Zimbabwe’s new president Emmerson Mnangagwa has declared the southern African nation “open for business” as his government rolled back previously prohibitive laws this week in an attempt to stimulate the country’s economy and counter crippling levels of hyperinflation.
The Indigenisation and Economic Empowerment Act was introduced by former president Robert Mugabe, in an attempt to increase black Zimbabweans’ stake in the mining sector. The change to the law sees diamond and platinum mining kept under the old rules, but opens up gold, silver, and other metals and minerals to foreign investment.
In a report by the Reuters news agency, Mnangagwa seeks to undo the economic damage caused by the strict Mugabe regime. The challenge over the coming months and years will be to restore confidence to foreign investors that Zimbabwe is a place to do business. Zimbabwe is a resource-rich region, with the second largest (known) platinum deposits in the world after neighbours South Africa and earth containing eight of the nine known “rare earth” minerals, which should help attract investor capital.
Foreign interest has already begun, with a Cypriot investor agreeing a $4.2 billion deal with the Zimbabwean government to develop a platinum mine and refinery in the Mhondoro-Ngezi platinum belt, to the west of Harare. Karo Resources will begin development work on their newly acquired mine in July, with the first output of platinum expected in 2020. The site will also develop a coal mine and power station, with a total of 15,000 jobs predicted.
Platinum is a feather in the cap for Zimbabwe but so too are diamonds. While the government is seeking to limit access to the valuable platinum industry, its restrictions over diamond mining are a result of combating illegal activity. The Zanu-PF party, of which Mnangagwa is the leader, are accused of collaboration with the Zimbabwean military and CIO (Central Intelligence Organisation) for human rights abuses (see Marange Fields 2006), with the BBC even accusing the government of running torture camps in the area. Politicians are accused of profiting from the chaos and the organisation Global Witness estimates that of the $2.5 billion in diamonds Zimbabwe has exported since 2010, only around $300 million were marked in public accounts.
Yesterday South African news website Times Live reported that Mnangagwa had begun naming companies who had been looting diamond mines in the state to sell to foreign buyers – primarily in China – as part of an effort to name and shame organisations while the government halted their illicit operations.
The country’s Finance Minister, Patrick Chinamasa, announced plans for the relaxation of the Empowerment Act last December as part of the 2018 budget statement. The changes were included as an amendment for the Finance Act, which was signed into law on March 14th.
