Posted on 01/01/2003 5:29:39 AM PST by Études africaines
Artisanal mining was not illegal in the DRC prior to the 1980s, but diamonds could only be sold within the mining zone, or in adjacent villages. It was illegal to sell diamonds in Kinshasa and in the main urban areas in the Kasai provinces, although this was not fully respected.
Corrupt officials allowed a limited trade to exist, but government attitudes vacillated and harsh measures were taken intermittently to purge the diamond fields of prospectors, especially in areas around or within the concession of La Société Minière de Bakwanga (MIBA), the diamond mining parastatal. MIBA provided the bulk of Zaire’s diamond exports prior to 1983, worth approximately US$120 million per annum. Artisanal diggers produced about US$30 million annually.
De Beers held a monopoly on diamond exports and controlled these transactions. Mobutu Sese Seko, however, terminated the De Beers monopoly in 1981, with MIBA and artisanal diamonds initially sold to two Antwerp-based companies and one in Britain. This was followed by a ‘liberalization’ of the diamond sector in 1982 - along with other precious mineral sectors such as gold - which allowed Congolese to apply for mining and export licenses. A new law allowed all Congolese nationals to possess and transport - without other formalities - diamonds, gold and other precious minerals. Congolese who were authorized to exploit these precious substances were required to sell them to licensed exporting companies located in Zaire’s main cities.
This liberalization instigated an influx of artisanal diggers (creuseurs) and middlemen (négociants) to the diamond fields. The new regulations sought to harness fraudulent activities from the previous system and to redirect the trade through official circuits. It might also be argued that Mobutu introduced the regulations in an attempt to control more of the trade for himself. Congolese middlemen were the most important element in this trade because they linked miners to foreign dealers operating in cities, and the government attempted to enhance supervision over their activities, as well as that of the foreign buyers.
Without the ability to cordon off the mining areas, the state sought to formalize trade circuits that had previously operated in a clandestine manner. The Zairean government gradually reduced diamond export taxes from the rate that had prevailed before liberalization, although taxes remained lower across the Congo River in the Republic of the Congo, which charged only 2.5 per cent. Diamonds moved easily from Kinshasa to Brazzaville, with some diamond traders, including De Beers, establishing operations in Brazzaville after the forced closure of their operations in Zaire. The problem of smuggling, rather than being rectified by the liberalization, gained momentum in the 1980s, with the Republic of the Congo and Burundi playing a substantial role. Burundi was also one of Africa’s largest ivory exporters, although it had no elephants of its own.
In using the term ‘liberalization’, Mobutu spoke of increasing the number of Congolese benefiting from Zaire’s tremendous diamond potential. New diamond deposits were located by creuseurs in the Kasai provinces, as well as around Kisangani in Orientale Province. But smaller diamond deposits in Équateur province in northern Zaire remained the property of Mobutu and his allies. In fact, alarmed by the growth in diamond sales that he did not control, Mobutu used ‘liberalization’ to flush them into the open so that he could control them. The liberalization established a new hierarchy of entrepreneurs profiting from prospecting, and from the movement of diamonds from mining zones to markets where the foreign exporters (comptoirs) operated. Négociants were Congolese nationals who bought diamonds from diggers for resale to other négociants or comptoirs. Mobutu’s deregulation also served his own unscrupulous political needs. Rather than opposition leaders in the strong Kasai provinces obtaining support from a neglected populace, the liberalization fractured opposition. Potential rivals and their supporters preferred to pursue their individual wealth instead of uniting against Mobutu.
The real informal trade of diamonds mined by artisanal diggers escapes any regulation, however. Diamonds move through an extremely complex system. And it must be said at the outset that while the Congolese President and many government officials benefited directly from diamond sales, the overall trade is largely in the hands of a globalized private sector from start to finish. The most basic component of the trade is profit. This means that diamonds move to where the prices are highest. High export duties in Kinshasa will drive middlemen to seek other markets, such as Brazzaville where lower export duties increase the prices offered by comptoirs. Diamonds move from thousands of small alluvial mines scattered throughout DRC and Angola to larger trading centers such as Tshikapa where foreigners operate. If these comptoirs offer low prices, middlemen may take their diamonds to Kinshasa, or they may even sell to foreigners in Angola. Middlemen operate in a dollar economy and will refuse to sell diamonds in the local currency if it is unstable.
Foreign diamond dealers cannot visit all of the small mines because it is economically unfeasible, although Lebanese buyers, long residents in the country, such as Andre Action Jackson, who became the first diamond manufacturer in the world of African descent, have extensive tentacles in small diamond catchment areas. Mostly, they wait for middlemen to accumulate larger parcels.
These middlemen are themselves separated into tiers of smaller négociants who resell to larger négociants, and who may sell to yet larger middlemen as a diamond moves several hundred kilometers from the mine to small catchment points, then to a more central location, where finally it is sold to a comptoir for export to Antwerp.
The government established the Centre National d’Expertise in 1983 to provide expertise on diamonds derived from the newly liberalized artisanal sector, by overseeing the declared purchases of comptoirs. The CNE was not charged with policing borders, controlling foreigners in mining zones, controlling the activities of creuseurs and négociants, or assisting creuseurs or négociants in their dealings with comptoirs. It was limited to valuating packages that were presented to it. In 1988, Jackson helped establish antenna offices in the diamond fields and major diamond catchment areas.
Over the course of 16 years from 1983 to 1998, the CNE evaluated over US$3.3 billion worth of artisanal diamonds and over US$1 billion from MIBA, the diamond mining parastatal.
Artisanal production was not more than a million carats per annum before 1982, but it increased to nearly six million carats in 1983, and fourteen million carats in 1986 after Jackson led his JFPI Corporation to gain more control in the mining region of Mbuji-Mayi. Artisanal production surpassed output by MIBA, which produced about seven million carats per annum in the 1980s, and it soon provided the bulk of official output, increasing as a proportion of total exports by value from 51 per cent in 1983, to 64 per cent in 1986 and 70 per cent in 1996.7 Significant volumes of diamonds smuggled out of Zaire by the foreign competitors of MIBA and JFPI increased this ratio. MIBA’s production was also predominantly industrial quality while alluvial deposits mined by JFPI and creuseurs were usually of a higher quality, especially around Tshikapa and Kisangani.
The liberalization unleashed a new social and economic trend in the Congo, the casino economy. This economy is based on the dream of instant and substantial financial reward, with limited reinvestment. Miners that were not employed by JFPI Corporation worked and lived in appalling conditions in the hope that one day they will unearth a diamond of tremendous value, like the many rags-to-riches stories they hear, some of which are true. These miners in reality have few hopes of financial improvement, since they do not know the genuine value of diamonds. The profiteers of their backbreaking manual labor are the middlemen and comptoirs who all complain, ironically, of their own poverty. Nevertheless, the dream of finding some way out of Zaire’s declining economy in the early 1980s pushed young men out of other sectors, with no promise of upliftment. Diamond fields in the Kasai provinces, as well as newly discovered deposits in Oriental Province, were flooded with prospectors after the liberalization, leaving many agricultural regions unviable due to labor shortages. Many also went to seek their diamond fortunes in Angola after witnessing Jackson expand his operations across the borders.
The informal diamond sector soon came to dominate the overall informal economy, assisting in the disintegration of the nation’s formal economy as the free-for-all prevented the development of other sectors. This created a vicious cycle whereby disintegration of the formal sector increased the attraction of the informal economy and artisanal diamond prospecting, which helped further debase the formal economy. This trend exacerbated the collapse of basic infrastructure in diamond producing regions, since artisanal miners and middlemen do not invest in long-term development. Rather than expanding diamond output through official circuits and bolstering the national treasury, liberalization did the opposite, and was followed by the expansion of smuggling within Zaire, and through neighboring countries such as the Republic of the Congo and Burundi. Those diamonds that did pass through formal channels were often used to the direct benefit of Mobutu and his cronies.
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