Government outlines investment policy

In his opening remarks to the Zimbabwe International Investment Conference held in Harare on Thursday and Friday last week, President Robert Mugabe said foreign investors were welcome “only as partners, not as the main entrepreneurs,” adding that this would be benchmarked on a 51 percent local shareholding in all natural resource-based industries.
Investors had expected the government to climb down on its bid to warehouse 51 percent of big foreign-owned mines for government investment vehicles and local investors through legislative changes in line with its empowerment policies now enshrined in the Indigenisation and Empowerment Act passed last year.
Through the Mines and Minerals Amendment Bill, drafted in 2006, but blocked the same year before reaching Parliament, the government initially sought a 25 percent non-contributory equity on precious minerals such as gold, diamond, platinum and emeralds and on energy minerals like uranium and gas arguing that it owned them in the first place.
Elton Mangoma, the Minis-ter of Economic Planning and Investment Promotion, expla-ined that the government was in the process of reviewing all investment-related policies and legislations to make them more investor friendly, but would maintain provisions on indigenisation and do away with free equity provisions.
“The issue of Zimba-bweans’ participation in the economy is paramount,” Mangoma said. “But those who want a piece of your company, they should pay real value for it. Those who want a piece of our parastatals should also pay real value for it. That’s where we are coming from. There’s nothing for free.”
Mines and Mining Develop-ment Minister Obert Mpofu, added: “The government is in the process of reviewing some sections of the Mines and Minerals Amendment Bill. The intention is to present a more investment-focused legislation based on a win-win principle. The review exercise addresses issues of levies and taxes to reflect prudence in the application of mineral rents.”
Mpofu said the government had already initiated all-inclusive consultations with the Zimbabwe Chamber of Mines, foreign investors and other stakeholders to strike a balance between the interests of investors and its goal of “democratising and indigenising” the sector, currently dominated by foreign extractors.
In 2007, mining accounted for 3,8 percent of gross domestic product and about a third of the country’s export earnings and therefore, remains of strategic interest to the state.
According to Victor Gapare, the president of the Zimbabwe Chamber of Mines, so far the mining industry has agreed to “all administrative aspects of the Bill,” but stands opposed to government proposals on indigenisation.
A Germany mining investor who refused to be named said the biggest risk was not the proposed indigenisation and empowerment provisions, but the lack of clarity on the matter and the delay in finalising the le-gislative chang-es.
“Many countries have black economic empowerm-ent policies. It’s not Zimbabwe alone. It’s the uncertainty created by unclear and conflicting statements that any investor is scared of. You need to be sure of the policy and regulatory environment before you put your money.”
The investor prospectus produced for the event listed 10 priority projects, including the expansion of the Hwange and Kariba power stations and the rehabilitation of the national power grid to stabilise power supply and the recapitalisation of the Hwange Colliery Company and five quasi-government institutions namely, the National Railways of Zimba-bwe, Air Zimbabwe, TelOne and the Small Enterprise Development Corporation.
The government is also seeking partners for the Grain Marketing Board in contract farming, the African Associa-ted Mines in chrysotile mining, Africom Continental Pvt Limited and the Infrastructure Development Bank of Zimb-abwe in a national broadband connectivity project and the Industrial Development Cor-poration in diamond exploration, mining and processing.
Together the 10 projects require roughly US$2,4 trillion.