Mnangagwa will likely secure another term in Zimbabwe’s presidential election later this year, which means that mismanagement of the mining sector will probably persist despite the recent reforms, thereby limiting the country’s access to the global market and perpetuating the country’s economic crisis. Zimbabwe is scheduled to hold presidential elections in July or August 2023 (an exact date has not yet been announced). Preliminary signs indicate that Mnangagwa will likely be re-elected, though likely with the help of pervasive voter intimidation and fraud. ZANU-PF’s political embeddedness and willingness to use corruption and violence to maintain power will leave little incentive for Zimbabwean leaders to pass mining sector reforms that would make self-enrichment more difficult. As such, international mining companies willing to play by ZANU-PF’s rules and ignore and/or participate in corrupt practices will continue to benefit from Zimbabwe’s vast mineral reserves. Chinese companies in particular are likely to continue to benefit from Zimbabwe’s lithium reserves at high rates, as their economic participation is not limited by human rights or governance abuses as is the case with Western companies. The US Treasury also maintains a sanctions program against specific members of the Zimbabwean government for undermining democratic institutions, which inhibits American access to Zimbabwe’s resources. As long as there is a market for Zimbabwean resources – be it Chinese or otherwise – the refusal of Western partners to buy Zimbabwean goods due to governance concerns will hold little weight in pressuring the country’s leaders to implement mining sector reforms. Taken together, this means that the industry is poised to continue to suffer from old ills, privileging political elites at the expense of public revenue and industry growth. The ongoing inefficiency of the mining sector — which accounts for about 60% of Zimbabwe’s exports and nearly 20% of GDP — will continue to fuel the country’s long-standing economic crisis as well.
In 2015, a bill was presented to Zimbabwe’s parliament to update the Mines and Minerals Act. But the proposed amendment has sat dormant under President Mnangagwa and his mines and mining development minister, Winson Chitando (both of whom took office in 2017).
Zimbabwe has been in debt default since 2000, as hyperinflation, unsustainable external debt, multiple exchange rates and high spending continuously destabilize its economy. These poor macroeconomic conditions have pushed many Zimbabweans into poverty, with 75% of the population living on less than US$5.50 a day.
Zimbabwe’s economic growth rebounded to 6.3% in 2021 after contracting sharply by 6.1% in 2019. According to the International Monetary Fund, the country’s economy continued to expand in 2022 (albeit more slowly), with annual GDP hitting 3.5% last year. But while growth has resumed since the COVID-19 pandemic, Zimbabwe’s currency crisis persists, with yearly inflation reaching 2.43.8% in December 2022. – Stratfor
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