‘Zim among most unattractive mining destinations’

via ‘Zim among most unattractive mining destinations’ – DailyNews Live 11 March 2015

HARARE – Zimbabwe has been ranked among the most unattractive mining destinations, with the country lagging behind the Democratic Republic of Congo, Mozambique and South Africa, according to a latest survey by Canadian think tank – the Fraser Institute (FI).

In the 2014 Annual Survey of Mining Companies – which canvasses the views of mining executives from around the world – Zimbabwe is ranked 118 out of 122 jurisdictions.

“The main problem with Zimbabwe is the impromptu changes in policy over ownership of mineral rights and taking leases off companies after exploration success,” FI said.

“The lowest-rated jurisdictions on the Policy Perception Index are Honduras (4.3), Malaysia (5.2), Philippines (5.2), South Sudan (9.3), Zimbabwe (9.5), and Sudan and Nigeria (both 10.6),” it said.

In 2012 and 2013, Zimbabwe was among the bottom 10.

However, the investment-starved country’s score on the Investment Attractiveness Index improved from 34,8 in 2013 to 37,4 in 2014, but remained way below Zambia’s 66,2 last year.

According to FI, Zimbabwe’s performance was dismal in terms of its policy perception index – a composite index measuring the overall policy attractiveness of the 122 jurisdictions in the survey – and best practice mining potential.

These findings by the Canadian firm that the country’s attractiveness as a mining investment destination is worsening come at a time when government is working on policy consistence to attract Foreign Direct Investment (FDI).

The survey results also indicated that the lowest rated jurisdictions on the Policy Perception Index are Honduras (4,3), Malaysia (5,2), Philippines (5,2), South Sudan (9,3), Zimbabwe (9,5), and Sudan and Nigeria (both 10,6).

Six African countries—South Sudan (119th), Zimbabwe (118th), Nigeria (117th), Sudan (116th), Central African Republic (115th), and Ethiopia (114th)—ranked in the bottom 10 of the worldwide survey rankings this year.

Botswana however, was again the highest ranked jurisdiction in Africa on policy factors, ranking 13th of 122 in 2014 and up from 25th of 112 in 2013.

In past years, investors have skirted the Zimbabwe, with analysts arguing that the Indigenisation Policy — compelling foreigners to cede majority shareholding to black Zimbabweans — is one of the major obstacles to attracting capital while some argue that government’s blatant disrespect of property rights has also contributed to the “FDI drought”

Zimbabwe’s FDI  inflows plummeted by 53 percent to $146, 6 million in the ten months to October 2014 compared to $311, 3 million recorded in same period last year according to the Finance minister Patrick Chinamasa.

Chinamasa last year said the foreign capital inflows remained subdued due to the perceived country risk.

However, he projected the FDI to increase by 69 percent in 2015 on the back of continued implementation of reforms and the re-engagement process.

This comes as Zimbabwe’s FDI was stagnant in 2013 with the country receiving $400 million, unchanged from 2012, according to a recent United Nations Conference on Trade and Development (Unctad) report. The $400 million represented just three percent of total FDI into southern Africa.