A story recently appeared in the local Press of a Chinese mining company that headed for Bikita, tail in the air, its hands itching, in search of kimberlitic diamonds, in search of fame and fortune.
TAPIWA NYANDORO
A few months later, it left the district, tail between its legs, its fingers burnt.
There was no exploitable resource to be mined. At least it tried. Action is always better than endless rhetoric.
“In 1980”, according to the TIME magazine (October 28, 2013), “biologist and environmental icon Paul Ehrlich and conservative economist Julian Simon made a simple wager. Ehrlich bet that the price of five common metals would rise over the next decade, and Simon bet that the price would fall, with the loser paying a price change on a one thousand dollar bundle of the five metals.”
“The bet”, the magazine said, “was a contest of visions”.
The biologist believed that the rising prices of natural resources would show that the world was headed towards scarcity and catastrophe.
Earlier on he had penned a book called The Population Bomb that warned against the global population boom.
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The economist, Simon, believed that human creativity would always find ways to make basic resources cheaper and more widely available.
In 1990 the economist was proved right, winning the bet, and taking $576 from the stunned biologist.
Ehrlich’s is a lesson Zimbabwean policymakers, and other policymakers from resource-rich countries, need to learn.
Prior to the platinum mines’ industrial relations problems in South Africa, the price of the metal once reached over $1 800 per ounce.
It has since fallen to around $1 400, notwithstanding the prolonged labour strike.
It appears the world (most probably China) had built a huge reserve.
That apart human ingenuity has led to industry being able to recycle the product used as catalyst in automobile exhaust emissions cleansing.
Demand for fresh platinum, despite rising usage had fallen. Because of technological exploits the USA “now has a booming oil and natural gas [production] business, rapidly falling oil consumption and rising [production] of renewable energy”, the above referred to issue of TIME magazine noted.
It may explain why President Barack Obama has not rushed back to Iraq to quell the sectarian war.
It may explain why China is not rushing to seize the opportunities offered to mine platinum in Zimbabwe.
Indeed it may explain the recent word of advice from the departing World Bank economist in Zimbabwe.
She has been among Zimbabweans for quite a while now.
During her tour of duty she has no doubt come to love the country, its docile, ever afraid and hard working people, not to mention the lovely climate, the best in the world. Who wouldn’t? Now and again, she has given Zimbabwe advice on how to manage its economy.
As with most good things do, her tour of duty has come to an end.
In her farewell speech, Nadia Piffaretti, the World Bank’s outgoing economist, had some good advice for Zimbabwe’s policy makers to digest.
The lady said: “One of the things that worries us [The World Bank] and worries me is that the country might become more and more resource dependent and the countries that are resource dependent are trying to get out of it, and that is why we are really engaging the government and the civic society to broaden economic reforms that really help develop the economy”.
She warned against securitisation of hard currency revenues of yet to be tapped mineral resources.
She cautioned against raising the costs of non-tradable goods and services such as electricity and government services that collectively reduce the country’s competitiveness as an investment/business destination.
She reminded the country that the majority of collapsing industries were beyond resuscitation; time and tide having rendered their business models, their plant and equipment, if not their management, obsolete.
In summary she pleaded for the reduction of country risk, to attract foreign direct investment and reduce the costs of off-shore sourced long term loans and bonds, all needed for sustainable economic growth.
Her advice was timely as Zimbabwe Statistics figures continued to show an economy in distress, in mortal decline in May 2014 for the fourth month in a row.
With deflation, company closures, missed pay dates, job losses and the liquidity crisis having a field day, the Bet’s lessons and the lady’s warnings need to be heeded.
The scenario obtaining calls for a paradigm shift in the nation’s economic plans, though first of all in its mindset.
Greater value needs to be placed on human capital and its ingenuity rather than natural resources.
Emphasis needs to be put on long term double digit growth rather than perceived get rich quick mining ventures which are highly capital intensive.
A prominent banker George Guvamombe recently pointed out that foreign direct investment, even in the good old days [without the policy of indigenisation, when President Robert Mugabe was the darling of the West and ironically when China’s consumption of natural resources and double digit economic growth triggered a resource boom, which Zimbabwe somehow missed], never really significantly contributed to Zimbabwe’s gross domestic product growth.
It is an important observation. Zimbabwe’s weaknesses are well known, amongst them a tiny population with weak demand and absence of a coastal region.
It may be time to think also of services such as exportation of skills, provision of legal services, financial services and health and education tourism, without forgetting the now neglected commercial agriculture.
