Editorial Comment: Diamond merger will foster accountability

zimplogoThe Chiadzwa diamond fields should be a major driver of the Zimbabwean economy, providing the exports that should do a lot to move the country towards a balance in its trading account and providing taxes and royalties that should help Government increase its capital spending.

After all, the diamond fields are probably one of the largest in the world and other countries in the region, especially Botswana and Namibia, use their diamond wealth to accelerate development significantly while the Kimberley finds in the 19th century helped turn South Africa from a poverty-stricken outpost to a major African economic  power.

Up to now, the Chiadzwa diamonds have not fulfilled expectations. Bad management and corrupt practices — in private companies, State companies and joint ventures — have been discovered and are obvious causes of the failures.

Now the Government is merging the seven Chiadzwa companies into a single Zimbabwe Consolidated Diamond Company with the State holding 50 percent of the equity and the other half divided among the private shareholders of the present companies in proportion to their investments.

While management will be reduced, the present workforces are expected to be retained. What will emerge is a single viable entity. It will be large enough to allow it to recruit top managers and being a single entity it will be easy for auditors and the tax authorities to police, ensuring that there are no underhand deals and no siphoning of diamond revenue and profits.

Botswana and Namibia both discovered the advantages of similar arrangements decades ago.

Diamond mining needs to be managed and regulated in a different way from other mining initiatives. Diamonds are valuable, easy to hide and smuggle and despite the Kimberley Process still far too easy to trade  illegally.

When the way the initial concessions were granted is added to these problems, more problems were bound to arise.

Zimbabwe has learnt the lessons the hard way. But we have learnt them. Now we must be determined to ensure that the new diamond company is properly managed and that proper measures are put in place to ensure that no one succumbs to temptation to break the law.

This should not be difficult.

We have expertise within Zimbabwe to do this, and if the new board and management of the consolidated company need to examine successful examples within the region, both our western neighbours provide such examples of secure, highly profitable enterprises providing a significant proportion of their exports and paying fair taxes and dividends to the national   treasuries.