ZIMBABWE needs to allow foreigners to own controlling shareholding in mines if the country is to attract investment, Reserve Bank governor Gideon Gono has said.
In his mid-term monetary policy review statement last week, Gono said the Mines and Minerals Act should reflect an indigenous policy that encourages foreign investment.
â€œThe Mines and Mineral Act should reflect an indigenous policy that encourages foreign investment. The policy should allow foreign investors who are bringing in capital to own more than 50% of the venture,â€ he said.
Gonoâ€™s recommendations contradict an earlier stance by government to give majority control of mines to indigenes.
The central bank boss said it was disheartening that Zimbabwe continued to experience foreign currency shortages while it was â€œbasking in the highest abundance of mineral resourcesâ€.
He said government should address uncertainties arising from â€œinconclusiveâ€ reviews of the mining sector legislation and what the governor described as â€œmysterious procrastinationsâ€ in the approvals of investment proposals coupled with uncoordinated investment attraction strategies.
â€œAnother area of serious concern is that currently, the mining sector was contributing very negligible amounts to the fiscus in the form of royalties as low as 1%,â€ said Gono.
In April this year, President Robert Mugabe assured a group of South African businessmen that Zimbabwe was a safe business destination and avoided talk of indeginisation.
Mugabe also assured the investor community that his country was ready to respect â€œthe sanctity of property rightsâ€ but investors are still in a wait and see mode.
An empowerment law, which among other things, provides for the mandatory sale of at least 51% stake in a foreign owned business was enacted last year.
South Africa embarked on a Black Economic Empowerment (BEE) drive a few years ago but the exercise is now mired in controversy after the ruling African National Congress officials got the lionâ€™s share of empowerment deals.
Investors have been jittery about investing in Zimbabwe because of the political situation.
Should Mugabe keep his word, Zimbabwe could see foreign direct investment in key sectors such as mining, pharmaceutical, banking and engineering.
Mining contributes 6% of the countryâ€™s Gross Domestic Product and accounts for a sizeable portion of Zimbabweâ€™s total exports. The sector accounted for 42% of Zimbabweâ€™s exports in the first half of this year. Mineral sales amounted to US$211 compared to US$402 million during the same period while manufacturers sold US$67 million compared to US$402 million.
â€œThe 2009 mining shipment exports represent a decrease of 57,6% compared to 2008. This is mainly due to the fall in mineral prices caused by the world recession. Furthermore, the sector stills faces challenges in specific sectors like labour shortages, frequent power cuts and foreign currency shortages,â€Gono said.
BY CHRIS MURONZI