(pradd) – liberia - Land Tenure and Property Rights Portal

There are several government departments and offices involved in governing ASDM, from the process ofissuing prospecting and mining licenses, verifying the background and eligibility of miners, zoning andsurveying, monitoring compliance (also environmental compliance), registering production, valuation andcertification, export and taxing. To improve monitoring and compliance, and to prevent smuggling, it isessential to strengthen information exchange between different government departments.There is little consistency in production rates registered at RDOs, the number of KP certificates issued by theGDO, and export statistics. 31 To remedy this, the chain of custody should be tightened to connect miners tospecific identifiable claims and to follow the rough diamonds all the way from the specific claim through tothe point of export. If miners are connected to claims, and the subsequent transactions are recorded andmonitored, KPCS certificates and export earning can be cross-checked and traced back.It is a well-known fact that many rough diamonds are smuggled in and out of Liberia, mainly because of theweak regulatory system and weak enforcement, but also because of Liberia’s porous borders. Minersthemselves seldom have the capacity to smuggle rough diamonds across national borders or to market themoutside of Liberia—it is brokers and dealers that engage in smuggling. According to GDO estimates, only 10percent out of about 750 previously registered brokers and dealers are currently licensed. 32 This is attributedto high licensing costs and the abundant availability of cheaper illicit diamonds. Unlicensed dealers alsoescape paying royalties to government.If the different government bodies that are involved in every step of the process exchange information anddatabases with each other, the chain of custody will be tightened and governance improved. If neighboringcountries progressively implement similar kinds of consolidated data-keeping systems, information aboutsales patterns and quantities of dealers can be verified to monitor compliance.8.4 CREATE PUBLIC-PRIVATE MICRO-FINANCE CREDIT CORPORATIONSFOR ARTISANAL MINERSAn issue that emerged in almost every engagement with miners is access to financing. In practice, it is hardfor miners to get access to financing. Mining is inherently risky, and credit requires collateral / security. Asmining is scattered and the sector informal, with no or limited access to banking institutions, it is virtuallyimpossible for miners to provide formal bankable guarantees. Private property is one of the most commonways to provide collateral, but it is undesirable to encumber communal property—if more than use rightswere recognized.Against this backdrop of high risk and no security, GOL should consider other alternatives to assist ASDMto improve their capacity. Assistance could take the form of credit by means of providing loan guarantees, butalso more practical and less risky forms of assistance. If equity (capital) can be obtained through privatecompanies, 33 development partners, revenue from benefit-sharing schemes, the Mineral Development Fund 34and/or GOL, public-private micro-finance credit corporations and joint ventures can be created. If thegeological potential is objectively determined and adequate tools and technical assistance are provided, minerscan cooperate with the equity stakeholders and government to share revenue. In micro-finance creditcorporations, GOL would take the lead to obtain financing as a development partner, without committingonly government funds, but utilizing funds from private investors as well. Ideally, miners should form smallcooperatives to reduce the risks for equity stakeholders.31UN Security Council Panel of Experts on Liberia, S/2009/640. 17.32USAID GEMAP. 2010.18.33Consultants in fact came across investment opportunities in Liberia’s ASDM on the internet.34MML, S. 18.3.30 PRADD LIBERIA: A REVIEW OF THE LEGAL, REGULATORY AND POLICY FRAMEWORKGOVERNING ARTISANAL DIAMOND MINING IN LIBERIA