COUNTRY IN FOCUS •
ZIMBABWE : BLANKET A STALWART
FOR ZIM ’ S MINING INDUSTRY
By Leon Louw and Nicolaas C . Steenkamp
Despite challenges , there are green shoots in the Zimbabwean mining sector . photo created by wirestock - www . freepik . com
The Zimbabwean roller-coaster first launched by Robert Mugabe in the 1980s has not slowed down a bit , although it has miraculously remained on its wobbly tracks . Not even the demise of Mugabe in September 2019 could stop the rot or better the plight of ordinary Zimbabweans trying to put food on the table .
Although new president Emmerson Mnangagwa introduced a range of measures to ease the burden for companies doing business in Zimbabwe since then , the economy has not been able to recover from the political onslaught by the ruling Zanu-PF party over the last three decades or so .
Zimbabwe ’ s economy is a dead horse , and no matter how hard Mnangagwa flogs it , it will remain hamstrung . The last nail in the troubled country ’ s coffin was Covid-19 . How they manage to recover from that shock will depend to a large extent on how comfortable Mnangagwa has become with embracing the private sector and attracting foreign investors outside of the Russia / China block .
The signs are there that there is life in Zimbabwe yet – and green shoots are starting to appear . But that has happened before . Much of Zimbabwe ’ s recovery in the wake of the Covid-19 pandemic will depend on the mining industry . Zimbabwe is blessed with an exceptional mineral endowment and the most attractive deposits remain undeveloped . Moreover , exploration activity in the country has almost ground to a halt , which should be a concern for a country with so much potential yet dogged by endless infrastructural constraints . But despite all the doom and gloom , there is hope that a better rain season and agricultural performance , in tandem with mining output , could save the economy in 2021 .
Rebound expected According to the World Bank ’ s outlook for Zimbabwe the country ’ s economy is set to rebound by 2.9 % in 2021 . “ An expected bumper harvest and continuation of rule-based monetary policy
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African Mining Publication will stabilise food prices and improve food security . However , disruptions caused by the pandemic will continue to weigh on economic activity in Zimbabwe , limiting employment growth and improvements in living standards ,” says the World Bank .
“ In 2020 , gross domestic product ( GDP ) is estimated to have contacted by 8 % for a second year in a row as COVID-19 halted economic recovery . Operating restrictions led to depressed manufacturing , non-mineral exports , and hospitality , trade , and transport sectors . Sales of manufacturing and services firms in July 2020 were about half sales in 2019 . Supply-side shocks subsided after easing of mobility restrictions , but domestic demand was weak in an environment of triple-digit inflation , high unemployment and income losses .”
Fiscal and monetary policy responses to the pandemic have been limited to contain volatility of prices . In June 2020 , the Reserve Bank of Zimbabwe operationalised the reserve money targeting framework , floated the exchange rate , and introduced foreign auction . These measures helped to stabilise the parallel market exchange rate and reduce the parallel market premium , although it remained distortionary . As a result , inflation slowed down to 322 % in February 2021 from its peak of 838 % in July 2020 .
The 2021-25 National Development Strategy sets out an ambitious plan to support the recovery . The World Bank states that it is critical that Zimbabwe ’ s domestic policies support price stability and the optimal use of public resources , especially given large financing needs to prevent a deterioration in human capital .
“ In addition , the economic stimuli provided to businesses should be carefully monitored , managed , and implemented to minimise wasteful spending and leverage the private sector . Meeting the government 2030 aspiration of attaining upper middle-income status will also require authorities to strengthen governance ; ensure greater transparency and accountability ; and increase public financing and investments focused on critical sectors .
Blanket rewards faithful shareholders Despite all the bad news , there are some good news stories , especially in the mining sector .
One of the most remarkable gold mining companies operating in Africa , Caledonia Mining , has commissioned a new shaft at the Blanket gold mine close to the town of Gwanda in the south of the country .
According to Steve Curtis , CEO of Caledonia , the mine ’ s Central Shaft will increase Blanket ’ s production to between 61 000 ounces and 67 000 ounces in 2021 , and to more than 80 000 ounces per
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