ZIMBABWE has been ranked among the 10 least countries in the world that lack investor friendly laws despite a huge endowment in mineral and natural resources, a report by a global think tank has shown.
Report by Business Reporter
According to the Canada based Fraser Institute, the country dropped to position 91 from 74 in the Fraser Institute annual survey of mining companies, 2012-13.
The Fraser Institute compiles a yearly report ranking the attractiveness of jurisdictions for mining investments.
Zimbabwe is in the same league with Greece, Indonesia, Vietnama, Venezuela, DRC Congo, Kyrgystan, Bolivia, Guatemala and Phillipines.
The report states that resource nationalism in Africa was a major concern and that corruption needed to be controlled.
“Governments have to be more proactive towards investors,” the report reads.
“Transparency is a must and could be a strong motivator for investors.”
The report further states that Zimbabwe indigenisation and empowerment laws compelling foreign-owned companies to sell controlling stakes to locals as well as political uncertainty make the country unattractive to foreign investors.
Already, mining companies which include the country’s major platinum miner, Zimplats, have partially complied with the empowerment law. Zimbabwe has the second known platinum reserves in the world after neighbouring South Africa.
Mining is the leading sector in the economy having overtaken the agricultural sector that has failed to attract any funding since 2009.
Mining is hamstrung by frequent power outages, high tariffs, weakening commodity prices on the international market, lack of medium to long-term lines of credit for working capital and recapitalisation, obsolete equipment and technology.
The sector requires close to $5 billion for recapitalisation, according to figures from the Chamber of Mines of Zimbabwe.
The growth projections for the sector were revised downwards by outgoing Finance minister Tendai Biti to 5,3% from 17,1%.