Political Economy of Alluvial Diamond mining in Sierra Leone

Introduction:

Sierra Leone, with a total land area of 71,325 square km, is one of the smallest countries in coastal West Africa. Its relatively small area is endowed with natural riches that include mineral resources and biodiversity (Squire Chris B. 2001). Sierra Leone has recently emerged from a long period of political instability and civil war. The UNDP economic and social development indicators suggest that it is the poorest country in the world (UNDP, 2007). Subsequent to independence from British colonial rule in 1961 and following years of poor governance and economic mismanagement under Siaka Stevens' APC government the country's economy was nearing a state of collapse at the end of the 1980s. The protracted internal conflict of the 1990s destroyed most of the country's basic social and economic infrastructure, and extreme poverty became widespread and deeply entrenched. Significant academic attention has focused on the political economy of the war and the ensuing debate over whether or not diamonds were responsible for fuelling 'greed-based' insurgency (e.g. see Keen, 2005; Richards, 2003; Smillie et al., 2000). The 'Conflict Diamond' campaign of the 1990s launched by a coalition of well-known NGOs and civil society groups drew wider public attention to the link between diamonds war and state collapse (Hilson, 2008).

The geological nature of diamond deposits in Sierra Leone makes their governance and trade exceptionally challenging. Usually, [as in South Africa or Botswana] diamonds come from volcanic breccias occurring as diamondiferous dykes, known commonly as 'kimberlites'. Although Sierra Leone's diamonds can be found in kimberlite pipes, they are more commonly dispersed in the gravels of river beds and terraces as alluvial deposits. These deposits are refrred to as 'alluvial' and are "mined" over a vast area of the country's territory (Maconachie, R., 2009).
In contrast to South Africa, where diamonds are mined using mechanical means from deep reserves, in Sierra Leone it is not a rare occurrence to find a good quality diamond on the ground surface, particularly after rain. As such, an estimated 80 per cent of diamond mining in the country is carried out by 'artisanal' methods, and involves little more than digging and sifting through river-bank mud, sand or gravel with picks, shovels, buckets and sieves. Unlike deep-pit kimberlite mining, which can be fenced off and monitored carefully, artisanal mining remains virtually impossible to regulate or control because there are relatively few diamonds per hectare, people tend to actually live where the diamonds are located, and labour-intensive mining techniques are common. Consequently, owing to the highly lootable character of Sierra Leonean diamonds and the ease at which they can be appropriated, there has been a well-established history of smuggling in the country, which long pre-dates the onset of the war (Maconachie, R., 2009).
Political economy theorists are divided in their opinion on the resource curse of alluvial diamonds. One group is rather pessimistic about the alluvial diamond resources and its expected impact on Sierra Leone's economy. The two resource management solutions offered by political economy researchers viz. a) direct state control through legislation and b) privatisation of mining activities under state regulation are not likely to yield much results because the former being too expensive to enforce and the latter is almost impossible to execute due to the non excludable nature of the resource. Thus the resource curse is likely to continue leading the country to successive internal conflicts (Mehlum, H, et al.2006, Davies, V.A.B., 2009). Yet another group of political economists see diamond resource as an opportunity. During 1950's and 70's, diamond revenues were used to finance infrastructure development, including road construction, and the provision of clean drinking water and electricity. As a result, the diamondiferous areas—most notably in Kono and Kenema Districts—prospered and were important drivers of economic growth (Maconachie, R., 2009). Today, the sustainable development of the country's valuable mineral resources—which includes not only diamonds but also gold, rutile, bauxite and iron ore—is a government priority and has been a central tenet of the National Recovery Strategy (NRS) launched in October2002, and the Poverty Reduction Strategy Paper (PRSP) of March2005 (ibid.). It is also increasingly believed that mining can definitely contribute to enhance economic growth; increase government revenues that can be used to finance development initiatives and the provision of essential public services; create jobs; facilitate the transfer of technology; lead to the improvement or construction of essential infrastructure; and catalyze the growth of lateral or downstream industries. The various measures taken by the post-war Sierra Leone government for ensuring better management and transparency in diamond mining are met with variying degrees of success in different localities (ibid.).
II. Relevant issues: It will be interesting to investigate the political economy of alluvial diamond mining in Sierra Leone during distinct phases of the country’s history, viz. pre colonial time, colonial rule, post colonial pre-war regime and the post war (present). A few relevant issues connected with the diamond sector are presented as follows.
II.1. Resource Curse
The case of diamond resources of Sierra Leone is often cited as an example of 'resource curse' (e.g. Mehlum, H, et al.2006, Davies, V.A.B., 2009). As the country's Minister of Finance, James Jonah (2000) put it, 'the war in Sierra Leone is simply about diamonds'. The literature suggests the following economic phenomena associated with such a situation.
a) 'Dutch disease' where in a real exchange rate appreciation following a resource boom diverts factors of production away from sectors with positive growth externalities (Corden and Neary, 1982).
b) Political economy factors like rent seeking, corruption and political instability, including violent conflict (Collier and Hoeffler, 2004).
c) Commodity price volatility (Ramey and Ramey, 1995)
d) Open access/ commons problem where in any diamond found is one diamond less for the others to find, and the last miner imposing a cost on all existing miners, raising private return above social return (Davies, V.A.B, 2009)
e) Gambling for resurrection problem: tendency for a financially distressed firm to engage in excessive risk taking. If the risky project succeeds the firm gains disproportionately but bears too little of the cost. If the project fails it files for bankruptcy and walks away from its debt (Davies, V.A.B, 2009).

A large body of work has theorized that in failing states where there are large deposits of alluvial minerals that are mined 'artisanally', a nexus between lootable (high value-to-weight ratios) resource wealth, poor governance, under-development and conflict is charecteristic (Collier and Hoeffler 1998, 2004). In the case of alluvial diamonds in Sierra Leone this theory has been empirically demonstrated by a still larger body of work.
II.2. Unsustainable extraction and Environmental degradation
The open pit mines used during the war in the eastern province have endangered the life support functions of the ecosystem for humans and other living beings, as well as the possibility of using these regions for economic activities other than diamond production (Powlick, 2005). For instance, mining activities, particularly in the eastern and southern regions of the country have left vast areas of land deforested and degraded. It is estimated that between 80,000 and 120, 000 hectares of land have been mined out in different parts of the country with minimal efforts at reclamation. The uncontrolled exploitation of mineral resources, coupled with the absence of mitigating policies and conservation programmes over the years has resulted in downward spirals of environmental degradation and socioeconomic consequences (Brima Abu A. 2004)
Experts claim that years of uncontrolled digging under wartime conditions in Kono have more or less exhausted the Kono alluvials (Fithen, 1999). As part of his plan to control Kono diamonds, Siaka Stevens uprooted the old colonial government railway line through the south and the east (the axis of power for the rival Sierra Leone People's Party-SLPP) and replaced it with a main road leading directly to Kono through the Northern provincial centers of Makeni and Magburaka provinces. This helped to secure more control of the Kono alluvials for the northern dominated APC elites.
The top-down approach to enforcement of conservation policies reportedly has not facilitated the task of conservation. Local communities were required to surrender their lands to the government for conservation purposes; and they had no additional input to the process or benefit from it. Encroachments for agricultural purposes, hunting, illicit mining, timber, and firewood were therefore commonplace (Squire, C.B., 2001).
II.3. Diamond governance initiatives
There are two diamond governance initiatives that (in theory) aim to play an important role in the country's post-conflict development trajectory: the Kimberley Process Certification Scheme for rough diamonds (KPCS) and the Diamond Area Community Development Fund (DACDF).
1. KPCS: Following intense negotiations involving 35 countries, in 2000, the UN General Assembly had adopted a resolution supporting the creation of an international certification scheme for rough diamonds which was finally adopted at a ministerial meeting in Interlaken, Switzerland in 2002. According to the terms of the KPCS, each participating government must issue a certificate to accompany all rough diamonds being exported from within its borders, to ensure that they are 'conflict free'. Each country must therefore be able to track the diamonds being exported to their place of origin, or to the point of import, and it must meet a set of standards for these internal controls. All participating countries must also agree not to import any rough diamonds without an approved KPCS certificate. The scheme officially took effect, with over 45 signatory countries, including Sierra Leone. Today, the KPCS is held up by many industry observers to be the 'gold standard' of voluntary corporate social responsibility mechanisms and it is now backed by national legislation in more than70countries.Though KPCS has been heralded as a success its implementation in Sierra Leone is debilitated by the alluvial nature of diamond deposits (non excludability as detailed above), the artisanal nature of its extraction and the widespread illicit smuggling enabled by the lootable nature of diamonds and the characteristics of its trade (Maconachie, R., 2009).
A number of commentators have pointed out that the initiative has done relatively little to address the poverty, inequality and desperate working conditions that small-scale miners must endure on a daily basis (Silberfein, 2004; Olsson, 2006). Indeed, the diamond diggers who work at the bottom of the supply chain must endure particularly dangerous conditions, and many live on less than a dollar a day (Global Witness/ Partnership Africa Canada, 2004). It has been estimated that there may be as many as one million artisanal miners in sub-Saharan Africa who operate beyond the KPCS (DDI, 2005) and up to50 percent of Sierra Leone's diamonds still continue to leave the country illegally (Partnership Africa Canada and Network Movement for Justice and Development,2006).
2. DACDF: Over the past few decades, community-based, decentralized and participatory approaches to natural resource management have become 'standard practice' in development agendas across sub-Saharan Africa. Building on the popularity of previous community-based natural resource management (CBNRM) experiments elsewhere in Africa, the Diamond Area Community Development Fund was formally approved by Sierra Leone's Ministry of Mineral Resources in December 2001, as part of a broader reform programme for the diamond sector following the end of the war. The DACDF adopts participatory mechanisms that aim to allow local actors to exercise their natural resource management responsibilities and decision-making powers. In addition to providing valuable resources for social and economic development, the fund is supposed to encourage chiefdoms to monitor mining more effectively and eradicate illegal activities, thereby enhancing the KPCS (Maconachie, R., 2009).
A portion of the government's 3 per cent diamond export tax (which amounts to 0.75 per cent export duty) is now put into the fund for community-managed small- scale development projects in diamondiferous regions; donors have been asked to match funding to the DACDF in order to further enhance social and infrastructural development (Temple, 2005). Reportedly there is much evidence to suggest that the fund has been utilized wisely by some chiefdoms and councils for financing community infrastructure, education, health and vocational skills training centers (ibid).
Although the DACDF is known to be a well-conceived governance initiative, it has frequently been at the centre of controversy. Early disbursements from the fund were made directly to the paramount chiefs. Many of them could not account for how the funds were spent and occasional misuse/ misappropriation of funds was also noted. Supporters of DACDF hold the inadequacies in supporting-institutional arrangements as responsible for initial setbacks. For example the Local Government Act (2004) had not been ratified at the time the DACDF was initially proposed, and the local councils, which have now become beneficiaries, were not involved with its implementation. Although it could be argued that the decentralization process should, in theory, play an important role in improving the accountability and management of the funds, it may also be the case that the re-introduction of the local councils has caused further conflict and confusion, which could have an impact on the rational use of funds (Maconachie, R., 2009).
II.4. Mining and Agriculture
Among the various issues associated with agriculture and mining, two important issues are land availability and labour availability.
In Sierra Leone, rural lands are generally abundant and held under various forms of communal tenure, with the paramount chief serving as the ultimate custodian of the land. Unruh and Turay (2005) note that in Sierra Leone there are as many different forms of customary tenure laws as there are languages groups. But in most places (male) family and lineage heads representing the original settlers of an area appear to have control over land. In such cases the involvement of paramount chief appears to be restricted (Williams, 2006)
Maconachie (2008) observes that
"In terms of production land availability in Sierra Leone is often described as being one of least constraining factors. The role that land tenure systems assume in constraining agriculture productivity is frequently played down by critics, it is believed by many commentators that customary or indigenous systems have generally accommodated the needs of the farmers seeking access to land. ………however detailed discussions with wetland managers revealed that gaining access to (wet) land sites can be a highly political process that is shaped by an individual's social relationships. An appreciation that struggles over land and other productive resources can thus be of a political nature provides sufficient reason to question many of the "blueprint" solutions to land issues that have so frequently been prescribed in the past" .
Thus widely held perceptions of a) abundance of agricultural land b) un-restricted use of mining land and c) rampant lawlessness and disorder in rural Sierra Leone are to be subjected to empirical investigation. The influence of paramount chiefs as custodians of the land is critical in controlling access to rural resources to the point of causing obstruction to the access to productive land especially land that is rich in natural resources. For example the control of mining land for diamond, gold and rutile rests to a large extent with traditional authorities and mining investment cannot take place without the consent of the chiefs (Jackson 2005).
Labour: Recent studies have found that a significant reduction in the availability of family labour over the years and increased levels of poverty in the post conflict period have made agriculture more challenging because of lack of means necessary to set the labour cycle in motion (including the food for 'food for work' arrangements). Another constraint is temporary off-farm labour migration (Maconachie, 2006). Peter (2006) indicates that youth in general and ex-combatants in particular in many areas have chosen to become full time miners and thus farm labour is drawn away from agriculture. Some studies have revealed positive livelihood strategies adopted by farming communities either by dividing their time judiciously between farming and mining or careful division of labour within households between mining and agriculture or resorting to seasonal mining, dedicating favorable seasons for agriculture and dry seasons for mining (Maconachie and Binns, 2007). Recent studies have also identified that the cultural changes taken place since the war has increased mobility of youth, due to the 'exposure' they have received during the war. Some also report that mobility has increased because a rift had developed between the youth and community elders, such that many youth do not feel any allegiance to the chiefs (Richards, 2005). This rift is also attributed to 'long term crisis of agrarian institutions' with labour exploitation by agrarian elite as the crux.
The process of acquiring and defending land rights and ensuring labour supply is steeped in micro-politics and based on power relationships between members of social groups. This poses the important question whether top down tenure reforms ignoring rural social institutions and their intricate functioning can offer permanent solution to problems of agricultural land access. This also offers a possible solution to indiscriminate mining and its unfavorable externalities by careful and well directed empowerment of the local institutions.
II.5. Diamonds for development
Since their discovery in 1930, Sierra Leone's diamonds have played a major role both in the prosperity of the 1950s and 1960s and in the devastation and war of recent years. Research conducted in the eastern province during 1970s before the war suggested that if diamond capital was reinvested into the local economy, it could provide the necessary catalyst for rural development (as reviewd in Maconachi, R and Tony Binns. 2007) The trade in diamonds generated an estimated annual income of 150 to 250 million dollars in 2000 against a GDP of only 636 million dollars (Smillie Ian et al. 2000). In stark contrast to the resource curse theories, there are reports of a 'tightly managed and highly ordered structure to production' in alluvial diamond mining (Maconachi, R and Tony Binns. 2007). It is also reported that the sector currently generate considerable revenue to the government and over 5 lakh people currently depend on the small scale artisanal mining sector (Ministry of Mineral Resources, 2005). Some scholars also foresee great potential for alluvial mining sector (Maconachi, R and Tony Binns. 2007).
Though large body of work illustrated detrimental effects of artisanal mining on rural economy by way of drawing productive young labour away from farming and suggested that the government became locked into a cycle of dependency on diamonds while food grains were imported (Richards, 1996), a relatively small number of researchers have tried to give a more optimistic account of 'nexus between agriculture and diamonds' at the micro- level. Maconachi, R and Tony Binns (2007) have identified a 'dove tailing' of diamond mining and farm activities in the early 1970s in which artisans engaged in alluvial diamond mining during the dry season and in farming during rainy season. They show 'regular circulation of labour between farming and mining activities'. Recent studies conducted by the same team confirm that many of these links between farming and mining persist in spite of severe dislocation during war and suggest that these links could play a key role in the rejuvenation of market-oriented food production, providing impetus for post-war rural development (ibid). The work implies economic incentive provided by buoyant food demands from the mining population with potential to strengthen economic capital among rural producers and demonstrates clusters of livelihood strategies exist (Scoones, 1998).
III. Interesting Issues for political economy analysis
Having thrown up a few issues that deserve attention, a concern that emerges is what were/ are the political economy factors contributing to the 'resource curse status' of alluvial diamonds in Sierra Leone and whether alluvial diamond resource, given its non-excludable and lootable nature, could be used for rebuilding the economy of Sierra Leone or will it continue as a resource curse? Disintegrating this big question, a few sub questions emerge
A) How successful were the various measures existed in the four distinct political phases of the country's history, viz. pre colonial time, colonial rule, post colonial pre-war regime and the post war (present) for management of diamond resources? B) Whether existing local institutions have anything to offer towards sustainable and transparent exploitation of these two resources (productive land and mineral) in such a way they complement each other? C) Whether the state can ensure sustainable exploitation of alluvial diamonds and transparency in its transaction through regulations? D) Whether alluvial diamonds problem can be modeled as a commons problem and could the current decentralization initiatives contribute to its better management?
These broad questions in place, it is important to study the political economy and institutional factors responsible for the resource curse of alluvial diamonds and its implications on the life of people in the pre-war, during the civil war and post war periods in Sierra Leone. It also ertinant to study the power relations from local chiefdoms through the national to the international levels which directly and indirectly influence the diamond extraction and transactions. Analyis of comparative performance of state introduced decetralised diamond management initiative namely 'Diamond Area Community Development Fund (DACDF)' in various provinces vis a vis other internationally monitored programs like Kimberley Process Certification Scheme for rough diamonds (KPCS) will not only be interesting but might provide useful insights into the process of nation building in Sierra leone.
Foot notes
¹ Stevens came to power in the late 1960s, and quickly moved to control Sierra Leone's diamonds. Although Stevens's political party—the All Peoples' Congress (APC)—had won national elections in 1967, it was initially prevented from taking office by a military coup in favor of the former ruling party, the Sierra Leone People's Party (SLPP). A countercoup in 1968 finally led to Stevens's installation as prime minister.
² Kimberlite is a type of rock where diamonds are found. Kimberlite and alluvial diamonds are identical in their crystalline structures, but their surface characteristics differ.
³Alluvial diamonds are found by "diggers", who manually, or with rudimentary equipment, sift through soil and sand, digging holes up to 30 feet in depth, in areas where they think it is most likely to find stones. Only men are diggers; women are farmers and petty traders, and service the household. Land is communally owned in Sierra Leone. "Leases" are managed and rents collected by traditional paramount chiefs. Diggers obtain permission to dig in specified areas from the respective chief. Because of the requirement to pay a land use fee, the diggers are generally financed by "dealers". Dealers are business people who manage groups of diggers by advancing them food, tools, and basic household goods, which they deduct from the proceeds of sales of the stones the diggers, turn over to them. Over time, poverty has conspired with ignorance to create a system of virtual servitude. The "dealers" sell to "exporters" and "agents" of the exporters, who buy and export the stones. Stones can change hands several times among dealers before they are finally exported. Prior to the coup of May 1997, some buyers declared their stones to the Government Gold and Diamond Office (GGDO), which valued them for the purpose of export taxes and statistics. Others smuggled the stones out of the country, with no documentation or registration, and were able to market them, eventually, in mainstream international markets (USAID, 2001)
⁴ In a real extent, the country's alluvial diamond-mining fields cover almost 20,000 square km, though the actual diamond-bearing alluvial ground is actually about 200 square km. Often, these deposits are spread across national and chiefdom boundaries.
⁵ This has to be read in the light of the contract form of hiring labour. In post war Sierra Leone, donors have launched a credit scheme to support the miners, allowing them to keep all the profits after repaying the credit. The argument is: while these terms are favorable to the miner relative to profit sharing, they increase the incentive to 'gamble'.
⁶Kono alluvials: Kono district is the major diamond mining/producing district in the country. It has both extensive alluvial and Kimberlite diamond deposits being exploited at the moment.
⁷APC: Stevens's political party—the All Peoples' Congress
⁸ Lootable commodities are those that have high value-to-weight ratios, and can be easily appropriated and transported by unskilled workers
⁹As such, some critics speak of the need for a 'Kimberley II Process', to address local issues that encourage smuggling and impede enforcement (Strasser-King, 2004). While the USAID-funded Peace Diamond Alliance initially laid the foundations for such an initiative immediately following the war, more recently, the Diamonds for Development (DDI) initiative has continued to strive for such a process. ( as reviewed by Maconachie, R. 2009)
¹⁰Restricted to validating the rights of those line heads to make decisions in relation to land, to arbitrate between them, to make grants of unallocated or forfeited land, and to become involved in grants to non natives and strangers under the provisions of the provinces land act

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