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Foreign Investment Drops 70% After Zimbabwe Takeover Of Diamond Mines

Nigel Chanakira

Zimbabwe’s decision to take over all the diamond mines in the Marange diamond fields has had the disastrous consequence of reducing foreign investment in the country’s mining sector by 70 percent, according to Zimbabwe Investment Authority (ZIA) Chairman Nigel Chanakira.

The Zimbabwe government already owned at least 50 percent of six of the eight private mining companies in Marange — Marange Resources, Mbada Diamonds, Diamond Mining Corporation, Anjin Investments, Jinan and Gye Nyame Resources — while two — Kusena/Zimbabwe Diamonds and RERA Diamonds — were wholly owned by the state-owned Zimbabwe Mining Development Corporation ((ZMDC). All mining operations were, however, taken over by the government and brought under a state entity known as the Zimbabwe Consolidated Diamond Company (ZCDC).

Chanakira told the Zimbabwe Parliamentary Committee on Indigenisation and Economic Empowerment that the government’s action had deterred investors, who otherwise have always been interested. They have now turned cautious and are waiting to see what happens in the diamond mining sector and this has resulted in a 70 percent drop in overall investment in the sector, he said.

A United Nations World Investment Report in 2014 showed that Zimbabwe had a total of $545 million in foreign direct investment (FDI), driven largely by investment in the mining sector. Last year, according to Chanakira, the country received a record $3.1 billion in investment applications, but actual inflows were only $421 million. In contrast, Mozambique received $3.7 billion while Zambia got $1.6 billion.

FDI has slowed dramatically this year, after the diamond mine takeovers.

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