A UK's Financial Times article says demand for emeralds is on the up, with jewellers such as David Morris and Bulgari confirming that the green gemstones are fast becoming a popular alternative to white diamonds. According to statistics from the UN Commodity Trade Statistics Database, sales of diamonds have been slowing while those of emeralds and other coloured gemstones have been mounting significantly in recent years.
|Clockwise from below left: Fabergé Solyanka ring; Avakian emerald and sapphire necklace; Gemfields, Zambian emerald bracelet by Octium; Graff ultra-versatile double brooch.|
Zambia is the third largest producer of gemstones in the world. Gemfields, the London-headquartered company with interests in Zambia's Kagem Mine that produces 20 per cent of the world’s supply, has clocked up impressive sixfold growth in prices for higher-quality emeralds over the past four years, and sevenfold growth for lower-quality stones.
I have previously noted that the challenge for Zambia is to get the policy right without stifling much needed foreign direct investment in this sector. It is particularly vital that policy in this area moves towards greater evidence based policy making and more promotion of transparency within the industry as a whole to ensure long term benefits to our poorest.
In that sense the current discussion around "restricting sale" of emeralds to Zambia seems to miss the point. The question of where the emeralds are traded is pointless. In fact it is poor economics to restrict the trade to Zambia because the trade should occur where they can get maximum value. The reason Government wanted trades in Zambia was to monitor what was being sold. Restricting the sale for those reasons is not only using a a heavy hammer to crack a nut, bu it misses other better options. For example, why can't government simply focus on ensuring they have a stake on all the eremald companies in the same way they already do with Kagem (and some copper companies)? That way they have a better handle on information and they can help companies focus on investing more in Zambia, etc.
But most importantly, the additional benefit of restricting trades locally seems to be negligible. The Government has now put in place various statutory instruments that already mandate revenue transfers back to Zambia within 60 days. We also have a new Minerals Development Commission with the task of veriifyng production figures across various sectors. That being the case, there's no additional benefit that I can see, from a transparency perspective, of restricting gemstones auctions only to Zambia. In other words, the additional cost in lost value of such restrictions will clearly outweigh any pyschological benefits.
Copyright © Zambian Economist 2013