Abstract
The mining sector has been the cornerstone of economic growth in Zimbabwe hence funding becomes very crucial to resuscitate the economy. The study aimed to assess the funding mechanisms for the mining sector of Zimbabwe and the effect of these on the performance of the sector. A quantitative study was carried out in the mining sector. The research findings showed that respondents pointed out that the funding mechanisms used in the mining sector of Zimbabwe are project finance, finance by private equity, public bonds and loans from banks and other financial institutions. It was also revealed that over and above available mechanisms, investment in the mining sector is being influenced by Interest rate, Business economic empowerment policies, bank lending criteria and Technical information, simultaneously. Furthermore, the study established that the mining sector needs skilled and technical staff, Technical information, banks’ lending criteria and Capital markets to get funding from investors. It was derived that, investment in the mining sector will increase production, product quality and profitability which in turn lead to infrastructural development. In addition, it is envisaged that funding will result in mining exports increase at the same time that new technologies are being introduced and the GDP is rising. Owing to the focus being exclusively on the funding of the mining sector, the study also recommended further studies on other factors, besides funding, that are affecting the performance of the sector.
Highlights
Minerals and minerals exploration and extractions have gained momentum over the past decade in SouthernAfrican
Investment in the mining sector will increase production, product quality and profitability which in turn lead to infrastructural development
The investment is mainly driven by booming commodity prices, high demand for commodities with China emerging as one of the largest consumers, and the need to revive economies, with some economies basing on natural mineral resources, for example, Zimbabwe targeting a mining economy of US$12billion by the year
Summary
Zimbabwe with its vast mineral deposits, being a high ferrochrome producer, high concentration of platinum deposits, and one of the African gold high producers, have to increase production to achieve economic growth as targeted. These mineral deposits are supported by relatively good infrastructure, a large pool of skills and relatively favorable policies which seem to be advancing mineral extraction in Zimbabwe. The trend of growth of mining output reveals poor sector performance, declining tremendously from 37.4% in 2010 to as low as -3.5% in 2014 owing to a variety of factors (Figure 1 below) These include under-capacitation of small-scale mining, prolonged mine closures, inadequate funding to develop new mines, payment currency for minerals (for example gold) and lack of capital to fund mineral output beneficiation assets. It is undisputed that the sectors’ performance declined due to financing constraints thereby contradicting the thrust to catalyze economic growth as a whole
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