Marange villagers miss out on diamond revenues

BY CLIFF CHIDUKU

AFTER diamonds were discovered in the south-eastern parts of Manicaland province’s Marange communal lands in 2006, many people, especially those living around villages of Chiadzwa, expected their lives to be positively transformed.

Instead, they were relocated to the State-owned Arda Transau Farm, 40km outside Mutare, to pave way for commercial mining activities.

“I used to do farming projects around the year which would provide enough food for my family. We never lacked. I have had enough of the poverty here,” Nomore Dzidzi said, adding that she was now considering selling her house at Arda Transau and starting a new life afresh elsewhere.

Dzidzi’s case is not isolated. Several years after Nomsa Muuya and her family were relocated to the same farm, the only benefit she has accrued is a four-roomed house and the rest is a sad tale.

She confessed that she has now resorted to prostitution and drug abuse to drown her sorrows.

“Some of us had no choice, but to engage in commercial sex work to make a living. If we had alternative ways of survival, we would quit the trade. It is unfortunate that we were not given equal employment opportunities in the mining companies,” she said.

Save Odzi Community Network Trust’s Tichaenzana Chibuwe said: “The situation at Arda Transau is desperate. Villagers lost all their livestock as the area has no pastures. Now they cannot afford to pay school fees for their children and the burden often falls on the mothers who have to take minial jobs to raise school fees.”

As if this was not challenging enough, Arda Transau villagers are also being forced to buy water as their water sources have given up to drought.

It’s a far cry from what they had in Marange before they were forced to relocate. There, the land was arable and water sources, which would provide the precious liquid all year round, were nearby.

Theirs is a case of unfulfilled promises. The government and mining companies had promised them decent housing, employment and compensation for loss of livelihood.

Malvern Mudiwa, the chairman of the Marange Development Trust, says at first, the discovery of diamonds was a boon for locals, as villagers upgraded their lives.

“Development was everywhere. People managed to send their children to school; even universities. Others managed to buy irrigation equipment. Solar power would light homes all night. Marange was virtually a town in a rural setting. It was evident that everyone was benefitting,” he said.

But then when commercial mining started in 2008, everything took a rude turn. Seven companies, among them Marange Resources, Diamond Mining Company, Gyn Nyame Resources, Kusena Diamonds and Mbada Diamonds, were licenced to mine alluvial diamonds. However in 2016, these companies were collapsed and consolidated into State-owned Zimbabwe Consolidated Diamond Company (ZCDC). Even though Anjin and Jinan were also kicked out along with other companies, they have since resumed operations. The area was sealed. Soldiers were deployed to ensure that no one was trespassing. Allegations of looting and corruption were rampant. Something had to be done to coordinate mining activities so that proceeds from diamond sales would reach Treasury coffers.

In his 2013 budget statement, the then Finance minister Tendai Biti lamented the low diamond proceeds to Treasury with government in 2012 receiving a paltry US$41 million dividend, yet Mbada Diamonds claimed it declared over US$117 as dividend.

Perhaps to dramatise the heavy losses from the diamond industry, the late former President Robert Mugabe suggested that Zimbabwe could have lost US$15 billion in revenue. However, the figure is way above earnings in the global diamond sector during the time. Kimberly Process statistics for 2012 shows that the total volume of production of rough diamonds was close to 128 million carats, amounting to a total value of over US$12,6 billion. However, imports and exports of rough diamonds have reached US$50,92 billion and US$50,27 billion, respectively.

A 2013 Financial Action Task Force report titled “Money Laundering and Terrorist Financing Through Trade in Diamonds” said in 2012 Zimbabwe produced 12,06 million carats of diamond worth US$640 million.

In a 2013 report, the Parliamentary Portfolio Committee on Mines noted that: “The committee observed with concern that from the time that the country was allowed to trade its diamonds on the world market, the government has not realised any meaningful contributions from the sector. This is despite the fact that production levels and the revenue generated from exports have been on the increase.”

However, the committee noted that sanctions imposed on diamond companies operating in Chiadzwa by the United States government were creating loopholes in the diamond trade.

“This (sanctions) has made it difficult for the companies to effectively market and trade their diamonds at competitive prices. Currently, the diamonds are sold at below 25% of the normal price. In the process, the sanctioned diamond companies are trading their diamonds through unconventional means because major international banks, insurance companies and couriers do not want to be associated with Marange diamonds. As a result of these financial restrictions, a number of loopholes have been created leading to fiscal leakages, promotion of corruption and national insecurity.”

Such leakages include trade misinvoicing, according to the Centre for Natural Resource Governance (CNRG).

Trade misinvoicing is the deliberate falsification of value, volume and/or type of commodity in an international commercial transaction of goods or services by a party to the transaction. By manipulating the price, quantity or quality of a good or service on an invoice submitted to authorities, companies and individuals can easily shift substantial sums of money across international borders.

The misinvocing of diamonds was made possible when Mines and Mining Development ministry secretary Francis Gudyanga and Mbada Diamonds chairman Robert Mhlanga were appointed to the Dubai Diamond Exchange (DDE) board. DDE, a subsidiary of Dubai Multi-Commodities Centre (DMCC), is the diamond trading platform of the UAE. DMCC can be equated to the Minerals Marketing Corporation of Zimbabwe (MMCZ). It was a serious case of conflict of interest.

This comes as Zimbabwe, which at one time held at least 25% of the world’s diamonds, is struggling with foreign currency, electricity, drugs and fuel shortages, partly due to continued illicit financial flows in the mining sector.

Anjin, a joint venture between Anhui Foreign Economic Construction Group (Afecc) and Matt Bronze, a Zimbabwe Defence Industries subsidiary, was named by President Emmerson Mnangagwa in February 2018 as having externalised foreign currency.

The Chinese miner, along with other players operating in Chiadzwa, was kicked out by the government for allegedly looting the country’s diamonds. Even though they refute the claims, the Chinese company were accused of disregarding environmental laws, underpaying workers and smuggling diamonds. According to CNRG, Anjin officials reportedly stashed diamonds in wooden sculptures which they would export to China via Mozambique.

Overson Mugwisi, the Zimbabwe Defence Forces spokesperson, did not respond to requests for an interview.

However, while Sugar Chagonda, ZCDC spokesperson refused to speak on the former mining companies; he said the new consolidated company has since its inception in 2016 initiated several corporate social responsibility programmes.

“Because it (ZCDC) operates in this country, it becomes a responsible citizen of Zimbabwe. Thus by being a citizen, ZCDC helps communities and the government. It is our obligation to better the lives of those in need, the underprivileged. In March this year, we rehabilitated Chiadzwa and Mukwada clinics as the health of the people in areas we operate are a priority to use.”

He also added that in June the company rehabilitated 20 hectares of disused mining area as part of environmental management.

Chagonda said ZCDC recently paid US$5 million to the Marange Zimunya Community Share Ownership Trust to initiate developmental projects, including rebuilding schools, rehabilitating roads and borehole sinking.

This story was written as part of Wealth of Nations, a media skills development programme run by the Thomson Reuters Foundation. More information at www.wealth-of-nations.org. The content is the sole responsibility of the author and the publisher.

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