Zimbabwe to mortgage minerals for capital

RESERVE Bank of Zimbabwe governor John Mangudya on Monday told visiting Australian assistant secretary for Africa branch Gita Kamath that the country is ready to securitise its mineral resources in exchange for over US$1 billion in long-term capital to turn around the economy, it has been established.

According to the World Bank, Zimbabwe's economy is expected to register modest 0,9% growth this year, a figure much lower than the government estimate of 4,5%. The country, which owes the international financial institution US$1,8 billion in arrears, has the second known platinum reserves in the world after South Africa.

Diplomatic and economic relations between Zimbabwe and most Western governments, which have in recent months been thawing, soured after government embarked on the chaotic land reform programme which saw white commercial farmers losing large tracts of land to blacks.

Currently, there are about 1 400 Australians living in Zimbabwe and over 30 000 Zimbabweans in Australia.

Sources privy to the Monday meeting told the Zimbabwe Independent that the central bank chief also re-assured Australian From
businesses that they could repatriate their profits back home despite the acute foreign currency shortages.

Mangudya, the sources said, spoke on the nostro stabilisation fund which he said had helped ease the foreign currency problems.

"The governor said the RBZ is currently hamstrung and is looking for fresh capital. He said the apex bank would use the country's mineral resources, particularly gold and platinum, as some mortgage in exchange for long-term capital," a source familiar with the developments said.

"The amount they are seeking is based on average gold production which according to official figures should be just over US$1 billion."

Australia's concern over the investment climate, marred by policy inconsistency, lack of respect for property rights and poor governance, comes as foreign investors have repeatedly called on government to review and clarify the Indigenisation Act which compels all foreign investors to relinquish at least 51% shareholding to indigenous Zimbabweans. Government has since relaxed the indigenous law, a move that is expected to renew interest on the southern African nation.

Questions sent to the Australian embassy were not responded to while Mangudya confirmed the convening of the meeting although he did not disclose the finer details.

"We discussed exactly what is in the Monetary Policy Statement (MPS)," Mangudya said.

On nostro stabilisation and assurance to foreign exchange earners, the central bank proposed in the MPS a cocktail of measures to restore market confidence. The apex bank also called for acceleration in restoring trade relations with the international community.

"In order to enhance business confidence and credibility under the ‘Zimbabwe is open for business' narrative, supportive monetary and fiscal measures are essential to walk the talk to improve the monetary environment which is characterised by tight foreign currency liquidity," Mangudya said in his monetary policy statement.

"The panacea for the challenge of tight foreign currency is to increase production, exports, foreign direct investment, diaspora remittances, loans and putting in place measures to protect investors' funds.

"In line with this narrative and to enhance the ease of doing business in the economy, the following measures are being put in place with immediate effect to gradually liberalise the foreign currency market and promote business confidence."