Diagnostic Report on Diamond Smuggling in the Central African Republic

Legal exports of rough diamonds from the Central African Republic have declined considerably since the start of the military-political crisis of 2013. While a certain proportion has always left the country without following the KP’s legal chain of custody, this did not represent a major part of production. In 2018, legal exports were 11,526 carats, or 3% of the 365,917 carats exported in 2012, while production continues in all diamond areas. Indeed, according to a study by the U.S. Geological Survey, the five (5) zones authorized by the KP to export produced 164,000 carats in 2017, or half of the national production estimated at 330,000 carats. It is therefore reasonable to conclude that the difference between current exports and historical and estimated production represents the volume that is smuggled out of the country.

Smuggling has become dominant and involves a wide range of actors: legal buyers only declare part of their purchases, illegal buyers trade diamonds openly in the provinces and in the capital, internal flights transport diamonds from areas controlled by armed groups, and networks at the Bangui international airport facilitate fraud. The objective of this study is not to map all the smuggling routes, but a significant part of the smuggling passes through Cameroon via land borders and regular flights from Bangui.

The diagnostic study aimed to gather perspectives from stakeholders and experts on how smuggling has exceeded legal exports and how to reverse the trend. Although funded by the AMPR project, the study was carried out jointly by project specialists, officials from the Ministry of Mines and Geology and the Kimberley Process Permanent Secretariat. This approach aimed not only to uncover the key drivers of smuggling, but also to build consensus at the technical level on strategies and changes to be considered by the Government and international stakeholders. As such, the study’s approach aimed to help improve policymaking and identify priorities for external engagement.

The report is organized around three groups of factors explaining the current situation. The first factor is difficulty implementing the KP Operational Framework for the resumption of exports of rough diamonds from the CAR, adopted by the Kimberley Process in 2015. The objective of the KP with this Operational Framework was to alleviate pressure on the CAR, which depended heavily on diamonds for tax income and rural livelihoods, by allowing a partial resumption of exports from areas meeting certain criteria. However, the Operational Framework is not working. Not only do diamonds from areas under the control of armed groups easily enter the global supply chain, the KPCS chain of custody has collapsed. This is in part due to a fundamental incompatibility between the requirements of the Operational Framework and the realities of the supply chain organized around purchasing offices operating with tight margins and high working capital requirements. However, this failure is also due to the institutional weaknesses which existed long before the suspension of the KP in 2013, but which have worsened since the crisis began.

The second group of factors concerns changes and dysfunctions in the rough diamond supply chain. The KP Operational Framework is one of the main causes of these dysfunctions, especially with regard to the lack of funding and the departure of major buying houses, but it is not the only problem. The effects of inter-communal violence in the western regions, leading to the displacement of Muslim buyers in Cameroon, is a factor still being felt as many buyers continue to buy from the other side.

There is also the effect of breaking the “social fabric” of the supply chain. Indeed, the supply chain relies on complex socio-economic relationships and unspoken rules about roles and benefit sharing. Today, the system is marked by risk aversion, mistrust and confusion of roles. Artisanal miners are less inclined to accept prices offered by those who finance them because they know the “real” price paid by smugglers. In addition, everyone is heavily in debt, so the little funding that goes into the system is misused. Likewise, former buyers from buying houses with access to international markets have become collectors. They asphyxiate local collectors without access to markets abroad. More generally, international trends are contributing to the reduction of margins and the evolution of practices. The emergence of gold mining is also impacting the availability of labor for diamond mining and has created new challenges.

The third group of factors concerns impunity for smuggling and the prevalence of other illegal and fraudulent activities. Although fraud has always been a problem in CAR, it has reached a turning point where it has become almost the norm. The more contraband increases, the more difficult it becomes to circumvent it. Before the crisis, at least some of those found at Bangui airport attempting to smuggle diamonds were arrested, thanks in part to the financial benefits derived by the agents carrying out the seizures. Today, the question arises as to why no smuggler in recent years has suffered consequences for their actions, a fact which shows ineffective controls and the power of trafficking networks.

By analyzing these different factors, the diagnostic study aimed to identify practical solutions at all levels. For the KP, a serious debate should take place on the viability of the Operational Framework, in particular the obligation to remotely verify the packages each month before export. In addition, serious consideration of the use of diamonds seized by the Central African government or other countries is necessary otherwise the fight against smuggling will be in vain.

For the Government of the Central African Republic, officials should see this as a rare opportunity to rethink their supply chain system, especially with regard to how artisanal miners are organized, data is collected and used, and the institutional role of the Kimberley Process Permanent Secretariat. With regards to the supply chain, consultations with purchasing offices and external experts are needed to reassess fees and taxes and the organization of actors.

However, no change will occur without the strict minimum of law enforcement, in particular at Bangui airport, but also with regard to the protections granted to traffickers or semi-industrial actors illicitly operating as cooperatives. International trafficking networks require special attention. Nevertheless, the starting point for reversing the trend should be law enforcement by the Central African Government, because until tangible efforts are made, the legal supply chain will remain weak and the Government will not be credible in its efforts to get the KP to completely lift the suspension.

More generally, CAR could benefit from an in-depth dialogue on the mining sector, perhaps in the form of formal policy dialogue like those organized in 2003, especially taking into account the 2019 Khartoum Accord and semi-industrial mining activities and the gold mining that are growing rapidly. The dialogue will help build buy-in for reform, generate technical ideas, and most importantly, restore confidence in the supply chain, which in the end is not about the stones, but about people—their lives, their livelihoods and well-being. Smuggling of rough diamonds therefore touches on fundamental issues of governance in CAR and should be seen as a priority and an opportunity to contribute to the broader process of peacebuilding and economic recovery.