Importance of mining and criticality of free capital flows – Leina Gabaraane

ZCCM-IH CEO Dr. Pius Kasolo (left), Zambia Railways CEO Mr. Christopher Musonda (immediate left), Zambia High Commissioner to South Africa - Mr. Emmanuel Mwamba, (middle), Deputy Secretary to the Cabinet - Hon Chris Mvunga (middle), Stanbic Bank Zambia CEO - Mr. Leina Gabaraane (immediate right) at the Standard Bank booth at the Mining Indaba in Cape Town.

“MINING is such an important sector of our economy, so vast such that it covers not only exploration and support businesses but extends to rehabilitation of the land where minerals are extracted from. It has a huge social impact on people resident in communities where extraction is done. The opportunities it provides are vast,” Stanbic Bank Zambia Chief Executive Leina Gabaraane said in a sideline interview at the ongoing 2018 Mining Indaba in Cape Town. Most of the discussions at this Indaba are very relevant to us as Zambia from a socio – economic  perspective, he said.

The need for responsible investments 

Gabaraane emphasized the need for responsible investment in mining citing examples of the autopsy of Kabwe’s Lead extraction where the community is grappling with contamination and  carbon emission effects. He highlighted a series of questions on how rehabilitation must be done, how well-functioning relationships between the mines and the community can be crafted and how downstream participation of the community can be catered for. These, he attached immense importance to as food for thought.

Criticality of free capital flows and foreign direct investment

He highlighted also that African countries were in competition for capital resources from potential investors and that this appetite was to foster the requisite investment to spur economic growth through employment creation. “That is why today we had a podium of 5-6 African countries, each one of them saying ‘we are the best, come to us'” he said. It is competitiveness that then forces governments to start thinking more ‘free capital markets’ and conducive environments manifesting through ease of doing business. That is a very important factor because it forces governments to realize the importance of making free competition and capital flows into countries with investment appetite. Capital flows and foreign direct investment are very critical in the mining investment equation, he said.

“We don’t just provide capital but advisory services as well. Mining in its nature is highly risky, capital hungry and volatile. The question then comes: where is the capital? We have it. Is it ready to support such a volatile environment characterized by unstable commodity prices – one moment copper is up and the other it’s down…We have a dedicated team of sector specialists that understand these commodity cycles and are able to structure deals accordingly and provide the requisite advisory services.”

Leina Gabaraane Stanbic Bank Zambia CEO.

Stanbic Bank Zambia Executive Head of Corporate and Investment Banking – Helen Lubamba (right) with Mining Indaba Managing Director – Alex Grose at the Standard Bank booth at the ongoing Mining Indaba in Cape Town

With sufficient risk appetite for mining, coupled with dedicated teams of sector specialists that understand commodity cycles, we have invested over $USD3billion in the Zambian mining industry over the last decade. There is no single bank in Africa as prominent as Standard bank in mining investments. As a group we have strategically positioned ourselves for opportunity and partnerships because we recognize the importance of mining as a GDP driver in African economies a sentiment we have echoed across all countries we operate in.

Meaning for Zambia

We have identified that copper and mining in Zambia are important. Other key drivers of the economy of Zambia are agriculture which we are big participants in, Leina said in an interview. Zambia is our home and we drive her growth and as such we understand that the government’s aspiration to grow the mining sector, create jobs and wealth. We also understand that for the government to realize it’s dreams or objectives in an African economy, it needs capital and that’s where we come in. Without the capital that the banks provide the government will not be in a position to realize it’s dream. That’s the fundamental role we play to say: how do we allocate capital optimally to where it is most required. In this instance we believe it is most required in the Zambian mining sector but there is still a lot we can achieve from it and there is still a lot of advisory we provide into it.

Gabaraane highlighted that Stanbic was seeing a rebounding economy on a path to becoming a leading regional economy. We want to participate in all those sectors and we believe that we are partners to the government and that’s the role we have to play and grow because Zambia is our home, he said.

Market note

The Zambian delegation can be commended for sending a strategic team to pitch opportunities at the 2018 Indaba. Honourable Yaluma was honest enough to admit the failures of government in the area of policies that should trickle benefits to communities. Seeing Deputy Secretary to the Cabinet Chris Mvunga at a Standard Bank booth was a deja vu of his previous life with Africa’s largest bank. Zambia Railways CEO just needed to be present because soon he will be ferrying 30% more bulk cargo through the recent enacted statutory instrument so the indaba should surely give him an idea of the volumes to really expect plus networking with other nations rail CEO’s. Dr. Kasolo reflected ZCCM-IH while last but not the least Stanbic Zambia CEO seems to have taken up a role just at the right time when copper outlook is positive and the mining indaba was one to re-initiate him into the industry. However Leina is not new to the Indaba save previously he spoke diamonds when he was CEO for the Botswana operation but this time copper and cobalt with be used more in his vocabulary. Our mining and banking analysts forecast an increased appetite for mining and related sectors under Leina’s clock as CEO. Our team has reason to believe he is experienced in the sector. This is a space to watch.

ZBT – Lead Analyst

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