Covid-19 Pandemic Drives Illegal Diamond Trade
Zimbabwe is among seven countries negatively impacted by stoppage of diamond sales due to the novel Coronavirus leading to an increases in illicit flows and rampant smuggling of the precious gems, a study has shown.
Findings of the new study conducted by the Kimberly Process Civil Society Coalition (KPCSC), indicates that the diamond sector has been hit hard by the coronavirus pandemic, disrupting activities across the supply chain.
In the study The Impact of COVID-19 on African communities affected by diamond mining’, KPCS reports an increase in opportunistic and criminal actors invading the sector luring artisanal miners into exploitative sponsor deals that entail selling gems at reduced prices.
In Zimbabwe for instance, the closure of official border posts is said to be leading to an increase of diamond smuggling to Mozambique via illegal exit points.
The KPCSC study outlines main findings from an assessment of seven African countries: Zimbabwe, Guinea, Cameroon, Sierra Leone, Lesotho, Côte d’Ivoire and the Democratic Republic of Congo (DRC).
The report, was edited by the Zimbabwe Environmental Law Association (ZELA), the Center for Natural Resource Governance (CNRG) and the International Peace Information Service (IPIS).
“The diamond sector has been hit hard by the coronavirus pandemic. The devastation is felt across the supply chain, not the least in various African countries that depend on this precious mineral in their socio-economic development.
“Operations in all surveyed countries, artisanal, small as well as large-scale have been affected by Covid-19 related measures. Exports have halted almost completely.
Across the region, there are reports of opportunistic and criminal actors stepping into this void, luring desperate miners into exploitative sponsor deals that force them to sell production at drastically reduced prices
“Also in Zimbabwe, artisanal miners indicated that regular buyers do no longer have money to trade, while new players are stepping in to buy at considerably reduced prices. While the formal market is being squeezed even further, this indicates that illicit actors may be stocking up on cheap artisanal diamonds, which they hope to sell with huge profits when the disruptions of international supply chains will be relaxed,” said KPCSC.
In Zimbabwe, CNRG found that women are disproportionately affected by this slowdown. Men often manage to circumvent restrictions by digging clandestinely, particularly at night, while this is much less evident for women due to particular security risks in the absence of social control and government oversight.
In Zimbabwe, worker numbers are also reduced and those who are allowed to work at ZCDC and Anjin Investments are required to camp onsite to reduce the risk of contamination through their family or other social contacts. The reduced production is moreover causing cash flow problems, which for ZCDC workers implies they have received no salaries since February
African governments were urged to address policy gaps, scale up responsible sourcing efforts, and to consider leveraging on the output of artisanal diamond miners through formalization of the sector.
KPCS also recommended that Corporate Social Responsibility (KPCS) is more nuanced and tailor made to address community vulnerabilities, some of which have been exposed by the Covid-19 pandemic.
Governments in all seven countries, were also implored to share information and data about the pandemic, with mining communities and seek ‘partnerships with organizations with appropriate networks, resources and expertise’.
“Corporate Social Responsibility (CSR) programs of the private sector should to be tailored to the specific needs and requirements of artisanal miners and communities affected by diamond mining, particularly in the light of the new challenges that emerge due to the Covid-19 crisis.
“Efforts should be scaled-up to formalize the artisanal diamond sector in order to eliminate avenues of illicit trade, avoid abuse of well-intentioned mining communities and promote national resource mobilization.
“All actors along the diamond supply chain, from producers over manufacturers to retailers, should, in their recovery from the devastating COVID-19 pandemic, be encouraged to not merely focus on restoring profits, but to continue scaling up responsible sourcing efforts,” said KPCS.
The KPCSC is the umbrella organization that acts as observer of the Kimberley Process on behalf of civil society, with most of its coalition members based in Africa, the world’s main diamond producing continent.
Representing communities affected by diamond mining and trade, KPCSC members strive to improve diamond sector governance, monitor diamond sourcing on the ground and articulate a grassroots perspective on sector at national, regional and international fora.