25 April 2014

Zimbabwe: Govt Must Clean Up Mess On Mega Deals

editorial

Government's inconsistencies in handling multi-million dollar investments deals signed over the past five years effects deep-seated policy problems, besides being an ominous sign for the country already struggling to attract foreign direct investment.

Top among deals which have been botched by the state are the sale of a Ziscosteel stake to Indian investor Essar, the Chisumbanje Ethanol Plant and cession of mining concessions to Chinese and Russian investors.

What is consistent with all these deals is how political bickering among key institutions of government and lack of disclosure have cultivated an environment of opacity and stalled the projects.

Only recently was an exchange of words between Tourism minister Walter Muzembi and his Environment and Water counterpart Savior Kasukuwere over the proposed plan to indigenise the Save Conservancy.

Muzembe has proposed a more cautious approach in handling the matter while Kasukuwere has told the Tourism minister to back off, even going to the extent of describing him as "childish".

There is growing discord in government over the handling of big investment projects and the evidence of this can no longer be hidden from the public that is eager to know and benefit from mega deals.

There is a whole community in Kwekwe and Redcliff waiting for the US$750 million Essar project to get off the ground and reopen Zisco. There have been many promises from government that the opening of the plant is imminent, but disclosures by then Mines minister Obert Mpofu in 2012 presented a dark side to how deals are structured in government corridors.

Mpofu told a parliamentary committee that the deal should be reviewed so that it is in sync with the country's indigenisation policies.

More shockingly he said he had not been made privy to the salient details of the deal. He claimed that Essar would pay US$750 million for iron ore worth over US$30 billion. This assertion has neither been rebutted nor confirmed. The nation is still waiting for answers.

There is still need to shine a light into the dark corners of the Chisumbanje Ethanol deal. Its value, touted at $600 million, is being disputed and ministers still do not seem to agree on key issues, including the value of government's stake in the project.

Insight into how the deal came to being was provided by fireband Zanu PF MP Themba Mliswa who is claiming a US$165 million facilitation fee for taking investor Billy Rautenbach to the right people in government and therein lies the problem.

Key investment deals in the country have their roots in cronyism and political interference by people who have little interest in developing this country.

Zimbabweans can only watch daily shipments of capital equipment passing through en route to Mozambique where our hitherto economically shattered neighbour has become the second largest destination for FDI in Africa, after Nigeria.

Our rulers need to take a leaf from Mozambique's book, where the country's natural resources have given it a distinct competitive advantage due to investor-friendly policies. It's getting the basics right.

Negotiate, agree to good deals and allow business to execute.

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