Demystifying Zimbabwe's Mining Sector Indigenisation Policy - "A focus on the 51/49 Policy Part 2"

My primary motivation for developing this page is to increase the knowledge of ordinary people in the rich mineral endowment of their country and hence be well equipped to fully participate in the mining sector. Zimbabwe has only recently legislated some of the most liberal mining sector investment regimes in the world, with entry barriers being removed significantly for the ordinary man and woman. Through the country's famed indigenisation and economic empowerment policy thrust, the government has introduced various initiatives to improve locals participation into the mining sector. 

Initiatives such as the 51/49 ownership structure in the minerals mining sector goes a long way to opening up more participation by the general public in typically capital intensive industries such as mining. This principle dictates (by way of a law/legal statute) that any and all prospective investors into Zimbabwe's minerals mining sector must partner with locals, who are anticipated to hold the majority shareholding at a minimum threshold of 51% local ownership and 49% foreign ownership. What this simply means is that locals are expected to hold no less than 51% of the total share capital of any foreign sponsored mining venture. Therefore, foreign partners can be introduced with a MAXIMUM ownership of up to 49% of the company's total shares. These provisions are timely for the mining sector if the country is to avoid what the Economic Commission for Africa and the African Mining Vision refer to as "holes in the ground."

Further, initiatives such as the Joint Ventures Act now mean that any foreign company wishing to invest in the Zimbabwean mining sector can meaningfully partner with the government in a form of "Public-Private-Partnership" with the government's mega mining sector investment and minerals development company, the Zimbabwe Minerals Development Corporation (ZMDC).

On the other hand, the Sovereign Wealth Fund aims to ensure inter-generational equity for the citizens of the country and the future generations while also inculcating a savings culture. This provides a useful source of capital which can be invested (by loan) for infrastructural development in the country thereby also helping in improving the condition of the economic enablers for the economy. Innovative approaches can be used to hypothecate these captures savings for developmental goals and aims.

Review of Mines and Minerals Act - outstanding since 2007

  

Mineral of the Week - Blurb

I developed the mineral of the week concept while teaching undergraduate public policy students at the University of Zimbabwe's Department of Political and administrative Studies. This department lies within the university's Faculty of Social Studies and has produced some of Zimbabwe's great minds in the fields of political science and public administration. Most of these have gone on to become prominent politicians (even attaining public office as Ministers and Members of Parliament). However, most find employment in the civil service or the numerous non-governmental organisations and other civil society organisations. Still others have found a home in the private sector as both employers and employees. Meanwhile there are those who have chosen an academic career and dedicated their lives to research, teaching and academic work at various institutions of higher learning around the world. Zimbabwean academics can be found in countries such as the United States of America, the United Kingdom and even is Asian countries such as China in as many disciplines as there are available to teach on. However, there was still an inadequate scholarship on mineral sector developments despite the mining sector being a major contributor to the country's Gross Domestic Product (GDP), ahead of other sectors such as agriculture. Further, Zimbabwe's natural resources and mineral endowment boggles the mind as to why such a rich sector has remained underdeveloped over the years. So much has been written about agriculture while so little has been done for the mining sector.

Teaching minerals of the week was aimed at increasing awareness of the Zimbabwean minerals sector. Most students did not have an in-depth awareness (sometimes even totally ignorant) of this crucially important policy sector, mainly because of the historically secretive and enclave nature of mining sector activities. This could be (partially) attributed to the fact that most minerals sector and mining developments were spearheaded by private sector corporations which would not typically publicise the lucrative mining sector to other potential competitor investors. In simple terms, it would not make sense for a private sector company making huge profits in a relatively secret industry to invite competitors to the table. Industries such as the diamond, platinum and gold mining sectors attest to this fact. 

This  was further compounded by the shortage of staffs within the government with the requisite competency to conduct mining sector (awareness and advocacy) research which could be used to encourage more local participation in the sector. Most of the personnel in the (then/former) mining and energy ministry of the time were typically technical staffs with expertise and experience only on the technical and engineering aspects of mining (surveying, metallurgy, geology etc)  but little aptitude for socio-economic and developmental expertise (advocacy, local capacity building etc). Even the very logic of combining the mining policy sector to the energy sector was skewed against the full development of the potentially lucrative minerals mining sector. The other potential causes of this lack of awareness were the unbalanced political economy of the post-independence state of Zimbabwe, an (extended/long drawn) over-emphasis on celebrating the nascent political independence without progressing towards imperative and indispensable socio-economic transformation.

This blog is premised on the need to increase more of the latter (advocacy for socio-economic transformation) without necessarily ignoring the former (technocratic natural resources exploration, mining and development), as both must act in a complimentary fashion. This blog will therefore review one mineral found and mined in Zimbabwe (every week), in terms of its key attributes and potential for transforming the economy of the country and improving livelihoods of the locals.