Zimbabwe Reserve Bank: Robust Diamond Mining and Marketing System Needed

Zimbabwe claims to have lost at least $400 million since diamonds were discovered at its Marange nine months ago. The country blamed looting and smuggling for the loss.

Dr Gideon Gono, Governor of the Reserve Bank of Zimbabwe has called for a government plan to maximize profit from the country's diamond riches.

Dr Gono said a robust diamond mining and marketing system is needed to guarantee that gems benefit the people of Zimbabwe, adding that 50:50 joint ventures in Botswana and Namibia with De Beers should serve as a model.

Zimbabwe suffers from a host of problems. A sense of political instability, repeated threats of nationalizing mining projects, corruption, and a lack of clear government controls are but a few of the issues that are keeping mining and exploration companies away.

According to a report in Zimbabwean newspaper The Herald, investigations over the past few months have revealed that hotels in Mutare were full of top officials and foreigners every weekend, some of whom employed runners who would buy diamonds during the week only to hand them to their principals in hotel rooms on weekends.

"The diamonds are in Zimbabwe, in areas where government enjoys full support, no opposition, no foreign government interference, no sanctions, no drought. What more do we want? We are our own worst enemies," Dr Gono said while addressing students and the business community at the country’s Midlands State University this week.

"There is no other area where implementation inertia is as glaring as that of the area of diamond mining. It's almost criminal the extent to which we are sitting on such a resource. Showing indecisiveness while Rome is burning."

Gono went on to call for the diamond sector to be treated as a special sector.

"In this regard, the diamonds - both rough and polished - could be used as a national reserve asset under the custody of the central bank. These could then be converted to foreign currency as and when necessary. The central bank could also use the diamonds to secure lines of credit and boost its foreign currency reserves," he added.