USAID/Sierra Leone: Local Cooperatives Improve Outlook for Diamond Sector

AUGUST 15, 2006

Local Cooperatives Improve
Outlook for Diamond Sector

Through mining cooperatives, diggers learn importance of democratic governance and gain a measure of control over their destinies.

FREETOWN - Mining cooperatives have provided a framework for good governance within Sierra Leone's diamond sector, but substantial work remains to ensure that the industry's troubled past does not undermine the country's promising future.

That's the assessment of Paul Temple of Management Systems International, who recently briefed Sierra Leone and international development officials here about his four years as chief of party for the USAID/Sierra Leone-funded Integrated Diamond Management Program (IDMP).

The IDMP aims to combat illegal and exploitative activity in the alluvial diamond industry by changing the way diamonds are managed and marketed. In partnership with the Peace Diamond Alliance and the Sierra Leonean ministries of Mineral Resources and Trade & Industry, the IDMP trains diggers in cooperative management, new mining technologies and diamond valuation.

Paul Temple of Management Services International says diamond mining cooperatives, though not successful economically, have put Sierra Leone "ahead of the curve" in terms of reform.

Since the end of a decade-long civil conflict in Sierra Leone - funded in part by trade in smuggled Sierra Leone diamonds - USAID and its partners have worked since 2002 to transform the diamond sector into "an open, transparent, legal business," Temple said.

To that end, the program has improved licensing and monitoring of mining companies, sought to encourage exports through legal dealers, established and improved the effectiveness of the Diamond Area Community Development Fund, piloted environmental reclamation projects, and trained "hundreds" of workers in diamond identification and classification.

As of late 2004, MSI, the Ministry of Trade and Industry and the Ministry of Mineral Resources had trained and registered 24 diamond mining cooperatives, which agree to mine ethically, incorporate environmental sustainability and track production from "earth to export."

By allowing miners to organize their own work and determine how diamonds are valued and shared, the cooperatives also have given miners control over their own destinies.

Although the cooperatives have "failed economically," Temple said they demonstrate the validity of the principles by which they operate. "Incentives are becoming ingrained," he said, adding that the groups have become "an invaluable font of experience" that put Sierra Leone "ahead of the curve" and make it "a model" for countries undergoing similar transformations.

"The [cooperative] structure is fantastic," Temple said, "but we need to do more work when we put it in place in the mining sector."

Although the diamond sector has been a past source of instability for Sierra Leone, Temple cautioned against expecting the industry to solve the country's problems.

The diamond sector generated $142 million in foreign trade for Sierra Leone last year, but "we've got to put some balance to this," Temple said. "There is a perception that the diamond industry will be the savior" of the revenue-strapped Sierra Leone government.

In fact, the country's diamond exports have declined over the past 18 months. Documented exports of Sierra Leone diamonds totaled 506,723 carats in 2003 and 691,757 in 2004, but declined to 668,709 carats in 2005. Exports this year have been running about 10 percent below last year's levels, Temple said.

"The resource is less easily available," said Temple, noting the departure of members of the Lebanese community, who have heretofore been active in the mining sector, may also be a manifestation of the slowdown in diamond production.

Story and photo by Richard Stirba