Tuesday, November 29, 2011

Marange Diamond Revenue: A Clueless Jigsaw Puzzle?

The statistics or estimates of proceeds from Marange diamonds are so mind-boggling in their discrepancies that at the end of the day, one is left with a clueless jigsaw puzzle, if not a headache.

For instance, following the lifting of the ban on the sale of Marange diamonds by the Kimberley Process (KP) Zanu-pf Mines Minister Obert Mpofu announced that the government expects US$2 billion yearly gross from Marange diamond sales.

Then there was a hint that of that amount, US$300 million was earmarked for civil servants bonuses, without clarity about what the rest of the greater portion of the remaining US$1.7 billion would be used for after paying shareholders and hopefully taxes.

Meanwhile, the US$300million for civil service pay arguably includes an estimated 75 000 ghost workers when government is spending US$960 million or more than 60 percent of its revenues per year on recurrent expenditure without any meaningful investment in infrastructure unlike other SADC countries.

Just two months ago, a war of words erupted between Finance Minister Tendai Biti and Mines Minister Obert Mpofu over the remittance of money realised from the sale of diamonds.

Of concern were the low remittance figures despite the huge production at Marange in 2011. For example, between January and June 2011, Zimbabwe exported 716 958.50 carats from Marange diamond fields and during that period only US$103.9 million of diamond export shipments was accounted for.

Then, in his recent budget speech, Finance Minister Tendai Biti confirmed diamond dividend receipts of US$ 122 million in 2011 and said he had held extensive consultations with the Mines Minister and diamond producers who had assured him of minimum US$600 million additional revenue for 2012.

Now, if during the first half of 2011 only US$103.9 million of diamond exports were accounted for and by November 2011 the year's proceeds to Treasury totalled US$122 million, it means only US$18.1million of diamonds were exported in the second half of 2011 - a huge discrepancy that defies logic and deserves clarification.

In 2010, declared total proceeds from diamond sales amounted to US$313.5 million from which Government received US$48.4 million while US$41.6 million was belatedly received in February 2011. The rest was reportedly paid to ZIMRA as royalties, corporate tax, VAT and withholding tax.

How do the ministers account for such wide variances in their estimates in view of last year's unconvincing figures and remittances amidst allegations of smuggling and undervaluing of Zimbabwe's gems which were then sold on Asian markets for a song?

For instance, if in 2010, diamond revenue was US$313 million how does Minister Mpofu account for his estimate of US$2billion annually henceforth? Does that mean because there are no more loopholes, so we can expect more revenue? Can Mpofu's estimate also apply in retrospect?

Similarly, if Treasury received only US$122million in 2011, what has convinced it that it will get a minimum US$600 million in 2012?

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