IN the run-up to the 30 July 2018 elections, President Emmerson Mnangagwa repeatedly claimed that Zimbabwe had attracted investment commitments amounting to over US$16 billion since he took over power from his late mentor Robert Mugabe.
Some of the so-called mega deals that Mnangagwa signed were in mining, energy, agriculture and tourism.
For instance, in May 2018, the government signed a US$5.2 billion deal with South African firm Nkosikhona Holdings for the production of over eight million litres of liquid fuel per day from coal in Hwange.
A groundbreaking ceremony for the plant was scheduled for 1 June 2018 while mining operations were expected to start in September of the same year, but none of that happened. The deal was even granted national project status by Mnangagwa himself.
The project raised eyebrows, with analysts saying the South African company’s credentials were suspect. Again in 2018, the government signed an agricultural deal with the Financial and Commodities Ecosystem (FinComEco) worth US$1.5 billion, which was touted to create 630 000 jobs.
Another major deal that was signed amounts to US$4.2 billion with a Cypriot investor to develop a platinum mine and refinery in Zimbabwe, an investment Mnangagwa said showed the country was open for business.
But very few or none of the deals had been implemented, almost three years after some of them were announced. Former Parliamentary Portfolio Committee on Mines and Mining Development chairperson Temba Mliswa, an independent legislator, said there was a need for Parliament to make a follow-up on those mega deals.
“My question actually to the Speaker this week was going to be what has become of those deals because we can only be successful if foreign direct investments are implemented and executed. Then you have money coming through,” Mliswa said.
“We seem not to have enjoyed any money from our own resources whatsoever. We are always talking about us doing well but from the resources we have, what has come out of it, yet our domestic and external debt is still bad,” he said.
Mliswa also bemoaned policy inconsistency, saying it was eroding investor confidence.
“There is no due diligence on the investors. These are briefcase businesspeople. Where is the RBZ in due diligence of people coming to invest? The real conglomerates are not coming to Zimbabwe, it’s the dealers, the shoddy corrupt people who are investing and we don’t need that.”
“We need conglomerates. We need Anglo-American coming here. There is so much on paper; there is nothing on the ground,” he said.
In a recent statement, the Southern and Eastern African Trade Information and Negotiations Institute (Seatini) raised a red flag over deals the government has signed as of 2017, saying they were characterised by opacity and lack of public accountability.
“There are, however, discomforts emanating from the opaqueness of the processes leading to these major investment deals, as they are signed in boardrooms, with the public lacking key details to such deals,” Seatini said.
“There is no full disclosure of details and information on these deals, including full disclosure of the investors. Currently, there are limited forums for collective interrogation of these investment deals that are inclusive of communities and civil society,” it said.
Policy analyst Gorden Moyo said the Mnangagwa presidency “is unfortunately infamous for over-promising and under-performing. In the last five years, we have witnessed premature celebrations on the part of the government.”
“Zimbabweans were promised houses, jobs, improved incomes, infrastructural revolution, civil liberties, and improved social protection programmes and many more. And yet today, Zimbabweans are worse off than they were a decade ago,” he said.
“This kind of investment is no investment at all. The irony is that Zimbabwe’s sovereign debt stock has in the process increased as a result of the so-called investment from Beijing.” Moyo, who served as minister of State Enterprises and Parastatals during the Government of National Unity, said much of the celebrated investments from Beijing were largely phantom investments.
“Instead of investing in Zimbabwe, the funds simply exchange hands between the Chinese Exim Bank, Chinese Development Bank and the Asian Infrastructure Investment Bank on the other hand and the Chinese suppliers, engineers, and constructors on the other, without landing on the shores of Zimbabwe,” he said.
In addition, Moyo said the investment has been associated with tax incentives, tax holidays, and tax breaks for periods up to five years. Where those investors are paying taxes, they are favoured because their taxes are very low, particularly in the mining sector, he said.
“By doing so, the country is deprived of the much-needed mining revenue that could be used in the development of the country. All social accountability institutions, including parliament, media, civil society and academics should scale up their scrutiny of the mega investments, especially from China. Zimbabwe is being subjected to neo-imperialism by Beijing,” he said.
Renowned independent economic analyst John Robertson said Zimbabwe’s investment authority has been approached by many potential investors, but not all of them lodge actual applications for business licences and not all the approvals that are granted are implemented.
“Some of the investors are discouraged by the number of licences and permits they have to apply for and pay for. When they discover that many of them have to be renewed and paid for again in a year or so and they realise that all these will add to production costs that could make their goods or services uncompetitive, they might then decide to take their investment plans to another country,” he said.
In some cases, Robertson said the authorities have demanded technical details that would force the disclosure of patented methods or highly confidential design features that would put at risk the potential investor’s competitive advantage.
“In such cases, the investment proposal is usually withdrawn. In certain investment projects, the investor needs assurances that large volumes of purified water will always be available, or that no power cuts will cause damage to equipment or lengthy down-time, while production flows are restored, but when these assurances cannot be given, the proposal is cancelled,” he said.
“Other investors depend on efficient rail transport services and they withdraw their applications when they see the state of our railways.”
“New power stations are to be built, but the handicaps holding up the commencement of construction have been in place for many years. The Lusulu Power Station was approved for construction in 2012, but work has yet to start. The Sengwa Power Station has been approved, cancelled, approved again and cancelled again. Rumours suggest that it might now go ahead, but no confirmation can be found,” he said.
Robertson said some tourism projects have gone ahead in Victoria Falls and “it is likely that they will add usefully to bed-nights there when the Covid pandemic is history, but little has been achieved by the major hotel groups elsewhere in the country.”
“If a new power station is built, if investment in the railways starts to yield improvements to efficiency and if the national road network and border post improvements can be completed, Zimbabwe can expect to become a more attractive proposition for investors, but they are still likely to remain reluctant unless government greatly reduces the licensing and permit requirements,” he said.
“Zimbabwe is considered to be a centrally-planned economy, following the political philosophy of North Korea. This is extremely unattractive to investors, who have the whole world to choose from when selecting an investment destination.”
Presenting his keynote speech at the 2018 pre-budget seminar held in Bulawayo, Speaker of the National Assembly Jacob Mudenda urged the government to fight inertia, whereby deals worth billions of dollars are signed every time, but not implemented on time, if at all.
Mudenda said the signed deals should not be allowed to go for more than six months without being implemented. If it stays longer, it simply means there was no commitment to invest, he said. However, the chairperson of the Portfolio Committee on Mines and Mining Development, Edmond Mkaratigwa, said the Mnangagwa administration’s performance in implementing a number of projects has been fair.
“Objectively, assessing what President Mnangagwa and government had set to do and where we are today under the prevailing socio-economic environment, I appreciate the milestones achieved and it would be amiss for me to say nothing has been done thus far,” he said.
“Honestly, a lot is going on and the foundation has been well laid and the country is leaping forward. I will hasten to speak about the successes in the mining industry which I am well versed in.” Mkaratigwa said he has so far witnessed the opening of new mines, several gold mines, expansion or upgrading of existing mines (for example Unki Mine and Blanket Mine) and the re-opening of closed and disused mines or those under prolonged care and maintenance (for example, Shamva Gold Mine, Falcon Mine) and some of the new mines are at developmental stages although their commissioning has been delayed by the Covid-19 pandemic.
“We have also witnessed quasi-governmental organisations posting profits and paying dividends, for example MMCZ (Minerals Marketing Corporation of Zimbabwe), ZCDC (Zimbabwe Consolidated Diamond Company) and Kuvimba. We have also been favoured with oil and gas exploration and Muzarabani is a case in point. The diamond sector has seen giants like Alrosa entering the Zimbabwean space and Murowa Mine focusing on an expansion drive.”
All this and more is a clear demonstration and validation of successes championed by Mnangagwa through the “Zimbabwe is open for business” mantra and ease of doing business anchored on the Vision 2030 agenda, he said.
“Tooling and re-tooling is ongoing and have seen small and humongous machinery being acquired and deployed, not to mention ambulances, vehicles and computers for government departments supporting the mining sector. Human capital development and innovation drive also deserve mentioning.”
Consequently, Mkaratigwa said Mnangagwa has re-focused the economy through National Development Strategy One. To that end, an integrated mining and industrial development and deployment approach investment will see the fruition of a single multifaceted project worth over US$10 billion spanning over four provinces for an iron and steel plant in Mvuma feeding of chrome fields within the vicinity, with rail and road transport linkages.
He said stainless steel production as well as construction of a smart city are envisaged to ultimately complement the performance of the Mnangagwa administration.
“On the other hand, the President’s magnanimous and compassionate approach is fostering the much-needed political unity which creates an enabling environment assuring positive development on the political stage which will surely create that enabling environment to support our national economic endeavours for sustainable national socio-economic growth,” he said.
“Like I always mention, investment is different from many national development sectors, it is sensitive and voluntary and you cannot force it, hence it is always a process of negotiation and these successes reflect huge strides.”
“Of late, the government has further adopted the plan to look within and not always externally, in searching for solutions to the national development challenge. In fact, national development is every citizen’s business,” he said.
Asked about progress on the deals, Information, Publicity and Broadcasting Services deputy minister Kindness Paradza referred questions to Mnangagwa’s spokesperson George Charamba who, instead, blamed corporates for their failure to implement them.
“You want me to be a spokesperson of a corporate organisation? The government was not going to be the implementer, was it? Phone those companies and ask them how far you have gone about the agreement which they signed with the Zimbabwean government,” Charamba said.
“I don’t speak (for the corporates), I speak for the President. The President is not the shareholder of those companies, is he? Government enables, corporates execute. An agreement involving a state and a corporate body does not turn the state into an actor but it turns the state into a facilitator. Delivery or lack of it, it’s a matter for the corporate body. You can’t get me to explain the failures of a corporate body. How is that my business?” he said.
Critics say Mnangagwa seems to have taken a leaf from his mentor Mugabe by signing investment deals worth billions of dollars – some opaque or dubious – that never see the light of day. During Mugabe’s era, countless deals were signed, especially with China, raising hopes of a swift economic turnaround, only to disappear from the radar after the pomp and ceremony.
Source – NewsHawks