HomeOpinion & AnalysisGovt needs to keep mining industry running, not destroy it

Govt needs to keep mining industry running, not destroy it

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IN the past decade, the mining industry lifted the hopes of a country that faced a myriad of crises.

Mining generates over US$4 million annually and together with tourism and tobacco, have kept foreign currency trickling in to keep the wheels of the economy creaking along in the absence of foreign capital.

The mining industry accounts for 70% of the country’s export receipts and this makes it important for government to expeditiously respond to its concerns.

Addressing its problems on time gives it the impetus to soldier on under the difficult circumstances that confront us as a country today.

It gives the industry the assurance that it is working with a government that wants it to flourish and rebuild the economy.

This assurance is vital for any country that hopes to attract foreign direct investment, especially Zimbabwe after two decades of de-industrialisation and capital flight.

The assurance helps the economy grow for the benefit of everyone.

We have been surprised, however, that in Zimbabwe authorities are determined to do the opposite.

A case in point is the Reserve Bank of Zimbabwe’s directive to push foreign currency retention thresholds to 40%, from 30%, which the mining industry has said would trigger viability problems.

The mines say these measures mean that on average, 60% of gross export proceeds are now taken by government departments and agencies.
They are squeezing them out.

If one adds these demands to several taxes that the mining industry pays to different State agencies, a clear picture emerges of how government is running down the economy.

This is why the US$12 billion mining industry envisaged by the Mines and Mining Development ministry will likely remain a pipe dream.

The best strategy to keep the industry running is to give it the headroom to grow — review the high taxes and fees then look at the policies that impede its growth and immediately implement reforms.

But what we have seen in the past few months is a government that appears determined to destroy industries.

Only a few weeks ago, reports emerged that the Indigenisation and Economic Empowerment Act was being extended beyond platinum and diamonds.

This announcement terrifies nervous investors.

We doubt if investors, who were targeting Zimbabwe would still have the zeal because it is now difficult to read the regime’s mood.

We urge government to stick to policies that calm the nerves of sceptical investors.

It’s the only way to rebuild Zimbabwe.

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