Dismay over diamond mining code

Harnessing diamond wealth could aid development

The Central African Republic's new mining code lacks transparency and allows for undue government interference in the sector, experts have said.

The new code was passed on Wednesday after extensive consultations with officials from the World Bank, IMF, and African Development Bank who visited Bangui last month.

According to a delegation source, given the information available, there is "surprise" that some of its key recommendations have not been taken on board.

According to the new law, "the government can issue special buying and export licences to individuals or companies... when circumstances dictate," state radio reported.

The new law also gives the government the right to be directly involved in buying and export activities, it said.

The country is the world's fifth-largest diamond producer.

Widespread fraud

President Francois Bozize, who seized control last March, pledged to fight corruption and begin economic reforms which would pave the way for a resumption of aid by international financial institutions.

The revision of the mining code was seen as an area in which he could prove his resolve.

Diamond buyers sometimes avoid tax

The Central African Republic officially exports some 500,000 carats of the precious stone every year.

But at least twice that amount turns up on the diamond exchanges in Antwerp, Belgium - the unofficial gems having been smuggled out the country.

Also, until now, licenses have been issued personally by presidents - a system which is open to corruption and delay and that donors wanted changed.

The government insists however the code will curb fraud in the industry.

It says brigades of mining police will be despatched to the diamond zones to prevent visitors from slipping into the country and buying diamonds directly from the diamond collectors and exporting them without paying tax.

There are also plans for a state diamond buying body.

But there had been hope that development of the mining sector would be left more to private enterprise.