‘Angola Diamond Sector Underdeveloped, Can Attract More Investors’

Excluding widespread smuggling, the country produced 6 million carats, valued at $788 million, in 2003, generating $112 million in income for the state diamond company Endiama. Smuggled output has recently been estimated at $350 million per year by Angola’s Ministry of Geology and Mines.

As of last July there were 264 Angolan firms and 34 international firms operating in a total of 90 concessions. However, only 8 of these concessions involve kimberlite deposits. ENDIAMA is a partner in all these concessions, as required by Angolan law.

“Angola has considerable potential to increase output further and benefits from the high proportion of its [gem quality] production,” says the report, adding that less than half of the country has been surveyed.

Added to a large amount of diamond production being smuggled abroad, and little ‘downstream’ activity, the Fund finds that Angola can further benefit from its diamond riches.

In its conclusions, the IMF suggests that, “A systematic appraisal of the sector might focus particularly on the separation of roles currently being played by ENDIAMA. Its sizeable potential conflicts of interest impede improvements being made to the transparency and openness of the sector and hence to its attractiveness to potential investors.

“The sector would gain in particular from clear and fair rules of entry under guarantees of a stable regulatory environment. In the granting of licenses and the application of tax provisions, clear commitments to fairness of treatment and transparency would reassure investors and ensure that government revenue could be maximized.