Gold bars illustration. The price of gold has been fluctuating in the international market., a photo by Pan-African News Wire File Photos on Flickr.
Mining to spur growth: WB
Friday, 26 April 2013 00:00
Rumbidzayi Zinyuke in Bulawayo
THE World Bank says Zimbabwe could raise up to US$5 billion in Foreign Direct Investment by 2018, if mining production volumes increase.
Speaking at the International Business Conference in Bulawayo on Wednesday, WB country economist Mr Seedwell Hove said gold, coal and chrome had a higher potential of absorbing new investment and creating 5 000 jobs than other minerals.
“The mining sector can contribute to industrialisation and economic transformation mainly through supporting measures to lower costs for other sectors and through economic linkages,” he said.
Mr Hove said forward and backward linkages required structural change and upgrade of the domestic endowment while horizontal linkages held greater potential with respect to procurement and demand in the mining sector.
He urged policymakers to take this into account when working on the roadmap to economic growth.
“It is important to leverage on the mining sector in order to boost production in other sectors.
“We can make sure that increased production in mining fuels more energy in other sectors through these linkages,” he added.
He noted that linkages had been very successful in other countries where exploitation of resources was leveraged towards industrialisation and structural transformation.
He said Chile, Indonesia, Peru and Malaysia had recorded success stories in terms of economic linkages.
“It financed the upgrading of the countries’ endowments (human and physical) from a high level of savings and helped to reduce production costs in new trade sectors.
“It also supported efficiency while encouraging new entries and good macro-economic policies, fiscal discipline over resource cycles and overall policies supporting the business environment,” he said.
Mr Hove said Zimbabwe should take advantage of the current wave of high demand for natural resources to foster a new wave of industrialisation and structural transformation.
“Zimbabwe has great potential to develop from its rich natural resources, but there is need to use those resources to create above-ground assets like human capital and infrastructure,” he said.
He added that the mining sector had the potential for autonomous growth, although there was need to leverage on the mining sector as the key driver to support the whole economy. Mr Hove noted that although the economy was recovering, the country was not yet able to take full advantage of the global boom in mining prices.
“Given lack of exploration, infrastructure weakness, and current persisting uncertainty, there might be no major increase in activity in the medium term,” he said.
The policies in the mining sector were key to Zimbabwe’s growth in the medium term, he said, as they may have downstream effects on other sectors, if linkages were strengthened.
“Mining can help increase domestic savings and accommodate increased flows of imports for capital goods,” he said.