Small-Scale Mining Too Risky To Invest In, Says Mwanakatwe

LUSAKA, June 11 - Barclays Bank managing director Margaret Mwanakatwe has said that banks could not support small-scale mining because it is a high-risk area.

Speaking when Bankers Associations of Zambia appeared before a Parliamentary Committee on Economic Affairs and labour on Wednesday, Mwanakatwe said banks' effort to lend small-scale miners had not worked because banks were not happy with the risk posed by the small scale miners.

"Unless banks are happy with the risks of lending small scale miners, lending them will not work at the moment," Mwanakatwe said. "Small scale mining is high risk area."

She said small-scale miners needed re-education and quality equipment to dig the minerals unlike the case now where they used picks, hoes and shovels.

Mwanakatwe said with the type of equipment they were using, it was very easy for them to run away after getting loans from the banks.

"We have to see that our risk is well covered and that the risk is shared 50/50 with the government for banks to start lending small scale miners," Mwanakatwe said. "Effort needs to be concerted because government must show the way. We have the money, yes, but government must fulfil its obligations."

Meanwhile, Mwanakatwe disclosed that government failed to honour its obligation to pay Barclays Bank K2 billion guarantee made when the bank gave out loans in 1994 to Mkushi Co-operative Union.

"This is the risk we talk about when helping small scale enterprises. To date we are still chasing government to honour the K2 billion. Government guarantee is needed if banks are to lend to small scale businessmen and women," Mwanakatwe said.

She told the committee that the bank has had a lot of write-offs in the agricultural sector.

"They talk about liberalisation of the economy and growth in the agriculture sector, it is all about bank money," she said.

Mwanakatwe said banks would develop cold feet to help small-scale mining if the government did not offer meaningful guarantees.

Mwanakatwe was explaining the European Fund given to the Bank for the Mining Sector Development Programmme for small-scale mining.

She told the committee that there were many lines that the bank opened with the European Fund to help small-scale enterprenuership.

But Mbabala UPND member of parliament Emmanuel Hachipuka said banks should have advised government that risk sharing should not be 50 per cent.

Hachipuka said it was surprising that bankers accepted a facility for three or seven years and yet the project was not feasible.

"We should act more than bankers," Hachipuka said.

And Munali FDD member of parliament Edith Nawakwi said retired and retrenched miners should be redeployed into small-scale mining after re-education.

By Mcdonald Chipenzi
Source: The Post / allAfrica Global Media