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Tenders and Vendors - Zimbabwe's Ailing Economy and Another Dubai Diamond Sale

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Close to a million carats of Zimbabwe diamonds are up for sale in Dubai this week, with authorities reportedly hoping to sell them for an average of US$100 per carat. If they are successful, Zimbabwe's latest sale through the Middle East's major diamond trading hub could raise almost US$100 million, making it the highest value international tender of Zimbabwe stones since EU sanctions lapsed in October. The rough diamonds are from Marange, the source of Zimbabwe's most recent and controversial diamond find.

On the same day the tender was announced, Zimbabwe's Daily News online ran a story headlined 'We are now a country of vendors'. The story reports on the increasing number of people forced onto the streets of Harare to engage in informal trade just to make ends meet. "[E]veryone is trying to sell something to survive," the report said.

It's not wrong. Zimbabwe's economy, which had showed some signs of revival under the previous Government of National Unity, is once again gasping for breath as a result of a credit crunch, company closures and rising formal unemployment. According to the World Food Programme, 72% of the population are currently living below the poverty line of US$1 per day, and the estimated unemployment rate is over 80%. Like the rest of Zimbabwe, life in Harare-once dubbed the sunshine city-is looking increasingly bleak.

"Hurray then for the sale of Marange diamonds," you might say, or, 'Zvinhu zviri kufaya' if you are one of Zimbabwe's large number of unemployed youth. Diamond revenues mean a cash injection for the economy--for schools, hospitals, basic services. Or so you would hope.

A previous Dubai sale in April realised US$76 per carat and raised US$30 million, with US$4.39 million earmarked for Zimbabwe's Treasury. The comparatively ambitious projected figure of US$100 per carat suggests that the sale in Dubai is expected to turn up better quality of stones this time round. A positive sign perhaps, but it's unlikely that Zimbabweans will be holding their breath.

Following the Dubai sale in April, the Minister of Finance complained that Dubai was too slow in sending dues back to Zimbabwe, reportedly going so far as to say "[Dubai] failed the test... Why would we continue selling our diamonds in Dubai under such conditions?"

The current Dubai tender will conclude in a week, and Zimbabweans can only wait for the treasury's announcement of the revenue received. Though Zimbabwe's dues from the April sale did eventually turn up, such a quick return to Dubai may seem at odds with the Finance's Minster's previous statement. Perhaps the change of heart has something to do with the cosy relationship between Dubai and Zimbabwe's diamond industries?

Robert Mhlanga, Chair of Marange joint venture Mbada diamonds, and a close associate of Zimbabwe's President Robert Mugabe, joined the Permanent Secretary to Zimbabwe's Ministry of Mines and Mining Development when he was appointed to the board of the Dubai Diamond Exchange in March. Such connections may have been helpful in smoothing the way for another Dubai diamond tender.

But good relationships aside, the Dubai figures are just a drop in the ocean compared to what Marange diamonds have failed to deliver. Once described as "the most significant find in many, many years" by one international diamond analyst, Zimbabwe's former Minister of Mines and Mining Development claimed that the country could earn US$2 billion a year from diamonds.

The opacity of the Zimbabwean mining sector makes it impossible to determine what sums have actually reached the Treasury--or where the Marange diamonds have gone--but repeated complaints from successive Finance Ministers about missing diamond revenues suggest that the anticipated flow of money from Marange could at best be termed a trickle.

There is little doubt that vast sums have not reached the Zimbabwean people. For a few well-connected and corrupted players, it has been bonanza time. Global Witness' research has revealed that several of the companies that have sent parcels to the latest Dubai sale are far from transparent about who owns and controls them, which may include some of Zimbabwe's most powerful political elites.

For too long Zimbabwe's diamonds have been viewed as a prize to be doled out by the powerful. Just last week Sergeant Gregory Mugova of Zimbabwe's Air Force was given shares in the controversial company Mbada Diamonds as a prize for winning this year's President's Medal Shooting Championship. He now joins some of Zimbabwe's best connected elites with interests in a Marange diamond company.

But, there is hope. State media recently focused on the Mining Minister's efforts to improve transparency and accountability in the diamond sector, aiming to ensure that the country's diamond money does actually find its way to the Zimbabwean people and not just prize winners and political elites.

This is a laudable aim and urgently needed. For the majority of Zimbabweans, however, concrete actions will speak louder than words.