Govt must refocus beneficiation model

Zimbabwe must offer incentives to companies exporting unprocessed commodities to encourage them to add value instead of just punishing them for raw exports, a debt management civil society organisation said last week.

In a research on the impact of commodity price fluctuations on economies in Southern Africa, the African Forum and Network on Debt and Development (Afrodad) said incentives in the form of tax cuts, access to capital, or concessionary lending among others seemed to work well in promoting beneficiation and value addition of minerals as opposed to bans that have been used in Zimbabwe.

“There is need for government to refocus from the current stick approach which is based on export bans and taxes in fostering beneficiation to a carrot approach,” Afrodad said.

“The carrot approach, where incentives are created to attract beneficiation, has proved to work well in other countries such as Mozambique, and Namibia).

“Therefore the government needs to consider changing its current stick approach which has not worked as demonstrated by the reversals in export taxes for the chrome mining industry.”

Government in the past four years imposed a ban on unrefined chrome exports to encourage beneficiation but the decision backfired threatening the operations of mainly small-scale chrome miners forcing government to reverse the embargo. Platinum miners were also threatened with high taxes for continued unrefined exports.

Afrodad said it was also imperative that government uses its industrial policy to drive its mineral beneficiation policy as opposed to a mining sector policy as is currently the case.

“The benefits of using the industrial policy is that it encourages the development of secondary industries which are competent in beneficiation and value addition instead of being limited to mining companies that might not have the requisite competence,” Afrodad said.

Afrodad reiterated that Zimbabwe and the rest of Southern Africa would continue to be vulnerable to commodity price fluctuations if they fail to value added their products. It also called for strengthening of natural resource governance institutions in the country.

“The institutional and legal setting for mineral exploitation and development need to be strengthened to ensure that the laws, regulations and institutional practices enable comprehensive disclosures, open and fair competition, and accountability,” the organisation said. “The reporting practices of extractive companies and the government also need to be enhanced.” – New Ziana.