It is always inspiring and a great honour to be invited to an august forum of such a prestigious and famous institution of higher learning and research.
I sincerely acknowledge the invitation to Oxford University and the Centre for African Studies, one of the highest centres of learning in the world. For centuries, some of the world’s greatest minds have walked the cobbled streets of Oxford and graced its platforms and I am humbled to have been chosen to be in your company today.
This is my first international engagement after the disputed elections in Zimbabwe and to do so at this world-renowned centre of learning is both an honour and a privilege. That you have invited me here represents a re-affirmation of the importance of our cause and the seriousness with which it is regarded by the academic world, especially the Centre for African Studies which has over the years provided a forum for discussion and debate on the critical issues affecting our continent, a continent toward which some of us have invested so much time, effort and love to ensure that it provides a safe and happy environment for its inhabitants.
Politics has always stood to benefit from intellectual capital. Developmental and democratic processes in Zimbabwe and Africa generally can benefit more from greater input by intellectuals.
Research is critical – it informs politicians and politics and as the MDC, we place high value in the contributions made by intellectuals even as we appreciate that politics is an arena for participation by everyone.
We regularly draw on the expertise of intellectuals and do not hesitate to invite them to work with us and we have been privileged to have some joining our ranks over the years. We take your work seriously and encourage you to do more research on Zimbabwe including on issues that form the core of today’s discussion. Left to ourselves and our egos, we politicians can easily become our own worst enemies and so we need intellectuals to play their critical role, pointing to our errors and checking our excesses. It is for this reason that we in the MDC fought hard to ensure the inclusion of the right to academic freedom in Zimbabwe’s new Constitution.
I have been asked to talk about the extractive industry, in particular, the diamond industry in Zimbabwe and its impact on the politics obtaining in the country.
This topic is most appropriate and poignant, given the background of the most recent elections in Zimbabwe, whose process and outcome have been marked by serious controversy leaving serious credibility and legitimacy questions.
While it is tempting, the purpose of the paper is not to discuss the process and outcome of those elections, which is a matter for another forum. The paper will however, make reference to the elections to the extent that it is necessary and unavoidable in discussing the interplay between the diamond industry and politics in Zimbabwe – which forms the core of this paper.
While Zimbabwe could have learned from previous experience in other African countries, such as Sierra Leone and the DRC, the discovery of diamonds has indeed followed the all-too-familiar script and turned out to be a curse rather than a blessing for the country.
There were serious human rights abuses that took place following the discovery of the precious stones – as reported and authenticated by civil society organisations and the initial disbarment of Zimbabwean diamonds from the Kimberly Process until not so long ago, when they received certification.
The military occupation of the diamond fields, the beatings and killings of those who came for the “Diamond Rush”, the forced displacement of the local people in Marange in Manicaland province and the problems they continue to face following their displacement remains a cause for concern.
The poverty endemic in this area is not consistent with the value of the diamonds extracted from their land. It is displeasing how a people can continue to wallow in poverty in the midst of a treasure benefitting the well-heeled and the well-connected in government.
The mining industry has replaced the once-thriving agricultural sector as the biggest export and foreign currency earner for the country. The sector has seen a lot of companies entering the fray, particularly in diamond mining.
The companies include: River Ranch, Murowa Diamonds, Mbada Diamonds, Anjin, Marange Resources and Diamond Mining Company (DMC). Government, through the state-owned company, ZMDC entered into joint venture agreements with a 50/50 shareholding in the following companies: Mbada, Anjin and DMC. Marange Resources is owned 100% by ZMDC.
The diamond mining sector was generally small until the huge discovery of alluvial deposits in Marange in 2006. It is estimated that the country now has the capacity to supply 25% of the global diamond market. As a party, the MDC’s aims to promote a “social democratic developmental state”, and sees the mining industry as a critical sector through which to promote both development and strengthen democratisation in the country.
Unfortunately, the experience so far under ZANU PF in control of natural resources and the mining sector is that the diamond industry has neither helped in promoting development or democratisation in the country.
Instead, it has increased the gap between the minority that are extremely rich and the majority who remain poor while at the same time fuelling the undermining of democratic processes. I will endeavour to demonstrate this in more detail below by showing the major challenges affecting the diamond mining industry and how they have impacted on the politics in the country.
Major challenges affecting diamond mining industry
1. Lack of transparency
The secrecy and lack of transparency in the diamond mining industry has resulted in serious leakages and failure to remit satisfactory revenues to the State. While the Minister of Finance expected $600 million from the proceeds of diamond exports in 2012, the State only received about $41 million. This is against reported sales of diamonds running into billions of dollars every year. According to international NGO Global Witness, about $2bn in diamond revenues have been unaccounted for since 2008.
In 2012, our Minister of Finance was forced to revise his $4 billion National Budget to $3,4 billion after the $600 million expected from diamond sales did not materialise.
Our own Parliamentary Portfolio Committee on Mines and Energy presented a report in Parliament in June 2013 which states the following:
“The Committee observed with concern that from the time that the country was allowed to trade its diamonds on the world market, government has not realized any meaningful contributions from the sector. This is despite the fact that production levels and the revenue generated from exports has been on the increase. There are serious discrepancies between what government receives from the sector and what the diamond mining companies claim to have remitted to Treasury”.
The parliamentary committee’s report said powerful officials, politicians and police and army commanders repeatedly tried to thwart the probe into diamond dealings. The chair of the 22-member panel, Edward Chindori-Chininga, a former Mugabe Mines minister, died in a car crash just days after he signed off the report in June.
Police said Chindori-Chininga’s death was accidental and that his car had veered off the highway and slammed into trees. However, observers found the circumstances of his demise suspicious.
Certainly, car wrecks or mysterious accidents are not uncommon in our part of the world and as a local press report indicated recently, they have taken the lives of 12 senior politicians, all of whom were believed to have bucked official policy, in the past two decades.
The parliamentary committee’s report said several officials lied while giving evidence under subpoena and that diamond earnings are not only shielded from scrutiny but are not channelled into the state coffers.
The one notable discrepancy is that while Treasury received $41 million only in 2012, one of the diamond mining companies which responded to the Parliamentary Committee (Mbada) stated that it had remitted $117 million to Government as dividends for its shareholding. The difference between $117 million supposedly received from Mbada and the $41 million actually received by Treasury remains unaccounted for. This is even before one considers remittances in dividends from other diamond mining companies in which the state is a shareholder, let alone the royalty fees and other payments due to the state.
The lack of transparency means that nobody appears to know exactly how much the country has earned from diamonds and whether the reported figures are accurate. It is clear that there is serious under-reporting of the proceeds from diamond mining and trade. The effect of the low remittances to government simply means the State has been thin on resources and it has not been able to finance the developmental projects that had been budgeted for. With the State receiving little revenues than expected, its developmental role has been seriously hamstrung.
It is hoped that the lifting of restrictive measures on ZMDC and the use of the Kimberly Process will promote greater transparency. The measures had the effect of giving rent-seekers an opportunity to conduct their dealings in the parallel market, thereby promoting shady deals, leakages, non-accountability and corrupt activities. They no longer have that excuse and it is expected that there will be added transparency and therefore accountability on the mining and trade of diamonds. If the State receives what is due to it from the diamond companies, the hope is that the Government will channel those resources to developmental projects. We had comprehensive plans, as an MDC Government to make diamonds work for the people of Zimbabwe – using the proceeds to support infrastructural projects and promoting social services for local communities.
Diamond mining in our country is riddled with corruption as confirmed by the Parliamentary Committee report and President Mugabe’s recent speech at the official opening of Parliament when he cited the former ZMDC chairperson as having accepted bribes from prospective investors. Many of us believe the naming and shaming of a few individuals is only a tip of the iceberg. The corruption is mainly due to the lack of transparency and unbridled greed on the part of those entrusted with overseeing the diamond mining industry. It is to be noted that the former Minister of Mines who has previously been fingered in corrupt deals is now an owner of a bank that had fallen on hard times. Many of the people in and around the diamond mining industry are known for their conspicuous consumption in the middle of a sea of poverty around the country.
Corruption has also impacted on investment as the costs invariably are higher because of rent-seekers using corrupt means to secure benefits for themselves.
There is an unusual involvement of the military and the police in the diamond mining industry, when mining is a civilian exercise. The army, police and other security services have formed trusts through which they own shareholdings in diamond mining companies. No other arms or agencies of the state have the same facilities. Indeed, there are no known investments by the army, police and other security services in businesses beyond the diamond mining industry. This goes to demonstrate the critical place occupied by the diamond mining industry in the political dynamics of the country.
With heavy interest invested in the industry by the military courtesy of ZANU PF, this has strengthened the bond between the party and the military, resulting in the latter having a greater incentive to ensure the former retains power at all costs. Not surprisingly, the military played a critical role in the election process, mainly propping up ZANU PF and mobilising support, including their role in electoral institutions and processes.
Military personnel were deployed in provinces to mobilise support for ZANU PF in what were referred to as political re-education campaigns, long before the election started. ZANU PF was actively aided by the security services sector in their political campaign, thereby giving them an unfair advantage over fellow contestants. While there was less of the violence that was seen in previous elections, the mere presence of soldiers and security personnel especially in rural areas during the election campaigns helped to intimidate voters, reminded them of the scourge of state-sponsored violence of 2008 and generally assisted ZANU PF to benefit from the “harvest of fear” in the 2013 election. The participation of the security services in support of ZANU PF was incentivised by the benefits accruing from the diamond mining industry.
Failure and/or Refusal to Account to Parliament.
It is expected in a normal democracy that the Executive is accountable to Parliament and that when Parliament seeks answers, it should be able to summon the executive and make the necessary enquiries. The experience of Parliament generally and the Portfolio Committee showed that when it came to the diamond industry, the Executive was actively refusing to account.
According to the Portfolio Committee Report, “During the four year period of the enquiry, the Committee observed with concern that the Executive and its officers were generally not willing to be held accountable by Parliament. This was evidenced through the Committee’s experiences as it conducted this enquiry. This goes against the basic universal principles of Ministerial Accountability to the Legislature as enshrined in national or international law”.
This goes to demonstrate how the curse of diamonds has actually worked to undermine the normal democratic process and therefore contaminate the democratic culture in the country.
6. China and the Diamond Industry
There is a heavy involvement of the Chinese in our diamond industry. They are probably the only foreign investor with significant control of the diamond industry but their investment and activities are also shrouded in secrecy and controversy. From the prevalence of unfair labour practices in Chinese-run companies to corruption and serious leakages, there have been many complaints regarding Chinese role in the diamond mining industry. ZANU PF has always regarded the Chinese as their all-weather friends. It is probably by no coincidence that in return, China has been one of the biggest backers of ZANU PF – at the international level (UN). We note that the Communist Party of China played an important to support Zanu PF in the recent election.
Zanu PF has used diamonds to strengthen its relationship with China, particularly in order to safeguard its own interests at the international stage, e.g. the UN Security Council. China’s approach in Africa is generally to turn a blind eye to human rights abuses or acts that undermine democracy as long as its own interests are being served. While some might acknowledge their refusal to get involved in the internal affairs of countries in which they operate, dictatorial regimes tend to take comfort in the cushion they receive.
In Zimbabwe, for example, ZANUPF regards China as a useful counter-weight to the West, which has generally been calling for human rights protection and promotion of democratic processes in the country. The diamond mining industry has been useful in oiling the relationship between ZANU PF and China with the latter providing political support needed by ZANU PF.
High dependency on raw exports as opposed to value addition
Along with many other countries in Africa, diamonds and other minerals are generally produced and exported in their raw and cheaper forms. This does not aid Africa’s development as it ends up importing value added products at much higher prices. There are reports of tonnes of soil and rubble being shipped to China and other countries representing serious leakages in the system that could help in the country’s development efforts if they were plugged.
The overall impact of the diamond industry so far has been to derail the democratisation process through the overt involvement of the military, corruption and the emergence of a parallel economy that has fuelled illegal and underhand dealings impacting on the electoral processes.
Through this parallel economy, Zanu PF has large amounts of cash giving it the ability to manipulate the electoral process and subvert the will of the people through payment of shady consultancies to perform election-related work, the refusal to support the Treasury in its developmental work simply because it was MDC-controlled and the deliberate porosity and leakages in this sector.
All these factors have created a compromised State in which the ruling party was closely wedded to the military and other agencies benefitting from the diamond industry. I have reliable information that all these factors have converged to ensure a ZPF victory at all costs. Everything was done to make sure ZPF remained in power in order to protect the new found spaces to accumulate wealth.
The lack of vision and proper plans in this industry have meant that apart from derailing the democratic processes, diamond mining is still is not geared towards development in the country.
What needs to be done?
Diamond mining has to benefit the communities in which mining is taking place and the people of Zimbabwe as a whole. Article 13 of our new Constitution provides that the State must ensure that local communities benefit from the resources in their areas. From a gender perspective, the new Constitution also provides that the State must ensure that women have access to resources on the basis of equality with men. I am certain that an analysis of the diamond mining industry and trade in Zimbabwe will demonstrate that it is skewed heavily against women. The militarisation, violence and power dynamics associated with the diamond industry are generally against any measures that are likely to promote women’s participation and their interests.
Overall, all activities in the diamond mining industry must be consistent with the spirit of constitutionalism. This implies safeguarding and promoting the fundamental rights and freedoms of the people as well as generally upholding the Rule of Law. Above all, there must be respect for property rights.
To this extent, one tends to agree with the recommendations of the parliamentary portfolio committee which investigated the diamond mining industry of Zimbabwe.
1. Value addition
There is need for beneficiation and value addition for our diamonds in order to create more revenue, build industry and create jobs in Zimbabwe.
This would assist in reducing the high unemployment levels currently pegged at almost 90 per cent. It will also enhance the country’s revenues by promoting the export of higher-value goods than the current practice where emphasis is on cheap raw materials.
2. Benefitting local communities
Our new Constitution enjoins us to ensure that local communities benefit from resources in their local areas. Ideally, from a development and upliftment perspective, investors should be encouraged to employ locally, i.e. from the local areas, thereby benefitting local communities but also other measures such as requiring minimum procurement of goods and services from local sources would also assist in the industries that are linked to the diamond mining industry. The province of Manicaland for example, should by now be the diamond hub of the country, hosting industries that form the supply chain to and from the diamond mining in Marange. Instead, we have diamond cutting companies establishing far away in Harare.
3. Environmental protection
Our mining has to be friendly to the environment. Environmental protection is now an important ecological aspect of mining as part of a strategy for sustainable development.
4. Geological surveys
One glaring fact is that there is lack of knowledge of the mineral deposits across the country and that is a result of lack of research and geological surveys.
The government itself has acknowledged that the last geological survey was conducted way back in the colonial era and that the discovery of diamonds was accidental rather than a result of proper exploration. The dearth of research and seriousness on the part of government is demonstrated by the fact that the Geology Department at the University of Zimbabwe, the country premier centre of learning, was at some point closed for lack of funds and staff. Man of our geologists are working in other countries like Sierra Leone, South Africa, etc. There is need therefore for a comprehensive geological survey to ascertain the extent, distribution and estimate value of the country’s mineral deposits. Current talk of the Sovereign Wealth Fund and other instruments is not backed by proper knowledge of what the country actually has.
5. Transparency and Accountability
There is absolute need for accountability so that our diamond deposits benefit the ordinary people. In this respect, I agree with the parliamentary portfolio committee on the need for parliamentary oversight to protect the interests of the ordinary Zimbabwe who should derive abundant direct benefits from this natural resource.
6. Development and Democratisation
The country’s mineral wealth should not be a curse but a blessing for its people. There is a critical link between the mining industry and development in that revenues gained from the industry should fuel development projects and support social services provision in local communities and across the country. The people must see development and growth in their areas not the wealth manifesting in private accumulation by the elite. Further, transparency and accountability should plug the holes through which a parallel economy has manifested over the years, funding and supporting anti-democratic practices. We believe diamond money played a critical role in the last election particularly with the militarisation of the industry and the underhand dealings that supported actors who manipulated the voters’ roll and electoral processes.
The militarisation of the diamond mining industry has created an unhealthy state of affairs politically. It has cemented the relationship between the ruling ZANU PF and the military who now have vested interests in the industry and therefore the continued rule of ZANU PF. It is clear that the investments by the military in the diamond industry have created a strong interest in ensuring the continuation of the status quo. It is also for that reason that the military and security services generally have veered towards ZANU PF politically and they played a critical role in ensuring a ZANU PF “victory” in the July 31 elections. I would encourage you, as intellectuals and researchers to pursue further research into the role of the military in Zimbabwean politics and the extent to which the diamond discoveries in the country have influenced this role.
The new Constitution now acknowledges the equitable sharing of natural resources, which is a good starting point for a new dispensation, especially in the diamond industry where a few people have benefitted at the expense of millions of people in the country
Chapter 14 of the Constitution speaks to the objectives of devolution and that the powers of the provincial, metropolitan and local authorities, key of which is to ensure the equitable sharing of natural resources. This Constitution now empowers and gives more rights to local communities, particularly in areas such as those where our large diamond deposits are found, to demand their share of the cake.
We need to measure our natural capital so as to better protect our social and ecological heritage which may entail temporarily leaving our resources in the soil and increasing regulation to ensure that broader objectives are respected.
The MDC’s policy position is that we must have a Diamond Act whose objective is to give ownership of diamond concessions to the State, the creation of a diamond agency, a diamond regulator and to define down-stream beneficiation and compensation for communities, among other things.
It would be remiss of me to leave this podium without talking about the urgent need to de-toxicate mining from politics.
This will enable Zimbabwe to avert the very real danger of using national mineral deposits to prejudice or promote the interests of political parties as we saw in the last election where Zanu PF abused the country’s diamonds to steal an election in broad daylight.
I have impeccable information of how 30 000 carats were clandestinely spirited out of the country in April and May this year by named senior Zanu PF officials and military generals and sold through an intermediary in Angola for the sole purpose of funding electoral theft.
God gave Zimbabwe these natural resources as a blessing and not a curse.
As the MDC, we pray that they benefit the majority of the people of Zimbabwe.
We will use all the platforms we currently occupy, especially Parliament, to articulate and protect the interests of the ordinary citizen of our country on such matters where the innocent citizen is being short-changed.
I thank you