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Bad leadership behind Zimbabwe's impoverishment

by Staff reporter
23 Oct 2023 at 10:50hrs | Views
FORMER Finance minister in the Government of National Unity (GNU) Tendai Biti has blamed poor political leadership and a shambolic mineral resource governance strategy for the stagnation in Zimbabwe's economic growth, with the country trailing neighbours in GDP, and resources failing to benefit the local people.

Speaking at the CEO Roundtable in Victoria Falls this week, Biti said Zimbabwe is lagging behind in economic development due to a combination of lack of transparency in mining deals and a toxic political environment.

"We have had around 13 elections since 1980  . . . and each one of them has been disputed, including the harmonised election on August 23. The report by the Sadc Electoral Observer Mission (SEOM) on the election is the most damning that you can ever find in recent times. And, that puts a premium on our attractiveness as an investment destination," Biti said.

"With the consequent slow development of Zimbabwe, slow growth rates, 3% growth rates and negative growth rates, where we could be having a sustained growth rate of at least 9% per annum, our GDP is around US$18 billion.

"In 1980, our growth rate was US$7bn, Zambia was US$3bn, Kenya was US$7bn. Fast track 44 years after independence, Kenya has a US$264bn economy, Zambia has a US$63bn economy and US$18bn. What is the difference? The difference is our toxicity. We need to confront the elephant in the room which is our ugly politics, our vicious politics, our predatory politics, we need to address that."

Giving a comparison of Zimbabwe and Botswana, Biti said due to transparency, the western neighbour has managed to make an economic breakthrough, despite relying on only one mineral.

"To address the issue of resources, it is true that Zimbabwe is a rich country. We have got 63 minerals and of those, four or five of them, we have got world-class deposits. World-class deposits of platinum, gold, chrome — and now world-class deposits in lithium," Biti said.

"But this country is not benefitting from these minerals. There is a country a few kilometres from here called Botswana. They have got one mineral. The per capita is US$6 500. The per capita in Zimbabwe in US$1 200. But, they have one mineral and we have 63. The difference is that Botswana has managed its one mineral transparently.

"Their agreement with the De Beers group is transparent, and our accumulation model is faulty. If you take diamonds in Botswana, they have got a huge factory outside their airport, which cleans and polishes diamonds at a greater cost than India. In Botswana, polishing is US$30. In India you can get away with US$10. But the Botswana government told De Beers to say that we will process the diamonds here.

"The problem in Zimbabwe is that we are selling these mining concessions opaquely. We are selling these mining concessions without any due diligence. Zimplats in Ngezi was given that concession. We do not know what price they paid. I was minister of finance, we do not know what price they paid. That agreement, if it had been subjected to Parliament, no Parliament would have passed that."

As previously reported by The NewsHawks, mining law experts have also urged the Zimbabwean government to align the legal framework that regulates gemstones with international best practice to curb the illicit trade in minerals, if the country is to benefit from natural resources in a similar manner to Botswana.

"The major difference between our policy in Zimbabwe and Botswana is that here mineral resources are vested in the President, while in Botswana they are vested in the republic. This has a serious implication," according to a report by the Zimbabwe Environmental Law Association (Zela), compiled by mining law expert, Lyman Mlambo.

"Firstly, the minister of Mines really acts in the interests of the President and government. In Botswana, decisions devolve to lower levels and are highly subject to scrutiny . . . also made by low-ranking officials."

The report also shows some loopholes within the Precious Stones Trade Act which have been promoting the illicit trade in diamonds.

"Section 7 (1) gives a lot of mandate to the minister to accept or refuse the issuance or renewal of a licence without giving any reason for such refusal. The most fundamental difference between Zimbabwe and Botswana is that there are policy statements which are not formal policies.

"There is no regulation. Basically you have informal activities taking place. This results in serious potential losses in terms of revenue to the country," reads the report.

Zimbabwe's existing diamond policy restricts exploration and mining of diamonds to four entities, including the Zimbabwe Consolidated Diamond Company (ZCDC), Murowa Diamonds, and any other two companies approved by the government.

Some of the companies granted rights to explore and mine gemstones have been mired in scandal, thereby raising speculation over transparency in the centralised gemstone management policy. ZCDC failed to account for the use of money exceeding US$400 million, and could not properly account for 352 583.11 carats of diamonds worth about US$146.3 million that were in stock, according to the 2019 Auditor-General's report.

Currently, mining operations in the gemstone industry, besides diamonds, and to some extent emeralds, are dominated by artisanal miners and informal foreign dealers.

Hopes of amendments to crucial Bills on mineral management have also been thwarted with President Emmerson Mnangagwa failing to reintroduce into the 10th Parliament Bills on mineral management.

Civil society had hoped that Mnangagwa would reintroduce crucial amendments to the Mines and Minerals Act, Gold Trade Act, Precious Stones Act and formulation of a policy on rare earth minerals, in the 10th Parliament, to plug the mineral leakages.

Source - newshawks