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Diamond Revenues Not Helping Zimbabwe's Weak Economy

Zimbabwe's Finance Minister Tendai Biti addresses parliament during his presentation of the mid term fiscal policy statement in Harare, July 26, 2011.
Zimbabwe's Finance Minister Tendai Biti addresses parliament during his presentation of the mid term fiscal policy statement in Harare, July 26, 2011.

Zimbabwe has one of the world’s largest diamond fields, but revenues are not making an impact on the economy.  The country’s finance minister is warning the government will have to virtually shut down if projected revenues do not make it into the treasury.  

Diamonds, not a panacea

Zimbabwe’s once sound agro-based economy plummeted more than a decade ago when President Robert Mugabe's government embarked on a policy of seizing white-owned land. When the country discovered diamonds about eight years ago, many thought this would be the panacea to the country’s financial woes.

That has not happened yet. And this week Zimbabwe Finance Minister Tendai Biti told the media it is essential these precious stones turnaround of the country’s fortunes.

"Diamonds have to deliver - otherwise the only thing we’ll be able to do is to pay wages and which means government will virtually close down. That is an unacceptable… situation and that’s cause for concern because we are back to the days of a fragile state that cannot look after its citizens in terms of health, education, roads," said Biti.

Lack of transparency

Analysts and rights groups have voiced concerns that diamond revenues are being secretly channeled to President Robert Mugabe's ZANU-PF party to fund his re-election bid.  

Shamiso Mtisi is the local Civil Society Coalition coordinator for the Kimberley Process - the international system designed to stop the export of so-called blood diamonds. He says there is no transparency in diamond mining in Zimbabwe’s Marange fields.

"What we have in Marange is limited transparency and accountability in terms of production data," he said. "No one knows what is exactly coming out of Marange. The fact that diamonds are sometimes mined without people knowing exactly how much money is coming out. The minister of finance from his budget statements appears to say that he does not have all the figures from Marange. To us that is a problem."

It might a problem to Zimbabwe’s civil society. But Obert Mpofu, Zimbabwe’s mines minister and ally of Mugabe, told VOA, he thinks otherwise.

"How government collects its revenue is not a civil society issue. They should be concerned with… [the] welfare of the people... Not to go deeper into issues that do not involve them.  They don’t speak for the minister of finance... For the first time in this country, the country is witnessing an inflow of revenues from its diamonds," said Mpofu.

Slow trickling of diamond revenues

But Finance Minister Biti is worried about the slow trickling of diamond revenues. This week, Biti summed up how Zimbabwe’s economy has been performing since the beginning of the year.

"We are under performing by at least 50 percent. Largely because of under-performance of the diamond revenue," he said.

Biti, a member of the MDC party in the uneasy power-sharing government, says he has taken up the issue with Mines Minister Mpofu.

"I enquired from the minister of mines why we had this deficit situation yesterday. And the answer I got was that we did not have auctions sales for diamonds in January and February," he said. "I am told auctions sales for diamonds have now taken place, so we hope to receive a fatty check from the ministry of mines."

Biti says he has no firm date when the diamond proceeds will be transferred into Zimbabwe’s treasury.

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