BY FIDELITY MHLANGA
An authoritative global mining report has exposed fault lines in Zimbabwe’s much hyped “Open for Business” mantra, demonstrating how President Emmerson Mnangagwa’s government has failed to walk the talk.
Under Mnangagwa’s investment policy reforms that came into force after the coup in 2017, Zimbabwe has been pursuing a strategy that gives it leverage over regional peers in terms of attracting foreign direct investment (FDI).
The reforms saw Zimbabwe reviewing the most hostile sections of its empowerment laws, especially in the mining sector, a vital cog in on-going efforts to drum up FDI and rebuild the economy.
But the US-based Fraser Institute said in its latest review of the global mining industry that Zimbabwe was far from reforming, and potential FDI inflows were being held back by a harsh investment climate.
The Fraser Institute ranked the southern African country as the worst attractive destination for mining investments in terms of policies.
It said when considering both policy and mineral potential in its Investment Attractiveness Index, Zimbabwe ranked as the least attractive jurisdiction in the world.
Zimbabwe’s mines are projecting to recover this year following two difficult years when Covid-19-induced lockdowns disrupted the entire global economy, forcing mining firms to suspend operations.
“This year, Zimbabwe replaced Venezuela as the least attractive jurisdiction in the world,” the Fraser Institute said.
Two other resource endowed southern African economies, South Africa and the Democratic Republic of Congo, were also ranked lowly.
“Also, in the bottom 10 (beginning with the worst) are Spain, the Democratic Republic of Congo (DRC), Mali, Nicaragua, China, Panama, and Argentina: Mendoza, Venezuela, and South Africa,” Fraser Institute said.
The 10 least attractive jurisdictions for investment were Venezuela, Philippines, and Argentina: Chubut, Nicaragua, Argentina: Mendoza, Zimbabwe, the DRC, Bolivia, Kyrgyzstan and Mongolia.
Venezuela, Argentina: Chubut, Zimbabwe, Bolivia, Argentina: Mendoza, and the DRC were all also in the bottom 10 jurisdictions last year.
Gold is one of the key minerals set to drive the government target of having US$12 billion mining industry by 2023.
Gold production, alongside platinum group metals, hydrocarbons like oil and gas, coal, gold, lithium, chrome and ferrochrome is expected to help the country achieve this target.
However, despite the hurdles, Zimbabwe Investment and Development Agency (Zida) statistics indicated last week that investors were still looking at Zimbabwe as an investment destination.
Zida said it approved 126 new investment projects last year with a combined value of US$557,8 million.
The authority’s acting chief executive Duduzile Shinya told Standardbusiness that ever since her organisation was formed, there has been significant improvement in FDI flowing into the country, largely driven by the “Zimbabwe is Open for Business approach”.
“There was an encouraging improvement in the number of projects approved between 2020 and 2021 where 76 and 126 projects were approved, respectively, representing an increase of 165%,” Shinya said.
“These are new investments excluding projects that were applying for renewals.”
She said the increase in the number of projects approved did not reflect the value of the proposed projects, however, where US$557,7m was invested in 2021 against just over US$1,5 billion in 2020.
“The significant difference is attributable to two outlier investments of over a billion worth of proposed FDI in 2020 from two projects in the agricultural and energy sectors with each contributing over US$650m and US$360m, respectively,” Shinya said.
The country is endowed with vast gold deposits, which remain unexploited but smuggling has remained a major challenge with tonnes of the precious metal being salted away.
Home Affairs and Cultural Heritage minister Kazembe Kazembe revealed in September 2020 that Zimbabwe was losing at least US$100 million worth of gold every year.