It’s not companies but gems that are forever

“A lot of swindling and smuggling has taken place and the companies that have been mining, virtually, I want to say robbed us of our wealth,” President Mugabe  says of the diamond mining activities at Chiadzwa

“A lot of swindling and smuggling has taken place and the companies that have been mining, virtually, I want to say robbed us of our wealth,” President Mugabe says of the diamond mining activities at Chiadzwa

Joram Nyathi Spectrum

The worst bit is that Zimbabweans themselves are complicit in bleeding their economy of scarce foreign currency. When it’s convenient we turnaround and blame the liquidity squeeze on Government policies which supposedly deter foreign direct investment.

WHEN Government recently announced it was taking total control of all diamond mining in the country under its Zimbabwe Consolidated Diamond Company, there was an uproar. The matter of property rights once again fetched up in the top drawer.

Issues of corruption and what the country was benefiting from diamond mining in the Chiadzwa area were relegated to the backburner, when in fact that is what should animate the nation — what is happening to our natural resources, and what should be happening. For once even paid Chinese haters were talking about the risk to “Zim-Sino mega deals” which all along they have dismissed as “pies in the sky”.

President Mugabe raised troubling issues about the mindset of Zimbabweans regarding policy implementation and corruption beyond the scope of diamond mining in his birthday interview in which he affirmed Government’s position regarding ownership and extraction of diamonds from now on. He is talking of “in-built resistance” in the system by people not keen to implement certain Government policies. Such people become impediments themselves or saboteurs through corruption.

“They are slow or they think the policies we are pursuing are not the correct ones and they are not happy and you have also quite some level of corruption in the system, private and public,” he said.

The President’s sentiments were confirmed by Reserve Bank of Zimbabwe governor Dr John Mangudya in his Monetary Policy Statement announced two days earlier. Dr Mangudya said almost $2 billion had been spirited out of the country in 2015. Corporates took away $1,2 billion, individuals the balance.

In his own words, this is how the money was siphoned out of the system: “Bank statistics show that during the period January to December 2015 a total of $684 million was remitted outside Zimbabwe or externalised by individuals under the auspices of free funds for various dubious and unwarranted purposes that include remittances of donations to oneself, offshore investments, externalisation of export sales proceeds by corporates through individual accounts, leading to pervasive tax evasion and externalisation.”

He observed: “This rampant export of liquidity is not sustainable.”

That warning is of course a staggering understatement. What is happening is downright criminal illicit money outflows by corporates. But the worst bit is that Zimbabweans themselves are complicit in bleeding their economy of scarce foreign currency. When it’s convenient we turnaround and blame the liquidity squeeze on Government policies which supposedly deter foreign direct investment.

But how much foreign direct investment is required to ease the liquidity crunch when, as revealed by Dr Mangudya, an individual can externalise as much as $10 million? This is money taken out of the economy without any official record. Which other democracy under the sun allows such freedom to undermine one’s country?

Back to Chiadzwa and the

diamonds

Contrary to diamond mining in Chiadzwa becoming the nation’s cornucopia, it has turned out to be a source of agony for the people of the area and beyond. President Mugabe lamented that precious little had accrued to the state in the past nearly seven years of hyperactivity. He estimated the state could have realised a measly $2 billion, exactly the amount estimated to have been externalised by corporates with the connivance of Zimbabweans in one year, 2015.

Have we run out of diamonds? There wouldn’t be so much anger against Government’s decision to kick out those mining companies if there was nothing in Chiadzwa. They all would have voluntarily left. Instead what they resisted was to be consolidated into a single entity to allow for closer Government scrutiny. And it’s now a public secret why closer scrutiny is undesirable.

President Mugabe revealed that “over $15 billion or so have been earned in that area”. But it can’t be accounted for and the companies want to continue their murky operations.

Here is the perverse paradox. Government’s indigenisation policy in all other sectors of the economy outside of natural resources is fairly flexible. The prospective investor can negotiate, even in a partnership with locals.

When it comes to minerals, Government has set an ownership ratio of 51/49 in favour of Zimbabweans, which is generous by any standard.

But looking at what the people of Zimbabwe have reaped from Chiadzwa versus what the mining companies there are accused of looting, we are nowhere near that ratio even if we were to be taken as the junior partner. We should be happy at $8 billion vs $7 billion for the miner. But no. The ratio is reversed and degraded. Zimbabwe gets $2 billion and they take away $13 billion; to make a mockery of the policy of indigenisation.

These are the same companies which scream murder at the slightest mention of a review of royalties or taxes.

Shouldn’t Zimbabweans be the first ones to erupt in anger at this level of looting of our national resources? How is Government wrong in fighting to stop this scam? For whose benefit are we allowing these companies to extract our minerals? So much about employment creation. How many of the former employees lead a lifestyle better than ordinary alluvial panners?

If Government discovered the criminal behaviour of the companies mining diamonds at Chiadzwa and did nothing drastic, it might as well stop talking about indigenisation of the economy. What those companies were doing at Chiadzwa is what they do everywhere across the continent. That is why Africans remain poor, despite the continent’s abundant natural resources. We allow foreigners to loot our resources in the name of private enterprise, and protest when Government intervenes to stop the looting!

President Mugabe pointed out the most painful bit, with all the elements of treachery: “There has been quite a lot of secrecy in handling them (diamonds) and we have been blinded ourselves. That means our people whom we expected to be our eyes and ears have not been able to hear or see what was going on.”

Why are our people always ready to conspire and connive with foreigners against their own? This is the same story Dr Mangudya related about externalisation of money through bribery, under-invoicing exports or overstating costs of imports, and tax evasion. Our learned brothers and sisters who should be our eyes and ears are in the thick of things, against their own. They constitute the backbone of what the President calls “in-built resistance” to Government policy and are happy to facilitate corruption, against their own. They are happier to defend the property rights of foreigners against their own economic empowerment.

Our people are happy to conspire and connive in the robbery of their own.

“A lot of swindling and smuggling has taken place and the companies that have been mining, virtually, I want to say robbed us of our wealth. That is why we decided that this area should be a monopoly area and only the state should be able to do the mining. You cannot trust private companies in that area, none at all,” said the President.

Surely there must be a fitting punishment for this crime against the people of Zimbabwe beyond kicking these companies out of Chiadzwa.

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