Nelson Mandela, I7 November 1999

There is a burgeoning literature and ongoing focus on the negative role played by diamonds in Africa. From Sierra Leone to Angola they have been labelled as a "Guerrilla’s best friend" and as "conflict diamonds". Yet this sweepingly condemnatory approach ignores two important points:

First, diamonds are no more the source of the problem in Africa's wars than is the pumping of oil and unregulated distribution of its proceeds, or the granting and delivering of aid in the absence of transparent governance. Diamonds have been used to fund African guerrilla movements - that much is undeniable. But the are also an easy campaign target partly because they are viewed as less of a strategic national interest than a luxury item

Second, negative labelling could threaten, however, to undermine the development opportunities they offer. Indeed, diamonds can -- as Botswana and others have indicated -- be an important, if not critical, tool in placing states on an economic growth path that prevents such as slide into conflict and societal implosion.

This talk examines these issues and highlights a number of short and longer-term solutions to the problems posed by the misuse of Africa's developmental assets.

A quick survey on the internet illustrates the bad press that those who mine and market diamonds have to contend with: "Africa's Gems: Warfare's Best Friend"; "Africa's Diamond Wars"; "Africa's Worst Enemy"'; "Diamond Mercenaries of Africa"; "Diamond Woes linked to Congo conflict"; "Diamond hunters fuel Africa's brutal wars", and so on.

According to the arguments generally presented in such reportage, the global US$7 billion rough diamond industry land US$42 billion annual jewellery business) is closely linked to the perpetuation of conflicts in the Congo, Angola, Liberia and Sierra Leone. In Angola, Jonas Savimbi's UNTA movement has kept up its campaign against the Luanda government in spite of an international sanctions regime through income derived from diamond mining and smuggling. It has been estimated that UNITA earned US$3.7 billion through illegal diamond sales between 1992-97. In Sierra Leone, rebels of the Revolutionary United Front (RUF) under the leadership of Foday Sankoh engaged in barbaric atrocities against the civilian population, an orgy reportedly fuelled by an estimated income of US$200 million’s worth of diamonds between 1991 and 1997.

As one analyst has argued: `Most people would be horrified to learn that their diamond jewellery had financed the purchase of landmines or guns in one of Africa's brutal conflicts". Yet estimates are that only between 3.7% (the industry figure) to 15% (the highest NGO estimate) of diamonds come from conflict areas -- this before sanctions were imposed on exports from the affected countries.

Although attempts have been made to distinguish between "conflict" and "conflict-free" diamonds, the long-term danger is that consumers are not that discreet and that the image of diamonds will be tainted and their development value diminished by such statements.

In contrast to this usual press, a cursory study of six diamond producing countries - Angola, Botswana, Democratic Republic of Congo (DRC), Namibia, Sierra Leone and South Africa -- provides an illustration of the potential for diamonds as a developmental asset.

The total value of diamonds to these six countries annually amounts to more than US$3.5 billion, but could be as high as (even higher than) US$5 billion at current production levels. Putting this into perspective, the total combined annual GNP of sub-Saharan Africa's 48 economies is just US$3()0 million (roughly the same as that of Belgium's), of which more than 40% is South Africa's and 11% belongs to Nigeria. The remaining 46 countries -- or 450 million people – survive on US$140 billion. US$3.5 billion goes a long way in that context.

In Botswana, to take another illustration, the world's largest diamond producer, the industry employs around 6,OOO people mostly in mining and about ten percent in cutting of the country's 1.5 million population and accounts for two-thirds of government income. The annual per capita income of US$3,300 is more than six times the sub-Saharan African average; while the annul average economic growth rate between 1975 and 1995 touched nearly 10%. Diamonds were discovered only in April 1967.

In Namibia, diamonds account for 40% of export earnings where the value of exports total more than 50% of GDP. For each dollar earned by the sale of diamonds, Windhoek takes approximately 85c through its share of the industry and taxation. The industry employs around 5,000 of the Namibian work force directly, though the importance of this sector cannot be under-emphasised in an environment where there is more than 35% unemployment. Namibia's GNP per capita is today more than four times the continental average.

Yet, we know, of course, that in other countries too much of the potential proceeds of diamonds are squandered, or used to fuel deadly conflicts by African warlords or by supposedly legitimate heads of state. We don't have to look too far north from South Africa to see the latter instance.

But it is not diamonds or, for that matter, oil that is the source of the problem in Africa's conflicts. Rather it is the lack of conditions of governance and regulation. And the absence of these essential features is encouraged where the international community is all too ready to backstop corrupt and inefficient African governments, and sometimes even collaborate with the worst elements in the distribution of Western largesse.

This was the case in Somalia, for example, where the relief effort provided a pernicious incentive for disorder and promoted the rise to power of armed groups within Somali society. This is predictable where the state has broken down in Africa, where the complex relationship between patronage and the means to distribute it rests at the centre of political power. The paradox of aid remains that those countries most requiring assistance are, by definition, unlikely if not unable to use it in the manner intended.

The answer does not simply lie in labeling potential assets such as diamonds a "guerrilla's best friend". Such commodities can, and have proven to be, invaluable in assisting African countries on steep and difficult developmental paths.

Technical solutions lie in the certification or certification of diamonds, but this is an expensive and apparently technically challenging process, and one even more difficult after the diamond has been cut.

More general solutions lie in the sanitation of diamond purchases through means (an issue dealt with by others at this conference); but this presumes that the purchaser is both big enough and responsible enough to see the need for his approach. Many simply will not want to know where the stones originate, particularly if the price is cheap. In the end it will come, unfortunately, down to premiums.

And any proposal for an knee-jerk overall diamond embargo on African conflict states -- such as that proposed in the US Congress by Representatives Tony Hall and Frank Wolf -- could cut off an important development source for legitimate regimes, even those in the same country as rebel movements such as in the case of Sierra Leone and Angola. There is certain hypocrisy here, too, of course: why did the US not cut off oil purchases from the Abacha regime in Nigeria, or even from the MPLA in Angola when it was not the legitimate government?

Diamonds are, pardon the expression, a soft target.

As Terry Lynn Karl has argued, "Diamonds are not devils. What matters is that there be a tradition of good government and compromise in place prior to the exploitation of these resources". What is needed is a practical and sustainable solution.

The overall solution must, therefore, rest in trying to instill conditions conducive for the creation of an effective state in Africa. The basis for this future lies in a combination of a law abiding society, strong governmental system, functioning economy, absence of conflict, good infrastructure, and an honest, limited and effective government.

In the short-term rather than pinpointing diamonds, solutions to the political economy of Africa's too many wars need to instead to focus on two related areas. First, the need for political solutions to the issues which give rise to many of these conflicts in the first instance. Second, the establishment of necessary regulatory regimes in promoting the effective harnessing of natural resources, whether they be diamonds or oil. Here the role of international organisations including the NGO community, and public business-government partnerships are central.

In the longer-term, this process has to build effective bodies in accordance with the needs of African states-- institutions that can enhance the quality of governance and do not try to intervene in or distort the markets as a way of distributing political favours, as happened in East Asia in the late 1990s. Nor should the need for an effective state dedicated to improving the quality of governance be used as a pretext for a large bureaucracy. If anything, its goal should be to implement systems that reduce the presence of government.

The role of the international community needs to be honestly assessed. As Anglo American's Michael Spicer warned recently, "the old suspect 'national interest’..often suits foreign governments to be suitably one-eyed in their morality"'.

Here the involvement of senior regional leadership in diamond production and their relationship abroad need to be highlighted and scrutinised. For example, the role of Rwanda, a close regional ally of Washington, should be closely examined in terms of UNITA's smuggling routes, as does Liberia's in laundering rebel diamonds from Sierra Leone.

Making the continent safe to do business through transparency and accountability has short-term costs not only for African e’lites. Western companies and governments perpetuate these conditions through their own business practices, in the same tray that aid agencies perversely thrive in disaster and conflict situations. For it is not just so-called "conflict diamonds", but also oil and aid that can, in the absence of good governance, cement the logic of the political economy of Africa's wars.

As hinted earlier, this process should thus also involve linking the allocation of aid to governance and transparency. This is an immediate and powerful ever that can be applied by the international community. In 1997, Angola received US$436 million (or 9.9% of GNP) in Overseas Development Assistance (ODA); Sierra Leone US$130 million or 16% of GNP."

Diamonds, like oil and industry, can offer prosperity. Botswana and Namibia and South Africa are testament to this fact. Without such an understanding, the danger is that this prospect is not divorced from the failings of corrupt and unaccountable governments and leadership in Africa.

International NGOs have played a very useful role in highlighting the pernicious combination of failing governance and abundant and easily accessible natural resources, and in doing so have also established an independent, if informal regulatory regime. In doing so this has mobilised governments and business into action. But along with (quite rightly) highlighting the role of miscreants in using diamonds to perpetuate personal and sometimes illegal political and even criminal agendas, NGOs and international organisations should also take responsibility for scrutinising the practices around the sale of oil and distribution of aid. And transparency and accountability does not rest with African governments alone, but also with those countries outside of the continent that benefit from these practices.

I want to stress again that conflict diamonds are not just an African problem. And diamonds are not just for perpetuating conflict, but can be land have been) used most effectively for the development of conditions of stability and prosperity in Africa. It takes responsible governance for this to occur, not just in Africa, but also in the wider international community.

[International, Ministerial Diamond Conference Index]