Zimbabwe's real wealth untapped

WE HAVE heard it all before. Zimbabwe has the second-largest platinum reserves in the world next to South Africa, the largest alluvial diamond reserves in the world, significant gold, chrome, coal and so on. Once upon a time it was a world leader in the production of lithium minerals, chrysotile asbestos and ferrochromium. Its chief minerals were coal, gold, platinum, diamonds, copper, nickel, tin and clay.

Zimbabwe also produced iron ore, palladium, rhodium, selenium, silver, tin, barite, hydraulic cement, clays, emeralds, feldspar, graphite, kyanite, limestone, magnesite, mica, nitrogen, phosphate rock, quartz, sulfur, talc, and vermiculite. The list goes on.

Zimbabwe is truly blessed with a wide range of minerals and a big resource base, which offer unlimited upside potential in prospecting, mining and beneficiation. There has been a claim by some that Zimbabwe is the richest country on earth in untapped natural resources per person. The question is: so what's the problem?

The fundamental issues we face in taking full advantage of this endowment include the lack of leadership, accountability, business ethics and an antiquated view of the world, including how we do business.

Despite the serious investment in education in the past, Zimbabwe has failed to advance and maximise its competitive advantages, especially human capital. As a result, we have seen an economy characterised by patronage, which is slow to react to new opportunity, inconsistent and rather myopic in policy, and which is clearly unable to accelerate social development and suffers from leadership paralysis.

Fear of change has shut out new thinking and new opportunities. Unfortunately, this paradigm has slowly crept into how we do things in Zimbabwe, whether in business or politics. A clear example is how we have totally mishandled the diamond finds in Marange.

Where there is no transparency in governance and a plutocracy in power, it is difficult to exploit opportunities quickly and completely. Unless, of course, you are Chinese. Democracy in Zimbabwe is certainly a critical factor for the fair and expeditious exploration, extraction and beneficiation of its mineral resources.

But in addition to that is the rapid development of infrastructure and the adoption of world-class business processes and technology. As far as I know, these have never really been the priorities of Zanu (PF), especially in the past 10 years. This is because the party has been in survival mode and, like any thief who is under hot pursuit, they must figure out how much they can make today, while tomorrow can look after itself.

In my opinion, the potential for investors in the Zimbabwean mining sector is not about the hard facts and figures ' these are well known and speak for themselves. It is more about effectively dealing with the soft issues. That is to say those emotional and psychological issues that have prevented us from unleashing our full potential as a country. Those issues are the very ones that continue to lead to the public remonstration by our president of the west and its allies, but the private acceptance of their expertise, know-how and technological advantage.

Some argue that it is dangerous to rely on mining-led growth because of unreliable resource prices and the lack of interconnectedness of the mining sector in Zimbabwe to the rest of the economy.

This actually presents a big opportunity for Zimbabwe to look beyond the extraction of its minerals for export as the main source of revenue, but towards beneficiation and the development of a manufacturing industrial base that will feed Africa's growing demand. That, for me, is the thinking we lack.

Indigenisation is of course the Achilles heel. However, remember that in 2000 it was Jonathan Moyo who was the anointed crusader of the Zanu-PF election campaign based on the land expropriation disaster. In 2008, we had Gideon Gono, who presided over an unprecedented destruction of value that led to the collapse of the Zimbabwe dollar, the obliteration of a number of banks and the highest hyperinflation the world has known.

Now we have Saviour Kasukuwere, whose indigenisation campaign is again going to destroy significant economic value and goodwill. This will delay our economic recovery. However, I predict that sooner or later he will also be irrelevant as the fresh winds of change sweep him aside. Unfortunately, the damage will already be done.

From my conversations with the Movement for Democratic Change, however, it is well aware of the challenges ahead and what needs to be done. Its blueprint for a new economy is quite clear, especially in the mining sector. Investors will be offered stability, consistency in policy and a better governance structure. More important will be the ability of a new government to replace old thinking.

The other side of 2013 certainly offers some excitement and, if you are in mining, you want to be part of it.

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Vince Musewe is an independent economist currently in Harare and you may contact him on vtmusewe@gmail.com