Mysteries of the Sperrgebiet: Namibia’s Original Fraud?

The Sperrgebiet conjures up many images, mostly of a desert full of diamonds that only a few have entered, and some having perished on arrival or in transit.

The need for permission from Namdeb to enter Oranjemund ended several years ago, but the prohibition on entry is restricted to those wealthy enough to pay the tourist operators who arrange special trips for the well-heeled.

However, it has had a profound effect on the Namibian economy as the area and the discoveries of diamonds formed the basis of the colonial economy both under the Germans, the subsequent South African rule as well as post-independence. Diamonds to this day remain the principal export of the economy and, after the subsidy provided by Southern African Customs Union (Sacu), the single largest source of government revenue for Namibia.

NAMIBIA’S ORIGINAL FRAUD?

The history of the acquisition of land by the Germans prior to the formal annexation of South West Africa under the Treaty of Berlin in 1884 is very much a mystery. In 1882, Bremen businessman Adolf Lüderitz decided to establish a base somewhere on the coast between the Orange River and Walvis Bay because he expected to find minerals in the interior.

He received chancellor Bismarck’s blessing for his business venture, so long as he did not interfere with the rights of others. It is said that Bismarck himself was uninterested in acquiring for Germany what he called a ‘Sandkiste’ (a sand box; a child’s plaything), clearly unaware of what was to be found.

Heinrich Vogelsang, on instructions from Lüderitz, arrived at Angra Pequena in April 1883. In May, Vogelsang set off on foot to Bethanie to meet Kaptein Josef Fredericks and he acquired the bay of Angra Pequena plus five miles of ground in all directions from the bay. Payment was £100 and 200 rifles.

Later the same year, Vogelsang returned and extended Lüderitz’s business area by purchasing from Josef Fredericks (for £500 in gold and 60 guns), a 20-geographical-mile wide coastal strip from the Orange River up to the 26° S latitude. Kaptein Josef Fredericks was probably unaware that a German mile was 7.4km and not 1.6 as in the British mile. He had in effect sold a vast tract of land which would prove, in less than 30 years, to be one of the richest diamond areas in the world. The transaction formed the geographic basis of the Sperrgebiet.

Neither Fredericks, Bismark nor Lüderitz had any idea of the value of what had been sold and it remains contested by historians whether Fredricks even owned this land he had sold.

As this transaction was undertaken just before the treaty of Berlin, it became one of the centrepieces of Namibia’s pre-colonial history. For their trouble, the Nama descendants of Fredericks were murdered in large numbers by the Germans following the Nama-Herero uprising of 1904-07 on the very land at Shark Island that he sold to the Germans 21 years earlier.

The area that was sold to Lüderitz was declared Sperrgebiet by the German colonial administration in 1908 and in the wake of the massive diamond finds at Pomona and Kolmanskop, was continued by the South African administration after World War I.

Consolidated Diamonds acquired the mines and these were eventually onsold to De Beers and Anglo-American. Namdeb was created after independence. The accounts of Namdeb, which remains Namibia’s biggest taxpayer, are open, unlike in Botswana where the accounts of the much larger Debswana remain secret.

NOT THE WORST LAND DEAL IN AFRICA – BUT CLOSE

Of course, this part of colonial history is something most forget, but it was by no means the worst loss from a colonial era deal. Just five years after chief Fredericks signed away the Sperr­gebiet to Lüderitz, the Zimbabweans got a far worse and certainly more fraudulent deal in 1888.

King Lobengula of the Ndebele sold mining rights over Mashonaland and Matabeleland to what was Cecil Rhodes’ company. Rhodes was elated at the deal, reportedly saying, “so gigantic, it is like giving a man the whole of Australia’’.

Lobengula had given Rhodes rights to mine in areas of what is modern Zimbabwe but had not sold the land. He had agreed verbally with Rhodes’ negotiators that this would not involve more than a few whites settling in his domain. However, within a year, the British moved in and eventually, following a long war of resistance, created Rhodesia, now Zimbabwe.

DIAMONDS IN DECLINE

However, diamonds are not what they used to be. Diamonds were long considered the king of gems, but increasingly they are being manufactured in factories.

The biggest producer of diamonds is not Russia or Botswana, but China, which produces billions of carats of synthetic industrial diamonds in factories. With the help of De Beers and its synthetic diamond arm Element 6, this production has been extended from industrial to synthetic gem quality which can be bought in most good jewellery shops in Windhoek.

This occurred because De Beers and others rightly reasoned that consumers wish to buy luxury products, but cheap ones, as diamonds have to compete with other luxuries such as Gucci bags and overseas travel.

As a result of the decline of mined diamonds, De Beers, with the agreement of the governments of Botswana and Namibia, made fateful decisions to dispose of mining rights in both countries.

In Botswana it sold the Karowe diamond deposit to Lucara in 2009 because it did not believe it was a substantial deposit. In Namibia, Namdeb sold off the northern part of the Sperrgebiet to Sperrgebiet Diamond Mining.

Both sales had fateful and unexpected outcomes.

In the case of Namibia, the sale of the mining rights to the consortium which owns Sperrgebiet Diamond Mining was at least, from De Beer’s standpoint, a financially sensible sale, but it has led the emerging energy sector into dangerous waters.

• Roman Grynberg is a Polish-born professor of economics, author and academic. He specialises in international trade and commodities. Grynberg has also worked at the University of Namibia.