HomeCommentCandid comment: Time for govt to demystify the diamond issue

Candid comment: Time for govt to demystify the diamond issue

THE certification and subsequent sale of diamonds last week came as relief to most Zimbabweans after years of wishing for divine intervention in the resolution of the country’s economic meltdown.

Prior to the certification of the diamonds, government and industry officials had thrown around jaw-dropping figures that would have accounted for the national budget. The average Zimbabwean reckoned this would bode well for government’s cash budgeting system, especially in a situation where the cash would be at hand.
However, no sooner had the nation been informed that the first diamond sale had generated US$72 million than the Minister of Finance, Tendai Biti, slashed the figure to US$42 million. Mines minister, Obert Mpofu, later revised the figure to $56m. Of the amount, the fiscus was expecting a measly US$15 million, meaning that government would need a hundred times more than the carats that were sold to finance the budget from diamonds. Minister Biti said the paltry figure due to the exchequer was because the miners had invested in machinery and associated production costs. He did not explain how the figures relating to the costs were arrived at, what machinery had been invested in (at what cost) and whether this expenditure would diminish with time.
Further, the nation deserves to know the timeframe within which the money that is due to government is paid. It is common knowledge that government is entitled to royalties and “dividends” from the Zimbabwe Mining Development Corporation (ZMDC) but the time-frame within which these are
deposited into the exchequer remains anybody’s guess.
According to information at hand, government is supposed to get 10% as royalties and 25% corporate tax on profits while the remainder will be shared by the state-run
ZMDC and South African companies,
Mbada and Canadile, with ZMDC paying dividends to government.  And, going by the standard practice among parastatals, the dividends might never come, thanks to the incompetent managers presiding over most of them.
Examples of parastatals that should be cash-cows for government abound. Apparently, the managers have been allowed to entrench a culture of failure to the extent that competence has become the exception. It is therefore imperative that government officials realise that this is not business as usual; Zimbabweans take the diamonds issue seriously. Politicians who do not realise this will reap rewards, come election time.
It is also incumbent upon the government to build trust in the owners of the diamonds — Zimbabweans — who have very high expectations from the glittering stones. Already, civil servants have expressed their desire to be awarded pay increases based on diamond revenue and the man in the street expects some form of benefit, such as reduced income tax or value added tax that would leave them with more disposable income. Although it is comforting to know that parliament, through the chairman of the Parliamentary Portfolio Committee on Mines and Energy, Edward Chindori Chininga, has emphasised the need for transparency and closing pilfering holes, mere rhetoric is not enough. The rhetoric becomes even less convincing when the pilferage involves as much as US$30 million disappearing with no trace. It is surprising that up to now, government, with its glut of bureaucrats, is yet to announce a formula for diamond income.
According to Chininga, Biti and his Mines ministry counterpart, Mpofu, are still agonising over the “structures of how the transactions should be worked out.” There is also need for government to state which companies are doing what on the diamond fields. The secrecy surrounding the exploitation of the national resource gives the impression that it is only the privileged few who should know what is happening. This creates room for the kind of corruption that has characterised diamond mining.

 

Edwin Dube

Recent Posts

Stories you will enjoy

Recommended reading