One major challenge Zimbabwe faces today is its perceived high politico-economic risk for investors in the last decade. Furthermore, lack of infrastructure development has kept investors at bay. Most of these minerals require multi-million dollar investments in roads and rail to allow raw minerals to reach their market destinations. Such investment decisions are not taken lightly, especially in a country where the rule of law and security tenure is illusive.
Most of the politicians are in it to serve themselves and their families, with no time at all to plan and create an environment necessary for businesses development. This could be exemplified by authorities’ failure to satisfactorily integrate the Chiadzwa diamonds revenue outflows into public finance systems.
The exclusion of traditional chiefs in Marange or indeed, indeed the absence of a Diamond Policy, has prompted citizens’ suspicion, particularly following announcement that at least $15 billion from the diamonds revenue has been unaccounted for. In addition, the government’s response to smuggling and violence in the informal minerals sector is worrisome.
Zimbabwe’s violent mineral resources accumulation has not yet been normalised. For instance, grisly murders and human rights abuses in Chiadzwa were reportedly committed by security forces and still, there are sporadic violent clashes going on among small scale miners across the country. As a result, investment in mining is far from positive compassion with that of peaceful, democratic nations, and certainly nowhere near that of industrialised countries.
The establishment of Zimunya/Marange Community Share Ownership Trust aroused expectations. However, it turned out in the end that mining companies had less been honest, and could not honour their $50 million pledges. Government officials, in cohorts with dodgy mining companies, failed to recognise that, indeed, the Marange Diamond Mines had disrupted communities’ small scale economic activities, and that they needed to be adequately compensated as a result.
For Zimbabwe to be competitive in the current minerals market it has to transform and create long-term investment decisions, including righting its political and economic stability, taxation regime as well as ensure availability of infrastructure to attract mining companies and investors with a good reputation. It is also government’s duty to ensure that mineral resources, although in raw form, should strengthen and fortify exports from other sectors such as agriculture.
During the Chiadzwa windfall, there had become a tendency to almost forget normal economic activities in anticipation mainly of revenues only from the diamond mines; something which led to loss of economic growth. Furthermore, natural-resource management policy needs to be changed from state-centric management to community based management; from centralised planning to bottom-up planning; from subsistence-oriented to market-oriented management Hall (2013).
A foreign investor’s decision is based on success stories from other players as well as a comprehensive assessment of the risk as compared to other nations. Mining projects will need to include the broader socio-economic development programmes that are a commonplace in industrialised nations such as Australia. These programmes could be achieved through partnerships between mining companies and other stakeholders, and this which would enhance financing and infrastructure development.
Government now needs to understand that poverty reduction and environmental sustainability can be achieved by involving the people living in and around natural resources catchment areas.
Perhaps it is worthwhile to critically review the regionalised model of natural-resource management in industrialised nations such as Australia. By doing so, Zimbabwe could learn what worked for others, identify flaws and maybe reflect on decentralisation of governance that is offered in elsewhere.
For instance, Australia’s devolution policies have been successful in addressing the local population’s well-being and natural resources’ sustainability and management. Her resource-management is planned and implemented in her 56 regional bodies or catchment management organisations with various structure and functional arrangements. The funding of resources has also been devolved to the local catchment level which allows for better identification of problems as they arise.
This model should not allow national institutions and policy systems to be part of the local level management. It is in the populations’ as well as government’s interest to reform and equip people with the necessary skills, general understating and knowledge on operations of the global economy. The Zimbabwe government has to play a major role in shaping an environment that will facilitate the types of programmes found in many industrialised and democratic countries. For instance, small and medium mining operations should be supported by clear-cut policy objectives to enable them secure financing to invest in value-added operations.
Many protest movements in Zimbabwe have expressed frustration at the way the country’s resources are being abused. Investment in research is key, for it enables those in the mining sector to create efficient means of exploration. It also enables the creation of responsive organisational structures.
The African Union and the UN economic commission for Africa have developed the African mining vision 2050 which sets out a number of ideas for increasing resource wealth flowing to the countries that host mining operations. Some of the ideas will transfer wealth from the mining companies to governments, for example, by making the auctioning of exploration rights more effective and linking taxation to commodity prices more closely. Others such as the management of resource income and the active development of the supply and infrastructure sectors, aim to create a more favourable environment for economic development.
To conclude, the Australian model offers an example of accountability. The government must equip the population with education that facilitates talent and knowledge expansion; accountable to people and one that embraces an open global market system, not the current system that relegates Zimbabwe to raw materials exports.
Kingstone Jambawo is a staff writer with The Solutions Tower is the media component of the Local Solutions Council that analyses and publishes Current Zimbabwe Issues.The Local Solutions Council is the Publisher of the The Solutions Tower.