The unlocking of Zimbabwe’s Diamond Fortune

By Darlington Nyambiya

When Botswana secured independence in 1966, it was an impoverished, arid and hungry land without hope of achieving economic stability but the discovery of diamonds a year later changed the economic fortunes of the country. But the discovery of Diamonds in Chiadzwa in 2006 has neither changed the fortunes for the province of Manicaland or the nation of Zimbabwe.

Infact, the recent revelation by President Robert Mugabe that the country had earned, but failed to account for diamonds worth more than US$15 billion in the eastern mining fields of Chiadzwa since 2008 had once again brought to the fore the government’s failure to curb corruption and looting that has helped to destroy a once thriving economy and reduce it to rubble. However after Independence in 1980, Julius Nyerere told the then Prime Minister Robert Mugabe that he had inherited the Jewel of Africa in describing Zimbabwe’s then robust economy and strong currency. Nyerere further implored Mugabe to look after the country and to leverage on the robust economy to take the country to another level of success.

But since independence, Mugabe and the ruling party have gradually run down the country to the extent that the country has turned from a breadbasket of the region to a basketcase where the nation is unable to feed itself; and the economy is on its knees due to mismanagement, corruption and looting. While Botswana has since its independence in 1966 turned the once impoverished country into an economic success anchored on its discovery of diamonds. Infact, most people describe Zimbabwe as the best case study in Africa on how to run down a once prosperous country and Botswana is the best case study of how to turn an impoverished country into an economic success.

Botswana

Botswana is a landlocked country located in Southern Africa and got its independence on the 30th of September 1966. Since then, it has maintained a strong tradition of stable representative democracy, with a consistent record of uninterrupted democratic elections. A mid-sized country of just over 2 million people, Botswana is one of the most sparsely populated nations in the world. Around 10 percent of the population lives in the capital and largest city, Gaborone.

Formerly one of the poorest countries in the world—with a GDP per capita of about US$70 per year in the late 1960s—Botswana has since transformed itself into one of the fastest-growing economies in the world. The economy is now dominated by mining, cattle, and tourism. Botswana boasts a GDP (purchasing power parity) per capita of about $18,825 per year as of 2015[update], which is one of the highest in Africa. Its high gross national income (by some estimates the fourth-largest in Africa) gives the country a modest standard of living and the highest Human Development Index of continental Sub-Saharan Africa.

The Contribution of Diamonds to Botswana’s Economic Success

 The right choices

1)      The success of Botswana was not inevitable as resource-rich economies often grow more slowly than resource-scarce economies. Windfall discoveries of minerals or oil can, in fact, become a ‘resource curse’. The discovery of diamonds in countries like Sierra Leone and Liberia resulted in a ‘resource curse’ as the precious stones were used to fuel fully fledged civil wars which killed thousands of innocent civilians. Although Zimbabwe’s diamond discovery has not turned the country into a war zone but the country has been enmeshed in challenges of diamond revenue leakages, looting and corruption.

2)      Botswana has developed and managed its diamond resources with long-term development goals in mind. Consequently, a significant body of literature now recognises Botswana as an example of how good political institutions and prudent economic policy can promote sustainable resource-led growth and development. The major challenge in Zimbabwe is the misplaced priorities by the government which has put a blind eye on diamond revenue leakages to the detriment of development and were over 80% of the revenue generated is spent on the wage bill; crowding out important sectors like infrastructure , health and education which can be utilised as lauchpads to boast economic growth.  

3)      The foundation stones of this success story were political stability, respect for the rule of law, and democratic leadership, drawn from the traditions of Batswana culture in which the will of the people is recognised, and in which high levels of consultation and consensus-seeking are common. Zimbabwe has gone through political instability for the past 18 years caused by elections which have been marred by vote rigging allegations, violence and intimidation. This political instability has provided a cover for opaque diamond dealing by the ruling elite and has had an adverse effect on foreign companies that wanted to invest in Zimbabwe; and negatively affected local companies who wanted to expand their operations.

4)      A second feature was the careful planning and investment of all diamond resources in infrastructure and human capital development. Five-year National Development Plans have been introduced since the time of independence, and these have consistently directed mining rents to investment in water and transport infrastructure, education and healthcare. Public spending on social services, still heavily funded by diamond revenues, remains high today.  The main challenge in Zimbabwe is that most of the revenue generated from the diamond industry has not benefitted the nation but has gone into the pockets of the powerful and politically connected individuals. On top of that, political interference and gross mismanagement of the recently formed Zimbabwe Consolidated Diamond Company (ZCDC), which now manages and owns all the diamond fields in Zimbabwe has resulted in diamond production nearly coming to a halt and treasury getting little diamond revenue.

  Conclusion

In conclusion, as is clearly evident from Botswana’s economic turnaround, the Zimbabwe Government needs to:

·         Ensure that there is political will to enforce transparency and integrity in diamond revenue generation.

·         Find a credible partner in the stature of De Beers, with vast diamond mining experience to assist in unlocking Zimbabwe’s diamond fortune.

·         Allocate diamond revenue to water and transport infrastructure, education and healthcare to assist in rebooting the economy and creating employment.

·         Build strong institutions that will guarantee that there is the rule of law were commercial, civil and property disputes are resolved by an independent judiciary; and inturn ensure that diamond revenue is fully accounted for.

·         Implement sound economic policy that will direct diamond revenue to critical sectors of the economy and benefit the nation.

·         Provide guidance on the Zanu-PF succession matrix to ensure there is political stability were investors in the local diamond industry have clarity on the future.

As noted from above, Zimbabwe needs to appraise on Botswana’s economic success so that it can unlock the value of the country’s diamond fortune to the benefit of the nation and restore the country to its rightful place as the Jewel of Africa. More importantly, Zimbabwe needs to develop and manage its diamond resources with long-term development goals in mind so that it can transform the economy.

The Writer: Darlington Nyambiya is the President of the Local Solutions Council (LSC) , a leading Zimbabwe Think Tank. The LSC is a Think Tank with members from diverse Zimbabwean communities in politics, business, religion and sports. He is also a Pro Democracy Activist, Political Strategist, Human Rights Defender, Social Media Commentator, Writer and a Business Executive. Contact Details ; Skype ID : darlington.nyambiya  , Twitter handle: D_Nyambiya,  Email : info@localsolutionscouncil.com , Corporate Twitter Handle : lsc_thinktank  For more information on  Strategic Views on Zimbabwe log onto our website on :Website : www.localsolutionscouncil.com. Copyright © 2017 All Rights Reserved. The Article may not be published or reproduced in any form without prior written permission

 

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