Mining sector experiences a sharp drop in FDI
Rising exchange rates, rapidly changing monetary policies, along with the lack of willing sellers of forex has negatively impacted direct foreign investment in the mining sector, Zimbabwe Miners Federation provincial chairperson has said.
Rudairo Dickson Mapuranga
Speaking to Mining Zimbabwe, ZMF chairperson of Mashonaland central Masango Mahlahla said that Zimbabwe has experienced a sharp fall in mining investments. Apparently, companies are considering the prevailing pol-economic situation that is in Zimbabwe hoping that the government will clarify on its monetary policy in order for them to invest.
“Currently the mining sector has experienced a sharp drop in foreign companies interested in directly investing in Zimbabwe mining operations. International businesses are waiting for monetary policy clarification regarding how invested capital and profit earnings will be converted back into foreign currency and repatriated to the home countries. They have noted the shortage of willing sellers within the interbank formal sector ’’, he said.
“International businesses who trade publicly neither operate on parallel markets nor illegal systems as it violates international laws governing foreign investment as well as shareholder agreements. Hence the reduced interest to invest in the current environment” added Mahlahla.
Mahlahla maintained that the government’s willing buyer, willing seller policy has greatly affected mining investments because banks are willing to buy foreign currency from miners but they are not willing to sell it to the same people who provide that foreign currency to them. Consequently, this affects mining operations because most mining equipment is imported, thus they need forex.
“What has greatly impacted mining businesses is the “willing buyer” “willing seller” policy implemented by RBZ. The majority of financial institutions such as Commercial Banks and International Funds Transfer Services such as Western Union are willing Buyers of forex but not willing sellers. This means that the much-needed forex is purchased and removed from the formal market whilst it’s not being replenished via sales. This further limits access to much needed foreign currency for imported mining equipment purchases” he said.
Member of Economist Round Table Zimbabwe Sifelani Jabangwe admitted that the 30 day period is not conducive enough for business as some members are advocating for its review. However, Jabangwe is convinced that access to foreign currency has improved since the willing buyer willing seller mantra was introduced.
“The 30 day period is under discussion as some feel it’s too short, then access is also improving since the full willing buyer and seller was introduced. The position has always been that the effective operation of the interbank is critical for investment to come into the economy” he said.