Will Foreign Investors Help Zimbabwe To Transform Itself?

Six months after Robert Mugabe was ousted from office, there appears to be a new-found confidence among investors that Zimbabwe has, at last, become a place where they can safely do business. This week, Botswana Diamonds signed a Memorandum of Understanding with gold miner, Vast Resources, which will see the firms exchange information derived from past exploration on areas prospective for diamonds in Zimbabwe.

In addition, they will create a jointly owned body which will develop diamond resources in the southern African country in line with Zimbabwe's joint ownership laws as they relate to diamonds.

"Zimbabwe is a country with excellent diamond potential,” said John Teeling, Chairman of Botswana Diamonds.  “Both Botswana Diamonds and Vast Resources have extensive experience in and knowledge of the country.  It is opening for business and both companies are keen to make the most of this opportunity.”

At the other end of the scale, Sergey Ivanov, ALROSA's CEO and Chairman, recently held meetings with Zimbabwe’s President Emmerson Mnangagwa regarding diamond exploration investment opportunities. The sides reportedly discussed the possible involvement of ALROSA in the diamond business in Zimbabwe. Ivanov said that he sees huge potential for the diamond business in partnership with Zimbabwe in new projects and the use of its technologies and expertise in exploring for new diamond deposits in Zimbabwe.

Meanwhile, Andrew Prelea, Chief Executive of Vast Resources, said: “As a result of the new government's desire to open up business in the country we believe the time has now come for us to make use of our historic diamond knowledge with a view to bringing value for all stakeholders in developing Zimbabwe's diamond resources.”

In a further sign of the progress the country is making, a Zimbabwe Mining & Tax Law briefing is to be held in Johannesburg which will discuss new legislation and forecast what changes may be on the horizon.

Investors have been encouraged by official comments, such as those by Zimbabwe’s Mines Minister, Winston Chitando, who said there were big opportunities in mining a range of minerals helped by a change of national policy. Change appears to be directed from the top, after President Emmerson Mnangagwa who took over after pressuring Mugabe gave up his 37-year hold on power, has calmed investors’ nerves with comments that the country aims to reduce the required Zimbabwean holding in new ventures created by foreign investors. He did point out, however, that diamonds and gold would specifically not be included. Foreigners were previously restricted to a 49-percent holding in mining firms but that is to increased to 100 percent for all minerals except diamonds and platinum, in which the government or bodies owned by it must hold a majority stake.

Nonetheless, the general aim is seen as friendly by overseas investors. The Zimbabwe Mines and Minerals Bill is seen as becoming law before the end of this month, according to Zimbabwe Mines and Energy portfolio committee chairperson, Temba Mliswa.

And, in another encouraging sign for investors, Foreign Minister Sibusiso Moyo has said that Zimbabwe will no longer require mining firms to list on the Harare stock exchange.

As President Mnangagwa has said on several occasions, the country is “open for business”. After having suffered the disastrous misrule of Mugabe for close to four decades, one can only hope that the country’s political changes are for real and that foreign investors will feel confident enough to enter the country and start providing much needed skills training and employment for its people who have been downtrodden for far too long.