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Tuesday, 29 May 2007

Eye on Zimbabwe

We continue to cast our 'economic eye' on our brothers down south with today's new report by Channel Four on how "the discovery of new diamond fields in Zimbabwe has sparked a rush to mine these valuable status symbols" - article and video [after a 10 second advert :) ].

5 comments:

  1. There can be no doubt that Zimbabwe is taking a step backwards economically and the reasons for this are complex and well known. Lets face it everybody has an opinion about Zimbababwe's dimise including Bob 'the despot' Mugabe himself, Tony 'the dossier' Blair, Walker' Mad George' Bush. Even you the reader of this article has an opinion on who is to blame for the demise of one of the greatest economies of the modern era n Africa...well sounds sad. Just a quick note to remind you that greedy and nepotism knows no boundaries and travel across lands like solar winds...Nepotism in World Bank? you know the story. Lets no get side-tracked after all there is greedy, nepotism and corruption everywhere...just some people decide to call it sleaze...interesting.

    The discovery of diamond should be a new lease of hope for a country under martial law. But would it change anything? I do not think so and thats just my opinion though I hope it does.

    The 'Kimberly process' or shall we call another creative idea by Cecil Rhodes light bearers to control the diamond trade in the world. Historical facts shows that this process has only benefited the 'glitterati and their puppert masters. So should we kick dust over diamonds in Zimbabwe I think not. Maybe the idea of trying to cut out loaded corporate vultures and predators sounds like is a good idea but the trouble is that it leaves the diamond trade in Zimbabwe in the hands of the political megalomaniacs and their puppets. The common man get caught between the devil and deep blue sea. The long suffering common men and women of Zimbabwe will not leave to enjoy the benefits of a their God-given natural resources. Its a familiar story across Africa if you are not exploitated by corporations you are exploitated by local despots. The common man loses again

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  2. " Even you the reader of this article has an opinion on who is to blame for the demise of one of the greatest economies of the modern era n Africa...well sounds sad. "

    Excuse me, but Zimbabwe was never one of the greatest economies of Africa.

    As we have seen, there were a tiny number of well to do 'commercial farmers', who had enough land to gather wealth to afford all the trappings of modern society.

    But at the same time, they had so much land, because the huge majority of the people didn't.

    This is not a great economy, or even a successful one. This was a time bomb waiting to go off. As it will across Africa, unless the underlying issue of land hoarding and extreme poverty are dealt with.

    Robert Mugabe has made mistakes, but don't put him at the same level as George Bush, who has ruined the one remaining world super power, and is responsible for the deaths of hundreds of thousands of people, mainly in Iraq.

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  3. It is interesting that diamonds, as a commodity "of use" almost exclusively to the most affluent consumers in the global economy, unlike other resource commodities like oil, coal and copper which have applications relevant to the lives of people in all economic strata, is nevertheless still not an effective instrument for income redistribution from richer to poorer. This would appear to be a missing element in the Kimberly protocols, which justify restraint and draconian policing of diamond trading on the basis of humanitarian concerns over the use of diamonds to fund destructive activities.

    I am reminded of the Save The Rhino campaign championed by such clear thinkers as the late Douglas Adams. One of the campaign's most successful efforts came in the form of marches, not in the capitol cities of affluent nations, but along the edges of the game preserves which contained the actual rhinos in question. The arrival of the marchers to a particular village was coordinated with local authorities and NGO's to coincide with the distribution of the funds, donated by environmentalists worldwide for wildlife protection, in the form of schools, health clinics, water projects and the like. The theory was that by spending the money on the people who might be tempted to personally kill a rhino in order to support their families, instead of on programs to police reserves or close them off from local populations, the presence of these rare beasts would be seen as economically advantageous to those lucky enough to have some nearby.

    To the extent to which the Kimberly policing process increases the economic overhead of smugglers and consequently reduces the amount paid to poor individuals who can only sell into the parallel market, it can be argued that the poor are simply given incentive to harvest an increasingly large number of stones in order to obtain the amount of money they need to support their families. The scarcity of diamonds on the market relative to demand is what props up the prices for the retailers in affluent commercial centers and the profits for industrial scale mining companies. As long as the process for legitimizing commerce in diamonds fails to provide superior benefit to the individuals currently supplying the parallel market, it is likely that policing will continue to be both expensive and ineffective.

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  4. "it can be argued that the poor are simply given incentive to harvest an increasingly large number of stones in order to obtain the amount of money they need to support their families". - Yakima

    Fascinating indeed!

    Can't fault your logic there :)

    I guess what the Kimberly proponents would say is that ultimately the process aims to transfer the rent back to the nations. Imposing the "kimberly process" ultimately constrains supply on the open market - pushing the price of diamonds further. Because demand is ineffectively inelastic (and rising over the horizon) the revenue to home nations rises.

    The caveat there being that the 'legal' and 'non-legal' markets are two separate worlds...:)

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  5. As the Kimberley Process team conducts its probe, questions continue to swirl over the effectiveness of recent efforts by the GRZ to secure undeveloped sites. A June 5 mineweb articles states, "Close sources to the country's mining ministry say Zimbabwe could have lost about US$300 million worth of the precious stones after villagers, illegal panners, dealers and smugglers invaded the Marange fields.
    The area is now cordoned off and a heavy presence of the national army patrols the area. But the army is alleged to be involved in the smuggling of the diamonds.
    And Ndlovu's optimism about the ZMDC's capacity to exploit the Marange diamond deposits is in stark contradiction to calls by Reserve Bank of Zimbabwe governor Gideon Gono who has publicly called for a foreign partner to be brought in saying the state firm did not have adequate technical capacity and financial resources to mine diamonds."

    http://www.mineweb.com/mineweb/view/mineweb/en/page37?oid=21784&sn=Detail

    I find it rather confusing to try and reconcile the statement that while untrained villagers and illegal panners equipped with hand tools can pull hundreds of millions of dollars worth of stones out of the field in a matter of weeks, parastatals and foreign investors require massive financing and technical capacity in order to be viable. I don't think that diamonds from the Marange deposit would be ending up on the parallel market if ZMDC was offering a better price than the smugglers. The actual offer seems to consist of a trip to jail for anyone caught with a diamond, or if allegations are correct the possibility of cutting a deal with corrupt policing authorities who have inserted themselves as middlemen between unlicensed panners and smugglers.

    With unemployment in the country running close to 80%, and acute shortages of forex with which to maintain industry and agriculture in general, a labour intensive and low tech initial phase of mining seems to be just what the doctor ordered. The official debate instead seems to center around the costs associated with tens of kilometers of perimeter fencing, army cordons and patrols, and the use of imported heavy machinery and small workforces with highly technical expertise. Even if they succeed in allocating the US$20 million estimated for the first eight month phase of initial mechanised development, how long before the informal miners take their shovels and pans into the undeveloped diamond fields in the Odzi, Chirasika and Wengezi areas?

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