com) prepared for 3MG MEDIA

Gilbert Muponda is a Co-Founder of 3MG Media . He can be reached at;

Email: gilbert@3mgmedia.ca . Skype ID: gilbert.Muponda

Twitter ; http://twitter.com/gmricapital

Phone: 1-416-841-5542