Smuggling hits gemstone business
Malawi and Mozambique are getting a raw deal from gemstones as prominent smuggling networks take out vast quantities of the stones to Asian countries, a new study on mining has revealed.
The study established that secrecy surrounds the trade such that it is not easy both to tackle its undesirable effects and to support development in gemstone-producing countries.
The report identifies Kamuzu International Airport (KIA) as a major conduit for gemstone export and smuggling, but it says consignments of precious and semi-precious stones also leave Malawi in container-loads from Dedza and Mwanza to Beira in Mozambique as well as to the Songwe Border Post in Tanzania, en route to Dar es Salaam.
Conducted by the Global Initiative Against Transnational Organised Crime (GI-TOC), the study, released at the weekend, is titled ‘Scratching the Surface; Tracing Coloured Gemstone Flows from Mozambique and Malawi to Asia’.
The smuggling, notes the study, is achieved by under-reporting both the quantity and the value of the gemstones or by simply concealing stones that are being exported.
It reads: “From Mozambique and Malawi, coloured gemstones are taken to the major trading hubs of Thailand and Sri Lanka, either directly or via Tanzania or Kenya. Rough stones are smuggled in and polished, and cut gems and jewellery are exported.
“A laissez-faire attitude towards the importation of gemstones in Asian trade hubs has also facilitated the smuggling and gross undervaluing of gemstone flows. As a result, there is limited interest in ensuring that imported stones are responsibly sourced and properly taxed.”
Malawian traders source gemstones from miners and middlemen at Malawian, Mozambican and Zambian sites and mining towns, as well as from trading centres on both the Malawian and Mozambican sides of the border.
The main entry point for gemstones being transported between Mozambique and Malawi, the report says, is Chiponde in Mangochi while Lilongwe and Blantyre are the principal trading centres in Malawi.
One of the authors of the study report, Chikomeni Manda, a partner at Perekezi ASM Consultants, said due to an immediate need for cash for household goods, including food, miners often have little choice on prices.
He decried that the situation creates a poverty trap whereby, despite excavating high-quality gems, many artisanal miners are trapped in a hand-to-mouth existence.
Said Manda: “The smuggling and significant undervaluing of stones is rampant in the coloured gemstones sector. For example, Malawi officially exported $746 114 worth of coloured gemstones from 2018 to 2020, but this is thought to significantly undervalue actual flows.
“Stones may be smuggled out of a source or transit country to avoid export taxes, regulatory requirements or the paying of bribes. Smuggling not only deprives producer countries of tax revenues, but also thwarts efforts to trace supply chains and establish responsible sourcing.”
The report has since recommended increased engagement with source communities and coloured gemstone traders and the establishment of relationships between artisanal and small-scale mining (ASM) and Large Scale Mining (LSM) operators.
Natural Resources Justice Network (NRJN) chairperson Kossam Munthali said there was need to reveal the people involved in the smuggling and seal the borders.
He said: “The sector must be sanitised. It must start from cooperatives, ASMs and national level. Let’s ask where the foreigners are getting the minerals. Even in Lilongwe, they are using KIA to smuggle gemstones, what is the security detail doing?”
Minister of Mining Rashid Gaffar said Principal Secretary Joseph Mkandawire was better-placed to speak on the matter, but the PS did not pick up when called several times on Sunday.
In his policy speech on mining in May this year, President Lazarus Chakwera said his administration will not allow the mining sector in general to be unstructured, exploitative, lawless and free-for-all as it has been in recent years.
Major policy directions announced include the establishment of a mining authority to regulate the industry whose Bill is expected to be introduced in the June meeting of Parliament, establishment of a new national mining company to implement business interests of the country’s mining sector, and the establishment of a gold market by the Reserve Bank of Malawi.
The fourth Malawi Extractive Industry Transparency Initiative admits that ASM operations remain informal and much of the actual economic potential is lost due to smuggling of minerals and high prevalence of rudimentary production, processing and marketing techniques.
Gemstones mined at small scale level in the country include ruby, sapphire, tourmaline, aquamarine, and rhodolite. New gem deposits have been reported in Salima and Dowa districts and Kafukule in Mzimba District.
