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Golden Sibanda Senior Business Reporter
THE single biggest obstacle to accelerated economic recovery in Zimbabwe appears to be the limited access to affordable long term finance needed to revitalise productive sectors which were weakened by decades of instability. Billions of US dollars are required in this regard, but the country is certainly incapacitated to be able to skirt constraints around this challenge, stifling the potential it possesses. Financial rescue packages promised by bilateral and multilateral partners appear far from being realisable.

One economist noted that resolving Zimbabwe’s economic puzzle is finding a long-term solution to the issue of funding with everything else being software that can be tweaked.

As such, it is clear at this point that the beneficiation of diamonds should be pursued with haste to counter the potentially devastating impact of the liquidity crisis on the economy.

This assertion is also informed by the African Union vision on mining that African countries should benefit more from its finite mineral resources than ever before at a time there is a new scramble for the continents resources by US, China, India and Europe.

The decade of macro-economic instability left the entire economy disembowelled by the debilitating effects of hyperinflation, which has left the economy struggling on life support.

A domestic solution to funding will prevent such crises from ever recurring again.
Zimbabwe has recently been subjected to numerous, frustrating demands to undertake innumerable arduous and conditional socio-economic and political reforms to access funding.

Arguably, access to a significant dose of fresh capital amounting to a few billion dollars could breathe life into an economy evidently in distress, but remains on all four due to its diversity, resilience and the ingenuity of its hard working people.

The epitome of Zimbabwe’s economic diversity also pertains to its resource richness, characterised by over 40 mineral occurrences.
The highlight of this being diamond and platinum.

While Government has rightly declared that mining will anchor in the medium term, it appears that Zimbabwe now needs more than ever before to move fast and harvest low hanging fruits deriving from its abundant diamond reserves.

This is probably the shrill call from productive sectors of the economy that are shrivelling due to the energy sapping impact of lack of fresh funding required to rejuvenate the economy.

While huge capital outlay, running into billions of dollars, is required to set up beneficiation facilities in the platinum mining industry, it said less is required to get the ball rolling for beneficiation and value addition in the diamond industry.

According to a recent presentation by Zimbabwe Diamond Technology Centre chairman Mr Lovemore Kurotwi before parliamentary portfolio committee on mines, Zimbabwe could reap as much as US$14 billion if it sold cut and polished gems.

The estimated potential proceeds would probably be enough to clear the country’s US$14,5 billion infrastructure backlog and liquidity crisis from only a year’s value of exports of cut and polished stones from Chiadzwa diamond fields.

The country is believed to have potential to supply a quarter of diamonds traded in global markets annually.
“Basing on Bain and Company research, the world diamond industry generates US$71 billion in finished product (jewellery) and US$47 billion cut and polished diamond.

“In light of this, Zimbabwe being a major producer of diamonds known to have capacity of contributing up to 30 percent of the world’s production when in full operation, can earn itself approximately US$14 billion if we sell polished stones,” he said.

“If we sell finished (diamond) product in jewellery form we will earn approximately US$21 billion annually,” Mr Kurotwi said.
Assuming this assertion is true in every sense of the word, then the country already has a half done solution to its crippling liquidity woes, which is less demanding as the prescriptions it has been given by multilateral lenders to get a few million dollars.

A potentially highly rewarding home grown solution would surely be what Zimbabweans want to put an end to the protracted economic challenges and to start creating new jobs.

Zimbabweans should find strength and motivation in that such a domestic solution would likely spell an end to high unemployment, depressed industrial activity, crippling liquidity crisis, infrastructure deficit, high cost of funding, low exports, current account and trade deficits among other problems.

Government only needs to vigorously start facilitating completion of the Zimbabwe Diamond Technology Centre designed to house 500 factories to create about 100 000 new jobs.

If the envisaged concept works perfectly, it would help ’fulfil objects of the Zimbabwe Agenda for Sustainable Socio-economic Transformation, which recognizes beneficiation and value addition as one of the four main clusters.

The first seed toward that domestic solution to ending the country’s liquidity crisis, through beneficiated diamond exports, were sawn through the opening of the Zimbabwe Diamond Education College a few years back and it would be worth the while to support this initiative or expand such programmes.

With hundreds of graduates trained in diamond grading, cutting and polishing out there, roaming the streets jobless, it can only be puzzling why beneficiation has not yet started and that Zimbabwe continues exporting raw gems.

Most African countries, including Zimbabwe, continue rushing to diamond centres across the world with their raw diamonds to trade instead of creating its own hub as a producer.

However, Zimbabwe needs to take a cue from neighbouring Botswana, which is now focused on domestic marketing of its gems with global producer De Beers already relocating its sales and marketing function to that country.

Instead of leaving it to private players, Government needs to urgently get involved in facilitating creation of the diamond hub mooted under the Zimbabwe Diamond Technology Centre, where buyers can get processed diamonds without hassles to raise the country’s stock as a major player.

One of the major advantages of such centralisation is the attraction of a plethora of investors and buyers, not just positively impacting the diamond industry, but also giving an upper hand to downstream industries for example tourism, infrastructure development and improved health facilities.

It is believed centralisation of diamond trading will enhance accountability, transparency and security while increasing convenience, efficiency and returns from the mineral.