The Sunday News
Mesabe Ncube Business Reporter
THE projected decline in the mining sector could be avoided if Government considers reviewing some of the laws that are keeping investors in the capital intensive sector at bay, an economist has said.
The Chamber of Mines noted that the mining sector was likely to experience a two percent decline this year due to reduced investments and falling global prices and weak demand.
An economist Dr Godfrey Kanyenze said once there are policies that incentivise investors, the mining sector can record notable growth.
“Policies in the mining sector need to be reformed if the sector is to survive the projected decline and avoid high costs of production and non competitiveness that are resulting in company closures and retrenchments in the country,” said Dr Kanyenze.
He said the Government should dedicate more effort to policy reforms as recommended by the Minister of Finance, Patrick Chinamasa in his 2015 National Budget.
In his 2015 budget Minister Chinamasa called for the resuscitation of the Zimbabwe Mining Revenue Transparency (ZMRT), which would comprise Ministry of Mines and Mining Development, Ministry of Finance and Economic Development, Reserve Bank of Zimbabwe, Zimbabwe Republic Police, Environmental Management Agency, Fidelity Printers and Refiners, Zimra and rural district councils to create a platform for ongoing policy reforms for achieving good governance of the national mineral resources, among other varied functions.
Dr Kanyenze added that power and water supply need to be available at affordable prices in addition to a sound rail system that can sustain bulk transportation.
“Without reliable energy sources and the relevant transport infrastructure, it would be impossible to grow the mining industry. The railway system must be able to function properly for bulk commodities to be transported easily without further damage to our roads,” he said, adding that a functional railway system would reduce road accidents caused by haulage trucks that are moving bulk minerals on the country’s main roads.
The mining sector remains a major contributor to the country’s Gross Domestic Product.
In a report that was issued in December last year, the Chamber of Mines projected that the sector’s performance would face a two percent decline in 2015, contrary to the 3,1 percent growth projected in the national budget.
Dr Kanyenze said the Government must also consider reviewing policies in the whole business chain as a way of addressing most of the problems faced by in the economy, especially failure to attract Foreign Direct Investment (FDI).
“Stronger policies in the mining and agricultural sector will ultimately have positive downstream effects on the manufacturing sector, and on services,” he said adding that if policies remained unchanged , levels of exports in the mining sector could be below the potential of existing projects, only reaching about $5 billion in 2018.
He also said the potential of the capital-intensive sectors such as mining can be maximised through building resource linkages with the rest of the economy comprising revenue linkages, supply chains, value addition, knowledge and spatial linkages to create new industries associated with mining.
