Zimbabwe aims to boost local manufacturing to reduce mining import dependency

Zimbabwe’s mining industry, a key economic pillar, faces a significant reliance on South African imports despite ambitious local content targets. Experts say accelerating local manufacturing and fostering industrial partnerships are crucial for economic transformation.

Zimbabwe’s mining sector, endowed with vast reserves of platinum, gold, lithium, and diamonds, ranks as a vital pillar of the national economy. However, despite policies intended to foster local i...

ndustrial growth, the sector remains heavily reliant on imports from South Africa, creating a largely one-sided trade relationship that stifles Zimbabwe’s domestic value retention and industrialisation ambitions.

Data from the Zimbabwe Embassy indicate that as of 2023, Zimbabwe’s mining industry, which generates approximately US$5.4 billion in revenue, directs about US$2.1 billion towards importing essential machinery, equipment, and services – predominantly sourced from South African suppliers. Supporting these figures, a report by Afreximbank reveals that around 80% of Zimbabwe’s intra-African mining-related imports, valued at US$4.7 billion, originate from South Africa. These imports encompass critical mining machinery and mechanical appliances (12.5%), mineral fuels and oils (11.6%), and fertilizers utilized in specific mining operations (5.65%).

Despite this substantial import bill, local manufacturing meets only about 15% of the mining sector’s needs, underscoring a significant gap between the country’s industrial capacity and the demands of the mining industry. According to the Chamber of Mines Zimbabwe’s 2023 survey, while the mining sector operates at 81–84% capacity utilisation—expected to reach 90% in 2025—the manufacturing sector lags far behind, with capacity utilisation reported at just 56.2% by the Confederation of Zimbabwe Industries. This disparity signals an urgent need to bolster local manufacturing capabilities to keep pace with mining industry growth.

South African suppliers benefit considerably from Zimbabwe’s mining boom but tend to engage with Zimbabwean businesses largely on transactional terms, offering minimal support through partnerships, joint ventures, or skills transfer initiatives. This approach results in limited local enterprise development and restricts the broader benefits that mining wealth could confer on Zimbabwean communities. Contrastingly, South Africa enforces robust local content requirements—mandating that 70% of mining goods and 80% of services be sourced domestically—with policies that prioritise businesses owned by historically disadvantaged groups, women, and youth. Zimbabwe stands to gain by emulating such measures to stimulate its local economy, reduce trade imbalances, and grow the tax base.

In response, Zimbabwe approved its Local Content Strategy (LCS) in 2019, setting ambitious targets: increasing local content from 25% to 80%, raising manufacturing capacity utilisation from 45% to 75%, and enhancing manufactured exports by 5% annually by 2023. Nevertheless, progress remains slow. The sector’s current 15% local content contribution far misses the target, and over US$2.1 billion continues to flow overseas for imports. Experts stress that capacitating domestic industry through financing, modernisation, and preferential procurement policies is essential to narrow this widening gap.

Nonetheless, Zimbabwe’s local capabilities are not wholly absent. Mimosa Mining Company’s recent US$75 million Tailings Storage Facility project (TSF-4) serves as a compelling case study, with all construction and contracting managed by Zimbabwean firms. Though the design consultancy was provided by a South African firm, the majority of project expenditures remained local, except for specific imported components like pipes. This achievement demonstrates that with deliberate planning and support, Zimbabwean companies can successfully execute major mining projects.

Furthermore, some Platinum Group Metals (PGM) miners, such as Zimplats and Mimosa, have pioneered Local Enterprise Development (LED) and Supplier Support programmes. Zimplats, for instance, has invested close to US$460 million into local businesses and has created over 2,600 jobs through these initiatives, thereby reducing import dependence, lowering operational costs, and fostering employment.

To fully realise the mining sector’s transformative economic potential, experts advocate several strategic reforms. These include enforcing preferential procurement policies favouring Zimbabwean suppliers; providing targeted capacity building and financial support to equip local firms with the technical and operational resources necessary to meet mining industry standards; and encouraging industrial partnerships with foreign firms to facilitate technology transfer, enhance skills development, and support scaling of domestic enterprises.

In parallel, the government has moved to amend the Mines and Minerals Bill to increase opportunities for local firms and investors, particularly in critical mineral segments, with the Chamber of Mines furnishing recommendations to extend local content beyond services into wider segments of the value chain. This legislative adjustment signals a recognition of the pressing need to deepen local participation throughout mining operations.

Nevertheless, scholarly analyses caution that Zimbabwe’s Local Content Strategy has fallen short, especially in nurturing downstream industries and inclusive participation by SMEs and women-led businesses. A more comprehensive approach is necessary to build resilient local supply chains and incorporate non-traditional actors, helping diversify and strengthen the sector’s contribution to the national economy.

Zimbabwe’s broader economic context further underlines this imperative. According to African Development Bank data from 2011, Zimbabwe’s import profile is dominated by South Africa, which accounted for nearly half of total imports, reinforcing the critical nature of localising supply chains to reduce the dependency burden. Meanwhile, the Mutapa Investment Fund, Zimbabwe’s sovereign wealth entity, manages a broad portfolio including mining and infrastructure assets with the goal of driving economic transformation and long-term wealth creation aligned to Zimbabwe’s Vision 2030.

In summary, Zimbabwe’s mining sector holds immense potential not only as an extractor of valuable minerals but as a catalyst for industrialisation and socio-economic development. While policy frameworks like the Local Content Strategy set the stage for this transformation, significant challenges remain in implementation. Accelerating local procurement, incentivising domestic manufacturing, and fostering collaborative industrial partnerships are pivotal steps. Success stories like the Mimosa project and LED initiatives provide a blueprint, but the promise of making mining a true engine of employment, industrial growth, and sustainable prosperity depends on urgent and consistent action to reduce dependency on South African imports and fully harness Zimbabwe’s domestic capabilities.

Source: Noah Wire Services