By Alex Bell
SW Radio Africa
13 March 2014
The ZANU PF government has been accused of wasting Zimbabwe’s resource potential, through corruption, bad legislation and incompetence.
The accusations, voiced by numerous observers, come as the Robert Mugabe administration is under pressure to halt the rapid decline of the economy that has continued despite Zimbabwe’s wealth of resources. A lack of transparency and accountability, along with the prevailing corruption problem, means the extractive sector is not benefitting the economy or the country.
For example, the completion of the long-awaited Zim Diamond Technology Centre (ZDTC) hangs in the balance due to suspected corruption, a problem already widespread in the diamond sector.
Located in Mt. Hampden, the ZDTC allegedly will house up to 500 factories, each able to employ 200 diamond cutters and polishers. It has been touted by ZANU PF as a having the potential to employ over 100,000 Zimbabweans, making it not only central to Zimbabwe’s mineral’s beneficiation plans, but also key to the ZANU PF’s economic recovery plan, ZimAsset.
But according to the Financial Gazette, the end of the already overdue project is unclear, with the contractor, architects, engineers and quantity surveyors of the building, among other professionals, taking the ZDTC owner, Lovemore Kurotwi, to court. Kurotwi, a retired army colonel and reportedly a nephew of the late General Vitalis Zvinavashe, has failed to pay almost $5 million in fees and interest.
Farai Maguwu, from the Center for Natural Resource Governance in Zimbabwe, said Thursday that the country’s economic woes could be solved simply by “sorting out” the mining sector. He disagreed that ‘incompetence’ was a problem, saying corruption and bad governance were the main issues
“There is a serious governance deficit in the country, which means that in the extractive sector, there is a free-for-all. It is chaotic and we need to stop all mining activities and find out who is doing what. On corruption, we need the political will to stamp it out,” Maguwu told SW Radio Africa.
Meanwhile, cash opportunities that are readily available to the financially strapped government are not being harnessed. It was reported this week that despite “huge” pressure on Zimbabwe to relax a law that bans exports of unprocessed chrome ore, a move that could help attract millions of dollars into the fiscus, Mines Minister Walter Chidhakwa has said this probably won’t happen.
“It’s not going to be easy for us to relax the ban. To open the window for ore exports when we have said we want beneficiation, we will be sending a message that there is no need for value addition. It might discourage investors willing to go into value addition,” Chidhakwa was quoted by Bloomberg as saying.
The ban on chrome ore exports in 2011 was done to try and force local companies to process the chrome on home soil. But it has led to some producers, such as the Harare-based Zimbabwe Alloys Chrome Ltd., shutting down mining operations completely because of the country’s inadequate smelting capacity.
Economist Masimba Kuchera said the ‘beneficiation’ argument is not benefitting anyone, because the country does not have the capacity, ability or financial means to start local refinement of raw minerals.
“It’s true that any economy that engages in beneficiation will get more for its resources. But it’s an issue of capacity. A ban on raw exports without the infrastructural capacity will not support anyone. You need the infrastructure, you need stable electricity supply, and water supply, and these are things that are just not there,” Kuchera said.
The Finance Ministry meanwhile is still looking for multi-million dollar loans to shore up the failing economy, with the traditional lenders refusing the hugely indebted country more credit. But this is not proving successful, and even Zimbabwe’s ‘friend’, China, has reportedly refused a bailout.
Last November, China pledged to give Africa some $1 trillion in aid over the next 12 years, and the just elected ZANU PF government said it would be receiving about $30 billion of this. But this cash-injection seems doubtful and even Mugabe’s spokesmen have been steadily downgrading the size of the financial ‘loan’, from $30 billion to $10 billion, to $3 billion, and then last month, to $400 million. A Chinese ambassador last week then moved to rule out any direct financial aid.
“We don’t normally provide budgetary support to other countries but we try to help Zimbabwe in our own way,” the Chinese ambassador to Zimbabwe told reporters.