How to empower Hwange (II)

HWANGE has remained a small town in Zimbabwe, even though it has enough resources and the strategic positioning to be a city with regional influence within the Southern African Development Community (Sadc).

Last week's article articulated some crucial opportunities which the town should take hold of, so that it contributes to its own development, whilst it revives the national economy of Zimbabwe. The analysis provided great detail on how the existing coal deposits in Hwange can be used to turn around its fortunes.

Zimbabwe is estimated to have coal deposits ranging between 10 billion and 25 billion tonnes. Of these resources, a significant portion is in Hwange.

Due to the abundance of coal in the town and its surroundings, Hwange's local is mainly based on coal mining, a thermal power station which generates electricity from coal, and tourism.

Last week's analysis insisted that the town of Hwange needs to start by mining more coal from its deposits in order to boost its economy. Secondly, the establishment of more coal power stations would be beneficial for both the town and the country.

Thirdly, capable investors need to be invited so that they can set up enterprises which can convert Hwange's coal into liquid fuels such as petrol, diesel and jet fuel.

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Fourthly, the coal could also be converted into hydrogen, so that Zimbabwe becomes a major exporter of hydrogen in the world. It is also possible that downstream industries, which use hydrogen as an intermediate product (raw material) could then be established in Zimbabwe.

Such downstream industries include manufacturers of the following fertilisers, pharmaceuticals, military weaponry, jet fuel, biofuels, high-quality steel, crude oil processors, etc.

If Zimbabwe manages to develop such industries which are premised on the hydrogen value chain, the country can go on to be a notable exporter of such commodities in the world.

Fifthly, the coal ash, which is a by-product of Hwange thermal power station, could be sold to the construction sector so that it provides inputs for the construction of roads, bricks, filling up of excavated holes, production of fertilisers, etc. These were the major propositions of last week's article.

Since last week's article comprehensively argued for the deepening of investments in coal in order to improve Hwange and Zimbabwe's economy, today's article takes a different route.

The focus of today's article is on the use of non-coal investments in Hwange in order to diversify its own and Zimbabwe's economy. A mix of both coal and non-coal activities are ideal, if the town and country are to be made more economically successful and resilient.

Indeed, Hwange needs more coal-based businesses than it has at the present moment.

However, an over-reliance on coal can turn out to be too risky. In the event that coal prices are down, or coal is phased out, or there are other challenges in the coal value chain. Hwange and Zimbabwe's economy will easily succumb to such pressures, if there are no available economic alternatives.

Therefore, this week's article describes how investments in non-coal sectors can be of good use. These should be viewed as proposals for additional investments above the initially proposed investments in coal which were tabled last week.

By adopting the measures which are articulated in the two analyses on empowering Hwange's economy, the town will likely be upgraded into a city, within the short-to-medium term (1- 3 years).

Its economic improvement can then be expected to draw in migrants to Hwange, who will come from rural areas and other cities within Zimbabwe, along with those from other countries.

The economic prosperity of Hwange can also be expected to result in its modernisation and infrastructural sophistication. This prosperity will not be enjoyed by the town on its own, but the whole country as a whole.

Non-coal investments

There is much room to diversify Hwange's (and Zimbabwe's) economy through facilitating investments in other economic sectors, which are independent of the coal value chain.

Hwange is one of Zimbabwe’s hottest regions and that makes it an attractive location for the establishment of solar energy projects, which produce electricity for the national grid.

The wind-potential of the town, including its rural hinterlands also needs to be confirmed, so that wind energy can possibly be added to its portfolio of energy investments. Once more, this would result in more jobs and greater prosperity for both the people of Hwange and Zimbabwe at large.

Since Zimbabwe has massive mineral resources, it will need a lot more electricity than what is currently being generated. This is because mining is an energy-intensive endeavour.

At present, local miners have an energy deficit of more than 1 800 MW. If they could the required energy (electricity), they would swiftly expand their operations. So, deploying both fossil fuels and renewable energy to support the national electricity grid is essential to support such energy-intensive industries and the overall economy.

Both mining and power stations use significant amounts of water. The presence of such industries in Hwange (mining and electricity generation), implies that there are opportunities in recycling the water used in the two sectors. Various water-harvesting techniques can also be employed to ensure that the town’s water resource is adequate enough to cater to the needs of all businesses and residents within the area.

More water can even be abstracted from the Zambezi River to Hwange, via a pipeline, if possible. That means the town may need a massive dam in its vicinity.

When Hwange has sufficient water, more economic activities can be established. The government may facilitate for investors to cultivate huge irrigated plantations of sugarcane, soya bean, maize, or industrial hemp, for biofuels, local consumption or exports.

In addition to manufacturing 20% of Zimbabwe’s liquid-fuel requirements from Hwange's coal, the country may go on to stipulate that at least 20% of all locally-consumed fuels should contain locally-produced biofuels.

By doing this, Zimbabwe would then be able to independently supply 40% of its liquid fuel requirements. In other words, the country would reduce liquid fuel imports by up to 40% (20% local fuels made from coal and an additional 20% made from crops or biofuel). In the process, more jobs and economic activity would be produced for Hwange and the country.

Hwange is located along a railway line and roads that link Zimbabwe’s major cities, Harare and Bulawayo, with Botswana, Namibia, Zambia, Mozambique and South Africa.

This makes the town suitable for developing various export industries and a vibrant manufacturing sector.

Its accessibility to major local and export markets gives it such a significant advantage.

Therefore, the establishment of agro-processing, chemicals, textiles and other manufacturing industries should be brought into serious consideration.

If the exploration for oil and gas, in Zimbabwe's Cabora Bassa Basin is successful, some of Hwange's power stations can be re-purposed to use the gas and oil (from Cabora Bassa Basin), to boil water and produce steam for energy (electricity) generation.

That would be a simpler way of integrating oil and gas into Zimbabwe's electricity value chain.

Already, Hwange is popular for its wildlife and is home to some of Zimbabwe’s best tourist resorts. In order to increase its prominence as a favoured destination for international and local tourists, the town needs to offer tax incentives for firms which invest in tourism and other infrastructure which can beautify the area.

Roads, municipal water, telecommunications and internet connectivity will also need to be enhanced in order to encourage longer stays by tourists, who visit Hwange. In that regard, the refurbishment of the Bulawayo-Victoria Falls road which passes through Hwange, should be commended.

In terms of destination marketing, the tripartite of Victoria Falls, Kariba and Hwange also needs to be marketed as a bundle, as much as possible.

This would improve tourist flows from one of the three areas, to another, thereby enhancing the performance of the respective areas and the country at large.

Decommissioned open-cast coal mines can also be turned into artificial lakes as a means of attracting tourists. Additionally, other obsolete open-cast mines can provide abundant land for erecting solar panels and establishing significant solar power rojects.

Conclusion

Hwange's over-reliance on mining, power generation and tourism is not ideal. The town needs to host more diverse economic activities so that its economy can thrive and be resilient.

Also, the fact that much of the economic activity in the town is too simplistic and does not even attempt to fully utilise available resources implies that there is a need to encourage more sophisticated economic endeavours there.

It is, therefore, critical that Hwange's economy is diversified, increases its utilisation of available economic resources and be made more sophisticated.

Improving the economic status of Hwange will lead to greater prosperity for its residents, those in its surrounds and the country at large.

The town already has enormous potential which can be used to turn around the fortunes of Zimbabwe’s economy.

• Tutani is a political economy analyst. — tutanikevin@gmail.com.