Smuggling of minerals bleeds region

With vast diamond deposits and after only three decades of exploitation, Botswana soared the economic ladder to become one of Africa’s success stories, while Sierra Leone, also with lots of quality diamonds, plunged to the bottom of the Human Development Index, with a per capita income 10 times less than Botswana’s.

The two are classic examples of the impact of natural resource management on African economies, with Botswana having pursued water-tight resource management and development policies, while Sierra Leone plunged into bitter and costly civil wars over the control of its ‘rough diamonds’.

Mineral looting is bleeding African countries and stirring civil strife on the continent, as massive smuggling of billions of dollars worth of natural resources continues to undermine economic and political development in many countries, and African governments have been making frantic efforts to control the exploitation of their resources.

Countries like, Zambia, the Democratic Republic of Congo, Sierra Leone, Zimbabwe and others have been hard hit by unscrupulous syndicates and individuals engaging in illegal and clandestine mineral trade, often involving gold, platinum and diamonds.

Plagued by excessive gold leakages, the Zimbabwe government last month announced that it was working on a number of security measures and principles to curb the smuggling of minerals, which is reported to have impacted heavily on the country’s mineral exports and foreign currency earnings in the past seven years.

Zimbabwe is reported to have lost over half of its annual gold output in the past seven years, with gold deliveries from mines declining from 27 666 kilogrammes in 1999 to 12 117kg in 2005, indicating an estimated annual leakage of above 15 tons of gold. “It is not in dispute that traditionally gold was one of the country’s highest foreign currency earners, hence a huge decline of the mineral deliveries to fidelity printers from a peak of 27 666kg in 1999 to below 12 117kg in the year 2005 eroded government revenue to undesirable levels,”

“Recent studies by a team of consultants from abroad pointed to, inter alia, the lack of adequate security risk management principles in gold mining as one of the major sources of leakages of gold into the grey areas of the economy,” said Zimbabwe police commissioner Augustine Chihuri.

In an attempt to curb the leakages, the Zimbabwe government is training police and central bank officials in investigations and mining legislation to make them more knowledgeable and efficient at dealing with matters involving illegal trade in minerals.

Zambia also recently stepped up efforts to curb the smuggling of its gemstones, following a recommendation by the European Union that the exploitation of the country’s gemstones be strictly monitored and exploited to the benefit of the local people.

Over 80 per cent of the country’s gemstones, including tourmaline and garnets, have been smuggled out due to lack of water-tight policies in the management of emeralds, resulting in massive revenue losses and a lag in economic growth.

Zambia’s gemstones are ranked among the best in Africa, but have not contributed significantly to the growth of the country’s economy and foreign currency earnings. The country boasts of a variety of gemstones spread in various regions.

In other countries where the illegal exploitation of minerals has been rampant and uncontrolled, affecting the levels of income, rates of growth and distribution of wealth, civil conflict has been an inevitable and recurrent outcome.

In countries like the DRC and Congo Brazaville, rebel groups gained access to natural resources by running protection rackets against companies legitimately extracting mineral resources, operating extractive businesses and selling concessions to mineral rights in anticipation of subsequent control of territories, especially in the DRC during Laurent Kabila’s rebellion against the Mobutu government.

Other rebel outfits like Angola’s UNITA, RUF in Sierra Leone, LRA in Uganda and the gangs currently abducting oil workers in the Nigerian Delta have used mineral and other natural resources as their currencies in waging war against their governments.

The costly but successful rebellions of Laurent Kabila against Mobutu’s government in the then Zaire and that of Denis Sassou-Nguesso in Congo Brazaville were all financed and sustained by mineral resources, in many cases unexploited, but ransomed out to military allies collaborating in the overthrow of their governments.

Natural resources have fuelled conflict in most countries where the control of “rents” (profits generated from natural resources that far exceed cost of extraction) is not entirely in the hands of the government, with secessionist rebel movements sprouting and claiming control of mineral rich regions, as seen in the DRC’s Katanga province, Nigeria’s Biafra, Southern Sudan and Darfur.

In Sierra Leone, the significant diamond revenues fomented violent political conflicts that resulted national tragedy and the country’s economy collapsed despite its vast mineral wealth, showing the importance of sound management of mineral resources and fair distribution of the proceeds from mineral resources.

September 2006
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