HomeNewsChinese companies may fill void in Zimbabwe — BMI predicts

Chinese companies may fill void in Zimbabwe — BMI predicts


An international research institute, Business Monitor International (BMI), predicts that cash-rich Chinese companies could quickly jump in to fill the void created by Western firms likely to cease operations in the country because of the indigenisation drive.

The country has seen positive economic growth over the past two years, but political uncertainty and murky waters continue to retard further growth.

“Over the short term, there could be renewed weakness in mining sector output, as the country looks to introduce its indigenisation policy. This could see some Western interests leave the country.

However, this could provide opportunities for cash-rich Chinese companies, which arguably have greater sums to invest in modernising mining equipment and developing new mines” said BMI in its latest report.

The withdrawal of licences for mining firms in particular would rob the economy of one its major drivers of growth, boding ill for the balance of payments, domestic liquidity and economic growth on the whole, it said.

But the report adds: “Such an arrangement could well be preferable for (President) Robert Mugabe, who might prefer to deal with Chinese investors willing to take a minority stake in Zimbabwean mining operations, and who would bring significant amounts of funding to the sector.

Moreover, China has not imposed sanctions or withheld budgetary aid to Harare in recent years, unlike Western powers. This would again appear to give Beijing the edge over Western interests.”

BMI was established in 1984 with headquarters in London. It is recognised as a leading independent source for analysis and forecasts on country risk and industry, spanning 175 countries.

BMI provides research to multinational corporations, banks, funds, research centres and governments in 140 countries around the world, including more than 400 of the Fortune Global 500 companies.

However, the international analyst says the gold sector looks well placed, following the liberalisation of the sector in 2009 “and we forecast a more than doubling in gold output between 2010 and 2015”.

“Taking the above into account, we believe the mining sector will grow by more than 8% a year over our forecast period to 2015, with risks to the upside once the uncertainty over indigenisation has come to an end,” adds the report.

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