Biti banks on diamond revenue for 2012 budget

Finance Minister Tendai Biti has banked almost 20% of next year’s Budget on profits from diamond sales, which observers have already criticised as ‘optimistic’.


The 2012 Budget was presented in Parliament on Thursday, with Biti rounding off the annual allowance from US$3.4 billion to US$4 billion. Biti said this extra US$600 million windfall will be as a result of diamond sales. He said that this 17% boost to the national Budget will help the government channel money into critical services, like health and education.

Biti’s revisal of the national spending allowance came shortly after his admittance that only US$80 million worth of diamond profits had reached the Treasury this year. He also made no mention of his previous calls for a probe into the whereabouts of at least US$100 million in profits that had not reached the Treasury.

Observers who used social networking websites like Twitter and Facebook to air their views on the Budget said Biti is being “too optimistic.” Some comments pointed to the lack of transparency clouding the diamond trade, which has seen hundreds of millions of dollars in profits go ‘missing’.

Political analyst Clifford Mashiri on Thursday agreed that Biti is being “very ambitious and brave,” regarding the projected diamond profits.” He told SW Radio Africa that Biti’s optimism is “questionable,” as there were no conditions in place to ensure the Treasury gets its share of the diamond sales.

“In the absence of a Diamond Act to ensure accountability and transparency, there is no reason to be optimistic,” Mashiri said.

Biti has previously voiced the need for such legislation to be in place, but to date there has been no movement on this issue. Mines Minister Obert Mpofu has also raised concerns about diamond smuggling, said to be rife at the controversial Chiadzwa alluvial fields.

Despite these concerns and ongoing reports of human rights abuses, Zimbabwe has been cleared to resume exporting to the international diamond trade market. The trade watchdog, the Kimberley Process, this month ended its two year long deadlock on Zimbabwe’s trade future, announcing that Chiadzwa diamonds could be sold. The KP membership has until recently been unable to reach agreement on whether to allow Zim back into trade circles, with mainly Western KP members raising concerns about human rights violations and smuggling.

These were issues that the KP itself had ordered Zimbabwe to sort out back in 2009, when it was faced with either banning the country completely or giving it a deadline to reform. The KP chose to avoid an official ban and instead suspended Zim from trade until it fell in line with international trade standards.

Two years later there are still reports of human rights abuses, smuggling and a lack of accountability, and the KP is now being criticised for appearing to bow to pressure to allow Zimbabwe to resume exporting.

An international diamond trading network has since issued a public warning against buying or trading in Zimbabwe’s diamonds, which the group says threaten the integrity and reputation of the entire trade.

The US based Rapaport group this week said in a statement that it “strongly opposes” the recent decision of the KP, warning that “the KP does not certify against human rights abuses and KP certification does not ensure that diamonds are not involved in human rights abuses.”

“The Rapaport Group calls on all ethical members of the diamond trade to cease and desist from the trading of (Chiadzwa) diamonds. We demand that firms selling (Chiadzwa) diamonds do so with full disclosure,” the group said in a statement.

The group also warned that any of its members who are found to have knowingly traded in Zim diamonds “will be expelled and their names will be publicly communicated.” It added: “The continued sourcing and legitimisation of diamonds involved in human rights abuses threatens the integrity and reputation of all diamonds.” – SW Radio Africa News

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