The Sunday Mail
Vision 2030
Allen Choruma
Government’s drive to achieve inclusive economic growth and broad-based prosperity under Vision 2030 will be impaired if the country focuses heavily on natural resource extraction and beneficiation without attendant investment in key enablers.
Mining is currently considered as the key sector driving economic growth in Zimbabwe.
Despite the volatility in prices of most mineral commodities such as chrome, nickel, platinum, copper, coal and so on, Government has set a bullish target to grow mining revenue to US$12 billion by 2023.
Mining has overtaken both agriculture and manufacturing, and is now the mainstay for economic growth and development.
Mining contributed an estimated 17 percent of gross domestic product (GDP) in 2016 and earned more than 50 percent of foreign currency inflows.
But for Zimbabwe to achieve an upper middle-income economy by 2030, as envisioned under Vision 2030, policymakers should not just focus on resource extraction, but should also invest in resource beneficiation and key enablers to ensure that the country derives maximum benefit from its natural resources, whose demand is high globally.
Export of Primary Resources
Exporting unbeneficiated mineral ores, at low cost, is viewed as being tantamount to de-industrialising and exporting jobs abroad.
On the other hand, importing finished products, at high cost, has been described as being equivalent to importing poverty and unemployment.
A country such as Zimbabwe, which is a net importer of finished goods and a net exporter of raw materials, will experience rapid de-industrialisation and high unemployment unless beneficiation is seriously pursued.
Paradox
Zimbabwe needs to move away from the paradox that “developing countries with abundant natural resources like minerals tend to have less economic growth and worse development outcomes than countries with fewer resources”.
Many resource-rich African countries have not been able to use their abundant natural resources to benefit ordinary citizens and uplift them from the clutches of inequality, unemployment and poverty.
Inequalities have actually widened in most resource-rich countries like South Africa, Angola, Zimbabwe and Mozambique.
Most African countries have struggled to account for revenues from their extractive industries in a transparent manner because of a number of factors, which include the following: governance challenges, revenue leakages due to corruption, pilferage, money laundering, weak law enforcement, political interference and so on.
If Zimbabwe is to achieve its developmental and social transformation goals under Vision 2030, it has to manage its abundant natural resources wisely and strategically.
Moving forward
If Zimbabwe is to move away from the “resource curse paradox”, it needs an overhaul of mining policies, strategies and regulatory framework in order to bring sanity, accountability, transparency and stimulate mining sector investment and economic development.
Beneficiation is one area that has been talked about by Government, but progress in this area has been slow.
Not much has been done on the ground.
It has been rhetoric and statements with very little tangible results.
What is Beneficiation?
It is important to explain what beneficiation is all about.
“Beneficiation entails the transformation of a mineral (or a combination of minerals) to a higher value product which can either be consumed locally or exported. The term is used interchangeably with “value addition”. (Department, Mineral Resources, South Africa, June 2011).
Advantages of Beneficiation
Value addition (beneficiation) of mineral resources will bring the following development outcomes:
- Setting up of industries and manufacturing plants locally.
- Job creation (poverty alleviation).
- Strengthening the knowledge economy (human capital development).
- Consumption of locally produced goods (Buy Zimbabwe concept).
- Export of higher value goods (Increase in Government revenue).
- Savings on foreign currency and import costs (through local manufacture of goods).
- Infrastructure development.
Policy
Zimbabwe needs to come up with a “National Strategic Mineral Resources Beneficiation Policy” that ensures selected mineral resources are used to create industries, manufacture goods for domestic use and export, create jobs and alleviate poverty in Zimbabwe through beneficiation programmes.
South Africa
The South African department of mineral resources adopted a national “Beneficiation Strategy for the Minerals Industry of South Africa” in June 2011.
Ten strategic minerals — gold, coal, iron ore, uranium, titanium, platinum, diamonds, nickel, chromium, vanadium — were identified for beneficiation.
In its preamble, the South African beneficiation strategy document provides “a framework that seeks to translate the country’s sheer comparative advantage inherited from mineral resources endowment to a national competitive advantage. The strategy is aligned to a national industrialisation programme, which seeks to enhance the quantity and quality of exports, promote creation of decent employment and diversification of the economy, including promotion of the green economy…”
Challenges
Resource beneficiation cannot happen overnight; it requires massive investment in key enablers for it to succeed.
Beneficiation requires massive financial resources, investment in knowledge (technical expertise), investment in science, technology, engineering and mathematics (STEM), investment in technology hubs, development of an overarching framework and supporting legislation and so on.
Beneficiation should, therefore, not be seen as an event, but rather as an incremental and gradual step-by-step process.
Establishing smelters and refineries, for example, is expensive and requires proper planning, technical skills and time to implement.
Beneficiation cannot happen without investment in technological capacity to innovate and run industries.
As these investments are private-sector driven.
There is need for Government to put in place investor-friendly policies to woo foreign direct investment, as well as stimulate domestic investment.
Key Enablers
For beneficiation to work there are key enablers that have to be addressed, which include the following:
- Political will to drive the beneficiation agenda.
- Good national governance (For example, rule of law, functional law enforcement and judiciary system, building trust between Government and business et cetera).
- A clear national vision and strategy (on beneficiation and identification of strategic mineral resources for beneficiation).
- Concise national beneficiation policy (finalise the Mineral Value Addition and Beneficiation Policy).
- A legislative framework on beneficiation.
- Infrastructure rehabilitation and development (For example, energy, water, health, telecoms, roads et cetera) through implementation of Government infrastructure development plans.
- Investment-friendly climate and policies (ease of doing business, removal of burdensome licensing requirements, policy consistency and clarity).
- Macro-economic stability (market-driven economy, low inflation, price and currency stability) to attract both foreign and domestic investment.
- Government support through negotiated/backed cheaper capital which can be accessed by mining houses.
- Government investment in knowledge economy; for example, emphasis on STEM, human capital development, resource support to technical universities and vocational training.
- Improving Government’s role in facilitating and incentivising beneficiation (through efficient and competitive mining tax regime, remittance of dividends et cetera).
- Strengthening governance and weeding out corruption and illegal siphoning and externalisation of revenue from mineral resources.
- Resource extraction transparency through adoption of international best practices (for example, membership of Extractive Industries Transparency Initiative (EITI).
- Plugging revenue leakages of mineral resources through implementation of robust monitoring framework and law enforcement.
Both Government (driver) and the private sector (investors) will need to play their roles in ensuring that the country does not rely on exporting low-value primary mineral resources and moves towards setting up industries at home through beneficiation.
This way the objectives of Vision 2030 could be achieved for the benefit of all Zimbabweans.
Allen Choruma can be contacted on e-mail: [email protected]
