Thursday, November 17, 2011

Zimbabwe’s Diamond Industry Can Boost its Economy

News 24: Zimbabwe to Get Diamond Boost
NewsDay: Is Zim any Better with Diamonds?
RadioVoP: Marange Diamonds to Generate $2 Billion Annually: Mpofu
The Zimbabwe Guardian: Zimbabwe, a New Economic Giant: Mpofu

The Kimberley Process Certification Scheme (KPCS), an organization that certifies that rough diamonds were not acquired through human rights violations, recently gave Zimbabwe permission to sell diamonds mined in the Marange district in the eastern part of the country. The KPCS’s decision lifts an international, years-long ban on exports from a portion of the country’s largest profit making industry to western countries.

The ban on Marange district diamonds started after a group of small-scale miners discovered diamonds in the region at the end of 2008. Police and military security forces forcibly removed, beat, and killed the miners to take over mining in the region. The takeover resulted in the evacuation of thousands of families who were promised, but never received, compensation.

Even with the KPCS’s ban limitation on western buyers, the mining industry in Zimbabwe has earned around $300 million by selling diamonds to Asian countries. Mines and Mining Development Minister Obert Mpofu stated that Zimbabwe stands to earn more than $2 billion without the ban. These profits would make up more than fifty percent of the nation’s total yearly earnings. The increase would drive Zimbabwe to produce more than twenty-five percent of the world’s diamonds. Many government officials believe that the increased income will allow the country to pay for its own development needs without needing foreign aid. However, analysts are concerned that the president, Robert Mugabe, will use the funds for political gain instead of to address development needs.

Experts also question whether the end of the ban will really be as lucrative as government officials claim it will be. The $2 billion in earnings depends on the industry’s growth rate and on how high-quality the diamonds are after processing in the country. Currently, Zimbabwe sells raw diamonds for less than what those diamonds would be worth if they were processed and cut. Zimbabwe currently does not refine the diamonds because there is a lack of skilled workers who could properly refine diamonds. Zimbabwe must further implement a system to track the profits it stands to make to ensure the government uses them in a productive manner. If it can manage these profits successfully, Zimbabwe could become one of the most developed African nations.

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