An investigation into the efficacy of diamond beneficiation as a fiscal resource mobilisation strategy: The case of Zimbabwe
Nzenzema, Ngonidzashe Clement
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Diamond mining is a highly contested area in the world, more so in Zimbabwe, while diamond beneficiation remains even more enigmatic. While some developed countries have managed to convert their natural resource riches into profitable financial gains, African countries including Zimbabwe have continued facing numerous challenges in attaining the same benefits. In Zimbabwe these challenges are especially evident in terms of shrinking fiscal space, liquidity problems, low industrial development, unemployment & underemployment, and a serious lack of appropriate skills, technology and infrastructure. This is despite being richly endowed with all manner of valuable mineral resources and precious stones, principally diamonds. The very high value and worth of the diamond therefore makes it a suitable candidate for enhancing fiscal resource mobilization. This study therefore seeks to analyse the efficacy of diamond beneficiation on resource mobilization for Zimbabwe. It relies on a mixed methods approach to get a fully nuanced perspective of the role minerals beneficiation can play in enhancing economic development through providing financing. Using various instruments, among them the survey questionnaire, the personal interview, documentary search and observations from personal encounters, the study explores the concept of beneficiation, analyzing its heuristic value to expanding the country’s fiscal space. Additionally, theoretical, conceptual and analytical frameworks were used to interrogate issues within the study. Anthony Downs’ “Issue Attention Cycle” has great significance in explaining developments within the Zimbabwean mining sector. Rational Choice Theories of Economic Action/Behaviour of public officials helped to identify and characterize decision making styles in the mining industry. Resource Nationalism, the newly emergent policy paradigm which has gained currency in developing countries has led to citizens and governments alike increasingly calling for more local ownership, processing and value added benefits to accrue to them. The major findings from the study indicate that there is scope for diamond beneficiation to enhance the country’s fiscal space, as seen in countries like Botswana, Belgium, China, India and South Africa. Although benefits from minerals beneficiation and value addition may not be perceptibly visible in the short term, the multiplier effects are easier to observe in the medium to long term and fiscal benefits may be subsequently accrued from the same. Thus there are further benefits that accrue in the long term including, employment creation, forex earnings, technology, skills and industrial development and modernization of the local manufacturing industry, leading to multiple upstream, midstream and downstream benefits. Beyond these issues, it also emerged from the study that governance issues, principally transparency and accountability frameworks, are crucial to ensure adequate remittance of mineral revenues to the fiscus.