Investors urges scrapping expropriation proposal

morgan_tsvangirai_4Johannesburg - PM Morgan Tsvangirai (pictured) came under pressure from foreign investors on Thursday to revise a proposal which would require mining firms to hand 51 per cent of their investment to local businesses.

Hundreds of investors attended a two-day mining conference in Harare ending Thursday in search of information on investment opportunities and clarity on the government’s plans to give Zimbabweans a greater stake in the sector.

President Robert Mugabe’s former government caused alarm among investors three years ago when it proposed forcing foreign companies to hand 51 per cent of their investments to black Zimbabweans.

The proposal drew comparison with the lawless seizure of white- owned farms and their transfer to new, black farmers.

“The 51 per cent is just an objective and not definitive. I know that the 51 per cent has cause a lot of consternation,” Tsvangirai told the conference.

“It needs to be clear. It does not make sense that an (Zimbabwean) investor comes without any contribution,” he acknowledged.

He was responding to a call for clarification from an analyst at South Africa’s Public Investment Corporation, that country’s largest fund management initiative. The analyst said the 51 per cent proposal had cause “panic” among investors.

Zimbabwe desperately needs foreign investment to rebuild the economy. The undercapitalised mining sector accounts for half of all export earnings.

Tsvangirai said Thursday the mining sector could attract up to 16 billions of dollars in investment between 2011 and 2018 if the government created an environment conducive to investment.

“Thereafter we could rationally target an increase to GDP exceeding 3 billion dollars per annum arising from such investment.”

The seven-month-old coalition government he and Mugabe formed in February would implement a Mines and Minerals Act by the end of the year, he said.

The “policy of indigenisation … will be based on ensuring that ordinary Zimbabweans benefit from the country’s mineral endowment and participate at all levels in the business of mining and mineral exploitation,” he said.

Zimbabwe was aiming for a “world-class” investment environment, he said.

This included respect for the sanctity of mining titles, agreements covering the repatriation of profits and dividends, favourable royalty and taxation regimes and an independent judiciary as well as indigenization, Tsvangirai said.

The government would be reviewing existing concessions to make sure they were being utilised fully as well as awarding new concessions in a transparent manner.

Zimbabwe has the world’s second-highest deposits of platinum, a precious metal used in car manufacturing and jewellery. It also has gold, coal, chrome and dozens of other metals, as well as diamonds.

A decade of misrule by Mugabe’s government left the economy in tatters. The new government says it needs 10 billions of dollars to effect a turn-around.

Post published in: Economy

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