Non-governmental organizations say Sierra Leone has made progress in turning its former blood diamonds into resources for development.

The report called the Diamond Industry Annual Review says that Sierra Leone's diamonds are no longer significantly being exploited by rebels and smugglers. It says a program to certify rough diamonds, which came into effect in 2003, has succeeded in preventing the sale of so-called blood diamonds.

Under the Kimberly process, agreed upon by diamond-producing countries including Sierra Leone and diamond trading countries such as Belgium and the United States, precious stones are accompanied by a certificate ensuring they have been legally bought and sold.

One of the report's researchers, Canadian Ian Smillie, says during the Sierra Leone civil war that ended in 2001 too much diamond money served the wrong purposes, such as buying weapons.

"The situation has changed quite a bit, I think that you can be fairly comfortable that they are not fueling wars in Africa," he said. "The big challenge now is the developmental challenge of diamonds that basically in Africa today there are more than a million people digging diamonds and earning less than a dollar a day. The ongoing challenge really today is to try and make sure that the people who work in the diamond fields are better paid."

Mr. Smillie says that miners are not getting equitable prices for their diamonds from buyers, who mark up the price by huge amounts when they sell them to exporters.

In the town of Koidu, a collaboration of non-governmental organizations and businessmen, called The Peace Diamond Alliance, has set up mining cooperatives to educate miners about fair, market prices for their diamonds, and to loan them money at good interest rates.

A consultant for the group, Paul Temple, says that at the moment miners have no option except to take out loans that they can not pay back.

"In Sierra Leone, which is coming out of a war situation, lack of capital hits everybody," he said. "And predominately at the moment, people if they want to mine have to go to a more private, less regular sources of funds. And the lack of transparency and the lack of understanding and also the rates they are charged work definitely against them."

The Sierra Leonean government is supporting the cooperatives and also newly-formed miner unions in diamond areas. The government is trying to make the industry more transparent, but non-governmental organizations say that illegal mining and smuggling still persist.

They also complain that too little of the diamond export taxes the government receives go into development programs for mining communities.