Harare – A struggling mining sector – companies delaying projects, halting expansion and putting properties up for sale – currently characterises Zimbabwe’s struggling economy in which cash, power and investment shortages are worsening economic growth prospects for the current year.

Endowed with mineral riches spanning gold, diamonds, nickel, coal and platinum among others, Zimbabwe has failed to boost its economy. These riches had attracted global resource investors such as Rio Tinto, Anglo Platinum and others but some have started to go away, with Rio Tinto exiting in 2015.

Others are merely hanging on due to their current investments, said analysts, referring to Impala Platinum – which faced threats from government requirements that it gives up excess land claims and that it builds a refinery in double-quick time. Apart from mining, Zimbabwe also has a booming telecoms industry and a thriving tourism sector.

A diverse agricultural sector capable of producing tobacco, maize corn, wheat and horticulture has been badly affected by the current drought situation while the industry sector, starved for retooling capital, has however seen productivity nose-dive and investors stay away.

“We used to be doing very well in terms of new investments but now we have taken a dip,” Nigel Chanakira, chairman of the Zimbabwe Investment Authority (ZIA) said by phone.

Investor worries have retarded growth in Zimbabwe, say economists and other experts. The southern African country has seen economic growth drop from 10.6% in 2012 to 2.7% in 2015.

This year, the government says, the economy will grow by some 1.7% but other experts say growth will be lower than this, with the IMF and World Bank saying growth will be around 1%. Growth is expected from telecommunications, tourism and mining although mining growth has been curtailed owing to low commodity prices.

Neville Mandimika, the Africa economist at Rand Merchant Bank in South Africa told Mineweb that investors are currently worried about “the application of the indigenisation law” as well as “how the economy will respond to the bond notes (local notes to be introduced in October)” after cash shortages worsened the economy.

“Any business depends on the ability of its customer base to make purchases. The elevated level of uncertainty in Zimbabwe at the moment is certainly a detractor for foreign firms looking to invest and for local firms to expand,” said Mandimika.

Zimbabwe finance minister, Patrick Chinamasa said in June that exports by Zimplats amounted to $217 million and accounted for 9.7% of total export earnings while Mimosa’s exports for the same five month period to June 2016 stood at $85.4 million, accounting for 3.8%.

The Unki mine’s export earnings from platinum for the same period at $42.4 million contributed just below 2% to Zimbabwe’s overall export earnings of about $2.2 billion for the period. Gold miners in Zimbabwe are required to sell their bullion through Fidelity Printers, a unit of the reserve bank while informal gold mining activities have now been de-criminalised as the country eyes about 19 tonnes in gold output for this year.

Even though mining remains an attractive bet for investors still focused on Zimbabwe, according to Frost and Sullivan, miners in Zimbabwe are sending out distress calls. They say on the ground there is no appetite for mining transactions in the country and add that this is being worsened by cash and banking restrictions in the country.

Ian Saunders, the chairman of Zimbabwe-listed and troubled Falgold said on Wednesday that “investor appetite for mining transactions in Zimbabwe is almost non-existent, and recent changes to deeming gold producers as non-exporters, together with the cash and liquidity issues in the country, are not helping matters”.

Another miner, Bindura Nickel Corporation, said on Wednesday that its board had concluded a feasibility study to convert its nickel smelter to a plant that will process Platinum Group Metals (PGMs) which had “indicated that this would not be viable, due to a limited supply of platinum concentrates”.

In the full year to the end of March, BNC, controlled by Asa Resources – formerly Mwana Africa – registered a 75% decline in gross profit from $36.1 million to $9.1 million while milled ore volumes declined 26% to 440 449 tonnes.

Zimbabwean exporters – among them the gold, platinum and diamond producers – will be incentivised with a 5% bonus payment on their receipts but this will be paid in the local bond notes. Zimbabwean banks have started to limit cash withdrawals while civil servants have had their pay dates pushed forward.

The notes are backed by a $200 million Afreximbank facility according to the Reserve Bank of Zimbabwe (RBZ) although there are growing concerns from business executives, bank depositors and other players that the government is re-introducing the Zimdollar “via the back door”.

Chinamasa said Zimbabwe would engage the World Bank, African Development Bank and Afreximbank on measures to ensure that the local bond currency to be introduced in October does not fire back for the struggling economy. The government says the country’s usage of the United States dollar as the base legal tender in a multi-currency regime had resulted in high externalisation of foreign currency, hence the cash shortages.

But despite these challenges, Mandimika said the “FMCG sector and resource sector has the lions share in terms of foreign investors interest” although the local stock exchange has been declining in values traded and seen foreign investors selling off.