Zimbabwe: Mining growth catalyst

via Politicsweb – Zimbabwe: Mining resources the catalyst for future growth – FEATURES.  10 June 2014 By   Vince Musewe & Elton Mangoma

Part 10 in Vince Musewe and Elton Mangoma’s series on The Zimbabwe we want

Chapter 10; Mining resources are the catalyst for future growth

Zimbabwe’s mining resources have a huge potential to drive economic growth source of revenue to develop infrastructure and to start an industrialisation revolution, there is no doubt about that. Our mineral wealth can never be replaced once extracted and we only have one opportunity.

What the country lacks is visionary leadership and a consistent informed policy regime, courtesy of ZANU (PF) predatory capitalism. In the Zimbabwe we want to create, our resources must not be a curse but a blessing but this requires men and women of integrity and conscience who put Zimbabwe and its people first.

Our first point of departure is that Zimbabwe and its resources belong to all its citizens, black and white, who must be beneficiaries.

The first issue we therefore need to address in ownership. There is no point claiming full ownership of resources that we do not have the technology or the capacity and experience to extract. We therefore need partnerships with international mining companies. This partnership needs to take into account that large investments must first be done and we must therefore have policies that are attractive to whoever wishes to partner with us.

We will therefore pursue joint ventures with international partners and the terms must remain favourable to those who are providing the technology and the know-how.

There is nothing wrong with large mining companies owning 100% but the revenues must be shared with Zimbabwe. There is also nothing wrong with Government owning 51% but we cannot disempower potential partners because of that. We must also look at enterprise development that arises from mining operations as more beneficial to us as it creates complimentary industries and jobs.

In other words, we must always use the most prudent and flexible model; depending on which minerals we are talking about. The minerals vary in degree of difficulty to mine and process. We can therefore not have a one size fits all approach as this leads to inefficiencies and wrong investment models.

On the issue of value addition, again our focus must be creating the most value for Zimbabweans. However, each mineral requires a different approach; for example, value add to diamonds is simpler and cheaper where we can create small enterprises that polish diamonds compared to a platinum which requires capital intensive crushing and refining equipment. We therefore need tailor-made solutions for each mineral product. In some instances it may not be viable or efficient for value addition and we need not force value addition which may not be profitable.

Small scale miners will always be there and our role is to ensure that they are viable and apply technology thus making it easy for people to mine. Currently there is organised chaos in this sector and the damage being done to the environment is unimaginable for short term benefits. Small scale mining must be safe, profitable and regulated efficiently especially when it comes to marketing their product without them being exploited.

The next level of thinking must then say, how we can use our minerals to industrialise our country? We need to begin to think about manufacturing finished products locally. This requires good research and patience.

Another idea is for us to tax mining at revenue level and not at profit level. This will not only simplify tax but also ensure that it is easy to close loopholes. The tax or royalties payable on revenue is more transparent and equitable. The Government can obtain the value on behalf of all citizens through taxation, as oppossed to indigenisation.

The tax regime then replaces the disasterous indigenisation debate and experiment in the mining sector. In the Zimbabwe we want, we want mining companies to be happy to pay tax and this will only happen when they see a government that is accountable and actually spends these resources prudently to the benefit of the country.

Mineral rights must also be allocated efficiently. These mining rights can be a tradable commodity as long as those who sell them pay income tax to the government. Where people are not using these rights, Government must reserve the right to reallocate them so that we utilise our assets to the highest advantage to the country. There is no point owning something 100% when its value cannot be realised.

Patronage must have no room as this destroys opportunity and value as has been the case in our mineral sector. Corruption, vested interests and opaque national policies serve only the interests of the few. This has been our fate.

Zimbabwe has all it needs to develop into a modern resource based economy and what we lack is the visionary leadership underpinned by fairness, ethical business practice and institutional integrity.

Vince Musewe is an economist and author based in Harare. Elton Mangoma is a Zimbabwean politician and entrepreneur. You may contact Vince directly on vtmusewe@gmail.com



  • comment-avatar

    Indigenisation under Mugabe and Zanu PF has always been yet another vehicle for the elite to enrich themselves as has been every venture over the past 30 years. Companies will never invest with the treat of 51% being confiscated from them and they having to take on an unknown partner who will bring nothing to the table other than expenses, huge salaries and self benefits. The South African BEE scheme is a prime example of this. Zanu PF has cried about corruption and huge salaries but done nothing and the plunder continues.
    Until Zanu PF goes the theft will continue and Zimbabwe will go further down the drain. Stupid countries that are continuing to donate are only delays the inevitable bankruptcy. Better they hold the funds in trust till this lot of thieves go or are deposed (and hopefully placed in jail where they belong, then step in to help rebuild Zimbabwe to what it was. Suffering there will be but it will be a lot worse later on if steps are not taken.

  • comment-avatar
    John Thomas 8 years ago

    The writers of this article mistake the ZANU paradyme for reality .