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Radical Economic structural Transformation (part 7 of 10)

10 Jul 2020 at 15:36hrs | Views
"The test of our progress is not whether we add more to the abundance of those with much, it is whether we provide much to those with too little" Jean Jacques Rousseau.

Natural resources have been shown to play a key role in the conflicts that have plagued a number of African countries over the last decade, both motivating and fuelling armed conflicts. Revenues from the exploitation of natural resources are not only used for sustaining armies, but also for personal enrichment and building political support. As a result, they can become obstacles where predatory coalitions involved in exploitation of mineral resources are unwilling to give up control over these resources.

Paradoxically, despite the prospect of wealth that accompany the discovery of natural resources in Africa, such endowments all too often impede than rather than accelerate development.

In our case in Zimbabwe, although the country is at peace, the exploitation of mineral resources continues to be used by the ZANU (PF) predatory cabal and its coalition as a source for self-enrichment and patronage at the expense of development.

Zimbabwe is well endowed with numerous mineral resources with 40 different minerals and 800 operating mines, but even this government has admitted that it is failing to unlock the full potential of this country.  Without strong institutions and good macro policies, even the very best mining policies will not deliver the investment output, jobs and exports that we need.

The key success factors for the effective management and allocation of mining resources lie in;
1.    Political leadership
2.    Institutional renewal
3.    Policy consistency and accountability
4.    Crackdown on corruption and IFFs
5.    Effective and fair tax laws
6.    Capital mobilisation
7.    Infrastructure development
8.    Beneficiation where it makes economic sense

With regards to corruption, we must never forget that there is an international cabal that is precatory which normally partners with locals predatory coalitions to exploit minerals in developing countries. The global "looting machine" is highly organised and normally has support from the highest offices in Africa. Angola is a typical example of a lucrative partnership between an international diamond and oil mafia cabal, the President's office and state institutions. Fighting corruption is therefore a difficult task that the predatory cabal is prepared to defend to the death and will therefore take some doing.
With regard to beneficiation, Zimbabwe has historically added value to its chromite to produce ferrochrome, the use of coal in power stations, gold refining, iron ore to steel, smelting of nickel, the production of platinum concentrate and matte. The issue has been the creation of linkages with the industrial sector to manufacture finished products and that requires a paradigm shift and new technologies.

Under REST it is proposed;
We add value to all our key minerals these being gold diamonds and platinum and chrome as a matter of policy. This requires we liberalise the mining sector but insist on an industrialisation strategy around current key mineral resources.

We stop exporting our gold and build up reserves. Our gold reserves alone estimated at 13m tonnes and establish a Rapid Gold Extraction Initiative (RAGE) which can see us targeting at least 500 tonnes per annum within the next five years. In order to achieve this it is necessary to liberalise the gold sector market and remove the Fidelity monopoly while ensuring that miners are paid 100% of their export proceeds ay best price.

That the diamond sector is privatised and commercialised into the local manufacture of jewellery and we stop exporting raw unpolished diamonds.

That we establish a manufacturing sector around our platinum reserves from refining the platinum locally to manufacturing industry.

That we reduce the export of unprocessed minerals on an incremental basis.

That our Sovereign Wealth Fund (SWF) be managed effectively as the country's endowment to future generations.

That we create Mining Development Bank which creates access to long capital for the mining sector and also funds exploration activity for us to determine the extent of our resource base.

That, where possible, we auction some of our mineral reserves to fund industrialisation and infrastructure development and we only invite those who are going to create new local industries and manufacture products from our mineral resources.

A long term vision to develop and determine and broaden our mining base, attract investment and transparency in the sector and aggressively industrialise while building our gold reserves and a SWF for future generation, will be the critical success factors for the maximisation of localised benefits from our prodigious mineral resources base.
What is required is leadership and new imagination.

Vince Musewe is an independent economist. You may contact him on or follow him on twitter @vincemusewe

Source - Vince Musewe
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