31 December 2013

Zimbabwe: It's None, but Ourselves


Government has promised to review downward some fees and charges in the mining sector. Finance Minister Patrick Chinamasa announced this position in his National Budget Statement on December 19, 2013.He said the downward review of the fees and charges would "encourage investment in prospecting and exploration activities and also to enhance the viability of the mining sector".

Separately, there were reports that mining still leads as the investment destination of choice in the country, generating US$207 from 57 projects approved by the Zimbabwe Investment Authority (ZIA) in the period to November this year. The next preferred investment area was manufacturing, while others found security in joint ventures.

The sad thing is that there was no local investor in the period under review. Government did well to respond positively to pleas to review downwards certain fees and charges. Moreover, it would be counterproductive for ZIA to approve investment projects that are later aborted because of high charges.

There is, therefore, need to synchronise laws and operations between ZIA and the Mines and Mining Development Ministry to avoid frustrating prospective investors.

Having said that, we hope mining companies and prospective investors will reciprocate by placing all their cards on the table in terms of remittances, quantities and quality of mineral resources. This is in light of disturbing reports that some companies are often less than honest with Government regarding their earnings and costs, and the quantities of minerals they are dealing with.

This breeds mistrust and might make Government appear unresponsive to certain proposals. Mining, like other sectors of the economy, must contain its avarice and the tendency to profiteer. Times are hard but there is very little justification for hyperinflation-era pricing or costing models. Government has also appealed to companies to beneficiate.

We note again that there has been great reluctance to comply, with some firms raising the figleaf of the cost of purchasing and importing requisite machinery. In many cases, companies invest their export earnings offshore, promising to bring in machinery which doesn't always materialise.

Again, this poisons relations between Government and the private sector. We don't need to overstate the critical need for honesty and transparency.

Let us state emphatically here that while Zimbabwe needs foreign currency and is ready to accommodate all investors, the country must also get fair value for its finite, natural resources. It is in this vein that the country has pursued policies such as land reforms, indigenisation and economic empowerment.

Those who want to invest must appreciate these national imperatives and not expect to get carte blanche. The 51/49 percent shareholding ratio is very generous by any standard despite the tendency by our local so-called analysts to cry louder than the aggrieved. We have a product to sell and the buyer must give fair value.

We have no full information on why there was no investment recorded from local investors. Perhaps this calls for a full survey for we don't want to impute a political motive.

It is, however, a sad commentary on us as a nation that we want and expect foreigners to invest in our country while we keep our eyes trained on World Bank country risk profiles which are specifically designed to deter investment in Zimbabwe.

The message we have is very simple as we get into the new year: It's none but ourselves who can rebuild Zimbabwe. Like Minister Chinamasa said in his budget presentation, the old enclave economy of Rhodesia is dead. It is dead never to rise again.

Yet we have people still living in denial of policies of black economic empowerment and indigenisation. They still nurse a forlorn hope cruising against this concrete reality that somehow, miraculously, the dead Rhodesian enclave economy will one day, like the proverbial phoenix, rise from the ashes of the Third Chimurenga.

Zimbabwe needs to construct a new economy which benefits the majority.


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