Posted in News by AGavin on September 3rd, 2007
I AM NOT A FLAME-THROWING nationalist, and my pan-African credentials are generally suspect. Therefore, I am not one to rush into blaming Africa’s problems on “imperialists” and evil schemes by the West - until I see the evidence, that is.
Well, compelling evidence came recently via an article (which we recommend that everyone interested in African affairs must read) that you can find on the Slate website, or the Washington Post/Newsweek interactive site.
The title; “Diamonds are a Guerilla’s Best Friend; Why War Was Good for Angola’s Big Miners” sums up what it is about perfectly.
Angola is one of the poorest countries in the world, but it also has one of its richest deposits of diamonds. After years of a liberation war against Portuguese rule, the country remained in the throes of a brutal and ruinous rebellion led by Jonas Savimbi.
After decades of war, the Angolans were poorer than they had been 30 years earlier upon independence.
Then on February 22, 2002, Savimbi was killed. The citizens of Angola poured into the streets of the capital Luanda to celebrate his demise, for Savimbi’s death promised a new era of prosperity and peace.
However, something unusual happened. When news of Savimbi’s death hit, investors dumped their shares in mining companies all over the world that had operations in Angola. Stock prices of these companies fell by an average 12 per cent within a matter of days. Unusual peace is supposed to be good for business.
Well, that might be so except if you are in the diamond (and arms) business.
The authors of a forthcoming study that the articles are based on argue that the share price of the mining companies who had extracted Angola’s diamonds amid the chaos of war plunged because the fortunes they’d made from its diamond mines relied on the treacherous conditions created by civil war.
Wartime Angola was a very expensive place for diamond miners to operate because of the bombed-out roads, kidnappings, and other hazards of operating in a conflict zone.
Companies employed guns-for-hire to keep their operations safe from rebel attacks. The cost of protecting a mine alone could run as high as $500,000 (Sh34m) a month. And to keep mines safe from government meddling, paying bribes was reportedly the norm.
Very few companies want to do business in such conditions, but the ones that do make massive fortunes.
The death of Savimbi signalled that now the mining industry could be run normally - open the sector to competition. The end of conflict hurt the dominant diamond companies by knocking down barriers to entry.
Indeed, the article reports, the mere presence of potential competitors helped the government to renegotiate its contracts from a position of strength. Previously, Israeli diamantaire Lev Leviev had a monopoly on the marketing of Angolan diamonds. With peace at hand, as many as six other companies reportedly also vied for his contract.
A peacetime Angolan government could afford newfound patience in its negotiations. Before, the government had faced a constant budget crunch, and in its desperation to obtain hard currency to purchase arms, was forced to accept unfavourable terms.
Royalty payments to the government for mining concessions jumped from $37.5 million (Sh2.5 billion) in 2002 to nearly $110 million (Sh7.4 billion) just a year later, despite only a modest increase in the value of the diamonds extracted!
Overall, the Angolan economy has taken off since the war’s end, with income per capita rising by more than 20 per cent between 2003 and 2005.
Because Angola’s wartime diamond miners didn’t have any business incentive to have peace, it would have been in their best interests to prolong the war.
Incentives, incentives. In the northern Italy town of Varallo, the mayor recently came with a novel idea - to literally bribe people who are overweight to cut down.
Participants in the initiative get $67 (Sh4,500) when they reach their ideal weight. If they don’t gain any weight back after five months, they will receive $268 (Sh18,000). If they maintain their ideal weight for a year, they will get $670 (Sh 45,000) more. There has been no shortage of takers. Is City Hall listening?
One man who is famed for being a good listener is former US President Bill Clinton. Sex scandals and all, Clinton is still the most popular former US president of recent decades at home and abroad.
One reason he is popular is that he makes everyone feel that he cares about, and is interested in him or her. Now the formula of his magic is out.
An article in The Times reports that Clinton keeps an information card for every person he has met since university! Remarkable, considering that he graduated in 1968.
Since we started on a high note, we shall end on a very low note with the case of a Thai man who was found dead last week from a heart attack. He was wearing a couple of his wife’s miniskirts and all 15 of her bras. He took the secret of his strange behaviour to the grave.
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