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Integrated Diamond Management Program 5Th Quarterly Activity Report: 1 October Through 31 December 2005

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Integrated Diamond Management Program 5Th Quarterly Activity Report: 1 October Through 31 December 2005 INTEGRATED DIAMOND MANAGEMENT PROGRAM 5TH QUARTERLY ACTIVITY REPORT: 1 OCTOBER THROUGH 31 DECEMBER 2005 JANUARY 31, 2006 This publication was produced for review by the United States Agency for International Development. It was prepared by Paul Temple and Mark Renzi, Management Systems International. INTEGRATED DIAMOND MANAGEMENT PROGRAM 5TH QUARTERLY ACTIVITY REPORT: 1 OCTOBER THROUGH 31 DECEMBER 2005 Management Systems International Corporate Offices 600 Water Street, SW Washington, DC 20024 Contracted under CA #636-A-00-04-00217-00 DISCLAIMER The author’s views expressed in this publication do not necessarily reflect the views of the United States Agency for International Development or the United States Government. CONTENTS EXECUTIVE SUMMARY .......................................................................................................... II INTRODUCTION ......................................................................................................................... 1 WORK SUMMARY, BY ACTIVITY.......................................................................................... 2 Activity 1: Improved GOSL Diamond Management Systems and Incentives to use them effectively............................................................................................................... 2 Activity 2: Civil Society Supporting Improved Public and Private Diamond Management .................................................................................................................... 4 Activity 3: Private Sector Diamond Businesses that are more transparent, competitive and responsive to community interests........................................................ 6 Activity 4: Improved Community Diamond Management Systems and Incentives to use them effectively......................................................................................................... 8 Activity 5: Improved Enabling Environment for Improved Diamond Management ................ 9 EVENTS, VISITORS, AND TRAVEL ...................................................................................... 11 HIGHLIGHTS OF UPCOMING PERIOD............................................................................... 11 FINANCIAL STATUS ................................................................................................................12 LESSONS LEARNED.................................................................................................................12 ANNEX B: FINANCIAL STATUS ........................................................................................... 13 INTEGRATED DIAMOND MANAGEMENT PROGRAM i 5TH QUARTERLY ACTIVITY REPORT: 1 OCTOBER THROUGH 31 DECEMBER 2005 EXECUTIVE SUMMARY The Integrated Diamond Management Program (IDMP) aims to improve management of Sierra Leone’s diamond sector at both national and local levels. It strives to increase benefits to government and communities through improved management of the resource. Bringing diamond mining and marketing into the formal sector increases government revenues through taxes and licenses while reducing security threats from diamond smuggling. Meanwhile, the innovative Diamond Area Community Development Fund (DACDF) releases funds from diamond export taxes for community development within diamond producing chiefdoms, encouraging citizens to both produce and export legally. These measures complement the effectiveness of the international Kimberley Process. Table 1, below, clearly demonstrates that considerable progress has been made in bringing more diamonds into the legal system, while improving the value of the diamonds exported legally. TABLE 1: SIERRA LEONE DIAMOND EXPORT FIGURES 2000 TO 2005 YEAR* CARATS VALUE AV. PER CARAT 2000 77,372.39 10,066,920.81 130 2001 222,519.83 26,022,492.27 117 2002 351,859.23 41,732,130.30 119 2003 506,723.37 75,969,753.32 150 2004 691,756.92 126,652,634.26 183 2005 668,709.15 141,940,243.71 212 Note: These are calendar years Table 2 illustrates the current position of the last period. While exports and caratage are seen to increase in the last quarter, values are down. This reflects the overall market conditions at present. TABLE 2: SIERRA LEONE DIAMOND EXPORT FIGURES FOR PERIOD FY 2006 Exports FY 2005 Exports FY 2004 Exports $Value per Period Carats $ Value Carat $ Value $ Value 1st Quarter 173,793 $32,763,774 $188.52 $25,857,164 $19,122,514 % Change Value per carat Value per carat +29.2% +26.7% -2.0% Year FY06 v 05 $192.28 $160.62 As the program seeks to enhance management of production within Sierra Leone, it is possible that goods from Liberia are being marketed through Sierra Leone. This was discussed during the Team Leader’s visit INTEGRATED DIAMOND MANAGEMENT PROGRAM ii 5TH QUARTERLY ACTIVITY REPORT: 1 OCTOBER THROUGH 31 DECEMBER 2005 to the Moscow Kimberley Plenary meeting. It would appear that the embargo on Liberian diamond production will not be lifted quickly. Its continuation – in the face of ongoing diamond production in Liberia and smuggling into Sierra Leone – may further erode the integrity of Sierra Leone’s exports under the Kimberley Process and force diamond marketing in Sierra Leone further underground. NATIONAL ISSUES Following previous concerns over Government political will to lead change, the High Level Diamond Steering Committee met twice in November and December and seems to have reactivated. Terms of Reference for both the High Level and Technical Committees were adopted and the recommendations of the report “Improving the effectiveness of the DACDF” were accepted. The program is also working closely with Government to develop a community land reclamation policy. LOCAL ISSUES There are contentious land allocation issues within the program area. New companies within Kono district are seen to be requesting large tracts of valuable mining land to the exclusion of artisanal miners. Fortunately, however, discussions continue in an open manner at present. Following a stakeholder meeting in Tongo Fields, dealers operating diamond buying offices established a Dealers’ Association was established to promote the legitimization of trading. While the Peace Diamond Alliance (PDA) workshop report is still being structured, key recommendations seem likely to inform improved policy for cooperative mining. The buying scheme terms of reference are also close to completion. Meanwhile, draft reports for both key scopes of work (SOWs) – the external program monitoring by Global Witness and the other for environmental management work by CEMMATS – were prepared. The anticipated visit by representatives of the Communities and Small- Scale Mining program (CASM) remains unfulfilled. PROGRAM ISSUES Please note that the previous website maintained by IDMP, http://www.peacediamonds.org, is now available at http://www.resourcebeneficiation.org. This new, more inclusive domain name reflects the the planned and currently available resources and information on the site. INTEGRATED DIAMOND MANAGEMENT PROGRAM iii 5TH QUARTERLY ACTIVITY REPORT: 1 OCTOBER THROUGH 31 DECEMBER 2005 INTRODUCTION This Activity Report describes activities in the fifth quarter of Co-operative Agreement #636-A-00-04- 00217-00, between Management Systems International and the United States Agency for International Development (USAID). These activities are executed consistently with the IDMP work plan and the objectives of the Agreement. For clarification, when using the acronym IDMP, the report is referring specifically to this USAID funded program. When the Integrated Diamond Management acronym is used, IDM, it is referring to the conceptual and implementation model for diamond management. In its effort to manage for results, activities are designed to achieve the outcomes summarized in the following results framework: Expected Results: •Increased diamond Strategic Objective: exports Sierra Leone diamond trade contributes •Increased benefits to positively to peace and prosperity communities from diamond mining Intermediate Results: 1. Improved 2. Active civil 3. Private sector 4. Improved GOSL diamond society supporting diamond community management improved public businesses that are diamond systems and and private more transparent, management incentives to use diamond competitive, and systems and them effectively management responsive to incentives to use community them effectively interests 5. Improved enabling environment for improved diamond management The main focus of the 2004-2005 year has been to ensure the principles of the Integrated Diamond Management (IDM) scheme were established and operational. Therefore, the greatest number of activities appeared under IR 4. Meanwhile, it is vital to build trust and confidence through increased interaction and integration of government, private sector and communities. This process is time consuming but profitable in increasing understanding and interdependence, while deflating potential tensions. In addition to providing greater benefits to local residents, IDM also complements efforts to strengthen the Kimberley Process through efforts to establish the Earth to Export scheme. The following section will present activities, by Intermediate Result, including: • An overview of the quarter. • Summary of work completed, by activity • Issues needing immediate attention, if any. INTEGRATED DIAMOND MANAGEMENT PROGRAM 1 5TH QUARTERLY ACTIVITY REPORT: 1 OCTOBER THROUGH 31 DECEMBER 2005 Subsequent sections will discuss challenges, successes, the project’s financial position; lessons learned, and highlight issues
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