ZIMBABWE should align its legal framework that regulates gemstones with international best practice to curb the illicit trade in minerals, if the country is to benefit from natural resources in a similar manner to Botswana, mining law experts have said.
NATHAN GUMA
There are serious gaps in policy, legal and institutional frameworks governing the gemstone sector in Zimbabwe.
This promotes illicit trade in minerals, says a Zimbabwe Environmental Law Association (Zela) report titled: “Scope and nature of illicit flows in Zimbabwe’s gemstone sector”, compiled by Lyman Mlambo, chairperson of the Institute of Mining and Research at the University of Zimbabwe.
Zimbabwe loses an estimated US$100 million per month through gold smuggling. The country has no overall national minerals development framework and solely relies on the diamond policy, which has been heavily criticised for its lack of adequate provisions for transparency and inability to curb top-level discretionary powers, among other shortfalls, says the report.
Mlambo said Zimbabwe’s institutional governance on gemstones falls short of Botswana, Africa’s best-performing country in transparency. Botswana has a score of 55 on the 2022 Corruption Perception Index (CPI), the highest of any African country, and 12 points above the average of 43.
Zimbabwe, in contrast, has a score of 23, which is 20 points below average, tying with Iraq, Cambodia and Honduras, countries largely known for corruption.
“The major difference between our policy in Zimbabwe and Botswana is that here mineral resources are vested in the President, while in Botswana they are vested in the republic. “This has a serious implication,” Mlambo said.
“Firstly, the minister of Mines really acts in the interests of the President and government. In Botswana, decisions devolve to lower levels and are highly subject to scrutiny . . . also made by low-ranking officials,” says Mlambo in a Zoom meeting hosted by Zela.
The report shows some loopholes within the Precious Stones Trade Act which have been pro[1]moting the illicit trade in diamonds. “Section 7 (1) gives a lot of mandate to the minister to accept or refuse the issuance or renew[1]al of a licence without giving any reason for such refusal.
Discretionary powers that cannot be chal[1]lenged are the breeding ground for corruption,” reads part of the report.
“If the issuing or renewal of licences is subject to corruption, there is no guarantee that the rest of the dealings related to such licences will be above board.”
In addition, the report shows that Zimbabwe has been operating without a policy covering trade of gemstones like ruby, sapphire and emeralds, among others, which leaves for illicit financial flows in the gemstone sector.
Zimbabwe mines more than 30 semi-precious stones, most which are mined by informal foreign prospectors from India, Mozambique and other countries.
“Semi-precious stone deposits in the country are estimated at a value of US$20 billion, according to the report, which is clearly an underestimation given that this sub-sector has not be formally explored and developed,” reads the report.
The report also predicted that exploitation of the gemstones could easily surpass US$1 billion by 2023, should the diamonds be formally exploited.
“The most fundamental difference between Zimbabwean and Botswana is that there are policy statements which are not formal policies.
“There is no regulation. Basically you have in[1]formal activities taking place. This results in serious potential loses in terms of revenue to the country,” Mlambo said.
Zimbabwe’s existing diamond policy restricts exploration and mining of diamonds to four entities, including the Zimbabwe Consolidated Diamond Company (ZCDC), Murowa Diamonds, and any other two companies approved by the government.
Some of the companies granted rights to explore and mine gemstones have been mired in scandal, thereby raising speculation over transparency in the centralised gemstone management policy. ZCDC failed to account for the use of money exceeding US$400 million, and could not properly account for 352 583.11 carats of diamonds worth about US$146.3 million that were in stock, according to the 2019 Auditor-General’s report.
Currently, mining operations in the gemstone industry, besides diamonds, and to some extent emeralds, are dominated by artisanal miners and informal foreign dealers, according to the report.
