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Comment: Another parastatal to bleed economy

HARDLY noticed by industry this week in President Robert Mugabe’s address at the opening of parliament is yet another attempt by the state to form another parastatal to add to the long list of state enterprises which have become notorious for bleeding the economy.

As part of government’s legislative agenda in this session of parliament, Mugabe announced that the Zimbabwe Exploration Corporation Bill would be brought to the House for debate. The Bill provides for the setting up of a Zimbabwe Exploration Corporation.

Mugabe said through the new parastatal “government will be more actively involved in mineral exploration and thereby be in a position to determine the types and quantum of the country’s existing mineral resources”.

So the services of the government’s Geological Survey, a department under the Mines ministry, are no longer enough. The department which should provide geological data on a countrywide basis and to act as a national depository for all information relating to geology has been unable to play an advisory role to facilitate the exploration of minerals by smaller mining firms in the private sector.

The department has over the years been rendered ineffectual because of staff flight and poor funding. Resultantly, mineral exploration in this country has suffered. Government feels it can right the situation by forming a company to explore for minerals.

As if the disasters at Zesa, NRZ and Arda were not enough, government wants to set up another quango to be staffed by top earners who will draw their salaries from the fiscus –– doing work that the private sector should be performing.

This is an unashamed attempt by government to crowd out the private sector, an anathema to investment and industrial expansion. The coming of the exploration company confirms government’s craving to go into mining full time.The Ministry of Mines already has two parastatals under its wings, the Zimbabwe Mines and Minerals Development Corporation (ZMDC), which is mining and processing minerals, and the Minerals Marketing Corporation of Zimbabwe, which is responsible for selling and marketing minerals.

The proposed company completes the chain of infamy: exploration, mining and marketing.
But this is not the solution to expanding the sector. The solution to exploration does not lie in forming another parastatal to perform the task stuffed with government cronies. It rests in government equipping and adequately financing the Government Geological Survey and eliminating corruption and cronyism within its ranks.

The private sector should then be encouraged to invest in exploration to expand existing mines and discover new mineral deposits. This is best practice which has been adopted by countries which have successfully fostered mining development. But we appear to be going against the grain of rationality.

Our rulers must look at how countries in the region are expanding mineral development through pragmatic mineral policies designed to enhance investment in the industry. Zambia is a case in point. The country took a deliberate decision to privatise state-owned companies under the Zambia Consolidated Copper Mines Ltd. The role of government has shifted to offering technical support through departments dealing with geological survey, training and mining safety.

“The government policy is not to participate in exploration or other mining activities or any shareholding other than the regulatory and promotional role,” Zambia’s mining policy reads.

But it appears in our case that the discovery of diamonds in Chiadzwa whetted government’s appetite to want to mine precious minerals and be in charge of processes. ZMDC and MMCZ are already massively involved at Chiadzwa together with private companies with alleged close links to government. It is this dangerous appetite that has seen the police actually forming a company to mine diamonds at Chiadzwa.

Countries that have attracted investment in this sector do not have policemen swapping beat patrols for alluvial mining. There is definitely something very wrong in the way mining is being handled in the country. There have been murmurs supporting such activities in the name of indigenising the economy. Far from it because state institutions like the police, ZMDC or MMCZ do not epitomise empowerment of the greater part of our population. Finance minister Tendai Biti on Wednesday in his Mid-Term Budget Review said the fiscus could not account for $30 million worth of diamonds mined at Chiadzwa. What is empowering about that?

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