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Promising mining opportunities in Zim

1st March 2019

By: Mamaili Mamaila

Journalist

     

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Despite Zimbabwe’s foreign currency crisis, specialist strategy and communications consultancy Africa Practice (AP) Mining Sector lead Rishon Chimboza says, “on a per capita basis, Zimbabwe is extremely well endowed with natural resources, so opportunities will always be there.”

Commenting on the keynote address delivered by Zimbabwe Minister of Mines Winston Chitando at a seminar, titled Spotlight on Zimbabwe, and organised by AP and law firm Webber Wentzel at the Investing in African Mining Indaba last month in Cape Town, Chimboza says the Minister highlighted two positive key points.

“The first key point was the acknowledgement of the foreign currency challenges that companies within the country are facing and the development of a new monetary policy framework by the Ministry of Finance in Zimbabwe that will ensure that miners are able to retain as much foreign currency as possible,” he says.

Chimboza adds that Zimbabwe’s foreign currency challenge does not enable companies to adequately meet their operational costs, fund expansion programmes and service foreign debt. “Most of the companies are paid in US dollars for their mineral exports but are paid a percentage of this back in local currency by the central bank at a pegged exchange rate that is not reflective of the market rate. As a result, local currency denominated costs have spiralled. Additionally, companies have struggled to access foreign currency to import inputs for production dampening recapitalisation programmes and the ability to service offshore debt.

The second positive point was how Zimbabwe is looking at the reforms that are taking place within the ministry, particularly on the legal and the regulatory side, to provide, a more consistent framework for investors as well as privatisation of State-owned mining assets.

Indaba Participation

Chimboza says AP’s participation at the Indaba has also included supporting the Ethiopian government in its investment promotion activities.

“A very important point to make about Ethiopia is the ability of its government to deliver on its promises. Ethiopia has a national economic development blueprint, the growth and transformation plan, which essentially sets out targets that the country has to reach to attain middle-income status by 2025.”

“For the first cycle of the plan, the country met its targets; for the second cycle, it is getting very close to reaching its target,” he says.

He points out that this is an interesting jurisdiction to watch out for in Africa, especially if Ethiopia could replicate the successes that it has had in other sectors in mining.

Speaking further on how these reforms have manifested themselves in the country’s economic growth rate, Chimboza commends the Ethiopian government for displaying a serious commitment to doing business. “The economic growth rate is now averaging at about 9% over the past ten years. Exports in that same period have gone up by about 500%, so they are definitely doing something right.”

Edited by Zandile Mavuso
Creamer Media Senior Deputy Editor: Features

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