According
to the Zimbabwe Independent, hundreds of applications submitted by prospective
mine developers as far back as 2003 have not been processed. Not only has this
brought exploration work in the country to a standstill, it is depriving the
country of foreign direct investment in the form of exploration money.
"Speculation is now rife that government wants the mining sector to be indigenised
before opening it up to more players," said the report in the Zimbabwe
Independent. The Indigenisation and Empowerment Bill, which forces foreign
companies to sell 51% of its shareholding to locals, is now awaiting President
Robert Mugabe's approval after it sailed through Zimbabwe's Lower and Upper
Houses of parliament. Already its introduction has created investment
uncertainty and resulted in several of that country's largest investors,
particularly in the platinum industry, holding off on new investment there. Now
exploration companies may be turned away from the country and like other
commodities producers, could seek a home in less restrictive, more
investor-friendly neighbouring countries like Mozambique, Namibia and
Madagascar. The United Nation's World Investment Report, released earlier this
month, said foreign direct investment in Zimbabwe slumped by 61% in 2006. South
African Institute of International Affairs (SAIIA) estimated in a 2006 report
on Zimbabwe that about 27 of South Africa's biggest listed companies have
operations in that country.
"Long-standing
business ties have not been severed by the current economic problems, although
many companies have preferred to 'ringfence' their Zimbabwe operations, keeping
financials separate from the overall group operations, as a way of riding out
the storm," SAIIA said in its report titled A Nation in Turmoil: The
Experience of South African Firms Doing Business in Zimbabwe. "Although
most companies have limited contact with head office in South Africa, they
believe that if they were faced with a real problem the parent company would
intervene to help them," the SAIIA said. "However, the fact that
Zimbabwe has not signed the trade and investment protection agreement drawn up
with South Africa makes companies feel more exposed to the vagaries of
Zimbabwe's economic policy, particularly as regards property and
nationalisation of assets," the report noted.
Zimbabwe
is South Africa's most important trading partner in Africa and one of the 15
countries, globally, with which South Africa exchanges the highest volume of
trade. China has become a major trading partner to Zimbabwe, second only to
South Africa and China is also the largest investor in incremental investment
in Zimbabwe. Earlier this month firms from Qatar and the Ukraine announced
deals totalling more than US$200 million in Zimbabwe's infrastructure "
further proof that Zimbabwe is determined to sever ties with the US and
European Union in the wake of previous year's sanctions and build stronger ties
with the Middle and Far East. And while reports out of Zimbabwe indicated that
there have been some deals concluded under the Indigenisation and Empowerment
Bill, these have been low key and said to involve much smaller companies. Sam
Chikowore, the operations director of exploration firm Exporien Mining, told
Zimbabwe Independent that the mining sector has been neglected compared to
other sectors such as agriculture. Confiming that no new prospecting orders
were being issued despite the industry's representation to the relevant
ministries and the Reserve Bank of Zimbabwe, Chikowore said Zimbabwe's
government should put in place mechanisms to safeguard the sector to ensure
that players develop the mines before they offload it.
