To save its economy, Zimbabwe may allow foreign investors own majority stake in diamond mines

Zimbabwe’s mines minister Winston Chitando during a cabinet meeting on Tuesday December 4, said that the country will now allow two more private companies to explore and mine diamonds in the country. He also said that Zimbabwe may allow foreign diamond miners to own more than 49 percent on condition that rough stones produced from the country are submitted to a beneficiation centre to be operated by the Zimbabwe Consolidated Diamond Company( ZCDC). Currently, Zimbabwe requires that companies mining diamonds or platinum are at least 51 percent owned by black citizens of the country.

Former President Robert Mugabe had in 2016 evicted foreign diamond miners from the country after they refused to merge under ZCDC.

Through the ZCDC, Zimbabwe will own 46 percent in all diamond firms in the country while five percent will go to indigenous partners of the foreign firms. Zimbabwe is also seen reserving majority shareholding in platinum mining companies for the state, a situation that will impact on South African platinum producers, Anglo Platinum, Impala Platinum and Sibanye which have operational units in the country.

This is in line with President Emmerson Mnangagwa’s promises after taking over from Mugabe last year. When he took over, he said “Zimbabwe is open for business” and he will ease the country’s local ownership rules and re-engage lenders which includes the International Monetary fund.

Zimbabwe has been faced with severe economic issues which led to the collapse of the economy. Investors pulled out of the country and the government was unable to pay workers on time, with several jobs lost. In 2009, the country abandoned its inflation-ravaged currency and a lot of people lost their life savings.

However, Mnangagwa’s ascent to power signaled hope. The country is gradually becoming attractive to investors. Since Emmerson took over, the Southern Africa nation has attracted investments worth over $16 billion. A number of foreign investors have come into the country such as American company, Hondius Capital Management, which signed a $1 billion investment partnership with the Infrastructure Development Bank of Zimbabwe (IDBZ).

The international coffee company Nespresso in September announced that it expects to purchase 95 percent of Zimbabwe’s high-quality coffee produced by smallholders this season. It will also provide training and technical support for 400 smallholder farmers during the next five years.

Johannesburg-based Moti, whose business interests include transport, aviation and property development also doubled its investment in Zimbabwean chrome.

While some investors are eyeing its huge natural resources, others are hunting for opportunities in the recovering agriculture sector, notably tobacco.

There is also so much confidence in the new team in the ministry of finance led by former African Development Bank vice-president Mthuli Ncube. He has put in place austerity measures to tackle budget deficit and reboot the economy.