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Zimbabwe’s diamond theft: power and patronage in Marange

miners

In February last year President Mugabe announced that the eight mining companies operating in the Marange diamond fields in the east of the country would be nationalised, claiming that the companies had ‘robbed’ the country of its mineral wealth. Since 2006 when the surface alluvial diamonds were ‘discovered’ in Marange, the massive wealth generated by these small stones has caused havoc. The experience of Marange over the past decade is an important lens on Zimbabwe’s tortured politics and economy in this period.

An excellent book has just been published by the wonderful Weaver Press in Harare – Facets of Power: Politics, Profits and People in the Making of Zimbabwe’s Blood Diamonds. Edited by Richard Saunders and Tinashe Nyamunda it offers a series of chapters covering the Marange story from different angles.

The basic storyline of corruption, patronage, violence and theft is well known, with parallels in other mining sectors as discussed previously on this blog. No-one knows how much of the diamond wealth was siphoned off and never declared. When Tendai Biti was Finance Minister in the ill-fated Government of National Unity (GNU) he was in constant battle with the Ministry of Mines, attempting to get transparent declarations. No-one knew the scale of corruption and theft, but it was clearly massive. President Mugabe himself claimed that only $2bn of a potential $13bn of mining revenue was ever declared.

In the introductory chapter, Richard Saunders describes the ‘perfect storm’ that was the Marange story: “The confluence of extraordinary conditions – a once in a lifetime diamond strike; a state characterised by military partisan control, elite predation and withered professional capacity; and the presence in willing partners in a shadowy international trade – cast Marange’s diamond fields into the centre of politically inflected, violent and ultimately destructive struggle for control over extractive resources”.

But there are important nuances to this standard narrative repeated in the introductory chapters that are revealed by other chapters in the book. These make any simplistic, sweeping perspective on Zimbabwe’s ‘blood diamonds’ more complex. As various contributions to the book show, although gaining the epithet from international campaign groups, Zimbabwe’s diamonds were not the classic ‘blood’ or ‘conflict’ diamonds of, say, Angola or Sierra Leone, directly feeding armed militias and insurgents. Instead Zimbabwe’s diamonds fuelled different forms of patronage and corruption, sometimes for sure linked to violence, but with multiple beneficiaries who shifted over time. In this sense Marange became the symbol of a classic ‘resource curse’, undermining accountability and fuelled by a corrupt legal and political order, linking political struggles with accumulation and elite formation, as Alois Mlambo describes in the Foreword.

But this was not just a Zimbabwe phenomenon, as is sometimes suggested. The international connections, feeding local corruption, were important. The chapter by Alan Martin offers a detailed and fascinating account of the murky international networks associated with the diamond trade over time. The connections with Dubai, India, Belgium, South Africa, the UK, US, Israel and more were crucial. Competition in the international diamond trade – from traders to distributors to processors to retailers – had big effects on who became involved at the Zimbabwe end, and what deals were struck with both companies and state officials. Of course the evidence is inevitably patchy and secretive, as much of this activity was illegal, but the chapter sheds important light on the international dimensions of the story, including the clear limitations of the Kimberley Process, the global certification attempt established in 2003 to ensure accountability and transparency in the diamond trade, and the focus for much local and international civil society action.

As the book shows, there were clearly different phases of exploitation of the Marange diamond fields over the last decade, involving different actors, with different political connections, and with different patronage networks. The first phase involved African Consolidated Resources, a company with British connections, who had the mining rights to the newly discovered field. However their license was quickly withdrawn. Here the rhetoric of indigenisation and resources for the people was used, although the party-state at that stage showed little interest at the highest levels, not knowing the extent of the find.

From mid-2006 followed a period of ‘free-for-all’ when informal miners arrived en masse. This was a period when the economy was in crisis, inflation was accelerating, and when many were looking for alternative sources of income. People had been displaced by Operation Murabatsvina in 2005, and younger people often had not benefited from the land reform in 2000. At its peak in 2007-08 there were reputedly 35,000 people – miners, traders, service providers of various sorts – living in and around the Chiadzwa area. The excellent chapter by Tinashe Nyamunda provides an important insight into this period, showing how mining was organised, and how miners had to link with policy and security syndicates, paying off other officials in turn, in order to operate. Links to traders were facilitated and cuts were taken at every stage. As the chapter shows, this phase resulted in major gains for many, both in the area and more broadly. The rapid accumulation of wealth – notably cars and trucks, but also a range of consumer goods – was tangible, resulting in a boom at a time when the national economy was nosediving. I remember being in Masvingo at this time, and young men (and some women) were coming back with a range of smart clothes, music systems, and more.

This all changed in late 2008, when the state announced the privatisation of the diamond fields, expelling the informal miners overnight in a ferocious, violent clampdown. The stories I heard back then were terrifying and the chapters in this book relay them again. About 200 people are reported to have been killed as security forces enforced the ban, making way for a series of state-sanctioned investments, where the government held a 50 percent stake. A number of these companies became major operators, bringing in huge equipment and massive workforces, including the infamous Chinese company, Anjin, with its close connections to the Zimbabwe armed forces.

In this phase, as Nyamunda shows, the patronage networks shifted. It was no longer the local officials, police and security personnel who were involved, but this now all moved to a much larger scale. This was the period, during the GNU, when ZANU-PF were re-establishing their base, and diamond money was an important source, and when what some have called a parallel or shadow government was in place. It was also a period when some senior party and military/security officials gained huge wealth. The book mentions the then minister of mines gloating that he was the richest cattle owner in the country. Certainly across Matabeleland the building boom associated with his tenure in office is legendary. Ironically, from 2009 was the period when Zimbabwe re-entered the Kimberley Process, and Zimbabwe’s diamond trade became legal. Certification requires formal mining by companies, and not informal systems, and the privatisation with government oversight ensured compliance. This period is when theft became legal.

In 2013 a brave parliamentary portfolio review exposed some of the extent of the looting that had gone on following an in-depth, although obstructed, investigation. The cries of Tendai Biti were reinforced. But still these went unheeded, and the diversion of funds on a massive scale continued. We do not know why the president decided suddenly nationalise the diamond industry in 2016 and put it all under a single body. Many are crying foul with court cases challenging the decision. The official rationale was that this was to stamp out corruption, and ensure revenues flow to the finance ministry. Of course the on-going attempts to woo the international community by Finance Minister Patrick Chinamasa under the banner of economic reform must have played a part. The IMF inspection missions were certainly on his case with respect to minerals revenues. But the suspicion must also be, as hinted in the epilogue to the book, that this also reflected shifts in power and patronage, ones that required new people to benefit, as those who profited from 2009 lost favour.

As is the case too often with mineral wealth in Africa – whether oil in Nigeria or diamonds in Sierra Leone – massive natural resource wealth can result in chaos if not well managed. Accountable, transparent systems of resource governance are rarely in place, and greed, corruption, and shadow authority takes precedence. Once thought to last for 20 years or more, Zimbabwe’s diamond fields are producing less and less. The extractivist boom has lined the pockets of some – initially more widely and then narrowing to a well-connected state-party-military elite, and their international connections – but the wider wealth such a resource could have offered to the nation, as glimpsed at in the early informal phase, has since tragically been squandered.

This post was written by Ian Scoones and appeared on Zimbabweland

 

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Zimbabwe’s gold rush: livelihoods for the poor or a patronage economy, or both?

One of the features of the post 2000 economy in Zimbabwe has been the growth in small-scale artisanal gold mining. This is sometimes registered with the ministry, but very often not, and remains informal and illegal. The small-scale panners, makorokoza, can be found in very large numbers in the dry season along the main rivers of Zimbabwe. They are mostly men under 35, and so represent a particular, often disenfranchised, demographic.  Many were too young to benefit from the land reform in 2000, and although some are resident on the new resettlements, combining farming with off-season panning has become an important livelihood mix.

While much international attention has been focused on diamond mining, and the human rights abuses that have taken place in the Marange fields in the east of the country (see papers by Nyamunda and and Mukwambo  and Bond and Sharife), there has been less commentary on gold mining. While the diamond fields have been taken over by a strong-arm alliance of government, the military and foreign investors, removing all small-scale diamond miners, the mining of gold is different.

Small-scale mining peaked in 2008 with the collapse of the formal economy. As formal mining receipts declined, the small-scale operations boomed, with much of the product being traded illegally and smuggled out of the country. The official statistics, like for agriculture, show massive declines, but in fact around 2 million people were involved in small-scale mining in this period. Clifford Mabhena has shown how artisanal mining has complemented land reform, as new farmers seek off-farm opportunities, particularly in times of drought

Another recent paper by Showers Mawowa explores the gold rush phenomenon based on research near KweKwe. He argues that the gold rush in his area should not be seen just as a form of local ‘survivalist’ strategies of the poor, but as a site of political control and accumulation by elites, part of a ‘patronage economy’.  In Mawowa’s study area in KweKwe, former farm and mine workers rather than resettlement farmers were the new miners. Many gold panners collect tiny quantities, but are reliant on mills owned by registered small-scale mines for processing.  There is a mix of alluvial panning in the open near rivers or the exploitation of disused shafts where mining takes place underground. Both types of operation may involve hundreds of individuals often working in highly dangerous conditions. The environmental damage of such intense gold rushes can be immense.

This new form of production creates new social and political relationships. Mawowa characterises this as a process of primitive accumulation by elites who control the processing and marketing operations. They are also able to subvert the regulations, and are often involved in shady, illegal activities. While there are a plethora of laws governing mining, with recent stringent regulations from the Environmental Management Authority for example, they are implemented only sporadically, and often arbitrarily. Raids by the police may happen around election times, when local big-wigs want to assert control, while at other times operations go untouched, with accusations of kick-backs and bribes.

In his fascinating account, Mawowa shows how alliances between miners are formed to control particular areas. They may form ‘syndicates’ that may be controlled by locally-powerful individuals, including chiefs or party officials. Access to gold resources may result in sometimes violent struggles between such groups, with clashes between ‘locals’ and ‘outsiders’ and between different political factions within ZANU-PF.

The story Mawowa and others tell for Zimbabwe is familiar in other areas where artisanal mining has taken off in a big way, whether in Latin America (as in the work of Tony Bebbington and others) or elsewhere in Africa (as in the work of Deborah Bryceson and colleagues). Mawowa interprets this in terms of elite accumulation characterised by corruption, but as he notes new livelihoods have been created too. He does not make the contrast though with what went before. Once controlled by a few companies – in the Kwekwe case a Canadian mining company that owned Empress and Venice mines, closed in the 1980s and 90s – mining activity – and so livelihood opportunities and employment – is now spread among a far wider group.

This reconfiguration of the economy attracts patronage from those in power – and this most certainly includes ZANU-PF officials – but in this case these include village headmen, councillors, bureaucrats in district offices and local politicians. These characters may be connected to others higher up for sure, but the new economy oils many wheels on the way. As Mawowa concedes there are many ‘rags to riches’ stories in the villages.

Certainly in the period before the Marange diamond field clampdown this is what we found in Masvingo, as youth returned to their villages with fancy consumer goods, but also with cash to invest in farming. He also notes that many of the local beneficiaries of patronage are often ‘low ranking’ officials and people like headmasters and councillors. Even if there are shadowy figures behind them, further up the chain, it may be difficult to define such people as elites, even if their outward political affiliation is towards ZANU-PF; whether out of belief or very often out of strategic pragmatism (what Grasian Mkodzongi calls ‘performing ZANU-PF’).

There are perhaps two ways then of thinking about these mining-based ‘patronage economies’. One is to condemn the rent-seeking, accumulation and elite control, and seek rational bureaucratic order and the implementation of controls, presumably allowing larger-scale formal operations to take the place of the informal sector. This would presage a return to the past, and a form or regulated and probably even more elite (probably foreign-controlled) capitalism. Alternatively, following the arguments of David Booth, Tim Kelsall and others, an argument could be made that there are developmental advantages of ‘working with the grain’, accepting that elite capture is somehow inevitable in the operation of capitalism, but that gains may well be shared through such patron-client networks, and there are actually not only survivalist but also developmental benefits of broad-based, distributed, informal economic activity.

These alternatives are of course not either/or, and there are many shades of grey between. However, the focus of so much writing on the corrupt practices of the ZANU-PF connected elite, including many of the contributions to the JSAS special issue that includes Mawowa’s paper, often fails to delve further into the practical, distributional consequences of new forms of economic organisation. While I would be the first to condemn much of the practice that Mawowa documents, I think there is probably another side to the story that is also worthy of telling.

Some interviews with some of the successful miners, traders and associated business people would be definitely interesting. It would be fascinating to learn for example how artisanal mining has changed their livelihoods and future prospects, and how such investment has been channelled into the local economy. This could in turn be contrasted with the experience of former mine workers in large-scale mines (perhaps even the same people), and how such enterprises had an impact on local livelihoods and economies. Rather like the contrast between the assumed successful, ordered and regulated commercial farming sector of the past and the assumed disorderly, chaotic and informal land reform farming areas, there may be some surprising, and challenging, findings.

This post was written by Ian Scoones and originally appeared on Zimbabweland

 

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An unbalanced economy: why mining should not dominate, and why agriculture needs support

Last week I reviewed some of the facts and figures in the recent 2013 budget statement. There are some definite bright spots, and the rebound since 2009 is impressive. But can Zimbabwe’s economy continue to grow sustainably and inclusively on the back of mineral revenues without a more balanced economy?

In his budget statement, Finance Minister Tendai Biti argues for moving beyond an ‘enclave economy’ towards what he calls a ‘cheetah economy’. Where is the investment for this transition going to come from? And what would such an economy look like?

Unfortunately, there is not much room for manoeuvre. The total budget committed for 2013 was only US$3.8bn, much of which was taken up by already committed salaries. Commitments to agriculture were only US$160m, ‘regrettably’ 6% below the Maputo Declaration target. Donor and multilateral support remains small in relation to overall need, and focused on welfare, humanitarian emergency and social services. As one commentator cruelly pointed out Zimbabwe’s total budget is much smaller than the turnover of Pick n’ Pay, a large South African retailer. So where is the strategic investment in a ‘cheetah economy’ going to come from?

One scenario is to rely on mineral revenues. But, as Cambridge Professor Haa-Joon Chang points out, this is risky. The current buoyancy of African economies is very contingent on high commodity prices and continued demand from the developed world, and perhaps especially China. A downturn elsewhere will see a sharp downturn in Africa. Even leaving aside the risks associated with the capture of mineral revenues by elites (the ‘resource curse’), reliance on even an array of minerals to finance the rebuilding of an economy may be foolhardy.

Another scenario would see agriculture more in the limelight. Rather than offering the paltry sums seen in the 2013 budget a much braver, more substantial agricultural rehabilitation initiative is required. This will inevitably require external support – including donors, multilateral banks, finance houses and the private sector – but it must be lead by government, and backed by the state. Agriculture has a different demand profile to minerals, and so different economic elasticities. It employs people in potentially larger numbers per unit of output, and the growth potentials are significant, given Zimbabwe’s comparative advantages. There remain outstanding issues of issuing leases and offering compensation, but planning for such a mission-style effort should start now.

The alternative will indeed be the take-over by Pick n’ Pay, and other elements of South Africa, Chinese, and Euro-American capital. You only have to go over the border to Zambia to see what a mineral led economy can offer. Growth, yes, but perhaps not more broad based development. This is not the sort of ‘middle income’ country that Zimbabwe wants to become. Instead it needs a firm national economic base, owned and controlled by Zimbabweans. Perhaps surprisingly for many (including Mr Biti I suspect), the land reform has provided just this platform for growth and recovery, if only the imagination, vision and of course finance are in place.

However it seems clear the Minister of Finance is currently backing the first, risky mineral-led scenario. The budget statement is replete with statements about the dramatic potentials of the mining sector. We have heard this since Cecil Rhodes, who ultimately was disappointed. And indeed in Minister Biti’s own words:

“The mining sector is a tiny enclave with little connectivity with the rest of the economy and, therefore, despite its high rentals, it has not been able to sustain growth or socio-economic development”.

He argues for a “major rethink” to allow forward, backward, spatial and other linkages with the rest of the economy, but does not reflect on the political economy of such a rethink. Mining capital is in Zimbabwe for a reason – minerals can be extracted and exported at a cheap price for profit. An enclave economy suits them just fine.

While Zimbabwe should not ignore its considerable mineral wealth, and it should tap it for maximum benefit, through appropriately balanced indigenisation policies, effective taxation and maximising local processing and value addition, it should also focus on its other sources of wealth: land and people, and give agriculture the boost it needs. The turn-around in tobacco, sugar and cotton, has shown the potential. In my view, agriculture following land reform can not only deliver growth, but pro-poor, inclusive growth if supported in the right way.

This post was written by Ian Scoones and originally appeared on Zimbabweland

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Growth in jeopardy? Reflections on Zimbabwe’s 2013 budget statement

Minister of Finance Tendai Biti recently presented the 2013 budget. It was, in his words, the most difficult yet. He revised growth projections downwards to only 4.4%, because of continued depression in the global economy and uncertainty about Zimbabwe’s economic and political prospects.

But there were some bright spots. The minister has presided over a remarkable period of recovery. Some basic graphs in his budget statement illustrate the point (copied below). Zimbabwe has grown faster than any other country in the region, and mining and agriculture have been the greatest contributors to growth. By 2010 mining contributed a massive 18% to overall economic output as measured by formal GDP indicators, and nearly 50% of export revenue.

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Growth in agriculture was stronger than expected in 2012, as both tobacco and cotton performed better than projections. Maize was however heavily affected by drought. The treasury expects a continued pattern of growth in the sector, around 5-6%.

But the success of agriculture has been overshadowed by the growth of mining, with annual growth rates of around 30%. Exports increased by a massive 230% in the period from 2009-2011. By the end of 2011, mineral exports accounted for 47% of total exports, made up of platinum (43%), gold (28%), and diamonds (20%) in particular.  Furthermore, the average share of mining to GDP has grown from an average of 10.2% in the 1990s to an average of 16.9% from 2009–2011 overtaking agriculture. Diamond output is expected to increase to 16.9 million carats in 2013, largely driven by enhanced production from the major diamond mining houses at Marange Diamond Fields. Platinum output is expected to rebound to 11.5 tons in 2013.

However, while growth has occurred at impressive levels since dollarization in 2009, it has not continued at such rates. Zimbabwe’s seemingly miraculous recovery from the dire doldrums of the late 2000s may have stalled, a concern raised in the budget. With continued investment uncertainty, and the prospects of yet more disruption during and following elections, question marks are raised about the robustness of the economy. While minerals and agriculture can continue to underpin some growth, the levels required for recovery to earlier levels are still not being achieved.

How can the economy be revived for the longer term? This will require investment, including by the state. The 2013 budget offered US$3.8bn in government expenditure. But this is a pathetically small amount in relation to needs, and much of it already accounted for in terms of salary obligations. Government taxation and revenue collection is improving, but the economic base remains small. Tendai Biti is in a bind. He is right when he says there is no more cash – not even to finance an election, let alone forge a recovery.

Next week, I will look at some future scenarios, making the case for a greater focus on agriculture, and avoiding an overly strong reliance on minerals, despite their allure.

This post was written by Ian Scoones and originally appeared on Zimbabweland

 

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