A REVIEW OF POLICY AND LEGAL FRAMEWORK TO PROMOTE ZIMBABWE’S COMPETITIVENESS IN THE MINING SECTOR

The Republic of Zimbabwe is a landlocked country located in the southern part ofthe continent of Africa, between the Victoria Falls, Zambezi River, Kariba Dam andLimpopo River. It is surrounded by South Africa to the south, Botswana to the west,Zambia to the north and Mozambique to the east. The country is well endowed withmineral wealth and has been a reputable contributor to the region’s gold, coal,nickel and chromium production in the late 90’s, but this has negatively changed forthe worse. Since 2000, Zimbabwe has been on economic recession resulting ingrowing global interest in the country’s economic and social environment.The lucrative mining sector has also been adversely affected by the harsh economicclimate hence thwarting flow of foreign direct investment (FDI) into the countrywhich is needed to boost Greenfield and Brownfield competitiveness in the sector.Apart from its lucrative mining sector the country has done very little in harnessingthe anticipated FDI that should ensue. Concerns about governance, the rule of lawand human rights, and the continued lack of clarity about property rights haveseverely damaged confidence, discouraged investment, and promoted capital flightand emigration, thus contributing to the economic decline. Its competitiveness inattracting FDI has since declined because of the international perception of thecountry’s high political risk. The country has failed to live up to expectations withregards to mineral resource development in the region.The research established that, governance issues are at the helm of the current lowperformance of the economy. It therefore prescribes a complete change ingovernment’s attitude and calls for it to develop a long overdue mineral policydocument to map a strategic way forward for the country’s mineral resourcedevelopment. Interestingly the country has been hailed to have one of the mostliberal mineral administration laws through the Mines and Minerals Act of 1996. Itsfiscal incentives to the mining sector compare favourably with the rest of the regione.g. a corporate tax of 15% for exporting mining companies and currently most goldoperations are royalty exempt among others. There is a growing divergence fromivpolicies to actions on the ground. The rule of law is under threat and corruption hastaken its toll. It is therefore important for this research to analyse the historicalperformance of the country in the mining sector to formulate policies andrecommendations that will improve the country’s competitiveness in the sector. Thepolicy and fiscal incentives should continuously be revisited to be in tandem withglobal developments. The endowment theory, strongly believed by the country’smining ministry as illustrated by Tilton in 1992 is not conclusive in attracting FDIespecially in this dynamic global economy. More and more developing countries arerevising their investment policies to try and improve competitiveness of theirinvestment environments. Zimbabwe should emulate countries like Chile currentlyleading the pack in attracting FDI in the mining sector.There is now fierce competition in attracting investment into a country becausenow, the investor has more countries to choose from. Zimbabwe should seriouslyfocus on getting rid of all the negative aspects that have seriously affected itseconomic performance and quickly develop policies that auger well with regionalintegration and various other NEPAD, SADC and AU policies that underpinAfrican development. The mining sector is a driver for economic development ifproperly supported as shown within the research.