News Archive: September 2005
Angola: The long road to recovery September 15, 2005
Angola: The long road to recovery
Sep 15th 2005 | LUANDA AND LUENA
From The Economist print edition
Three years after the end of its civil war, Africa's second-largest oil producer is still licking its wounds
FOR Helen Cahamba, exile is finally over. The 46-year-old widow, who fled Angola in 1976, has just returned from Zambia with her seven children and four grandchildren. Back now in Luena, in Moxico province, she feels at home. Since the end of the country's 26-year civil war in 2002, over 320,000 Angolan refugees have come back, and the UN will soon stop its repatriation programme. The end of fighting has brought some improvement and great hope. But in spite of the country's vast oil and diamond riches, prosperity for most Angolans is still a distant dream.
Despite occasional violent incidents, the seeds of war seem finally to have been removed. The death in 2002 of Jonas Savimbi, who led the National Union for the Total Independence of Angola (UNITA) with an iron fist, finished off the exhausted rebel movement. About 100,000 former rebels have since been demobilised, and over a third have been helped with training or jobs. UNITA is now part of a government of national unity dominated by its former enemy, the Popular Movement for the Liberation of Angola (MPLA). Isaias Samakuva, UNITA's new leader, is working to turn the guerrilla movement into a democratic political party.
The country could take another step towards recovery next year with the first elections since 1992. No date has yet been set, and UNITA has accused the government of José Eduardo Dos Santos of dragging its feet. But the problems involved in organising a poll are daunting. About 750,000 Angolans were killed in the war and a further 5m fled, so nobody knows exactly how many people live in the country. Many have no identity documents, and most roads and bridges are destroyed, which makes registration even harder.
Some signs of recovery are visible, though not everywhere. In Luanda, swanky office buildings are going up and informal shacks gradually being demolished as residents are relocated to new houses. The local Toyota garage reports that car sales have more than tripled since 2002. Some provincial capitals are also showing signs of improvement. But in the countryside the situation is worse. Landmines still make farming and transport hazardous, and UN food aid has been scaled back for lack of money.
The irony is that Angola, where 70% of the people live in abject poverty, is rich. With over 1m barrels extracted every day, it has become the second-largest oil producer in sub-Saharan Africa, and volumes are expected to double by 2008. Oil, which provides close to 50% of the country's GDP and over two-thirds of the government budget, has turned Angola into one of the top destinations for foreign investment in the region. It is also the world's fourth-largest producer of diamonds. The economy grew by almost 12% last year, and could do even better this year. But too little wealth trickles down to ordinary Angolans.
Much of the oil production has already been mortgaged. Angola's foreign debt now stands at about $9.5 billion—half of GDP. With only limited access to cheap borrowing, the Angolan government has turned to commercial, oil-backed debt. In 2003-04 alone, it raised $4 billion from commercial banks and bilateral credit lines against future oil revenues. Vast amounts of money have also been nabbed by a small elite, and Angola is considered one of the region's most corrupt countries.
Some within the government have been seeking more openness and reform, though it is difficult to know how far they are willing, or able, to go. But in a review of government economic policies published in July, the IMF reported progress. The budget has been unified, suggestions for reforming the oil sector published and information on oil revenues released. The budget deficit has been cut, and inflation has dropped from over 106% in 2002 to 31% last year. Still, reform has been slow, and with the price of oil at over $60 a barrel, the government has little incentive to heed advice (let alone borrow money) from outside donors such as the IMF.
It is essential, to keep Angola stable, that its wealth is shared more fairly. A rebel group fighting for independence in the oil-rich enclave of Cabinda seems to have been defeated, but a heavy-handed military presence there is alienating many. Though the region now gets more money from the government and oil companies, a general feeling of discontent is easy to tap into. A recent report also paints a grim picture of human-rights abuses in the diamond-mining Lunda provinces in the east, where locals feel cheated and angry.
Next year, Angolans will at least have a chance to speak through the ballot box. But they may struggle to find an articulate and compelling plan for their future from either the ruling party or the opposition. Until the country's leaders are more interested in the country's welfare than their own, elections are unlikely to bring the drastic changes Angolans need so badly.
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African state seeks diamond gain September 01, 2005
African state seeks diamond gain
The Republic of Congo is seeking to prove it does not deal in so-called conflict diamonds - gems sold to fund wars - to regain international trust.
The Central African country was removed from a list of nations recognised as legal diamond dealers last year after being widely accused of smuggling.
It could not explain the gap between its known production and total exports.
Now French researchers will certify its output, a step Congo hopes will help it to regain legitimate trading status.
International agreement
Scientists from the Office of Research Studies on Geological Resources are visiting the Congo Republic's rough diamond mines as it tries to rid itself of the damaging tag of being a supplier of 'blood diamonds'.
Congo Republic was expelled from the Kimberley Process - an international certification scheme set up to prevent the trade in conflict diamonds - thus preventing it from trading with other member states.
“They will have to demonstrate they are giving the right facts and are able to control their borders,” -Eli Izhakoff, World Diamond Council chairman
The scheme - whose 43 members are responsible for 99% of the global trade in rough diamonds - requires its members to identify the origin of its diamonds and guarantee that they are legally exported.
Congo could not satisfy the watchdog that its import-export controls were robust or justify a huge discrepancy in exports versus production.
Although its known production was only 50,000 carats a year, it was exporting three to five million carats.
'Smuggling hub'
The Democratic Republic of Congo and the Central African Republic have long accused their smaller neighbour of helping to smuggle diamonds out of the two countries as well as Angola.
Human rights groups have accused Congo Republic of being a "hub" for the illegal diamond trade, the proceeds of which have been used to buy weapons and fuel long-running conflicts in central Africa.
THE KIMBERLEY PROCESS:
Established in 2002, it has 43 members including Sierra Leone, Democratic Republic of Congo and Angola. It governs annual production worth $8.5bn and annual trade worth $20bn, 99% of the world's total output.
Congo Republic initially proclaimed its innocence but subsequently froze its diamond exports and said it would act to stop illegal trading.
Before it can be considered for re-admittance to the Kimberley Process, the Congo Republic must provide verifiable details of its output and trade controls, something which the French visit appears designed to achieve.
"The experts will begin their task as soon as they arrive," Jean-Marie Djama, an advisor to mines minister Pierre Oba, said after the government announced the researchers' visit.
Actions not words
Industry bodies remain sceptical about whether Congo will be given a clean bill of health, given its previous history of non-compliance.
"They will have to demonstrate they are giving the right facts and they are able to control their borders and diamond imports and exports," Eli Izhakoff, chairman of the World Diamond Council, told the BBC.
"There have been a lot of statements from the government but actions speak louder than words. They have to meet these requirements."
Human rights groups claim the Congo Republic has continued to export rough diamonds since its expulsion, despite claims to the contrary.
"Congo Republic has little or no diamond production of its own and acts as a conduit for illicit diamond smuggling," says Susie Sanders, from non-governmental campaigning group Global Witness.
"It is critical to have this survey but it is not going to exonerate the country from its past behaviour."
Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/4198408.stm
Published: 2005/09/01 13:36:10 GMT
© BBC MMV
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Diamond town loses its sparkle September 01, 2005
Diamond town loses its sparkle: After mines shut, South Africans worry about future
By Peter Apps, Reuters | September 1, 2005
KIMBERLEY, South Africa -- Kimberley's diamonds once drew prospectors from all over the world, but the end of underground mining in the remote South African town has left some wondering how it will survive without them.
Hundreds of workers still descend one-third of a mile underground at the town's three mines before dawn, but only for essential maintenance. Production has stopped and although consultation with workers continues, gem giant De Beers says it doubts mining will ever restart.
''We are moving towards the final cessation of underground operations," said David Noko, the company's operations manager in Kimberley. ''It has hit morale. Shock, frustration, anxiety -- there are all of these things."
Diamond prices have risen some 5 percent in the last year, fueled mainly by demand from middle-class Asian customers. But the firm says the mines that once produced most of the world's gems are simply too exhausted and expensive to run profitably.
While underground mining accounts for only about 1,300 jobs in a city of roughly 200,000 people, many locals worry the loss of the miners' spending power will hit businesses from bars to taxi operators to engineering firms that may now shift elsewhere.
De Beers -- created here by empire builder Cecil Rhodes in 1880 and now 45 percent owned by miner Anglo American -- says it will not abandon the town, but some locals are skeptical.
''People are not falling for that," said Johan du Plessis, managing editor of the Diamond Fields Advertiser, founded at the height of the diamond boom.
''De Beers has taken so much out of Kimberley for so long, and all they're putting back in is a few million rand."
The discovery of diamonds in the area in the 1860s sparked a rush of prospectors. Diamond revenues funded the growth of South African industry and gold mines, which themselves helped finance colonial ruler Britain through two world wars.
''People came from all over the world," said Kimberley Museum curator Derek Shaefer. ''On one ship, everyone including the captain jumped ship to come here and dig. That was the lure of diamonds."
Initially digging by hand, thousands of men dug holes hundreds of yards deep. The largest -- known as the ''Big Hole", which De Beers now hopes to make a major tourist destination -- still dominates the center of town. But others are being filled in.
High-tech recovery of previously missed gems from the spoil heaps now accounts for 90 percent of Kimberley's diamond output, extending the operation's life but employing only a few hundred.
De Beers says it hopes to avoid throwing all its staff out of work. The firm's global headquarters remains in its original corrugated iron roofed building in the town, and services such as the firm's IT support and payrolls have relocated there to boost employment.
But some 300 miles from South Africa's commercial heartland Johannesburg in the remote and sparsely populated Northern Cape Province, Kimberley must face the fact that without diamonds it would never have existed.
Now, the town hopes the ''Big Hole", a De Beers visitor center under construction, and a string of game farms and hunting lodges in Northern Cape Province will tempt visitors into stopping off on the road to Cape Town.
''I think it can work," said De Beers project director Brian Harkin. ''We've lots of ideas. I've always wanted to put a roller coaster down a mineshaft, but I don't know that they'll go for that."
The Boston Globe
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