SA, Zimbabwe deal 'imminent'

Jana Marais | Tue, 10 Nov 2009 09:29
[miningmx.com] -- A long-awaited investment-protection agreement between Zimbabwe and South Africa, which for so many years has been the impediment to South African investments in Zimbabwe, could be signed before the end of the month.

Sadiq Jaffer, director of the Department of Trade & Industry's Trade and Investment South Africa (Tisa), says considerable progress has been made towards resolving outstanding issues and that the documents should soon be signed.

For the first time in a long time political risk insurance for Zimbabwe is available from government's Export Credit Insurance Corporation of South Africa, says Ufikile Khumalo, managing executive of the industrial Development Corporation (IDC).

This would not have been so had the signing of the protection agreement not been "very, very close", Khumalo believes. The IDC last week granted a $10m loan to London-listed Mwana Africa, which has gold operations in Zimbabwe.

The loan is conditional upon political risk insurance being approved.

"We are very confident that we will get it [the insurance]," says Khumalo.

Zimbabwean Minister of Finance Tendai Biti told the Financial Times that the investment-protection agreement would be signed in South Africa in the last week of November.

It seems unlikely that it will include a clause on land, which has so far held up the agreement. It is feared that an inclusion regarding land would expose the Zimbabwean government to claims from South African farmers whose Zimbabwean farms have been expropriated without compensation.

Khumalo says there is tremendous interest from South African companies wanting to become involved in Zimbabwe but, while they are prepared to run the commercial risk, the political risk has so far been too high.

He says the IDC has a massive pipeline of possible investments in Zimbabwe, with particular interest in industries like steel. Konrad Reuss, head of credit rating agency Standard & Poor's in Johannesburg, says Zimbabwe is by no means yet on S&P's radar screen.

"It is probably still too early to begin thinking of credit ratings [for Zimbabwe]. There are a number of outstanding issues; much still needs to be done to normalise relations with international players.

"At this stage Zimbabwe remains a market for true pioneers."

- Sake24.com