Analysis

Salone Diamonds: The Good News is that....But....

25 November 2006 at 20:08 | 648 views

"Since Sierra Leone started participating in the scheme, there has been a whopping increase in government revenue from its diamond industry. This is evidenced in figures quoted in London-based magazine, the Economist, in its November 11-17, 2006 edition. The Economist reports that in 1999, the Government of Sierra Leone realised a mere measly $1.2m from diamond exports. By contrast, the official Sierra Leone diamond exports for last year stood at about $140m. The contrast cannot be more glaring. Better still, our government collects a ballpark figure of $7m from licences, royalties and taxes on diamond."

By Hassan-Morlai, United Kingdom.

The good news about Sierra Leone diamond exports is that it is getting better and yielding more revenue for the country. Thanks to the Kimberley Process Certification Scheme - a voluntary intergovernmental self-regulatory scheme for diamond exporting countries which came into force in January 2003. Named after the South African town in which the pact was negotiated in May 2000, the Kimberley Process is a worldwide certification scheme that seeks to regulate the international trade in rough diamonds and eradicate the link between blood diamonds and civil wars. In essence, diamond-exporting countries should sell their diamonds only to other KPCS participating countries and certify that their diamonds are clean and blood-free.

Since Sierra Leone started participating in the scheme, there has been a whopping increase in government revenue from its diamond industry. This is evidenced in figures quoted in the London-based magazine, the Economist, in its November 11-17, 2006 edition. The Economist reports that in 1999, the Government of Sierra Leone realised a mere $1.2m from diamond exports. By contrast, the official Sierra Leone diamond exports for last year stood at about $140m. The contrast cannot be more glaring. Better still, our government collects a ballpark figure of $7m from licences, royalties and taxes on diamonds.

Early this week, the Network Movement for Justice and Development called upon the Government of President Kabbah to heighten its efforts on increasing domestic revenue collection so as to reduce the high dependency on donor funds. Clearly, if the progress in the diamond industry is emulated in other domestic revenue sectors, it would not be off the mark to suggest that sooner rather than later, Sierra Leone would be heading for a brighter future.

That’s the hope. This is the realty. Despite the increased in this class of government revenue, it is believed that our national budget is anticipated to include an increase in donor funds as a budget item in 2007. That aside, many commentators have noted that the increase in government revenue is yet to benefit the ordinary Sierra Leonean. One theory upon which there is a near unanimity is that corruption remains a central factor that inhibits even greater revenue realisation from our diamond industry and the distribution of its proceeds through meaningful government targeted poverty reduction programmes.

Like the Economist, Global Witness (a UK-based non-governmental organisation which investigates the role of natural resources in funding conflict and corruption around the world) has just reported this November that in Sierra Leone KPCS experts assess the illicit trade to be between 15% and 20%. However, the Economist believes the real monetary value attached to smuggled diamonds from Sierra Leone is between $30m and $160m. This is partly attributed to our government’s reluctance to use a digital-mapping system that could improve the country’s poorly administered concession-licensing scheme.

The current licensing scheme is believed to have been used by government officials to grant themselves diamond trading licences through some 2,000 small businesses using different trading names. This practice goes virtually unmonitored. Any digital-mapping system has the potential of identifying, among others, the proprietors or financial backers of those small businesses and the sources of their finances to engage in the diamond trade in the first place. This is certainly something some government officials would not want to see happen for fear that it would expose them. Hence, the actual revenue which government could have realised from an effective monitoring system has been obstructed due to personal and not national interest.

Like in other countries, including Cote d’Ivoire, Ghana, Mali and Liberia, political will for effective implementation of the KPCS is waning. This problem cuts across diamond producing countries. Imagine Eugene Shannon, Liberia’s new mines minister saying Liberia “...is desperately in need of revenue and illicit mining will continue, you cannot control it completely”. It is for this lacklustre official government attitude to corrupt and inefficient implementation of the KPCS that a meeting was held last week in Gaborone, Botswana supported by United Nations to put new zest into the Kimberley Process.

In Sierra Leone, we have seen evidence that progress is achievable. The government is asked to continue to demonstrate leadership in curbing corruption in the diamond industry and other domestic revenue sources. It is only by so doing that poverty could be eradicated,and a better standard of living guaranteed for all Sierra Leoneans who have an inalienable right to benefit from the natural resources of the country. A successful government would like to see itself achieving these, if nothing else, and reducing the causes of inequality, friction and conflict.

Photo: Mohamed Swarray Deen, Sierra Leone’s Mineral Resources minister.

About the author:

Hassan-Morlai is a post-graduate law student in the United Kingdom.He is an alumnus of St.Francis secondary school in Makeni, northern Sierra Leone.

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