From purse to curse: Zimbabwe’s mineral wealth or is it poverty

via From purse to curse: Zimbabwe’s mineral wealth or is it poverty – Southern Eye 8 August 2015 by Welshman Ncube

Those of you, like me, with a deep interest in the subject of political economy, will remember the phrase “resource curse”.

A quick reference to Wikipedia will tell you that the term “was first used by Richard Auty in 1993 to describe how countries rich in natural resources were unable to use that wealth to boost their economies and how, counter-intuitively, these countries had lower economic growth than countries without an abundance of natural resources”.

For many decades, the ruling party, Zanu PF, has somewhat thoughtlessly and with disdain for common sense been shouting to all who care to listen that Zimbabwe is so rich in natural resources to be poor and hence they have argued that “Western governments are clamouring to recolonise us” so as to have free access to our natural riches. Even though this is rank madness born of childish, scandalous hallucination, Zanu PF politicians have not tired of listing most of Zimbabwe’s natural endowments — ranging from national monuments like the Victoria Falls to a whole bevy of minerals — including the world famous diamonds as the evidence that we are too rich to be poor!

From the time alluvial diamonds were “discovered” in the Eastern Highlands in 2006, Zanu PF’s superficial world revolved around this gem. They lied, cheated, beat people and according to human rights organisations, even killed in the name of diamonds. However, we all know that this newly found enthusiasm brought nothing but misery to our people, particularly those around the areas of the “discovered” diamonds. For the people of Marange and Manicaland, this resource was nothing but a curse. They stood in awe as Chinese, Russians, Jordanians, Zimbabwe Republic Police and Zimbabwe National Army (ZNA) “commanders” set up shop to plunder the gems in the name of “national wealth creation”. The people of Marange were not only made poorer, but also moved to new locations that had nothing but barren top soils, watching from a distance as their resources turned from purse to curse.

Meanwhile, the new owners of this national treasure became richer, bought private jets and lush seaside homes in Durban while the government purse shrunk. Our country’s image was savaged as we came close to being classified as a “blood diamond” nation. At one time the World Diamond Council agitated for our expulsion from the Kimberley Process, saved only by our neighbours, South Africa.

When the MDC was part of the inclusive government we asked many questions which went unanswered such as why we read that our diamond resources were calibrated in billions of United States dollars, but we were failing to generate enough money to pay normal government expenses, including workers’ wages. My colleague, Tendai Biti, then Finance minister, tried several times to visit these “rich national resources”, but was turned away because he was accused of being a Western puppet with a regime change agenda.

However today, the new Zanu PF Mines minister and the relevant Parliamentary portfolio committee now know all the talk about diamond wealth, community share ownership schemes and “big kaylite cheques” was one gigantic political fraud founded on illusions meant to hoodwink Zimbabweans as the diamond gems disappeared into the pockets of a few committed chefs and cronies.

I am writing this because I know that for lucky countries like Botswana and Angola, minerals have uplifted the lives of citizens. When a sensible, people-centred government manages a national endowment, minerals become a purse, not a curse. Angola’s export trade is largely driven by oil. Botswana entered into a sensible resource management agreement with De Beers to form Debswana, one of the most sustainable mining agreements in the world.

Unfortunately for Zimbabwe, Nigeria and South Sudan, national endowments have caused the citizens anguish. Zanu PF has no excuse. When President Mugabe took over the reins in 1980, Zimbabwe had a sophisticated mining industry. As a young man growing up in the Midlands, I encountered blissful towns like Shabanie, Mashaba and Queque (Kwekwe) whose entire lives depended on chrome or asbestos.

They boasted sophisticated sporting and skills training facilities while young people hardly ever failed to secure jobs. Further west, we had Shangani and Turk mines while north-west was the world famous Hwange coalfields. Most roads leading to these mining centres were well maintained, but today, the glory days of Rio Tinto, Redcliff and Alaska are nothing but distant memory and history. Our country is not only saddled with a $10 billion foreign debt, but also a ballooning unemployment rate which is skyrocketing in the face of the abuse and misuse of the recent Supreme Court judgment on notice termination of employment.

It is difficult to understand how a country of only five million employable adults can fail to secure safe jobs for its citizens when we are so blessed with so many natural resources! Ironically, the modern history of Zimbabwe actually began with mining as the Portuguese and the British sought mining concessions. From Cecil John Rhodes to Ian Smith — mineral resources fortified the Rhodesian colonial governance. However, as “late” as July 2013, Zanu PF lied to Zimbabweans that of the 398 mines in the country, worth $6 billion, Mugabe’s “indigenisation policy” would “unlock” $3 billion worth of “wealth” for locals. They went on to claim that they could receive well over one $100 million as community shares.

You and I know our country is now classified as poor, but with rich resources. We also know that there are once “resource-poor” countries like Mauritius, Singapore and South Korea, but now a thousand times richer than Zimbabwe. With all its curses, the racist colonial regime as part of its sanctions busting strategies had successfully diversified our economy to avoid over-dependence on the extractive sector. The colonialists had seen what over-dependence on a single mineral (copper) had done to Zambia when the prices of copper plummeted. Our very own Mhangura town died when its copper mine was mothballed. Today, Zimbabwe has been extended a kind hand by fate to exploit platinum resources.

According to a Reserve Bank of Zimbabwe report, our country has the second largest deposits of platinum in the world, estimated at about three billion tonnes, scattered along the Great Dyke (from Shurugwi to Selous). As if the Zanu PF government did not learn from the diamond plunder, they have allowed the ZNA to partner Russian prospectors Pen East Mining Company, Rostec State Corporation, Vi Holding and Vnesheconombank to angle for five billion platinum mines. Nobody knows, including Mining minister Walter Chidhakwa, how you and I will benefit from this “curse’”.

For good reasons, mining seems to have been the only export sector that has survived the vagaries of bad Zanu PF governance. Note the use of the word “survive” rather than thrive, because according to the Robertson Economic Information Services report, the mining sector has witnessed staggering falls in production for just about every significant mineral with a few notable exceptions, particularly platinum and platinum-based minerals such as ruthenium, rhodium, palladium and iridium. Notable examples of the decline in the mining sector include iron ore which fell from a peak of 1,6 million tonnes in 1980 to zero consecutively from 2008 to date, asbestos from a peak of over 160 thousand tons in 2002 to zero consecutively from 2011 to date and phosphate rock (used in the manufacture of fertilisers) from over 100 thousand tonnes in 2002 to less than 10 thousand tonnes by 2014.

Notice I have not even commented on the potential for gas deposits (Lupane, Sengwa) or the timeless resilience of gold and yet there is nothing to indicate that we will soon be out of poverty. As Wikipedia warns: “When a country’s chaos and economic policies scare off foreign investors and send local entrepreneurs abroad to look for better opportunities, the economy becomes skewed. Resource extraction becomes the ’default sector’ that still functions after other industries have come to a halt.”

As leader of MDC, I am aware how the absence of a devolved system of government has seen local communities fail to benefit from their God-given natural resources. Mining is meant to be one of the top growth drivers and employer in Zimbabwe. Ordinarily, its revenue base must be able to drive the resurgence of Zimbabwe’s crumbling infrastructure. The tragedy is that corruption, greed, incompetence, policy intimidation and poor accountability have diverted mining proceeds to non-fiscal silos. This means even if Zimbabwe is one of the top platinum and diamond producers in the world, its citizens will remain poor because only a few beneficiaries of political patronage are pocketing the proceeds.

In order to drive an effective devolved growth-oriented mining programme, the MDC will strive to ensure that proceeds from national minerals are invested in infrastructure development that is hinged on a devolved agenda to equitably distribute benefits and burdens at national level in all projects. Mining companies will be encouraged to fight for tax credits and incentives based on their investment in local community education, health, social and infrastructure sectors.

The Mines and Minerals Commission will be made to account for every transaction relating to mining extraction, marketing and sales of minerals in the interests of shared benefits from a devolved national plan. Treasury will have a firm hand on mineral sale proceeds so that there is transparency in all transactions.

Policies will be put in place for mine employees to be empowered and decently remunerated and insured against major risks. It will be critical to ensure that all mining investment is sustainable, so that mines remain within acceptable environmental management standards to preserve the ecological balance.