Zimpapers Logo

Zimbabwe’s economic blueprint, Zim-Asset and the recently presented 10-Point Plan for Economic Growth, both identify value addition and beneficiation as key pillars for economic recovery, growth and socio-economic transformation. The Herald’s Political Editor Tichaona Zindoga (TZ) spoke to industrialist and businessman Mr Lovemore Kurotwi (LK), who is the founder and chairman of the Zimbabwe Diamond Centre in Harare, on the importance of value addition and what the country needs to do to derive maximum value from its natural and agricultural resources. Read on. . .

TZ: President Mugabe recently presented the State of the Nation Address and he outlined the 10-Point Plan for Economic Growth. How did you receive the address and the proposals he put through?

LK: In my own view that is a very good roadmap to follow as a country. What we expect as Zimbabweans, Government and business included is to implement these provisions. At least we have got guidelines where we know exactly what to do. In my own view, we now need to implement and the most important thing from those guidelines is the beneficiation aspect. Beneficiation is critical. People do talk of industrialisation; we talk of job creation; we complain about the liquidity crunch; all those issues are solved by one fundamental which is value addition of our resources. Zimbabwe is actually blessed. We have minerals which I am very vocal about. We also have agriculture where we are very active, but we lack processing of our resources. Industrialisation is all about creating industries. We can only create when we process our locally available raw materials. To me that is key and it opens doors for everything.

TZ: Right! And on to the issue of diamonds and value addition, you have been vocal about that. It would seem Zimbabwe has not done much — and perhaps much to your frustration?

LK: Look, we have talked about this issue for a very long time, but unfortunately we are not seeing action on the ground. If you ask anyone about value addition, it is becoming like a song but we don’t see anything tangible happening on the ground. Yet in other countries, their GDP is being controlled by diamonds, including countries which don’t own a single mine. We have got countries like Belgium, Israel and others, Dubai included.

Those people are turning tens of billions of US dollars annually because of processing. Countries like ours, Zimbabwe, where we offload a number of that same resource into the world market but we don’t seem to benefit anything. Why? Because we are not doing what is expected. Value addition is something which the country must take seriously and I am happy that in the guidelines, the President is overemphasising the fact and has been preaching value addition in each and every forum that he attends.

TZ: Ok, you mentioned value addition becoming much like a song and nothing materialising. Where are we getting it wrong as a country?

LK: In my view as Zimbabwe we are failing to be proactive and I also feel we are a spoilt nation, where people think that foreigners will rain down on us and initiate value addition, which I believe is not correct. Value addition is supposed to be initiated by Zimbabweans. It is the responsibility of us as industry and it is the responsibility of the Government to make sure that value addition is done. There is an initiative happening on the ground, but that initiative is not being supported at all. If Government supports what is happening on the ground, we will see engagement of all other important sectors like our banks.

Even the foreign investors themselves, will also find somewhere to start from. But in our case we are calling upon investors to come. Where do we want them to start from when we are folding our arms? We are supposed to start. I always say, if we can polish one stone it means we can also polish 1 000 stones. The argument is that we need to sit down and reflect on how and what we should do so that we polish more stones.

That is where I think we are missing it as a country. We are going out of our way trying to lure people from nowhere, instead of us encouraging those who are here who are interested. They must start to do value addition. That is where I think we are missing it.

TZ: But some other critical sectors of economy like banks do not seem keen enough to bankroll these value-addition and industrialisation initiatives?

LK: As long as there is a clear policy other sectors will see business opportunities availed. Like in this case, beneficiation is something that is much talked about in this country, but honestly ask anyone, nobody knows how to start or how to go about it. So I think the powers that be should be challenged to put sanity into this.

That people must start to see benefit and they must start to see business opportunities locally. Some of our banks are sitting on money, but they don’t know where to invest and if they want to, there is a lot of uncertainty in that equation. That is why I think it is critical for Government and business to sit down and put clear policies which will attract the growth of businesses.

TZ: At the moment one would say that the enthusiasm around the country’s diamonds and the potential thereof has somewhat died down. Is there much business potential, especially for value addition?

LK: I wouldn’t say it is dying down; the enthusiasm is there. But what lacks, as I have said is a clear-cut policy. To some extent we are very grateful with what the Government has done by removing quite a number of barriers which were discouraging the few who wanted to start up this business, but there are still other challenges.

TZ: What are those challenges?

LK: I will give you an example of what happens. If a foreign buyer of diamonds comes into the country, he will come, go to MMCZ (Minerals Marketing Corporation of Zimbabwe), will be allowed to see diamonds, pay his money and he goes. If you want to do cutting and polishing, there are a lot of processes in between and some of them are discouraging.

Another factor is that Zimbabwe is offloading over 90 percent as rough diamonds. If you are to do cutting and polishing buyers who are coming into this country prefer rough diamonds, because it is easy cash. Some of them come to Zimbabwe buy those diamonds and go and sell them as rough diamonds to a number of people. So it actually discourages people who come to buy the finished product. If you want to sell now, it becomes very difficult unless you also take the polished stone out to the market.

Because our system doesn’t encourage customers to come and buy a finished product, it does encourage customers to come and buy rough diamonds. If you put a rough diamond there and a polished stone there, people will go for the rough.

TZ: Because it is cheaper?

LK: Yes. That is where we are also missing out and because of those factors, all those people who were interested are being discouraged because the Government itself is not serious about value addition.

On another note I don’t think it is fair for the country to criminalise the possession of diamonds or any other mineral. This country has lost a fortune because of that. There is no way the country is going to stop this 100 percent. What happens is that those who are going to get the opportunity to get these stones are sneaking out of the country. When they are out there, they are not getting the full value of the stones. They come back with a quarter or less of the value. We instead should be allowing those diamonds to be sold openly in the country so that whoever comes across that stone should be given full value of that mineral. For that person to be paid full value it means we are returning money into the country.

Instead, by criminalising we are allowing our minerals to benefit other countries. Look at what has been happening for all these years with makorokoza and what have you. We have lost a fortune! But now Government is now saying they are now trying to bring them into the mainstream. What does that mean? It means we are now going to recover full value of our gold. Same applies to all minerals. We need to retain the value. Let’s not criminalise them. Everybody who picks a stone must come forward and that person should be given the full value of that stone and proper regulations should be put in place.

We are Zimbabweans, these are Zimbabwean minerals and they must benefit Zimbabweans and money should circulate in this country.

TZ: What is the practice in other countries, especially among diamond producing nations in terms of beneficiation and how they approach value addition?

LK: I will give you an example of India where we are channelling most of our diamonds. Those companies to Surat, cut and polish. When I was there last time, the whole city of Surat, the diamond city, was being consolidated.

The government there wants everybody to be under one roof and they don’t have so many restrictive laws like the ones we have here, which are so discouraging, which entails that for you to have a licence you have to undergo vigorous processes instead of being encouraged to open factories. But it’s not everyone who can be given these so easily.

That is another different thing which I have observed. There is also a difference in the way we are selling our diamonds. The way we sell our diamonds is completely different from the way other countries are selling. Last week I was in Botswana on Friday, I spent the whole day viewing diamonds.

I was actually sharing a joke today because I went for a local tender here and I actually asked them a question, “Guys why are we doing all these things?” In other countries you cannot invite a buyer, the police officer is sitting there, the whole chain is sitting there yet you have got cameras. Buyers should be left free to see the diamonds and do their business.

You put a system in place, you see? So those are some of the things which we need to do as a country and also remove some of the frustrating systems which we put in place in trying to do our business.

TZ: The question of jobs is one critical aspect in the economy of the country at the moment. If we go the value addition way, how do you project the job creation in the country?

LK: To me, if we are to go by what we are producing, there is a potential for us to create hundreds of thousands of new jobs on diamonds only.

TZ: And maybe compared to other industries, would you think it would be a bigger industry than any other?

LK: The advantage with creating at such a magnitude, is that it also goes by down and upstream effects where you create say 100 000 new jobs, the way we live as Zimbabweans, the impact of 100 000 being absorbed into one

Industry means there will be impact in other industries. There will be impact on agriculture. Everyday there will be people who can afford three decent meals a day. They can also afford to do other things which they cannot do when they are not employed. Once we start to create a product at that magnitude, it also means that we are now going to attract a lot of foreigners into the country which automatically also supports the tourism industry. So the impact at the end of the day is quite huge.

TZ: Talking about foreigners, you are a player in the country and one of the nagging issues concerns foreign direct investment. How have you gauged the mood of outside players engaging with locals like yourself, or with Government for business?

LK: We as an organisation have attracted quite a number regionally and internationally. That is why I said earlier on, we don’t need as a country to fold our arms and invite foreigners to come. We need to demonstrate first that this is what we want and this also is what we can do, no matter how small it might be but that is our level. Then this gives us leverage when we attract the foreign investors.

Yes we did engage with the internationals on the technology part. Cutting and polishing of diamonds today is now scientific. We need to be at par with the outside world and we are also engaged in the region where we are asked as an organisation to assist some of our neighbouring countries in training and also in sharing business as a region.

TZ: Early last year you offered Government the diamond cutting facility. How has been your relationship with Government or what was the uptake on your initiative?

LK: The relationship is quite good, I don’t have any complaints so far as I have said initially when we started there were so many punitive measures and most of them were removed. Yes it’s a process although we expect more, but I am quite happy with what they have done and we are still encouraging them to do more. The relationship as far as I am concerned is good and I am happy.

On the facility aspect as an organisation we feel that in our discovery of diamonds, we did not invent any wheel. We are following what other countries have done for a long time before we discovered our diamonds.

The way I see things is different from the way others see them. I am of the opinion that as people who are not inventing the wheel, we should start at a better level than those who started before us.

But others choose to start where others have started. That is why we are now at this level where we have not yet fully taken advantage of our minerals. For the facilities I offered, those facilities I am actually constructing for the industry and I am actually happy that the uptake is quite encouraging. As I am talking to you, we now have over 200 companies which have expressed interest in taking up space in the diamond centre; local and international.

But in the process we are also creating facilities for the relevant authorities because the whole idea is to try and make businesses feel comfortable. Anywhere where the diamonds are traded meaningfully, everything is under one roof.

The industry, regulatory authority, banks and all other services are found under one roof so that when we are polishing diamonds and say for example we have different companies, if there are certain technologies I do not have in my factory I will just walk to your factory, get the services and come back.

But under the current scenario we are so fragmented and so scattered, it makes the whole business very difficult because that is not the norm. So we are trying to bring sanity by putting up centralised facilities for all interested parties to come, including the Government itself and the regulatory authorities, so that it becomes convenient and cheaper even for the buyers.

Instead of a buyer coming to the country, having to come sand see diamonds at my place, drive to Bulawayo, drive to Mutare, drive everywhere, it’s convenient if everything can be found under one roof and we stand to benefit as a country than to do it the other way.

TZ: What do you think should be done so that Zimbabwe can realise the benefits of the pillars in both Zim-Asset and the 10-point plan enunciated by President Mugabe?

LK: My suggestion from a practical and an industry point of view, is, I believe it is critical for Government and for industry to sit down and reflect on our capacity as a country. Because some of the expertise and some of the things we worry about we have got them as a country, but we just lack that coordination.

That is where I feel is the starting point. We need to sit down, reflect and also as a country we need to take stock of our universities, because there is no way we can be effective when we don’t make use of such institutions. Universities train their own people, industries also expect a certain class of people.

There is supposed to be harmony between all these sectors, so that the quality which is produced by the universities should come and suit what we require in the industry. We cannot talk of industrialisation when our local institutions like universities don’t take the initiatives to manufacture related technologies.

No matter how small they are we cannot manage this when we import everything from abroad. Those are some of the things which I feel as a country we need to quickly reflect on and start from there, then we see where we run short.

TZ: Alright! Thank you very much.