Falling revenues

After years of mismanagement, President Robert Mugabe's regime hopes diamonds will turn around an ailing economy.

The Marange diamond fields, discovered in 2006 and controversial because of claims of human rights abuses, have been touted as the biggest find of the last decade.

The Zimbabwean government anticipated $77.5 million (58.8 million euros) from diamond sales during the first two months of this year, but received only $19.5 million. Finance Minister Tendai Biti has projected $600 million in revenue from diamonds for 2012. This is a sizeable fraction of the total budget of $4 billion.

"Diamonds have to deliver," Biti warned, "otherwise the only thing we will be able to do is pay wages which means the government will virtually close down. That's cause for concern because we are back to the days of a fragile state that cannot look after its citizens in terms of health, education, roads."

Government employees in Zimbabwe have embarked on a series of strikes this year over pay demands that the finance minister insists can only be met if payments into state coffers are boosted by diamond revenues.

Rights groups have expressed concern that diamond revenues could be used by Mugabe's ZANU-PF party to finance violence and intimidation in proposed elections. The groups say the diamond mining companies lack transparency and accountability. Shamiso Mtisi is the local coordinator for the Kimberley Process Civil Society Coalition, a reference to the international system designed to stop 'blood diamonds' from entering the mainstream rough diamond market.

"It is best to know the actual totality of the revenue realized from diamonds," he says. "Once we are aware of that information, we will be able to say how much of that money is being distributed in electricity, water and the social sectors."

Civil society groups want to see diamond revenues ploughed back into social services so that the lives of ordinary Zimbabweans will be improved. Such ambitions apparently do not enter into the calculations of Obert Mpofu, Zimbabwe's minister for mines and a close ally of President Mugabe.

"How the government collects its revenue is not a civil society issue. They should be concerned with the welfare of the people," the minister claimed.

Since the military, loyal to Mugabe, took control of the diamond fields in 2008, using troops and helicopter gunships to remove willagers and small-scale miners, Zimbabweans with diamond interests have bought luxury cars and opulent homes. The boards of mining companies include executives who are retired and serving police and military offiicers.

Finance minister Tendai Biti asked Mpofu why diamond revenues had been so meagre. He was told the reason was the absence of diamond auctions in January and February. Auctions had, however, taken place in the meantime, but no date was forthcoming as to when the proceeds might arrive at the treasury.

Author: Mark Caldwell (AFP, AP, Reuters with additional material from Columbus Mavhunga)
Editor: Susan Houlton / rm