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Marange, Chiadzwa and other diamond fields and the Kimberley Process - Index of articles
aid will not generate Zim’s wealth
November 10, 2013
the wilderness and in a desperate attempt to be embraced by the
international community, Zimbabwe has initiated dialogue with the
Bretton Woods institutions, so as to encourage the latter to release
more funding for the impoverished Southern African state. Contrary
to the pre-election political grandstanding that elevated the landlocked
former British colony to the status of a mini-super power, post-election
reality has sunk proving that the country needs the West more than
the latter does.
As Finance minister,
Chinamasa’s visit to the United States recently in a bid to
re-engage with both the IMF and the World Bank is proof that Zimbabwe
is a tiny drop in the ocean in the eyes of the West and can hardly
tick without her.
staggering debt as of the end of 2011 was an estimated US$10,7 billion
with the World Bank owed US$911 million, IMF-US$138 million, African
Development Bank (AFDB) US$587 million and the European Investmemt
Bank (EIB) US$244 million. Not underestimating the significance
of this aid to Zimbabwe, the rest of which rarely reach its recipients,
the country’s present and future development needs need not
be shaped by the generosity of outsiders but by homegrown solutions.
While the minister’s
initiative to re-engage with the West is welcome, its significance
shouldn’t be overestimated, as financial aid on its own devoid
of accountable and transparent governance is a recipe for disaster.
Financial aid from outside on its own does not generate wealth and
bring about development, but it assists the nation that has its
own socio-economic and political blueprint to meet its objectives
the international NGO Global Witness, aboutUS$2 billion in diamond
revenues in Zimbabwe have been unaccounted for since 2008. Tendai
Biti, the former Finance Minister is on record complaining that
in 2012, Treasury expected to get US$600 million from the
proceeds of diamond exports, but only got a meagre US$41 million,
with the rest unaccounted for.
A study by the
AFDB and the Global Financial Integrity reveals that from 1980-2009,
Africa has lost US$1,2 to US$1,4 trillion in illicit financial outflows
such as corruption, tax evasion, bribes and other criminal activities.
This figure, it is estimated, is more than three times the total
amount of foreign aid received in the same period. A recent poverty
report on the 2011-2012 Pices Survey (Zimstat) 2013 reveals that
72,3% of Zimbabweans are poor not because the country is not endowed
with precious natural resources, nor is it a result of having no
access to international financial aid, but due to poor governance
characterised by lack of accountability and transparency on the
part of government.
and his colleagues in government can’t account for the diamond
proceeds at Chiadzwa, what is the logic behind the minister’s
visit to the US begging for aid if it is not for selfish and individualistic
reasons? Does Chinamasa or anyone in government, in spite of their
PhDs not realise that financial aid from outside can’t be
the basis upon which to base the country’s economic development?
Rather, it is
the unaccounted diamond revenue from Chiadzwa which Chinamasa should
focus his attention on and not the Bretton Woods institutions. Zimbabwe
is blessed with vast mineral resources ranging from gold, coal,
diamonds, platinum, uranium and land not to mention her abundant
platinum reserves are the second largest in the world and together
with South Africa, they hold 75% of the world’s platinum reserves.
Wealth for the country is created by tapping into these resources
and distributing them equitably among the people, as opposed to
begging for aid from the IMF or the World Bank. It is the culture
of accountability and transparency above anything else that ensures
that society benefits from the wealth tapped from the soil.
Are the Chinese
not reported to be involved in illegal alluvial gold panning in
the country with Chinamasa’s government giving them a blind
not have to rely on the generosity of outsiders to sustain herself.
If the country can afford to lose US$2 billion in corruption and
other illicit financial outflows annually, what justification is
there to reward her with financial aid?
indigenisation policy, while on face value appears appealing, deters
investors. Investor confidence in the country is at an all time
low. The major factor dampening investor confidence is lack of policy
clarity and transparency regarding key economic issues, such as
implementation of the indigenisation and empowerment laws.
Who would want
to invest in such a volatile and turbulent market in which property
rights are not respected? The country desperately needs revenue
generated from investors to boost her coffers and Chinamasa should
be the first person to realise this. It is progressive and informed
policies pursued by governments that generate wealth which empowers
people and not aid from the Bretton Woods institutions. By seeking
aid abroad, Chinamasa contradicts himself, as he is one of the chief
architects behind the introduction of retrogressive policies that
deter investors in the country. Zimbabwe is poor not because she
is cursed, but due to the fact that she is guided by individuals
like Chinamasa who are of the opinion that aid can substitute wealth
that is unaccounted for from Chiadzwa.
show, Zimbabwe’s global ranking on the ease of doing business
dropped this year to 170 out of 185 countries, according to the
World Bank’s Doing Business 2013 report. The country needs
a robust taxation system that closes the current loopholes which
have led to the loss of millions in government revenue. Not only
is this measure enough but it has to be accompanied by a culture
of accountability and transparency on the part of government and
dollars in royalties paid by diamond mining firms in eastern Zimbabwe
have disappeared under unclear circumstances. Mbada Diamonds mining
company, which works with the Zimbabwe government, claims to have
paid US$293 million in taxes over four years but the government
only received US$82 million in total with the rest unaccounted for.
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