No silver bullet to Zim’s economic woes

via No silver bullet to Zim’s economic woes – DailyNews Live 18 September 2014 by Chris Goko

HARARE – After China and Russia’s much-celebrated economic interest in Zimbabwe — over the last few weeks — we believe that this significant foreign direct investment (FDI) must be welcomed with a great deal of circumspection.

While it is true that some of the offered projects could positively impact on our troubled economy, it might be too early to celebrate given the previous and disappointing experiences of similarly over-hyped “mega” investments.

One of those initiatives is the $3 billion Darwendale platinum deal under the banner of Great Dyke Investments.

If the project comes to pass, it could mark the single largest FDI into the country since independence in 1980 because it has the capacity to produce an estimated 800 000 ounces a year and to create 8 000 badly-needed jobs when it reaches maturity in 2024, we were told by our desperate political leadership.

But until this and other projects such as those inked in Beijing actually come on stream, Zimbabweans are within their right to be a tad cautious about all this, and with good reasons too.

While it is true that Harare has for many years enjoyed good political relations with China and Russia, it is equally true that the two are important global players from whose relations Zimbabwe could substantially benefit.

It is also indubitable that the country is richly endowed with resources that foreigners lust after and which should have seen us stand proudly as one of Africa’s economic giants — if we had good, committed leaders to harness this unquestionable wealth and the country’s dormant potential.

Alas, Zimbabwe is on autopilot — just to put it mildly or politely here — owing to the myriad and certainly avoidable political, and economic crises of the past 34 years.

Thus, our abundant natural resources have meant little to the generality of our people, who continue to wallow in heart-rending poverty since our supposed independence in 1980.

In that light, many Zimbabweans will need a lot of convincing that the recently announced mega deals will result in a good life for the average citizen.

Crucially too, the much-trumpeted Chinese and Russian benevolence still has to materialise tangibly.

Indeed, trade between Zimbabwe and the two Asian giants has been slow since businesspeople from the two countries are ultimately not different from their Western counterparts in that: they sign and get into deals for money, not charity.

Another reason why Moscow is now looking for resources in these shores is that it is facing ominous Western sanctions and so it needs to look for alternative sources of such materials fast. And what better place to do cheap business than a desperate pariah state, and capital like Harare. But will such a relationship be equal and favourable to Zimbabwe?

And while welcoming the “arrival” of these Chinese and Russian companies to our banks, it is also important to note that the Chiadzwa diamonds have largely not benefitted the economy.

Indeed, many Zimbabweans loathe suggestions that the Marange find is still paying for the defence college in Harare and which the country does not need.

As such, the question is whether the Darwendale treasure is also going to pay for arms given the distressing news that part of the talks between President Robert Mugabe’s government and the Kremlin involves military hardware supply.

A further reason to doubt these massive agreements among Zimbabweans is how our government has treated other “mega deals” reached with outsiders such as the Essar-Ziscosteel deal, but which remain in an embarrassing limbo.

In the meantime, it is quite instructive that Mines minister Walter Chidhakwa has rightly summoned Chinese miner Global Platinum Resources (GPR) over concerns that the company was holding on to claims for speculative purposes only.

This is despite the fact that the company said in June 2013 that it was ready to start mining in September of the same year.

A joint venture between Norinco International Cooperation, a State-owned Chinese engineering firm and the Zimbabwe Mining Development Corporation, GPR is a beneficiary of concessions seized from Impala Platinum Holdings.

In that regard, it is our sincere hope that these deals are not an avenue for corruption in this troubled nation.