From rest room paper and child system shortages to skyrocketing world fuel costs, the previous two years introduced challenges throughout the globe Particularly, the COVID-19 pandemic and the Russia-Ukraine Battle have highlighted the interconnectedness of the world’s economies, particularly concerning useful resource administration and provide chains. It has additionally uncovered, greater than ever earlier than, who advantages and suffers in these interconnected commerce offers. As probably the most pure resource-rich continent on the planet, but extensively thought of probably the most impoverished, this disconnect raises the query: the place is Africa’s wealth going?
To look at this query, I can be simply one among Africa’s considerable and priceless sources—diamonds. To take action successfully, one ought to put Africa’s poverty challenge into perspective. In 2018, the common poverty fee in Sub-Saharan Africa was roughly 41 %, and of the world’s 28 poorest international locations, 27 had been in Sub-Saharan Africa. Whereas it should be acknowledged that some progress has been made, the COVID-19 pandemic has stalled many efforts at development, even exhibiting regression to poverty ranges usually.
“Blood Diamond” Provide Chain
Diamonds characterize an business price over $81.4 billion per 12 months, with 65 % of world manufacturing sourced from Africa. Whereas they’re a high-end, luxurious useful resource, the method of acquiring diamonds from the earth is just not practically as glamorous. Human rights violations plague the diamond mining business and generally embody youngster labor. Circumstances are sometimes atrocious with labor-intensive and dangerous work, scandalously low pay, violent administration or risk of violence, and harrowing impacts on close by communities. The mining business can also be riddled with battle, giving rise to the time period “blood diamonds” within the early 2000s. This refers to diamonds produced from warfare zones, gas conflicts, and even assist fund armed teams or rebellions.
Inspecting the diamond provide chain begins on the supply—the miners themselves. Whereas sources and numbers differ from nation to nation, the pay is commonly practically negligible, whether or not youngster or grownup. Practically 1,000,000 African miners make a wage of lower than $1 per day. Inside diamond mining, there are two essential forms of mines: industrial mines and artisanal/small-scale mines. Artisanal mining operations are sometimes much less formal and due to this fact much less regulated, making it more durable to crack down on unlawful mining operations or implement efforts to reduce human rights and dealing situation violations.
The availability chain begins to obscure from the mines because it travels and crosses a number of borders by means of the varied phases of growth in the direction of its last product. Put merely—these mining operations feed into merchants or buying and selling hubs. Two of the highest buying and selling hubs on this planet are Belgium and the United Arab Emirates (UAE), with the latter overtaking Belgium because the main tough diamond buying and selling hub in 2021. In response to the CEO of Dubai Multi Commodities Centre, $22.8 billion of tough diamonds had been traded by means of UAE in 2021 alone. Though African diamonds don’t account for the whole thing of that determine, the disparity from $22.8 billion to $1 per day is staggering. If not the laborers, who else advantages from that revenue margin? Presumably, it might be the homeowners of the mines and the federal government from which the diamonds originate. Moreover, if the governments should not correctly distributing and regulating these earnings, I consider that it ought to fall to the worldwide market to implement and implement such rules by means of calls for for transparency and moral sourcing.
It’s at these buying and selling hubs that the Kimberley Course of Certification Scheme (KPCS) is enacted and issued. Carried out in 2003, the Kimberley Course of Certification Scheme (KPCS) is an lively worldwide safeguard in opposition to blood diamonds—or battle diamonds—with the aim of accelerating transparency round diamond sourcing. The KPCS is without doubt one of the solely present worldwide rules on the diamond commerce—another rules are as much as every nation to find out. Nevertheless, the time period “battle diamond” inside the KP certification course of solely qualifies diamonds which have benefitted or contributed to insurgent actions, which vastly limits the scope of what may conventionally be thought of “battle.” For instance, the KP doesn’t take into account human rights violations inside the mines or environmental impacts in its analysis, that are definitely blind spots in its mission to “clear up” the diamond provide chain.
As well as, having the KPCS happen at this stage implies that many home actors are missed in its analysis. Since these buying and selling hubs are sometimes worldwide and never positioned internally within the nation of the diamond’s origin, it’s the buying and selling hub nation that’s listed because the exporter. This leaves many loopholes and missed steps inside the KP certification course of, so its stamp of approval is just not practically as complete and reliable accurately. This additionally obscures the traceability of the diamonds, so many main diamond retailers should not even certain the place or what mines the diamonds they’re promoting come from.
Submit KP certification, the diamonds enter what is known as the midstream and downstream portion of the availability chain. This consists of chopping, sprucing, manufacturing, and shopper and retail gross sales. This course of happens globally, and diamonds usually undergo every step of those processes in numerous international locations, altering palms and borders usually, which may contribute to traceability difficulties.
Botswana’s Success Story
The diamond mining business represents greater than 40 % of Botswana’s GDP and 90 % of its exports. Given this, one may count on Botswana to be a sufferer of the “pure useful resource curse,” nevertheless, it’s ranked among the many high 5 highest GDPs per capita and the high 5 most democratic international locations in Africa. Botswana has been largely in a position to obtain this success by means of strategic applications and insurance policies, together with inside the diamond provide chain course of.
One such contributor is their partnership with DeBeers, whom for the reason that discovery of main diamond reserves in Africa, has “entered right into a 50-50 three way partnership with the federal government…[and has] additionally offered the federal government a 15 % stake within the firm,” displaying a real partnership quite than exploitation. The corporate additionally prides themselves on their company social duty, demonstrated by means of the numerous gesture of closing its main diamond sorting facility in London and opening a brand new one in Gaborone, creating native employment alternatives and offering the chance for Botswana diamonds to stay in Botswana for a bigger portion of the availability chain course of. The corporate may be very selective about its sourcing and supplies a assure that one hundred pc of the diamonds they promote are “conflict-free.”
One other consider Botswana’s success story additional shows the nation’s dedication to transparency and truthful mining practices. The Botswana authorities is lobbying to create a brand new, everlasting headquarters for the Kimberley Course of in-country. Within the phrases of Botswana’s President Masisi, “We’ve got the whole lot to lose if diamonds are badly managed…now we have used the whole lot we’ve bought from diamonds for colleges, for roads, for medication, for creating our human useful resource[s].”
The Larger Image
To make sure that African international locations expertise the total advantage of their pure useful resource wealth, change must first be demanded and enforced on the high of the availability chain. Like DeBeers, firms worldwide ought to intently look at their provide chains to make sure that they’re sourcing from mines and drill websites that pay their workers dwelling wages, present secure working situations, and forestall youngster labor the place doable. Nevertheless, it ought to be famous that in some instances, outlawing youngster labor outright could do extra hurt than good at this level, provided that many households depend on extra sources of earnings. As well as, firms ought to start requiring elevated transparency from buying and selling hubs and “middle-men” within the provide chain. Change at first of the availability chain can be simpler made and enforced if particular completed merchandise might be traced again to their origin.
These oversights all through the diamond provide chain are echoed within the industries of Africa’s different considerable pure sources, together with: platinum, cobalt, phosphate, gold, copper, coal, iron ore, lead, uranium, petroleum, pure fuel, and many others. Whereas there are successes corresponding to Botswana’s diamond business, some international locations, sadly, face challenges with authorities corruption or instability. These parts can contribute to why earnings made within the pure useful resource sector are misplaced or not reinvested within the precise laborers or improved working situations.
Taylor Laube-Alvarez was the Director’s Workplace Intern on the Wilson Heart Africa Program for the Summer time 2022 time period (Could-August). She is at the moment a pupil on the College of Minnesota, pursuing a bachelor’s diploma in International Research and Biology, Society, & Setting.
Picture Credit score: A gaggle of males washing the soil and dealing the land in quest of diamonds within the artisanal mines of Sierra Leone by Belen B Massieu/Shuterstock.com
The opinions expressed on this weblog are solely these of the authors. They don’t mirror the views of the Wilson Heart or these of Carnegie Company of New York. The Wilson Heart’s Africa Program supplies a secure area for numerous views to be shared and mentioned on vital problems with significance to each Africa and america.
