Items filtered by date: Thursday, 24 May 2018

CLAIM:

On Friday, May 18, 2018, President Emmerson Mnangagwa said Zimbabwe had received a loan from the United Kingdom, which would go towards easing the country’s cash shortages.

“For the first time after nearly 20 years, we have received a soft loan, from the British, of $100 million and the (RBZ) governor has been telling me how he has disbursed the money and as from yesterday almost every single bank in the country had received part of the $100 million received,” The Herald quoted the president as having said.

Mnangagwa was to repeat the claim at a political rally in Mutare on Saturday.

Speaking in Shona, Mnangagwa was quoted by The Sunday Mail saying:

“We now have good relations with Britain, this week, on Tuesday, they gave us $100 million to help us resolve the cash crisis in the country.”

DETAILS OF THE BRITISH LOAN:

On Thursday, May 17, 2018, the Commonwealth Development Corporation (CDC), announced it would partner Standard Chartered Bank in extending an investment facility of up to $100 million to private Zimbabwean businesses seeking capital to grow.

The CDC is the UK’s development finance arm, while Standard Chartered is a leading British bank, whose Zimbabwean unit is the oldest in the southern African country.

The five-year facility will see CDC and Standard Chartered share the default risk on up to US$100 million of new loans originated by Standard Chartered Bank Zimbabwe in the southern African state.

The investment will be used for capital expenditure and for helping businesses meet their day-to-day financing needs. The likely recipients will include firms in the food processing, manufacturing and agriculture sectors.

In an interview with the Financial Times, CDC chief executive Nick O’Donohoe stressed that the funding would not be to Zimbabwe’s government, but private firms.

Commonwealth Development Corporation (CDC) chief executive Nick O’Donohoe

CONCLUSION:

While the loan will improve Zimbabwean businesses’ access to foreign currency, improve local production and reduce pressure on the country’s current account in the long term, it is incorrect to say, as Mnangagwa claimed, that the British have given Zimbabwe funds to ease its cash crisis.

While the president claimed the funds had already been disbursed to Zimbabwe, the Financial Times, which broke the story, reported that CDC and Standard Chartered Bank were in the process of drawing up a list of private firms to benefit from the facility.

The president’s statement created the impression that the $100 million loan was being directly injected into circulation in Zimbabwe, which is not the case.

 

Source: zimfact.org

Published in Economy

Ever since diamonds were discovered in Sierra Leone in the 1930s, they have had a significant impact on the country – socially, politically and economically. This is partly to do with how they are extracted from the ground.

In countries in southern Africa, diamond mining is mostly undertaken by large-scale, mechanised companies, which monitor and control deep reserves. But in Sierra Leone, diamonds are more commonly dispersed close to the surface of river beds. They can be found by anyone with a shovel and a sieve.

This accessibility has made Sierra Leone’s diamond-rich Kono district a magnet for migrant workers – mostly young, single, uneducated, unemployed men seeking their fortunes. World Bank estimates suggest the artisanal diamond mining sector is now Sierra Leone’s second largest employer (after agriculture), providing a livelihood for between 300,000 and 400,000 people.

Dirty work. Roy Maconachie and Simon Wharf, Author provided

Since 2003, I have been carrying out research in Kono, looking into the challenges of the diamond mining sector, and its problems of exploitation and poverty. My most recent project, funded by the US foundation Humanity United, aims to shed some light on the challenges of natural resource governance, and converting revenues into sustainable development.

Despite the non-mechanical and non-regulated nature of artisanal diamond extraction in Sierra Leone, there is still a tightly managed, highly ordered structure to production. Typically, gangs of labourers will work together in small areas, digging up gravel, and transporting and washing it. A different group of people will supply the miners with food and tools while they do this – but no payment will be offered unless diamonds are found.

This highly unequal relationship between diggers and “supporters” has led to serious concerns over the detrimental social impact of diamond mining in Sierra Leone. It has even been described as a “system of debt bondage and a contemporary form of slavery”. One local expert told me:

Everybody is doing business to maximise profit … [by suppressing] those that are below.

Yet the artisanal diamond mining sector still has an important role to play in driving local economic development in rural areas. It supports hundreds of thousands of poor people, supplying valuable start-up capital for other economic activities, and helping to nourish smallholder agriculture.

Generally, though, Sierra Leone’s wealth of natural resources – gold, iron ore, bauxite and rutile – has not translated into better living conditions for its people. In fact, the opposite has been true.

The United Nations Development Programme places Sierra Leone at the bottom of its Human Development Index. It is one of the world’s poorest nations and lags well behind most on social development.

Ravaged for years by war, and battered more recently by the Ebola crisis, economic development has come to a grinding halt through a combination of corruption, revenue mismanagement and misfortune.

Diamonds are clearly linked to Sierra Leone’s underdevelopment. Small, transportable and extremely valuable, they played a major role in funding the country’s brutal civil war of the 1990s. And the informal nature of the industry in Sierra Leone makes it easy for local communities to miss out on any related economic benefits.

Diamond mining remains one of Sierra Leone’s most lucrative export industries, with annual production of up to US$250m. But due to poor governance and widespread corruption, only a fraction of this wealth returns to the areas where diamonds are mined.

For richer, for poorer

While international traders reap vast rewards, poverty and hardship is the reality for many of those who actually find the diamonds. Many mining operations take place in remote locations outside the reach of government monitors, and in close proximity to the porous borders with Guinea and Liberia.

The unregulated nature of the artisanal mining sector means that many diamond diggers end up in exploitative relationships with buyers and middlemen. They become trapped in cycles of poverty and indebtedness. While some effort has been made to address this exploitation, and empower unregistered miners and their families at the bottom of the supply chain, more needs to be done. Some have argued that the keys to making the sector more sustainable are formalisation and better local governance.

Yet most mining activity still takes place informally – a situation driven by the many vested interests in the sector. Too many people are benefiting from the informal and unregulated conditions that currently exist.

What’s mined is yours. Roy Maconachie and Simon Wharf, Author provided

If the government and policy-makers of Sierra Leone wish to address the poverty and inequality of diamond mining, a more nuanced understanding of the realities in these mining communities is needed.

Artisanal mining will likely remain a dominant industry in Sierra Leone for many years to come. But it is an industry which has always been characterised by exploitation and poverty.

Addressing the challenges of local-level governance, and how power is exercised over diamond management and decision-making is vital. It is the only way to ensure that more of the wealth remains where it begins – in the communities where the diamonds are being mined.

 

Roy Maconachie, Reader in International Development, University of Bath

This article was originally published on The Conversation. Read the original article.

Published in Opinion & Analysis

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