RESERVE Bank of Zimbabwe governor Dr John Mangudya has said the country is losing a lot of potential income due to lack of transparency in the diamond sector.
Zimbabwe discovered diamonds in Marange nearly a decade ago amid huge expectations that the financial resources generated from exploitation of the gems would generate funds to drive the development agenda.
At the time, it was estimated the country would at its peak, contribute about 25 percent of the world diamond production.
But activity in diamonds mining has remained shrouded in mystery for the better part of the last decade.
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And Dr Mangudya said at a symposium on the 2016 economic outlook, it was critical that transparency and accountability in the diamond mining sector be enhanced.
The symposium was organised by The Herald Business and the Confederation of Zimbabwe Industries.
Dr Mangudya said the diamond industry had significant impact on the economy during times of uncontrolled operations by illegal panners than what is being realised following the re-organisation of the sector. Zimbabwe’s biggest diamond fields are in Marange.
“If you look at tobacco for example; Zimbabweans grow tobacco, from rural, A1 up to A2 farmers,” said Dr Mangudya.
“It is marketed at the auction floors, we all know about it.
“But we don’t know the same information from diamonds. We don’t know the quantum that was produced. We don’t know how much was exported. We need to improve on transparency and accountability for those resources so that we have a positive outlook.”
Dr Mangudya said other diamond mining countries in the region such as Botswana and Namibia were significantly benefiting from the diamonds.
In Botswana, for instance, where on average about $3,2 billion worth of diamonds are produced annually, the revenues enable every child to receive free education up to the age of 13.
Finance and Economic Development Minister Patrick Chinamasa has previously expressed the same reservations on diamond mining, in which the Government, through the Zimbabwe Mining Development Corporation (ZMDC) holds a minimum of a 50 percent stake in all diamond mining companies.
“This is a resource that seems to have not benefited the generality of our people, notwithstanding that the diamond industry has potential to uplift our population, especially as we fully exploit the diamonds value chain,” Chinamasa said in the 2016 National Budget.
Government is currently in the process of consolidating companies in the diamond sector into one big company with expectations this would improve on the industry’s ultimate contribution to Government revenues and the economy.
Efforts are also underway to undertake value addition of the gems.
Turning to foreign currency outflows, Dr Mangudya said there was need to put in place policies that would ensure the bulk of the money is retained in the economy.
“We are so concerned about the way this economy is utilising the resources,” said Dr Mangudya.
“What is the rate of retention of the money in this economy. If the rate of retention is zero, (then) even if you bring $10 billion in this economy, it (still) goes out. So we need to ensure we put policies that retain money in production. From the office where I sit, am not seeing it.
“Yes, people are poor but the economy is not poor. We need to extract those resources,” he said.
“We need to change the usage of money from consumption to production. Then Zimbabwe’s outlook will be positive.
“Unfortunately the money is in the hands of a few people who are using it inefficiently to the detriment of the whole economy. We need to close the loopholes.”
Last month, Dr Mangudya said the country lost $500 million through illicit financial outflows last year, a figure which analysts said could be significantly higher. The funds were moved through an intricate web involving some companies and individuals.
A report by the Zimbabwe Coalition on Debt and Development also said the Government lost almost $1 billion since 2009 through lack of accountability and illicit capital flight among various State departments.
The ZIMCODD report was done based on the Auditor-General’s reports since 2009 which revealed rampant illicit outflows. — Business Reporter/New Ziana