Zim warned against mortgaging minerals

via Zim warned against mortgaging minerals – DailyNews Live 4 June 2015 by Ndakaziva Majaka

HARARE – Zimbabwe must stop mortgaging minerals to secure loans but must negotiate deals more shrewdly to preserve future generations from bad decisions, a renowned Ghanaian economist said.

Douglas Boateng, Africa’s first ever extraordinary professor in supply and value chain management, told an Institute of Directors Zimbabwe (IoDZ) awards ceremony recently that government was compromising the country’s future.

“China and most countries you are getting into deals with are in it for the best of their people and they are very smart, however, Zimbabwe’s decisions are mostly short-term so future generations will suffer from these decisions,” he said.

“These days Zimbabwe has been signing a lot of contracts. I wonder how you are going to feel after these things you are selling off for a song are valued at over $50 billion five years later,” added Boateng, who is also chairman of the advisory board of Chartered Institute of Purchasing and Supply Africa.

The Management-Africa board member also said government had to establish the value of minerals first, before entering into “unbeneficial partnerships”

“Everything is being mortgaged, but, why can’t government first do some geological work on these natural resources, then make informed decisions,” he said.

This comes as the hard-pressed nation, which last year brokered infrastructure and platinum deals with China and Russia respectively, is yet to draft a priority list for minerals that will be evaluated through the newly-formed National Mining Company.

In June last year, the World Bank also warned government against mortgaging minerals, saying this jeopardises future generations’ welfare.

Nadia Piffaretti, the World Bank’s senior economist, said Zimbabwe was better advised to seek loans at concessionary rates instead of securitising its minerals to secure loans.

Piffaretti said instead, Zimbabwe must seek loans, which have clear-cut terms and conditions.

Zimbabwe, which is struggling to secure $27 billion to finance its economic blueprint ZimAsset, also directed diamond firms to deposit their gems with the central bank as part of wider efforts to secure external loans by securitisation of minerals.

Zimbabwe has an external debt of approximately $10,7 billion.

Economist, Tony Hawkins, also shares the same sentiments.

“In this process, Zimbabwe’s future is being mortgaged because servicing and repaying these loans… will absorb a large and growing chunk of future exports.”

“This will take the debt burden to an even more unmanageable 135 percent of Gross Domestic Product (GDP) by 2018,” said Hawkins, adding Zimbabwe’s desperation for economic relief has forced government to try and borrow more from China and Russia.

Zimbabwe last year signed cooperation deals with China, most of them focused on the energy, agriculture and telecommunications sectors.

During the same month, government and Russia signed several agreements which will culminate in a $3 billion platinum project in Darwandale, 70km north-west of Harare.

It remains unclear how a broke government would repay China, and how the deals would ease the suffering of Zimbabweans blighted by shrinking incomes and failing social services.


  • comment-avatar

    Who cares?

    Zanu and Mugabe sell the country – and the people pay – as usual