A review of policy and legal framework to promote Zimbabwe's competitiveness in the mining sector
Date
2006-11-17T08:48:09Z
Authors
Saungweme, Willis Z
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Abstract
The Republic of Zimbabwe is a landlocked country located in the southern part of
the continent of Africa, between the Victoria Falls, Zambezi River, Kariba Dam and
Limpopo River. It is surrounded by South Africa to the south, Botswana to the west,
Zambia to the north and Mozambique to the east. The country is well endowed with
mineral wealth and has been a reputable contributor to the region’s gold, coal,
nickel and chromium production in the late 90’s, but this has negatively changed for
the worse. Since 2000, Zimbabwe has been on economic recession resulting in
growing global interest in the country’s economic and social environment.
The lucrative mining sector has also been adversely affected by the harsh economic
climate hence thwarting flow of foreign direct investment (FDI) into the country
which is needed to boost Greenfield and Brownfield competitiveness in the sector.
Apart from its lucrative mining sector the country has done very little in harnessing
the anticipated FDI that should ensue. Concerns about governance, the rule of law
and human rights, and the continued lack of clarity about property rights have
severely damaged confidence, discouraged investment, and promoted capital flight
and emigration, thus contributing to the economic decline. Its competitiveness in
attracting FDI has since declined because of the international perception of the
country’s high political risk. The country has failed to live up to expectations with
regards to mineral resource development in the region.
The research established that, governance issues are at the helm of the current low
performance of the economy. It therefore prescribes a complete change in
government’s attitude and calls for it to develop a long overdue mineral policy
document to map a strategic way forward for the country’s mineral resource
development. Interestingly the country has been hailed to have one of the most
liberal mineral administration laws through the Mines and Minerals Act of 1996. Its
fiscal incentives to the mining sector compare favourably with the rest of the region
e.g. a corporate tax of 15% for exporting mining companies and currently most gold
operations are royalty exempt among others. There is a growing divergence from
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policies to actions on the ground. The rule of law is under threat and corruption has
taken its toll. It is therefore important for this research to analyse the historical
performance of the country in the mining sector to formulate policies and
recommendations that will improve the country’s competitiveness in the sector. The
policy and fiscal incentives should continuously be revisited to be in tandem with
global developments. The endowment theory, strongly believed by the country’s
mining ministry as illustrated by Tilton in 1992 is not conclusive in attracting FDI
especially in this dynamic global economy. More and more developing countries are
revising their investment policies to try and improve competitiveness of their
investment environments. Zimbabwe should emulate countries like Chile currently
leading the pack in attracting FDI in the mining sector.
There is now fierce competition in attracting investment into a country because
now, the investor has more countries to choose from. Zimbabwe should seriously
focus on getting rid of all the negative aspects that have seriously affected its
economic performance and quickly develop policies that auger well with regional
integration and various other NEPAD, SADC and AU policies that underpin
African development. The mining sector is a driver for economic development if
properly supported as shown within the research.
Description
Faculty of Engineering and Built Enviroment
School of Mining Engineering
0405669f
Willis.Saungwame@bhpbilliton.com
Keywords
Mineral Policy, Zimbabwes Policy, Zimbabwe's Competitiveness, Mining resourse development, Zimbabwe