Zimbabwe Diamonds must be certified before being sold

Zimbabwe Diamonds must be certified before being sold

Zimbabwe’s discovery of diamonds has become the proverbial case of the gift and the curse. The discovery came when Zimbabwe was in desperate need of a solid revenue flow after years of being shut out of the International Capital markets due to political instability and poor Governance. Recent Kimberly Process (KP) failed to agree on allowing trade of Zimbabwe’s diamonds. Obviously this has disappointed many Zimbabweans who have come out strongly criticizing the KP as “an extension of Western Imperialism”. This is most unfortunate and is misleading as it ignores material facts and KP guidelines on how it should certify diamonds. Zimbabwe’s diamonds must be properly certified and accounted for before being sold to ensure that the country as a whole gets to benefit not just a few individuals who have clandistinely privatized national institutions and behave as if they own public resources and Institutions.

“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 current threats to sell diamonds outside the KP process is the most ill advised idea since Independence in 1980.Diamonds have a very limited market which is confined to Western nations. China and India are emerging diamond markets but they are not yet the dominant markets for diamonds. This means should Zimbabwe decide to sell outside the KP process it will be selling to a far smaller and limited market since the bigger Western Market will boycott these gems. This will result in a bigger loss for the country since the diamonds will be sold only to a fraction of the available market.

Secondly the idea of puling out of the KP is pushing Zimbabwe towards trading in the black market of diamonds and other precious minerals. A country which is seeking to rebrand and rebuild can not be directly trading in the black market and hope to attract investment in the process.

Thirdly whilst Zimbabwe seems to be in a hurry to sell diamonds it is clear there is lack of proper Institutional capacity to monitor the quantity of diamonds being mined and how the proceeds are being handled. It is still yet unclear as to which Government body gets what and how this money will be injected into the Economy. There appears to be a rush to go somewhere but the destination is unknown. Instead of rushing to trade Zimbabwe should focus on putting in place proper systems to fully account for all the diamonds and comply with other KP requirements to ensure maximum benefits to the whole nation.

Whilst Zimbabweans are clummering to be allowed to sell the diamonds it appears no serious thought has been given to any value addition to the rough diamonds. Its clear countries like Israel and Holland are important players in the diamond industry but is unclear whether they have any meaningful diamond mines of their own? The lesson in this is clear. Wise and Creative nations have managed to monopolize the trade through value addition and created thousands of jobs and billions of dollars in revenue when they do not own any serious diamond mine. So Zimbabwe instead of forcing to sell and trade rough diamonds should instead focus on building a proper diamond industry to include polishing, cutting and jewelery making. This is where the money is and not just selling rough diamonds.

Should Zimbabwe insist on selling diamonds they should be certified to ensure the country gets the best price from the highest bidder. Avoiding the KP will only serve the interest of those who are keen on privatizing a national resource to avoid accountability and transparency. This action will only serve to confine Zimbabwe to poverty. Africa has just about too many resource rich nations such as Angola, Nigeria, Sudan which however remain very poor due to the persistent lack of transparency of resource exploitation by those in power. Zimbabweans must resist joining this club of resource rich nations which remain highly indebted and poor through schemes such as this proposed KP withdrawal being done in the name of “earning money for the country”.

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

Gilbert Muponda is a Founder and CEO of GMRI Capital ( http://www.gmricapital.com ). He can be reached at;

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

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