Where will the diamond money go?

With Zanu (PF) set to form a government on its own, the people are waiting to see whether any money from diamond revenue will reach the fiscus.

During the tenure of the Government of National Unity, the remittance of diamond money was a thorny issue. Outgoing Finance Minister Tendai Biti complained of being undermined by the companies’ apparent unwillingness to surrender money to the Treasury.

In the first half of 2013, Biti said he did not receive a single cent from diamonds.

Analysts have said the problem for Biti was that the mines were under direct control of Zanu (PF). A recent parliamentary report on diamond mining showed that Mines Minister Obert Mpofu had a stranglehold on the sector.

According to the report, Mpofu circumvented the Zimbabwe Mining Development Corporation and directly appointed people to sit on the boards of various mining companies. This gave the minister direct control of the mines. Economic analyst, John Robertson, told The Zimbabwean that Zanu (PF)’s control of the diamond sector could either become a blessing or remain a curse.

“The problem is who is in charge of the mines. The party can make decisions on what to do with the revenue and that could translate to money being remitted to the Treasury. But the problem with that is it seems its individuals within the party who have control and have a claim of the proceeds,” Robertson said.

Recent reports have said that Zanu (PF) used $850 million generated from diamonds to fund a massive rigging plot during the July 31 elections. Zimbabwe, in the throes of a crippling liquidity shortage, looked to the sector for respite.

The report by the parliamentary portfolio committee on Mines and Energy underlined the militarisation of the Marange diamond fields, leakages of diamonds and fraudulent partnering processes as some of the problems affecting the sector.

Economist, Eric Bloch, said any improvement in the flow of diamond revenue was dependant on whatever policy direction the new government took.

“The development of the mines is still taking place and that could improve revenue as production increases,” Bloch said.

Post published in: Business
  1. Tiripo

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