…Foreign diamond buyers trickle back into Zimbabwe
AN estimated $1.2 billion of diamond revenue was lost every month to diamond smuggling between 2007 and 2010 during the Chiadzwa diamond rush. This is according to the former Reserve Bank of Zimbabwe Governor Dr Gideon Gono with further empirical research undertaken by the non-profit making natural resources research body, Centre for Research and Development (CRD) Zimbabwe, which focused on diamond smuggling through the Forbes Border Post to Mozambique.
Apart from diamonds being smuggled out through porous borders, the smuggling in of bales of humanitarian aid second hand clothing from Mozambique has also become a growing concern whilst most recently in Mutare the smuggling in of cheap unleaded fuel, illicit alcoholic brews and Coca Cola soft drinks all selling at uncompetitive prices, is now rampant.
The Eastern Times looked deeper into the country’s porous border woes to get more insight on the matter which is now more of a chicken and egg situation as the populace blame government whilst government is blaming the citizens.
A visit to Forbes Border Post in Mutare will make you wonder how smuggling is rampant when the Zimbabwe Revenue Authority systems in place appear very well coordinated. However, spending a day there you will realise there are under dealings by Zimra officials as well as the Zimbabwe Republic Police and military agents manning the border post, although most of the smuggling is done through undesignated entry points.
The brisk business daily at the taxi rank to the border in Mutare downtown, opposite the Mudzviti bus terminus will tell you that the cross border trade of goods from Mozambique is feeding many mouths in the eastern border city and has become an income generating trade for many, from the youths to the aged.
A survey last week showed that six out of 10 people walked out from the customs clearance with little or nothing to declare, a sign that there is a well coordinated smuggling scam through undesignated entry points.
It was suspicious to observe someone changing money at the border and go to Mozambique then see the person come back four or five hours later with nothing to declare.
A foreign currency dealer (money changer) just outside the Mozambican border post who requested anonymity revealed that business from second hand clothes and fuel traders was booming daily.
“My friend for us it is big business this side. I am Zimbabwean but I am now staying in Manica because I change money here and link people to smugglers of fuel and bales of second hand clothes. A lot of us are feeding families through this. It might be illegal but give me a job then I will stop. For now I do what I have to do to survive. Even some Zimra officials, police and soldiers that patrol various designated and undesignated entry points are in on the dealings. So this is beyond me and you,” said the money changer who laughed as he went to attend to a customer.
Since last year there was a boom in the trade of unleaded fuel from Mozambique. Most dealers buy the fuel from a nearby fuel station just two kilometres away from the border post after crossing to the Mozambican side. Daily at the fuel station Zimbabweans are now known to buy fuel. There is actually now a reserved pump for dealers that come with 20 litre plastic containers, where fuel is being bought like hot cakes, usually very busy all day.
The fuel which is bought for around 50 cents per litre for diesel and 60 cents per litre for petrol depending on the rate of the Metical on the day, at first was sold for a $1per litre in Zimbabwe but the prices have recently gone up but remain slightly lower than the pump price fuel sold in Zimbabwe.The Mozambican fuel is also now preferred by local motorists because it is not blended unlike the local ethanol blended fuel.
This demand for Meticals has also created a black market rate on the streets. The Bond notes have a different rate to the United States dollars. Last week the Bond notes ratio was 100 Bond: 6000 Meticals, whilst with US dollars it was US$100: 6500 Meticals. With large US dollar bills like $100 notes the rate was higher at 6800 Meticals. This contradicts with the pronounced RBZ 1:1 exchange rate of the Bond note and the US dollar.
Transparency International Zimbabwe in 2014 launched an anti corruption barometer which comprised of an anti-corruption value chain which identified institutions and actors that have positive and negative effects on anti-corruption efforts in the country.
TIZ Manicaland advocacy officer Ched Nyamanhindi on Thursday said the potential to reduce or even nip corruption in the bud at our border posts was more than achievable but it would need political will.
He said according to the TIZ anti corruption value chain to reduce corruption, 19 actors that include citizens, judiciary (Judicial Service Commission), National Prosecuting Authority, Auditor General, Zimbabwe Prisons and Correctional Services (ZPCS), ZRP, Zimbabwe Anti Corruption Commission, civic society organisations, private sector and Reserve Bank of Zimbabwe, Media, Parliament of Zimbabwe, Ministry of Justice, Legal and Parliamentary Affairs, the Executive in government, Faith Based Organisations and development funding partners were identified.
“The actors look into how best to reduce corruption, combat it, detect it, policy formulation and implementation, education and awareness and research. In our barometer we noted that bribery was the most common form of corruption that citizens and business relate to and experience day to day in their constant interaction with bureaucrats in public institutions. This can however be nipped in the bud if well executed with support from all the actors (stakeholders). We need to reduce corruption levels at our borders to support growth of local industry and create jobs,” said Nyamanhindi.
The Minister of State for Provincial Affairs in Manicaland, Mandi Chimene, who has been very vocal about border leakages early this year, said she was going to probe the smuggling syndicate at Mutare’s Forbes Border Post.
She claimed that perpetrators were syndicates of top government officials and business cartels.
Chimene made said this in February while addressing a business meeting convened by the Confederation of Zimbabwe Industries (CZI) Manicaland chamber under the theme: “Resuscitation of the Manicaland Economy – Current and Future Pointers”.
“Army and police officers are receiving a $50 bribe to allow a consignment of second hand clothes in the bush. We are told bales of clothes are being smuggled through the bush after individuals receive bribes,” said Chimene.
The minister however said it was better for ZIMRA to revise its duty charges on second hand clothes to reasonable amounts as a stop-gap measure than to enrich few business cartels and corrupt officials.
Mutare’s economy dead after diamond rush: Minister Chinamasa
The Minister of Finance and Economic Development Patrick Chinamasa early this year in February said there was need to return the diamond sensation in Mutare to the levels where the impact of the gems was felt throughout the city.
He pointed out that the diamond rush had created so much investment potential in Mutare but sadly no visible infrastructural or socio-economic development was realized from the precious gems.
“In fact Mutare without diamond mining activity Mutare is a dead. There was a time when you could literally feel the diamond money in the city when there was active diamond mining. Even in Manica and further down in Chimoio in Mozambique Chiadzwa diamond activity was felt to the extent that in Manica a diamond polishing and cutting company was set up to buy smuggled diamonds from Zimbabwe,” said Minister Chinamasa.
The Minister was referring to the 2007-2010 diamond rush period where a lot of locals traded illegally in the gems, an era which saw many rise from rags to riches, the likes of the late Bothwell ‘Bathez’ Hlahla that rose from being a street urchin to a diamond kingpin in the city and amassed a lot of properties. Hlahla was reportedly a millionaire by the time of his death in 2011.
Minister Chinamasa made the remarks in February while addressing a business meeting convened by the CZI Manicaland chamber under the theme: “Resuscitation of the Manicaland Economy – Current and Future Pointers”
Minister Chinamasa however said treasury was hoping to realize more money from mining kimberlite diamonds.
He said the gem composition of the diamonds that were previously being mined in Chiadzwa was little compared to those in Botswana, Namibia and Angola that have 95 percent gem quality diamonds.
“The DNA of the Zimbabwe diamonds that were previously mined in Chiadzwa was 10 percent or about gem quality and would sell at US$80 per carat or slightly more whilst 10 to 25 percent were near gem quality and would sell at US$15 to US$50 per carat. The rest were industrial diamonds and would sell at $6 to $10 per carat,” he said.
At the event Manicaland business-people were urged to venture into diamond polishing and cutting opportunities under the new regulation of the Zimbabwe Consolidated Diamond Company.
This was in response to a point raised by real-estate businessman Joseph Sanhanga who quizzed why Government had set up a polishing and cutting facility in Harare instead of Manicaland.
Minister Chinamasa had highlighted in his presentation that Aurex, a subsidiary of the RBZ was the official diamond polishing and cutting company withs its headquarters in Harare, which is over 400km away from the Chiadzwa diamond field, compared to Mutare which is just 120km away from the gem rich area.
“Manicaland boasts of huge developmental economic opportunities that can be transformed for the benefit of the province but nothing has been done over the years to really show for this. Why really should Harare have a diamond polishing and cutting centre which is a subsidiary of RBZ when Mutare which is closer to the diamond fields does not have one? Aurex should have setup here then have smaller units in Harare,” said Sanhanga.
Sanhanga added that he had at one point invested in the diamond polishing and cutting business in 2011 but had to shut down operations after government in 2012 abruptly hiked licenses for local players to astronomical rates which were not feasible.
Chairman of the Diamond Beneficiation Association of Zimbabwe Richard Mvududu said a lot of players in the sector who had closed operations in 2012 after the increase in diamond polishing and cutting licences had expressed interest in coming back. He said there were at least 29 registered local diamond polishing and cutting companies in 2011.
“It was only after Government hiked the licence fees from US$20 000 to US$100 000 per annum in 2012 that most players opted out. In 2014 when the Minister of Mines and Mining Development Walter Chidhakwa announced the increase in the tenure of the diamond polishing and cutting licence to 10 years and also reduced the fee to $20 000 ($2 000 per year), a move he said was meant to locally create jobs, income and profits locally, many players are reopening but want policy consistency,” said Mvududu in a telephone interview.
Minister Chinamasa however encouraged those interested in diamond polishing and cutting to now start projects freely and ‘make noise’ if the allotted 10 percent of diamonds designated for local players does not get to them.
“Open your polishing and cutting industry and we will help you. If you are sabotaged make noise and we will help you. India has a vibrant polishing and cutting industry and we want to go that direction,” said Minister Chinamasa.
The 2012 World Federation of Diamond Bourses report revealed that the Chiadzwa diamonds created 60 000 jobs in Surat, which Zimbabwe National Chamber of Commerce past –president (national) Hlanganiso Matangaidze translated to $125 million of salaries income that was lost annually to the diamond polishing and cutting industry in Surat.
CRD director James Mupfumi in an interview last week Friday however revealed that already foreign diamond buyers were trickling into the country ever since ZCDC took over the Chiadzwa diamond fields last year in March, a sign that illegal diamond activity was resurfacing.
“The porous security situation in Chiadzwa presented by the sudden seizure of diamond mining companies by government last year in March has seen an increase in diamond buyers in Mutare from Dubai, West Africa and Lebanon. “These buyers who are well connected to local security agents use the Forbes Border Post to smuggle diamonds out of Zimbabwe. This has been systematically done through the designated border posts since the diamond rush up-to-date,” said Mupfumi.
Please feel free to email your feedback firstname.lastname@example.org. There will be Part Two to this story on porous borders and the Chiadzwa diamond leakages.