Editorial Comment: Think beyond the mining bank account

By IAfrica
In Zimbabwe
Jul 7th, 2014

zimplogoWE welcome Government’s belated decision to open an account dedicated to lodging deposits from mineral exports only although we believe even this may not be enough.
Finance minister Patrick Chinamasa said the Zimra would be directed to open such an account after it became clear that Treasury was not getting anything substantial from mineral exports, one of the key extractive activities which was expected to fund most Government programmes, including its economic recovery blueprint, Zim-Asset.

We, however, feel that while opening such an account might help expose the paucity of contribution of the mining sector to Government revenues, there is urgent need to find out what happens to our minerals. It is possible to open such an account and wait for a whole year only to discover that there isn’t much in it.

There have been reports of massive leakage of mineral resources in the media. These have not been refuted, nor have thorough investigations been carried to check their veracity and plug the holes. It has remained business as usual.

Where there have been attempts to take action, such as the rationalisation of operations at Chiadzwa where it is planned to leave one or two companies operating from the peak period of six firms, there has been punitive action taken.

In other words, the guilty are let lightly off the hook.

We, therefore, believe Government needs to carry out a thorough investigation to stop the smuggling of our minerals. It is possible to discover that there could be a cartel involving individuals and mining firms which are benefiting at the expense of the nation. The investigations need to cover the whole sector, not just diamonds.

What has made smuggling so lucrative is that people have become inured to threats and protests by Government which are never met with commensurate punitive action.

The Government appears happy to only pay lip service to fighting the scourge of corruption. Those who were exposed are still scot free.

Government is also taking its time to force companies to beneficiate and add value before exports. This could also account for the low contribution of mineral resources to revenues.

This is a negation of one of the key clusters of Zim-Asset, value addition and beneficiation. Yet at the same time Government is quick to act when companies raise frivolous complaints about high royalties, exploration fees etc.

A reality which needs to be acknowledged is that there is not likely to be any significant foreign direct investment coming Zimbabwe’s way anytime soon. There is just too much politics at work. At the same time, those who want to come into the country, they want to do so on their own terms, a situation which would lay to waste all the progress made under the land reform programme and Government’s economic empowerment policies.

In fact it has been shown that, left to their own devices, some of these foreign investors choose areas with the quickest return but least investment because they always want to make a profit and go. Yet we believe it is desirable for Government to direct the priority areas with the most potential benefit for the country.

Thus while it is important to open a bank account for purposes of monitoring revenue inflows from the mining sector, there is need for Government to go further and fight the smuggling of minerals by individuals and companies.

That will maximise returns and help in financing some of the Zim-Asset requirements.

This post has already been read 1 times!

Comments are closed.