HomeOpinionPartnerships between foreign and local investors crucial

Partnerships between foreign and local investors crucial

CHINESE resources firm, Afrochine’s plan to expand in Zimbabwe will represent the biggest mining investment in two decades. Rolling out of an integrated chrome operation bigger than Zimasco would be a landmark development for many reasons. Zimbabwe has not attracted investments of such magnitude since the turn of the millennium when Zimplats took over the Ngezi and Selous platinum assets from Australian firm, BHP.

A mega-investment would give multinationals confidence that there are real reforms taking place in Zimbabwe before they start trooping back. On paper the benefits of foreign direct investment at a bigger scale would be significant. This will cascade down to downstream industries and enhance technology transfers for cost-effective production. For a country that has been on fire for 21 years, big industries create opportunities for skilled people to work.  Over 80% such skilled people, most of them university graduates, are redundant in Zimbabwe right now.

But any major foreign investor must not flourish at the expense of locals who wish to make their contribution, no matter how humble, to the development of the country. It is quite relieving, therefore, to learn that, contrary to recent reports, Afrochine does not wish to push out 77 small miners from their claims and instead is assisting them in their mining endeavours by supplying them with the know-how, the equipment and other necessities that make their jobs easier and also earn a decent return from their activities.

Afrochine’s role, as it says, is to buy the raw chrome from the small miners and process it in a way that adds value for export to international markets. Managed well this is the right kind of partnership that ensures the small miners are empowered and the country itself benefits from the enhanced proceeds of beneficiated exports.

The common weakness that has always haunted Zimbabwe is the export of raw materials which earns the country only a fraction of what it deserves as a resource rich nation. The beneficiation of minerals has always been the weakest link in the value chain, so the Afrochine initiative is a good example of what needs to be done.

Promoting domestic businesspeople, especially in mining, is a great stride ahead. Domestic investors are heavily involved in Nigeria’s oil and gas and Abuja has created its own billionaires and a spending middle-class. Domestic investors have had a fair share of mining and manufacturing sectors in South Africa and have created wealthy industrialists who have been expanding worldwide and remitting forex. Other Southern African  Development Community countries that have pursued the same template have had extraordinary results. Government must plan for the long term. Home grown industrialists are loyal and don’t abandon ship during turbulent times. If treated fairly, local investors are well placed to know where to deploy resources. But to reach this level, efforts are required to fund investments. Local banks cannot dispense the required funding to open mines at the scale that Afrochine is doing.

It is therefore incumbent upon the government to regulate and monitor closely the relationships between huge foreign investors and local ones to create a win-win situation.

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