Zimbabwe just like any other African Economies , have its fair of challenges which is affecting its economy , the mining industry included as well, but however there are companies which have managed to thrive in this economy companies like Mimosa Mining , Zimplats have been doing well in the Zimbabwean mining sector.
As for investors wishing to invest in Zimbabwe in the mining sector , the Zimbabwean government has put rules and regulations which has been favourable to the investors to invest into the Zimbabwean mining sector.
Lets explore some of the challenges which are faced by western investors in the Zimbabwean Mining Sector.
Infrastructure and Logistics Challenges
Zimbabwe infrastructures such as roads ,railways and power supply is not sufficient enough particularly in the remote mining areas of the country. This will lead to disruptions in the supply chain , increased transportation cost and delays in the production process.
Solutions:
Collaboration with the government and local authorities to develop infrastructures such as roads and also carry development projects which will benefit the company and the communities at large. Regarding Power supply best alternative will be resorting to renewable power sources such as solar plants and biogas energy which will also present investors with an opportunity for investments.
Explore Alternative Transport Mode: Zimplats Mining company is a good example of how mining companies can explore other alternative transport modes in order to have an efficient transport system. Zimplats has developed infrastructures such as roads in the Ngezi area they operate in , this has really helped them regarding their transportation of minerals.
Regulatory Barriers and Indigenization Policy
In Zimbabwe there is the Indigenisation and Economic Empowerment Act ,which give Zimbabweans the right to control foreign owned companies in Zimbabwe. Foreign owned entities in Zimbabwe will have 49% of the company shareholding , while the local Zimbabweans gets 51% of the shareholding.
Solution
Possible solution will be do study the Zimbabwean mining industry rules and regulations , then explore how best they will navigate through the regulations , also seeks legal advice from reputable laws practitioners and firms which are in the country.
Another possible solution an investor can take , is to carefully negotiate with their Zimbabwean counterpart and make sure the profits will be shared on equal grounds for a fair and sustainable partnership.
Access to Financing and Capital
Due to the economic instability and constant change of monetary policies in Zimbabwe , accessing financial Capital from Financial Institutions can be very difficult especially for foreign owned companies.
Solution
An investor can have a diversity of funding sources , just in case they fail to get financial assistance from local banks ,they can seek funding from International Financial institutions or private institutions.
Investors can also explore innovative financing mechanisms such as project financing , private -public partnerships to access capital and share risks.
Conclusion
Through collaboration, innovation, and a commitment to sustainable development, foreign-owned mining companies can contribute to the growth and prosperity of Zimbabwe’s mining sector.
