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Mining & Sustainable Development

articles on mineral resource governance

Who wins if Zimbabwe Joins EITI?

Co-authored with Marco Zaplan

Recent news, which the government has not refused, suggested that Zimbabwe is not keen on joining the Extractive Industry Transparency Initiative (EITI). By joining EITI, the mining sector – the main engine for economic growth, would have been opened for citizens to question government and industry on how past and current mining deals are best tailored to contribute Sustainable Development Goals (SDGs). Last year in October, the government launched a blueprint to grow mining sector earnings by 344% to US$12 billion in 2023, up from just US$2.7 billion earned in 2017. Based on past records and the plunder on Marange diamonds, however, citizens have become sceptical that the envisaged mining sector growth will revamp education and health services.

What the country needs is a framework like the Extractive Industries Transparency Initiative (EITI) to help surface issues, bring sectors together, and build trust amongst them so that they all come up with solutions together. Given lack of traction on joining EITI, it is pertinent to reflect on the potential governance gains associated with implementation of EITI – who wins if Zimbabwe joins EITI?

Winner: Government

EITI Blog 1

According to the Transparency International’s 2019 Corruption Perception Index (CPI), Zimbabwe continues to perform badly when it comes to fighting corruption. With a total score of 24 over 100, Zimbabwe is lowly ranked 158 out of 180 countries by the CPI. Fighting corruption is on the top of the government’s agenda; the public remains sceptical, though. Joining the EITI will not increase transparency overnight but it will help the government manage the extractives sector in a more inclusive and transparent manner. Raising transparency will also help minimize speculations and distrust towards the government.

Winner: Host communities and civil society and organizations (CSOs).

EITI Blog 2

Zimbabwe has a lot to work on when it comes to citizen engagement. According to the World Governance Index 2017 edition, Zimbabwe scored -1.196 when it came to the “Voice and Accountability” indicator which indicates weak performance. By joining the EITI, mining communities and CSOs earn a platform to access information and constructively engage with companies and the government. For a government that seeks to rebrand as a “New Dispensation” and breaking away from old habits of keeping citizens in the dark on mining deals, joining EITI is critical to winning doubters.

Winner: Mining investors and companies

EITI Blog 3

While Zimbabwe was not ranked lowest when it comes to the Mining Investment Attractiveness Index 2018 of the Fraser Institute, it also fares badly on Policy Perception Index compiled by the same institute. The Investment Attractiveness Index blends mineral wealth potential and policy attractiveness.  Joining the EITI can become a game changer for the country as it aims to open the country for a business to attract more investments into the mining sector. Transparency helps level the playing field and ensure that no affiliate of those in power gets more favourable mining contracts. By supporting transparency initiatives, investors can freely compete with one another regardless of affiliation. It also makes doing business in Zimbabwe less riskier for international investors who are bound by laws on foreign corrupt practices like those in the US and Australia.

Should Zimbabwe join the EITI?

A country like Zimbabwe, whose economy is dependent on its vast mineral wealth, embracing EITI is a critical building block to curb corruption, prove the seriousness of the agenda to open Zimbabwe for business, and to regain public confidence and trust. Regressive elements in government will always find excuses not to open up the mining sector for public scrutiny. To prove that this is a new dispensation, actions should speak louder than words.Joining EITI can show that the government is walking the talk.

Transparency and the challenging path to accountability, lessons from Gwanda mining community

Mukasiri Sibanda, Emily Nickerson, and Bekezela Maduma

Giant strides, in the past decade, have been made by Publish What You Pay (PWYP) campaign to improve the extractive sector transparency landscape world over. The results are quite telling. 51 countries are now implementing the Extractive Industries Transparency Initiative (EITI) – a global best practice on promoting open and accountable management of the extractive sector. In addition to EITI, Canada, EU and Norway now have mandatory disclosure rules which compel extractive companies listed in their jurisdictions to disclose payments made to local, regional and national governments per project per country. With all this progress, focus is shifting to how citizens and civil society are making use of disclosed information to improve development, fight inequality and strengthen accountability.

lTo confront this conundrum or challenge, the Zimbabwe Environmental Law Association (ZELA), Gwanda Residents Association (GRA) and Publish What You Pay (PWYP) Canada are currently working on a joint study, assessing the impact of Caledonia’s Extractive Sector Transparency Measures Act (ESTMA) reports in Gwanda district, Matebeleland South province of Zimbabwe. The focus of this article is to share preliminary findings from the field study which was conducted last week in Gwanda, 22 to 26 January.

“I hear I forget, I see I remember, I do I understand” Confucius.

One of the main challenges when collecting and analysing data from communities on development issues is to ensure community ownership and buy in of the whole process. A challenge we tried to mitigate by deliberately working together with community-based organisations to conduct key informant interviews (KIIs), Focus Group Discussions (FGDs) and to assess emerging patterns from the collected data. We worked with Gwanda Residents Association, Gwanda Economic Justice Network Community Trust (GEJNCT), and Gwanda Youth in Mining. With GRA, we went a step further and we are working together on compilation of research. The benefits are mutual. Working with community-based organisations (CBOs) enabled us to have a more nuanced understanding of the local context, to leverage existing relationships to strengthen participation and to overcome the language barrier risks. Working with the CBOs on this study was also a mechanism to do on the job training for research skills. Before we started the data collection, we spent a half day going through the conceptual framework for the research to check for blind spots together with CBOs.

Gwanda not benefiting fairly from mining activities: mixed reactions

To try and loosen up the conversation on assessing the impact of Caledonia Mining Corporation’s ESTMA reports, we sought to find out the general perceptions of residents on their take concerning mining contribution to local development. Generally, most people interviewed were clear that Gwanda is not benefiting from mining activities. There was wide acknowledgement that Gwanda Community Share Ownership Trust (GCSOT) has made noticeable strides to improve health and education services, an achievement made during the first years of its operations. Communities now barely see the contribution of GCSOT on improving local service delivery. The GCSOT administrator concurred with the observations, and further explained “GCSOT has shifted its focus on local social service provision to support income generating projects to address sustainability concerns. We have not abandoned altogether the thrust to improve service delivery.” Whilst most interviewed people in Gwanda rural lamented little benefits from mining activities, they acknowledged GCSOST’s tangible contribution to local service provision – health, education and water infrastructure. A striking observation is that few people interviewed outside Gwanda knew that interventions made by the GCSOT were funded through dividends from the mining companies.

The opposite is true for residents in Gwanda town. They are clear that mining companies, Caledonia’s Blanket mine particularly, finance the operations of GCSOT. Residents of Gwanda town are not happy that they are directly affected by the impacts of mining activities due to their proximity to the town, yet they are excluded from the benefits of the GCSOT which is focused on rural development.

Upon seeing the payments made by Blanket mine to Gwanda Rural District Council (RDC), a woman artisanal and small-scale miner (ASMer) remarked “we ASMers are not encouraged to pay taxes to Gwanda RDC as communities are not seeing any development from what is contributed by large scale miners.” This clearly demonstrates the far-reaching consequences of how a lack of transparency and accountability in the management and utilisation of mineral revenue can impact on domestic resource mobilisation buy in.

Transparency matters according to communities

Virtually all respondents solidly agreed that transparency in the mining sector is crucial. Several respondents were clear that transparency matters to them because the gold being mined is owned by the communities and they want to know the details of how much is gold is extracted, value realised, royalties, taxes and levies paid, what is received by various government institutions and how the mining revenue is spent since it impacts not only this generation but future generations.

“Leaders must be just as transparent as companies.”

Only a few demanded to know the terms and conditions for the mining agreements so that they could check if the deals were well negotiated to deliver on local development and for monitoring purposes as well. There was limited reference though to the Constitution. Only one respondent revealed that access to information is guaranteed under Section 62 of the Constitution, therefore, public access to information on mining is their right. There was no reference to other constitutional provisions like Section 298 (1) on principles of public financial management which calls for transparency and accountability in all public financial matters. Transparency and accountability during negotiation of mining agreements and for performance monitoring purposes is provided under Section 315 (2) (c) of the Constitution.

Another pattern that emerged from the KIIs and FGDs was that transparency is critical to build public trust and confidence among stakeholders – mining companies, government and civil society. Several allegations were raised mainly against Blanket mine which were hinged on transparency issues.

“The gold mined by Blanket Mine is used to develop Canada, we want the gold to be sold in Zimbabwe and proceeds used to develop this country.”

“We heard that some people from Canada visited Gwanda to see the mine which is behind the development of their country.”

“Gold is sold in foreign currency, we want to know if Blanket mine is paying dividends to GCSOT in foreign currency as well as local tax payments to Gwanda RDC.”

“We do not know how much gold is produced, how much is earned, and taxes paid by Blanket Mine.”

“If the Blanket Mine achieves record gold production and with the gold price soaring, does this mean more dividends to the community trust and taxes paid to government?”

Even though they are several large-scale mines operating in Gwanda, largely, the focus of respondents was on Blanket mine, because of its leadership role in gold production and recent media coverage. From the above comments or questions on Blanket mine’s opaque operations, effectively, it can be discerned that transparency is not only about disclosure but making data to be more accessible and easily palatable for communities. This is so because Blanket Mine on its notice boards displays monthly its performance data related to tonnage milled, gold recovered, gold price, earnings, profits and bonuses paid. Further, Caledonia’s ESTMA reports available online reveal various payments made to government institutions on annual basis. The company is also listed at the Toronto Stock Exchange (TSX), therefore, it is compelled to public release its operational and financial performance data which is available online. On paper, you can hardly ask for more from such as mining company, especially in Zimbabwe, a country that is not part of EITI, so the data produced by Blanket mine is gold. The main challenge though is, the company is failing to make use of transparency as a currency to engage with communities, build public trust and confidence. Civil society organisations (CSOs) have been found wanting on making data as widely accessible and easily understood by the communities.

Gwanda ESTMA FDG

Figure 1: Following the focus group discussion, participants discuss how to find ESTMA data online at www.resourceprojects.org

According to Gwanda CSOT administrator, when Blanket mine achieves record gold production, dividends paid to the community trust also spike. However, since GCSOT received an advance dividend payment of USD4 million as seed capital, the dividends are used to offset this loan and interest that has accrued – it was mentioned that the loan will likely take another 12-15 years to pay off.

Transparency alone is not enough, communities want to see clinics, schools and roads

There was special emphasis by communities that transparency is only a first step – what is critical is to see the development impact stemming from taxes paid by mining companies. Even though we are not sure that the companies are paying their fair share of taxes, it is important to see development from the little resources that are being paid.

Respondents had a wider view of transparency beyond mineral revenue. There was also interest in employment data, to see how many locals were employed and push for preferential local labour recruitment. Another area of interest was openness of procurement to enhance the development of community enterprise development, for example, provision of catering services, personal protective equipment, and security services. Additionally, some respondents mentioned they wanted to understand safety procedures that are in place to protect employees, how minerals are process, how waste is disposed, the environmental impacts of the mine’s operations, and the CSR investments that are made (since these may be exempted from paying taxes).

Gwanda Bridge

Figure 2: Bridge that leads from Gwanda to Blanket Mine.

Community members lamented about how the bridge has weathered with heavy use by trucks from mines, and described challenges of flooding. When it floods, respondents described how people cannot get to work, children cannot get to school, and pregnant women and those that are ill cannot reach the hospital.

Devolution can provide answers to the mismatch of impact of mining activities and poor local economic and social development

From majority of the key informant interviews, the demand for devolution, to enable provincial and district structures to have more control, responsibility and power to participate in decision making processes was echoed. A notion which firmed up more when the respondents noted after being shown Caledonia’s ESTMA reports that local government received a meagre share of revenues compared to central government. For example, in 2018, Blanket Mine paid a total of US$5,227,855 to various government institutions out of which the local government, GRDC received a 2.77% share which amounted to US$144 760. This evidence shows that despite having constitutional powers to mobilise revenue through taxes and levies, Section 276 (2) (b), resource rich local governments struggle to get a fair share of mineral tax revenue.

Caledonia ESTMA report 2016

Figure 3: Re-printed from Caledonia Mining Corporation 2018 ESTMA Report (https://www.caledoniamining.com/wp-content/uploads/2019/05/Extractive-Sector-Transparancy-Measures-Act.pdf)

For Ward 22 which host the key gold mines, Blanket and Vumbachikwe, a key informant interview showed a clear demand that revenue sharing arrangements between the host community and the local government are needed. “We want to get an allocation from what the local government receives from mining companies operating in our Ward. That way, the host communities can be guaranteed of getting some benefits from the mining activities in their area.”

ESTMA data must inspire domestic legal reforms to enhance transparency in the mining

Upon seeing the ESTMA data, several respondents were clear that Zimbabwe must have legal reforms which delivers on open and transparent management of the mining sector. They indicated that this should include a requirement for all companies operating in Zimbabwe to disclose information including production, revenues, and the payments made to governments as well as compel local authorities to share how these revenues are used.

What it takes to make data more accessible

“The biggest challenge is that communities do not know this data exists.”

One of the key research questions was how to make Caledonia’s ESTMA data more accessible and easily palatable for women, youths, and men. Responses varied it was suggested that fact sheets, newsletters, newspapers, radio, ward level local information hubs, WhatsApp groups, twitter, Facebook, and meetings should be used to achieve wider distribution of information. There was emphasis that the fact sheets should have figures and explanatory notes in local languages. As for the meetings, the suggestions were that local accountability structures at village and ward levels must be utilised to ensure wider sharing and greater usage of the Caledonia’ ESTMA reports. One councillor lamented that “…the local planning structures are not effective because they lack information which is useful to effectively plan for development which is hinged on mining revenue…”. It was also mentioned that community-based organisations can be a key channel for information.

It was also revealed that due to lower levels of education, women need more attention when it comes to understanding the meaning of various payments made to government institutions by Blanket mine. Traditional beliefs in the area have not prioritised the girl child when it comes to education. The impact of early child marriage was noted but its severity could not be established. Another important factor as to why the transparency drive must be women focused was that because of their care giving role, they are more affected by service delivery challenges compared to men and they further cannot travel as far for meetings given the many responsibilities. Channels to share information are important and should consider how best to reach women in the community. It was emphasized however by a number of respondents that men and women should get the information in the same way so that they can share the information together, and the information source will not be challenged.

It is a struggle to take the next steps to demand accountability based on ESTMA data

Majority of the Community Based Organisations (CBOs) showed knowledge of Caledonia’s ESTMA which was gained through workshops organised by ZELA. Only one CBO, Gwanda Residents Association (GRA) gave an account of how they have tried to use ESTMA data to demand accountability. Using ESTMA data, GRA followed the money paid to Gwanda Rural District Council (GRDC) and to the Rural Electrification Agency (REA). GRDC management confirmed awareness of the reports but councillors lacked awareness of the reports. Further, GRDC was not keen on discussing opportunities and challenges hinged on disclosure of Caledonia’s ESTMA data. After GRA approached REA, the agency asked them where they accessed the data and general lack of awareness on the contributions made by mining companies in Gwanda to RDC. Beyond this engagement, GRA has yet to follow-up to attempt to assert its right to this information, as outlined in the Constitution.

“When information is limited on what you can do, you are limited.”

Artisanal and small-scale miners have their own version of transparency

Apart from revenue transparency, opacity in the allocation of mining claims especially tributes from large scale gold mines like Blanket mining was also topical according to majority of the respondents. A mining tribute is a result of the allocation of a mineral right or a claim to a third party in exchange of a fee, an arrangement the is recognised under the Mines and Minerals Act. There were strong allegations that senior politicians are the main beneficiaries of lucrative tributes from large gold mining companies in Gwanda. ASMers clearly expressed disappointment that as the largest contributors of gold deliveries to government, automatically they contribute significantly to royalties, but the plough back in producing communities is lacking. In Gwanda, infrastructure deficits, poor road and power networks are hampering productivity of ASMers.

 

Assessing the impact of Caledonia’s ESTMA reports on accountable mineral revenue management

Mukasiri Sibanda – ZELA’s Economic Governance Officer and Emily Nickerson – Coordinator of PWYP Canada

Background and introduction

In the quest to improve transparency, to curb corruption and maximise the sustainable development dividend from mining, government revived its interest in 2018 to join the Extractive Industries Transparency Initiative (EITI). Civil society actors, especially Publish What You Pay (PWYP) campaign are behind this push. There is guarded optimism though. Over the last decade, government’ repeated commitment to join EITI or resuscitate a home-grown version of EITI, the Zimbabwe Mining Revenue Transparency Initiative (ZMRTI) has not brought any tangible changes on the ground.

Much as Zimbabwe’s mining sector is less transparent, courtesy of mandatory disclosure rules for extractive companies listed in Canada, EU and UK, in some areas, transparency has been boosted. For instance, payments made to various government intuitions by Caledonia’s Blanket gold mine in Gwanda district can be accessed because of Canada’s Extractive Sector Transparency Measures Act (ESTMA). Such disclosures started in 2016.

Given growing calls by civil society for government to implement EITI, it is important to reflect on lessons learnt on how to strengthen accountability in an improved transparency environment. Such lessons are critical to ensure that civil society and communities will not be caught flat footed in case data from EITI becomes available. Importantly, the reflections will allow civil society to reinvigorate their campaign for EITI with tangible evidence of greater linkages between transparency, accountability and improved local economic development outcomes.

Another value add relates to fine-tuned transparency advocacy strategies which makes better use of payment data from Caledonia’s ESTMA reports. Certainly, Zimbabwe takes center stage in this study. But the lessons drawn can be handy to other resource rich countries in Africa which are part of the EITI as well as other non EITI implementing countries where extractives data is available. Further, the lessons can inform Canada, EU and UK government on progress, challenges and opportunities associated with mandatory disclosures and how they can support data access and further improve the quality of reporting. A collateral impact of this study is to make a compelling case to countries like Australia and South Africa, key capital markets for the extractive industries, to have a better picture on the impact of such reforms.

Problem statement

There is no specific study which has been done which focuses on how civic society, communities and stakeholders have reacted to Caledonia’s ESTMA reports to improve accountability in the management of revenue generated from mining. Therefore, there is no compelling evidence to prove whether this transparency gain has been utilised by civil society, communities and other stakeholders to improve accountability as well as the gendered impacts of this use. There is limited documented reflection of experiences and lessons learnt from using ESTMA data to foster demand driven accountability. Given the push by civil society for government to adopt EITI, failure to prove the impact of transparency can be a set back to civil society’s transparency agenda including the quest to use extractive data to fight inequality – how women, men and youth are benefiting, the right for communities impacted by mining activities to benefit from resources in their localities, and information access asymmetries among others.

 Signature objective of the study

To draw experience and lesson learnt by civil society and communities (men, women and non-binary peoples) from using ESTMA data to improve accountability in the management and utilisation of revenue generated by mining.

Anticipated results

  • Fine tuned strategies to convert transparency gains for ESTMA data into strengthen demand for accountability
  • Recommendations on what civil society and communities must work on to prepare ahead for the possibility of increased disclosures in case Zimbabwe joins EITI
  • Feedback to governments that are champions of mandatory disclosures on progress made, challenges and opportunities
  • Compelling story for major mining capital markets like Australia and South Africa to adopt mandatory disclosure rules.
  • Better understanding of the gender impacts of data access and use by civil society, communities and other stakeholders to improve accountability.

Expected activities

  • Survey of men and women in approximately 2-3 communities in Gwanda district on awareness of ESTMA data related to Caledonia’s Blanket gold mine using key informant interviews and focus groups.
  • Meetings with strategic partners including with Canadian embassy to discuss the study and findings
  • Report/blog which summarizes findings and recommendations

Anticipated Timeline

  • December 2019
    • Develop survey and seek feedback from relevant stakeholders
    • Reach out to Canadian embassy to let them know this work is moving forward – Emily Nickerson with Mukasiri Sibanda in cc
  • January 2020 – potentially January 27-31, 2020
    • Key informant interviews and focus groups with communities in Gwanda District
    • Blog on project and twitter handle to get feedback
    • Meetings with Canadian embassy (PWYP Canada and ZELA)
  • February 2020
    • February 3-6, 2020: Share preliminary findings at Alternative Mining Indaba and do mini capacity building activity on how to access and use ESTMA data to understand what companies are paying local governments [if funding secured]
    • Prepare summary report of key findings and recommendations
  • March 2020 – As relevant, develop funding proposal to move recommendations forward

Survey (preliminary ideas)

Focus for discussions to better understand perceptions of the sector and value of this data to address some of these questions:

  • General perception of mining sector contribution to local economy
    • Who benefits from mining?
    • Who makes money from mining?
  • Understand the importance of data or why is data important in the drive for transparency.
  • What data is important to you? If you had that data how would that benefit you?
    • What information/data types do you need to hold government and companies to account?
  • Where do you find information? (Or, how do you access information about the local economy?) Who has information/holds information/do you go to for information?
    • What are key ways that you receive information on company activity and that you participate in governance of the mining sector?
      • Make note of differences between how men, women and non-binary peoples receive information
    • How would you like to access this information?
      • Make note of differences between how men, women and non-binary peoples would like to access information
    • Assess stakeholder awareness and knowledge of ESTMA data. This could include presentation of the data, discussing key questions and interests in the data as well as exploring:
      • Is this data valuable?
      • What are the gaps and opportunities?
        • Consider making these a “choose from a set of suggestions with option for other”
      • How best promote this data to hold government and companies to account?
      • Do you have suggestions for how would you like to access this information? (particularly if this is not already being accessed and is of interest)
    • Find out if there are other transparency challenges and opportunities

Respondents (both key informant interviews and focus group discussions):

  • Local development committees at ward level
    • Have you interacted with this data? If not, how could this be a game changer?
  • Village development committees at local level
  • Education and health committees
  • Community-based groups and faith-based organisations in Gwanda – women’s groups…
  • Gwanda Community Share Ownership Trust
  • Local government – Gwanda Rural District Council
  • Blanket Mine
    • How leveraging this data with stakeholders?
  • Other companies
    • What are the challenges with disclosing similar information on the payments that are being made, similar to Blanket Mine?
  • Chamber of Mines
  • National government, including Revenue authority
  • Media
    • Has anyone written about mining sector using this data? If not, why?

Other

  • How many people are we surveying in the community? How well does this represent community views?
  • Add a few questions above we categories or rating scales to facilitate data analysis and presentation of the findings.
  • Information on participants – what are we collecting? Age, gender, occupation, ethnicity, ability-disability etc?
  • Consider testing questions with local leaders first
  • What is a better way to say “hold companies and governments to account”?

Understanding violence in Artisanal Small Scale Mining in Zimbabwe: Drivers, Implications and Key Options

Amid socio-economic malaise facing Zimbabwe, mining is the only remaining silver lining. The sector underpins the country’s socio-economic growth prospects. Gold which is expected to contribute US$4 billion, a third of the anticipated US$12 billion earnings from mining by 2023, undoubtedly, is strategic to the country’s development agenda. Central to the growth of gold production is Artisanal and small-Scale Mining (ASM).

The ASM sector eclipsed gold output from large-scale miners in 2017 and 2018, a trend which is likely to continue judging by last year’s results. Latest gold delivery data from Fidelity Printers and Refiners (FPR) shows that, in 2019, ASM accounted for 63% (17,478.74kgs) of total gold deliveries (27,650.26 kgs) to FPR. Total gold deliveries to FPR declined by 16.72% in 2019 compared to 2018. Likewise, ASM gold deliveries to FPR dropped by 19.46% from 21.6 tonnes in 2018 to 17.48 tonnes in 2019. FPR falls under the Reserve Bank of Zimbabwe (RBZ), the country’s sole gold buyer, refiner and exporter of gold.

According the Zimbabwe Miners Federation’s (ZMF) president, Ms Henrietta Rushwaya, factors behind the plunge of ASM gold deliveries include but not limited to the unfavourable payment method, severe power cuts, and machete violence. In February 2019, the Monetary Policy Statement reduced foreign currency retention ratio of ASM gold deliveries from 70% to 55%. Because of general preference of the US dollar over the unstable new domestic currency, Artisanal and Small Miners (ASMers) divert part of their gold to the black market which pays 100% in USD said the ZMF president. ZMF is a mother body of all associations representing artisanal and small-scale miners (ASMers) in the country.

Gold smuggling, poor policy environment and rampant violence caused by machete wielding gangs in ASM casts doubt on sustainability of anticipated socio-economic development hinged on gold production. Over the years, authorities appeared to have taken a backseat whilst chaos, violence and other forms of conflict were festering in ASM. Now, the violence appears to be malignant in most key gold producing districts, frequently flaring up on closed gold mines and gold rush hot spots. As the Zimbabwe Environmental Law Association (ZELA), a public interest organisation whose DNA is natural resource governance, we are deeply concerned with sustainability of ASM. A sector envisioned by the Africa Mining Vision (AMV) as an integral part of sustainable rural socio-economic development.

In light of climate change induced challenges which have ravaged agriculture, ASM has emerged as a fundamental source of livelihood for many Zimbabweans. ZELA, therefore, is challenged to unpack the drivers of violence, its implications and key options for stakeholders to help to end the malignant violence in ASM.

What is driving violence in artisanal and small-scale gold mining?

Why paint ASMers and machete wielding gangs with the same brush?

Sophia Takuva, a woman ASMer operating in Zvishavane explained “there is a difference between ASMers and machete wielding gangs. The machete welding gangs are not miners, they are criminal who rob ASMers of their gold, gold ore, money or dislocate ASMers from their prolific gold sites.” She illustrates her point by referring to a recent attack on youth miners operating under tributary arrangements with Sabi gold mine Zvishavane. A tribute arrangement is when a third party is given permission to mine by a claim holder in exchange of a royalty fee. Under Section 285 of the Mines and Minerals Act [Chapter 21:05) tribute agreements must be registered with the Ministry of Mines and Mining Development (MMMD). Upon learning that the youth miners in Sabi were getting good gold grades, in December 2019, machete welding gangs attacked and robbed the youth of their gold ores. The helpless youth were forced to load the gold ore into trucks.

The ZMF president is worried, “instead of viewing ASMers as victims, the police, policy makers, media and the public unfairly label them as perpetrators of violence. Painting ASMers and machete gangs with the same brush affects thousands of genuine miners who are striving to earn decent living in these tough economic conditions.”

Her fears were confirmed when the Zimbabwe Republic Police (ZRP) imposed a ban on so called illegal mining activities on 1 January 2020 after the killing of a police officer in Kadoma by a machete wielding gang. Of course, calls for a distinction of ASMers and violent criminals must not be blind to the fact that within the sector, some elements are using violence to unfairly and illegal displace other miners from prolific gold sites.

Another dimension of criminality by machete wielding gangs is forced labour. “A relative of mine who went missing in Hatfield, 28 January 2019, was kidnapped and forced to work at Jumbo mine in Mazowe for about 2 months”  narrated the aunty of the kidnapped person, who chose to remain anonymous. She explained further, “after given some food and water, they would be forced to work underground for 3 days and then haul their owe to the ground. If one fails to bring ore, a punishment was meted out through a thorough beating. Early April 2019, he was lucky to escape. Although Jumbo mine is guarded by the police, they are get bribe to facilitate access to the closed mine.”

Digging gold is synonymous with US dollar earnings, criminals are also attracted.

Persistent currency woes have propped up the significance of gold as a substitute currency. Having failed to sustain a multi-currency regime which was established in 2009 to barricade the economy against hyperinflation, a decade later, government introduced a domestic currency. Officially, it is now illegal to buy or sell goods and services using foreign currency. Consequently, most of the citizens have been hit hardest as they have limited access to foreign currency. However, the informal sector, an economic denominator still prefers to transact in foreign currency, particularly the United States Dollars (USD).

Notably, remittances from the diaspora are playing a significant role but not enough to cushion citizens whose purchasing power has been severely eroded by loss of value of then domestic currency against the USD. Since digging gold is almost synonymous with USD earnings, more and more people have been attracted into Artisanal and Small Scale (ASM). “Criminals too, have found ASM to be a lucrative hunting ground” according to Shamiso Mtisi, ZELA’s Deputy Director and Kimberly Process (KP) civil society coordinator. It is not only about the USD, climate change is disrupting production in the agricultural sector, thereby pushing more and more people into ASM, now a prominent source of livelihood in rural areas and some urban areas said Shamiso.

The archaic and chaotic mining award and title administration system fuelling disputes

Repeated efforts by government to modernise the mining cadastre system – the award and administration of mining title have remained fruitless to date. The old system being used is prune to manipulation and mistakes leading to double allocation of mining claims. Consequently, disputes are a common feature especially when gold rushes occur with two or more people claim ownership. The disputes can easily spill into violence as people fight to secure access of prolific gold areas.

Technology making it easy for gold deliveries and spreading of information

The use of gold dictators has made it easier to illegally prospect and discover gold. Once the gold is discovered, advanced use of social media especially WhatsApp allows information to be spread easily. Illegal gold buyers who are aware that they can easily get huge amount of gold within a short space facilitates the movement of violent gangs to control access and guarantee the gold supplies. The illegal gold buyers normally provide transport, food and alcohol to violent gangs including protection from arrest as they can bribe the police. During the anti-corruption day, Thursday 19 December 2019, the President disclosed that he was approached by a gold buyer in Dubai who revealed that he was buying UD$60 million worth of gold in Zimbabwe from the black market. This shows that the gold mining sector in Zimbabwe’s quite susceptible to transboundary organised crime which has no respect to the rule of law and can easily contribute to violence and other illicit behaviours.

Corrupt and greedy senior politicians are fingered in violence

Philemon Mokuele, the Secretary of ZMF’s General Council narrated about how some senior politicians in Matebeleland South are behind chaos and violence in ASM. In 2018, West Nicholson Youth In Mining received a tribute from Farvic gold mine in Gwanda which was duly registered with the Ministry of Mines and Mining Development (MMMD). When they started to get some good gold grades, senior politicians from ZANU PF negotiated to join the West Nicholson Youth In Mining Group. The senior politicians did not like the terms and conditions they were given. They then teamed up with youths from the party to invade the tribute and used their influence to ensure that the police do not interfere with their operations. Philemon’s story is not an isolated incident. ZELA has noted several cases in which senior politicians from ZANU PF abuse their powers to facilitate and control access to prolific gold sites in a manner which ferments conflict and violence. These cases were noted during the district, provincial and national alternative mining indabas, the social accountability platforms established to promote good mineral resource governance.

Who will guard the guards, the security officers have their fingers on the pie

Newspapers are awash with stories of  involvement of police and military officers in ASM. In Bubi, 17 police officers were arrested for illegal gold mining activities, a story reported in the Chronicle, 28 January 2017. The Newsday,  10 October 2019, reported a story in which the Minister of State Security, Owen Ncube was implicated in machete violence “…. artisanal miners had been boasting that they are linked to the Minister and were untouchable.” Given that the security officers have their fingers on the pie, who will guard the guards. “When gold rushes occur, the police quickly move in under the guise of restoring order and then proceed to control access to the mining areas” said a community member in Silobela who preferred to be anonymous.

Buying gold on no questions asked basis creates a free for all scenario

RBZ is buying gold on no questions asked basis albeit not aligned with the Gold Trade Act. A measure which was introduced by the Treasury through the 2014 National Budget Statement. It was a stop gap measure meant to facilitate the registration on artisanal miners. It is almost six years now since the introduction of buying gold on no questions asked basis, tellingly, government has been tight-lipped on progress recorded. Instead of leveraging this moratorium to promote registration and formalisation of artisanal miners, chaos, conflict and criminality are festering. What this means is that one can use violence or even kill to secure gold and easily dispose it to FPR without any questions being asked. The know your client rules which allows traceability of gold have been set aside. Government has also been hesitant on re-joining the London Bullion Market Association (LBMA) after dropping out in 2007 for failing to produce the 10 tonnes of gold required for membership. It is key to note that in 2012, gold production surpassed the 10 tonnes required to join LBMA. Currently gold from Zimbabwe is being refined in South Africa as Zimbabwe lacks international accreditation.

Implications

Failure to distinguish ASMers from machete wielding gangs will lead to a wrong diagnosis which will affect the livelihoods of roughly a million people that are directly depend on ASM. The effects are already showing as ZRP has moved to ban the so-called illegal mining activities after the death of one of its offers.

Because of increased violence in ASM, the Zimbabwe is open for business agenda might have suffered a huge dent in the eyes of local and international investors and the market who are keen on responsible mineral supply chains. Themba Sibanda, the chairperson of Zvishavane-Mberengwa small scale miner cautions “violence is making local investors to think twice about venturing into ASM. Even players that are in the sector fear discovering and exploiting high grade ore as this can spell trouble by attracting machete gangs.”

Internationally, mineral resource governance frameworks like OECD guidelines on due diligence for responsible mineral supply chains means that investors and the market will most probably shy away from increased risk associated with gold mining in Zimbabwe. The net effect is that government’s drive to achieve US$4 billion annual earnings from gold mining by 2023 will be scuttled.

In the Great Lakes region, minerals have helped to fund conflict and wars. Zimbabwe is fragile. There is a high risk that some certain factional elements within ZANU PF or others that lost out during change of government in November 2017 can use gold to finance violent change of government. Without order, as cautioned by the Financial Action Task Force (FATF), minerals like gold and diamonds can easily be used to finance terrorism and as havens for money laundering.

Way forward

The police must target criminals, the machete gangs, not ASMers who carry tools of trade. Government must not ban artisanal mining but promote decriminalisation of artisanal mining, an important source of livelihoods for millions of people in Zimbabwe. A special permit for artisanal mining proposed by the mining technical working group on ease of doing business offers a great starting point.

A multi-stakeholder committee must be established to probe violence in ASM. Further a sustainable multi-stakeholder engagement platform dialogue on ASM which involves relevant government ministry, political parties like ZANU PF, industry, the security sector, civil society and ASM associations must be established.

Government must move with speed to improve mineral resource governance in Zimbabwe in line with the aspirations of the Africa Mining Vision and other international frameworks like OECD guidelines on due diligence for responsible mineral supply chains and to re-join LBMA.

This entails computerising the mining cadastre system, implementation of the Extractive Industry Transparency Initiative (EITI), having a distinct ASM policy and legal framework which enables sustainable development of the sector.

Despite the bad image attached to ASM by machete wielding gangs, it is critical to remember that ASM is an integral part of Zimbabwe’s socio-economic development discourse. It creates employment, facilitates income generation and community enterprise development. The media must be encouraged to tell stories that do not ignore the tangible benefits associated with artisanal and small-scale mining.

Conclusion

It is important to reflect, how did we get here? the wanton violence and killings by machete wielding gangs in ASM areas appears to be malignant. Government certainly failed to prevent danger at its embryonic stage roughly 5 years ago. The involvement of powerful and greedy politicians, the security officers who have their fingers on the pie, the role of technology in fuelling gold rush and the growing currency woes are some of the factors which conspired to cause a lukewarm response to this violence. At a time when the gold price is surging, the spike in violence in ASM is causing an irreparable damage  to government’s quest to open Zimbabwe for business. Despite all this negativity, we must not forget, the ASM sector has huge transformative potential to local and national economy – employment creation, income generation and community enterprise development are some of the benefits that can be reaped from ASM.

Does the 2020 National Budget have mining fiscal scaffolds?

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A truck carrying diamond ore in Marange, picture taken by Mukasiri Sibanda

Soft landing into the budget analysis

A few days after the release of the 2020 National Budget Statement, the Zimbabwe Environmental Law Association (ZELA) received an invitation from the clerk of Parliament, to share its insights from a mineral resource governance lens. The mining sector’s economic footprint has been growing over the years. Its significant contribution though has been magnified by shaky performance of other economic sectors – agriculture and manufacturing industries mainly. Part of ZELA’s mission is to influence policy and practice reforms that help to deliver greater transparency, citizen participation and accountability in the management of public revenue generated by mining.

As such, analysing the National Budget and publicly sharing insights is as pivotal process in ZELA’s quest to follow money generated from mining, gauging how efficiently resources are generated and allocated to revamp public services that are currently in a despicable state. Interestingly, the 2020 National Budget came at a time when government, in the previous month of October, launched its mining strategy to hit a target of US$12 billion by 2023. A 344% spike from US$2.7 billion earned in 2017. This has firmed up public interest on whether government is scaffolding the National Budget on the US$12 billion mining strategy.

Another angle explored in this analysis is how far government has gone to implement the mining fiscal transparency reform agenda set by the previous 2019 National Budget. Among others, the measures included joining the Extractive Industry Transparency Initiative (EITI) and monitoring and evaluation of tax incentives. It is worth mentioning that ZELA had made use of the pre-budget public consultations to input into the National Budget formulation process. This is also another basis within which the 2020 National Budget will be evaluated against. It is also necessary to highlight this analysis of the 2020 National Budget comes after ZELA’s scrutiny on how agile or fragile is the mining fiscal transparency reform agenda pivoted on the 2019 Midterm Budget Review.

Tip toeing around EITI implementation

Government interest to join the EITI was reignited by the 2019 National Budget Statement. Previous government intentions, since 2011, to join EITI failed to yield any tangible results. The 2020 Pre-Budget Strategy Paper recommended “…… the 2020 National Budget should proffer specific steps on Zimbabwe joining the Extractive Industries EITI as a way for enhancing transparency and curbing any corruption activities in the sector that may deter investment.” A positive sign that government intended to build on its interest to join EITI. The 2020 National Budget, however, only gave a light reference to continued multi-stakeholder discussions on joining EITI.

Unfortunately, this did not meet the bottom bar for specific steps on joining EITI as recommended in the Pre-Budget Strategy Paper. Without appearing to discount the importance of multi-stakeholder engagement process in preparations to join EITI, one year has almost lapsed, and the set target for next year is continued multi-stakeholder dialogue. As the Chinese cautions, “talk does not cook rice”. We expect more from government.

Importantly, it must be flagged out, mining sector transparency reforms are a constitutional requirement. Therefore, government can afford to tip toe around implementation of EITI, but the Constitution compels government to deliver on mining sector transparency reforms. A point we emphasised in our submissions during the pre-budget public consultations. Convergence of principles between the Constitution and EITI offers an opportunity for government to hinge mining sector transparency on the global standard, EITI. For instance, public financial management principles embodied in the Constitution under section 298 requires transparency and accountability in all public financial matters which resonate with EITI. Therefore, the National Budget must put mechanism to ensure mining sector contribution to the national purse is accounted for per each revenue head annually, and per each major mineral sector – gold, platinum, diamonds, chrome and coal. Currently, royalties are the only revenue head where mining sector performance can be picked. As it stands, it difficult to track contribution of the mining sector to revenue heads like corporate income tax, custom duty, withholding taxes, and pay and you earn.

Disclosure of tax incentive, a full picture not shared

Partly, the Treasury honoured a commitment made by 2019 National Budget to monitor and evaluate the impact of tax incentives – tax revenue forgone to incentivise the industry. Only one revenue head, duty concessions given from January 2011 to May 2019 were disclosed and total revenue forgone amounted to. During the same period, duty concessions to the mining sector summed up to US$103, 837,015.9, constituting 7.16% of the total revenue forgone (US$1,449,367,688.13).

Much as the disclosure of duty concession is commendable, however, it does not give a full picture of revenue forgone through tax incentives. Other areas where transparency is critical, for example, include the impact of stabilisation agreements, and thin capitalisation exemptions. Stabilisation agreements or clauses generally freeze the agreed tax rates for an agreed period.

As a result, when tax rates increase as prescribed by the Finance Act, the stabilisation clauses cushion the concerned company from honouring tax obligations arising from upward adjustment of tax rates. Given a situation where a stable tax rate undermines the country tax adjustments, tax revenue is forgone.

Because mining agreements are not public, there are high risks that some clauses included can undermine the debt equity ratio of 3:1 required by the Income Tax Act for the purposes of managing thin capitalisation risks. When a company takes the route of financing its operations through debt rather than equity, it has a leeway to use a related party to get returns through financing costs – interest on loans which are deducted for the purposes of calculating taxable income. Such practices have an effect of eroding taxable profit.

To help citizens to appreciate the impact of tax incentives, the National Budget missed the opportunity to disclose what has been earned by the mining sector per revenue head since January 2011 against tax revenue forgone per each revenue head. On a positive note, the Treasury hinted “…. government, going forward, will streamline incentives with a view to prioritise the development of local value chains and exports.” This falls into line with Africa Mining Vision’s thrust to ensure that where necessary, tax should be used as a tool to promote local value edition and beneficiation as well as mining linkages with other economic sectors.

Enhance fiscal linkages from “use it or lose it” principle

Obviously, the “use it or lose it” principle is key to ensure that mineral claims that are not going to be utilised in a foreseeable must be forfeited to allow new players to unlock the stranded mineral assets. Use it or lose it principle offers government an opportunity to optimise tax revenue from the disposal of released mining blocks which have proven geological potential. However, because of the opaqueness of the current system in which mineral rights are granted, first come first serve basis, cronyism and corruption are unchecked. Last year (2018) Zimplats released roughly 24,000 hectares of platinum claims to government. The Great Dyke is known as a mineral pregnant belt which cut across Zimbabwe. In this instance, government must have auctioned the mineral blocks released by Zimplats in an open manner. As recommended by the Africa Mining Vision (AMV), competitive bidding allows government to pick a bidder who offers a greater development dividend – tax revenue, infrastructure, skills transfer, local supply chains and value addition and beneficiation. Without discrediting the US$4.2 billion Karo platinum deal, based on mineral blocks released by Zimplats, it is hard to assess if the deal offers optimal developmental returns to the nation. This is so because there is no basis to compare the $4.2 billion Karoo deal with what other investors were willing to offer. A good glimpse of the fiscal impact of associated with released mineral blocks can be taken from the below statement by Anglo American company, extracted from company’s 2011 Integrated Annual Report.

“The Government of Zimbabwe has also agreed to ensure that the Company will receive payment of the amount of $142 million due to it for the cession, in March 2008, of the Kironde and Bougai mineral right claims. This payment will be in lieu of empowerment credits due to it as per the 2008 cession of claims agreement and is in addition to the amounts that will be receivable in respect of the disposal of the 51% equity in Unki.”

Clearly, the statement above illustrates why the Treasury must have interest on the “use it or lose it principle” as a leverage for domestic resource mobilisation by curbing opaqueness which breeds cronyism is the disposal of released mineral blocks. Another development which buttress why the Treasury must harness fiscal linkages from “the lose it or use it principle” is Mimosa’s interest in purchasing or leasing platinum blocks owned by Unki.

Be open about mega mining deals, are they tailored to deliver mega or meagre national benefit?

During the pre-budget public consultation, we demanded all mining mega deals must be presented in Parliament for scrutiny to ensure the deals are well aligned with national development interest. The 2020 National Budget disclosed that “…investment agreements in platinum, gold and chrome, which have been concluded, are expected to boost output in the sector.”

The Constitution, Section 315 (2) (c) requires an Act of Parliament to guide negotiation and performance of mining agreements to ensure transparency, honesty, cost effectiveness and competitiveness. Worryingly, the 2020 National Budget failed to push for contract transparency and to support Parliament scrutiny on the fiscal terms and conditions of the mega mining deals.

For Zimbabwe, the 1888 mining agreement, the Rudd Concession, is a stern reminder of how far mining agreements can prejudice national interests. It is easier for some to dismiss reference to the Rudd Concession. Some might argue, the agreement was signed a century ago, some much have changed, government is now better placed negotiate good deals.

With Honourable Winston Chitando at the helm of the Ministry of Mines and Mining Development, a man with an impeccable mining experience as the former executive chairperson of Mimosa, what can go wrong, one can argue. Yet, secretive mining agreements, it must be noted, allows corruption to fester. Even if we discount corruption, the huge of financial transactions involved, must not lack checks and balances to ensure mega mining deals are tailored to deliver mega and not meagre benefits to citizens.

Constitutional right for communities to benefit from resources in their areas ignored

The 2019 Midterm Budget Review issued a death certificate to the indigenisation and economic empowerment framework which also included community share ownership schemes. Constitutionally, “The State must ensure that local communities benefit from the resources in their areas.” To address the gap created by the scrapping of the indigenisation of economic and empowerment framework, we demanded the inclusion of revenue sharing arrangements between central and resource rich local governments. For example, 20% of mineral royalties must be ploughed back in areas where the resources are extracted. That way, CSOTs will have a sustainable revenue stream to finance local socio-economic development.

Treasury continues to renegade on its promise to review platinum royalties

Part of our contribution during the formulation of the 2020 National Budget was the need for the Treasury to honour a commitment made in the 2018 National Budget to review platinum royalties in August 2019. A commitment made because the platinum royalties were deflated from 10% to 2.5% to ensure fairness and equity among the platinum producers. Prior to this arrangement, ordinary platinum lease holders like Mimosa were paying 10% royalties whilst special lease holders – Zimplats and Unki were paying 2.5%. The reason for the August 2019 deadline for the review of platinum royalties was that the stabilisation agreement between government and Zimplats was set to expire in that period. Hence an opportunity for government to increase royalties without renegotiating its way out of the stabilisation clause. Currently, platinum royalty rates are now half the rate of the gold sector and marginally higher than base metals by 0.5%. Regrettably, the Treasury continues to renegade on its promise to review platinum royalties.

Parliament can still salvage the situation

Disclosure of duty concessions given to the mining sector is the only silver lining in the National Budget from a good mineral resource governance lens. The Treasury failed to demonstrate how the 2020 National Budget is scaffolded on the US$12 billion mining strategy by 2023. Our input during the pre-budget public consultations was largely ignored. No safeguards were put in place to ensure communities benefit from resources in their localities as required by the Constitution. On EITI, the National Budget failed to meet the bottom bar set by the 2020 Pre-Budget Strategy on coming up with clear milestones for implementing EITI.

Reference to the use it or lose it principle is made only from the productivity point. Yet the National Budget can leverage on competitive bidding to curb rent seeking behaviour in the disposal of mineral blocks with which have significant interest from several investors. The plans by Mimosa to purchase or lease platinum claims is a reminder to government that there is potential to raise revenue from released platinum claims, for example. There is lack of urgency to comply with the Constitution when it comes to transparency and accountability in the negotiations and performance monitoring of mining agreements.

As such citizens do not have a clue whether the US$12 billion mining sector will deliver optimal benefits to the nation. Since this is a budget proposal, Parliament must stand its ground to ensure that the 2020 National Budget is well hinged on the US12 billion mining strategy and the delivery of necessary mining fiscal transparency reforms.

 

 

2020 National Budget must be hinged on US$12 billion mining economy strategy

 

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Nyaradzo Mutonhori, ZELA’s senior programmes officer standing next to ZCDC’s earthmoving machine. Picture by Mukasiri Sibanda

Introduction

Anchored on public pre budget consultations, the process to formulate the 2020 National Budget Statement is underway. Public participation during budget formulation is fundamental. Citizens and civil society must grab the opportunity to influence how public revenues are generated and allocated to address the stubborn challenges posed by inequality and poverty. Obviously, citizen participation must not be restricted to budget input, but across the whole value chain of service delivery. This entails public participation in processes which determine how public resources are raised, allocated, disbursed, spent and accounted for to ensure progressive realisation of socio-economic rights embodied in the Constitution. The nation is quite plugged in on the increasingly domineering role of mining in the economy. Therefore, it is critical for civil society organisations like the Zimbabwe Environment Law Association (ZELA) to give input on how the budget can hinge more on mining potential on domestic resource mobilisation.

An input harvested through multi-stakeholder engagement meetings grassroots which feed into the provincial and national alternative mining indabas. Primarily, the focus on such indabas is to push for conducive policy and practice reforms to have grip for the slippery sustainable development dividend from mining. Recently, government launched its strategy to realise a US$12 billion mining economy by 2023.

Given this significant development, It is imperative to influence the budget formulation to ensure national budget is primed to capture a fair share of revenue from this anticipated remarkably growth. Below are key pointers of how the 2020 National Budget Statement must enhance mining fiscal linkages by ensuring greater transparency and accountability. Essentially, the pointers raised here are not necessarily new, over the past couple of years, resource rich communities and civil society have been making such demands with mixed success.

Deliver on mining sector transparency reforms as required by the Constitution

Six years have passed now since the new Constitution was adopted in 2013, but mining sector transparency reforms as required by new Constitution are a mirage.

  • The Constitution requires an Act of Parliament to guide negotiation and performance of mining agreements to ensure transparency, honesty, cost-effectiveness and competitiveness, Section 315 (2) (c). With the launch of a strategy to realise US$12 billion contribution from the mining sector by 2023, more mega mining deals are in the pipeline. The secrecy around how these deals are negotiated must be ended as required by the Constitution. Further, existing and new deals must be monitored to ensure mining growth is not unhinged from national budget contribution. As such, the budget must set the context for Parliament to review the fiscal terms of past, new and prospective mining mega deals.
  • Public financial management principles embedded in the Constitution under Section 298 requires transparency and accountability in all financial matters among others. The budget, therefore, must put in place tangible steps to harness low hanging fruits to deliver mining tax revenue transparency reforms. Low hanging fruits include the disclosure of mining sector performance across each revenue head and the revenue performance of key mineral sectors like gold, platinum, diamonds, chrome and coal, for example. Already, the country’s tax collector, the Zimbabwe Revenue Authority (ZIMRA) is disclosing quarterly and annual tax revenue performance reports per revenue head. Such revenue heads include Corporate Income Tax (CIT), customs duty, royalties, withholding tax, Pay As You Earn (PAYE) and Value Added Tax (VAT).

There is room to fine tune such reports to track the performance of the mining sector.

 

  • The Budget can also borrow inspiration from how the Intermediated Mobile Money Transfer Tax is handled in order to improve mineral revenue transparency. This can be done by earmarking a portion of mining revenue, 50% for instance, towards human development and infrastructure programmes. Further, billboards can be erected to show clinics, schools, roads and dams being funded by revenue from diamonds, platinum, gold and other minerals. By doing so, the budget can set the tone to acquit to citizens the the depletion of the country’s mineral reserves through mining is not a plunder of resources but a catalyser for sustainable development.

 

  • Another milestone which the upcoming budget must deliver is disclosure of the tax incentives. That is, tax revenue forgone to attract investments in the mining sector. Disclosure of tax incentives is fundamental to fulfil the promise made in the 2019 National Budget Statement on monitoring and evaluation of tax incentives.

 

  • The 2020 budget must give a clear update on funding for modernising the mining title administration system – a computerised mining cadastre. The current mining cadastre is outdated, a source of claim ownership disputes and a corruption enabler. It is critical that the budget address perennial nagging challenges associated with funding for computerising the cadastre mining system.

 

  • In the medium term, focus should me on adoption and implementation of the Extractive Industry Transparency Initiative (EITI) to enable open and accountable governance of the mining sector. Remarkably, the 2020 pre-budget strategy paper embraces EITI. Concreate steps like creation of a multi-stakeholder grouping and budgeting for implementation of EITI must be included in the Budget.

Review of platinum royalties

A commitment was made in the 2018 National Budget Statement to review platinum royalties by August 2019. A result of the lowering of platinum royalty rate from 10% to 2.5% to ensure equity and fairness among all platinum players. Prior to this arrangement, ordinary platinum lease holders, Mimosa specifically, was paying a 10% royalty rate whilst special lease holders like Zimplats and Unki mine were paying 2.5% royalty rate. Given that the Midterm Budget Review which happened in August failed to review platinum royalty as promised, it is critical, therefore, for the 2020 National Budget to review platinum royalties upwards to increase mining tax revenue contribution. As it stands now, platinum royalty rates are now half the rate of the gold sector and marginally higher than base metals by 0.5%.

Mineral revenue sharing mechanism

Considering that previous budget instruments are responsible for dismantling the indigenisation and economic empowerment framework, in the process removing legal backing for Community Share Ownership Trusts (CSOTs). A vehicle tailored to hinge sustainable local economic and social development on mining. The right of communities to benefit from resources in their localities is a constitutional issue through Section 13 (40 of the Constitution. Consequently, the Budget must embrace mineral revenue sharing arrangements between the national government and resource local government. For instance, 20% of mineral royalties must be ploughed back in areas where the resources are extracted. That way, CSOTs will have a sustainable revenue stream to finance local development.

Conclusion

Policy coherence is an important ingredient for government to spearhead sustainable and broad-based socio-economic development. Now that the Ministry has a strategy to realise a US$12 billion mining economy by 2023, the national budget must clearly speak to the mining fiscal linkages hinged on this remarkable projected growth. The journey towards EITI must be marked with clear road signs which are to be benchmarked with constitutional requirements, tax transparency and contract transparency. It is imperative for a budget which dismantled legal backing for CSOTs to come up with measures to ensure communities benefit from resources in their areas as required by the Constitution. In this regard, government must consider mineral revenue sharing arrangements with communities where resources are extracted.

Demanding accountability is not a walk in the park: Personal struggles uploaded

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Sometimes we want to bottle up the pressure. Giving up on our citizen agency when faced with several accountability hurdles appears to be an easy route to take. Yet, this is a struggle we cannot afford to give up. If we cannot do it for ourselves, then for our children’s sake, our backs must not be turned away. With this, I feel motivated to allow the public the opportunity to download one of my personal struggles. This instalment relates to getting a grade one place for my daughter in 2010 at Eastridge primary school.

Parents were called to a meeting by the headmistress (now late) in 2010, we were informed that the school cannot accommodate all the children doing grade zero into grade one. Competition was stiff. Places will be secured by parents who pay school fees, uniforms and sports wear on first come first serve basis. If my memory is not failing me, uniforms and schools fees were slightly above USD100. Parents were then asked by the headmistress, if they had any questions to ask.

I looked around, there were no hands up, but the faces were telling a different story. Understandably, most probable the fear of antagonising the headmistress when competition for grade one place was stiff acted as a deterrent. I must confess, I also felt the pressure too. However, I had to summon my residual strength to seek clarity from the headmistress.

I remarked, I had no problems with the prices set by the school for purchase of school uniforms and sportswear. It is only fair for the school to provide samples to satisfy parents on value for money. Before I had gotten a response from the headmistress, from her looks, it was unmistakable that I had asked an annoying question. I was flatly told that we cannot afford to give places to children who have parents that are going to haunt us for the next seven years.

There was no solidarity response from the parents. “Each man for himself and God for us all” a saying that I heard repeatedly since my childhood whenever collective action was sought was at play. On that sour note, the meeting was ended.

I started to question my boldness, was it a matter of temerity or a genuine cause to demand transparency and accountability from the school authorities. This was just the beginning, back home, my wife got incensed knowing that my actions had probably extinguished the chance to get a grade one place for our child. She told me, “when you see other parents quiet, they are not stupid. But they care about the future of their children.”

Incalculable was the loss for failing to secure a grade one place for my child. This meant that we were going to deal with the uncertainty of securing a grade one place in other schools, if successful, fork out more money on transport. We decided not to give up on Eastridge primary school. My wife went and paid the required fees, a place was secured. Easily done, one would think. A colleague of mine whom I had known from college was nearly denied a place for her daughter because of mistaken identity by the headmistress.

Our angel on the day was the grade zero teacher of my child. She ignored the headmistress’s instruction not to enrol my daughter. Case closed, we celebrated. My wife though never missed the opportunity to remind me that I nearly jeopardised chances for my daughter to secure a grade one place. I could not blame her although I fell short on apologising.

When schools were opened in 2011, i received a letter from the school with a request for a meeting. In that meeting, sat the headmistress, the deputy headmaster and the senior teacher for early childhood development classes. Coldly, the headmistress told me that the educational policy demands that places must be given to children residing in areas around the school. By that time, I had relocated from Hillside to Warren Park.

According to the said educational policy, my daughter was not eligible to get a place from Eastridge. In my response, I reasoned that I am a tenant, does that mean every time I change a place to stay, I also must move my daughter to a new school. This policy, I cautioned, makes sense for property owners but tenants. She was adamant, take your refund and your daughter, there is nothing we can do but to enforce the policy.

Further, I argued, if you are genuine about implementing this policy, at my cost, i am willing to sponsor a survey so that children who are not living in suburbs near the school will meet a similar fate to mine. My point was not to make other parents and children suffer, but to prove in a subtle way, how unreasonable the headmistress was.

She maintained her hard-line stance, it was not my responsibility to tell the school what to do. Realising that there was no escape route in this conversation, I became agitated, I told her to release her dogs and I realise mine (warumwa warumwa). Quickly, I walked out of the office. This is how my daughter secured her place at Eastridge primary school.

I am sharing my personal struggles to motivate other parents and youths to be more open to share the struggles that they face when dealing with schools on transparency and accountability issues. This call is not limited to educational services, but all other essential services, health, water and sanitation among others. The following lessons can be drawn from the experience I have shared;

  • The costs of citizen urgency can weigh heavily at personal level. For demanding accountability, my family got victimised and we nearly lost a grade one place for our daughter. It brought conflict at home.
  • Even when school administrators act in bad faith, the whole school staff must not be painted with the same brush. The teacher of my child helped by ignoring the headmistress’s unreasonable instructions.
  • When faced with pressure, in this instance, competition for places, parents may put their individual interests first, deflating public accountability opportunities.
  • Give a chance to negotiation. If this fails, it is not the end, we must protest in any civil way to demand accountability.
  • Citizens must speak out, document and openly share their struggles. Solidarity is important oil the engines of the social justice vehicle.

As it turned out, the sports wear we got was of poor quality, it failed to match the asking price we had paid. It is interesting to flag out that government has banned schools from forcing parents to buy uniforms from any other sources other than the schools offering services to their children.

Why Zimbabwe Must Join The Extractive Industry Transparency Initiative

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Introduction

Recently, the government of Zimbabwe reignited its interest to join the Extractive Industry Transparency Initiative (EITI) through the 2019 National Budget Statement. A step in the right direction. But it is important to note that since 2011, government repeatedly expressed interest to join EITI or to resuscitate the Zimbabwe Mining Revenue Transparency Initiative (ZMRTI). A domestic version of EITI which suffered a still birth in 2011. Interest on joining EITI disappeared from the fiscal policy radar screen from 2016 to 2017. That said, it is quite critical to look at the drivers, the fundamentals for government to join EITI to ensure that positive policy intentions to join EITI not go to waste as before. This article is part of a series of article being produced by the Zimbabwe Environmental Law Association (ZELA), designed to stimulate multi-stakeholder interest on joining EITI.

Convergence of principles, the Constitution and EITI

The 2013 Constitution, the supreme law has provisions which resonates well with EITI principles. Section 62 of the Constitution speaks to public access which basically is the bedrock of EITI, opening the extractive sector for public accountability. Emphasis on the right of resource rich communities to benefit from the exploitation of resources in their localities is both echoed by the Constitution, under Section 13(4) on National Development and EITI. Contract transparency, another pillar for EITI is a constitutional requirement under Section 315 (2) (c) of the Constitution. To ensure transparency, honesty, cost effectiveness and competitiveness, an Act of Parliament is required to guide negotiation and performance of mining agreements.

Regarding transparency and accountability of how revenue mining, oil and gas is collected, allocated, spent and accounted for, the Constitution caters for this under Section 298, Principles of Public Financial Management. Subsection (1), essentially calls for transparency and accountability in all public financial matters. Section 299 of the Constitution speaks to Parliamentary oversight on state revenue and expenditure to enhance public transparency and accountability. This constitutional role of Parliament can be enabled by implementation of EITI as Parliament have access to granular data on mining sector performance on tax revenue contribution and impact on inclusive development.

There are fears of what will happen if Zimbabwe struggles to comply with EITI requirements. Mutuso Dhliwayo calms the nerves with a good piece of advice, “we are grappling with implementation of the provisions of the new Constitution, we stand resolute though, laws must be aligned with the Constitution. Likewise, implementing the EITI requirements will not be easy. But with political will, Zimbabwe must rise to the challenge.”

Building trust between government and citizens

The wanton plunder of mineral resources witnessed in the past means that government lacks public goodwill, public confidence and public trust on its steward role in resource governance. A point in case is the allegedly missing $15 billion from Marange diamonds. Never mind arguments on the accuracy of the figure, but findings from credible sources like the Office of the Auditor General (OAG) is damning on the same subject. Since the changes in government which happened in November 2017, several mega deals have been sealed in the mining sector. Public apprehension is high on how the deals are primed to cure past ills. By adopting EITI, government will set itself on a firm path to win lost public confidence concerning its stewardship role in the mining sector. This also augurs well with government’s stance to fight corruption which is particularly rife in the mining sector. Although mining sector transparency reforms anchored on EITI may not curb corruption, it sends the right signals to citizens.

Zimbabwe is open for business

To attract essential foreign direct investment (FDI), government is on a rebranding exercise, the new mantra is “Zimbabwe is open for business.” A quite simply appealing message. If Zimbabwe is surely open for business, certainly, what stops government from being open about business, mining sector transparency in this case. Therefore, government must embrace policy reforms to show openness in a sector general perceived globally as murky. One important area of reform is implementation of EITI, an initiative regarded as a global best practice on openness and accountable governance of oil, gas and mining industries. By so doing, government will be sending a message to the international community and its citizens, the Zimbabwe open for business mantra is not a fluke.

The quest to reengage with International Financial Institutions (IFIs)

To move the country away from isolation and to unlock access to finance for development, government is prioritising engagement with International Financial Institutions (IFIs). The IFIs include International Monitoring Fund (IMF). In this bid, government must prove seriousness on enhancing its domestic resources mobilisation (DRM) capabilities. A move which helps to justify the importance of external support to the country’s socio-economic development thrust. Because Zimbabwe is a mineral rich country, demonstrating the nexus between mining and DRM is critical. Without transparency, leveraging mining sector for DRM will prove to be a daunting exercise. In the past, government, as part of the IMF’s staff monitored programme (SMP) managed to publicly disclose audited annual reports for the Zimbabwe Mining Development Corporation (ZMDC). By implementing mining sector transparency reforms in form of EITI, government will be adopting a proactive stance to improve resource governance.

EU, UK and Canada’s mandatory disclosure requirements

Data on various payments made to government by major mining companies operating in Zimbabwe which are either registered or listed in EU, UK and Canada is already in the public domain. Such companies include Caledonia’s Blanket Mine which promotes tax revenue transparency because of Canada’s Extractive Sector Transparency Measures Act (ESTMA). Anglo-American owned Unki Mine, for example, is disclosing information on payments made to government at the behest of the EU accounting directive. Given this important ventilation of Zimbabwe’s mining sector, government must be encouraged to entirely open the mining sector for greater public accountability. Importantly, government once angled for local primary listing of all companies in the mining sector as part of the amendments to the Mines and Minerals Act. Of course, this was dropped due to pressure from investors who felt that the domestic market does not have capacity to mobilise investment capital. However, another important objective of achieving good governance in the mining sector, greater transparency and accountability suffered as a result because listed companies have a high corporate governance compliance bar. This noble objective can still be achieved if government implements EITI.

Conclusion

To win public confidence and trust pertaining its steward role on the management of mineral resources, by adopting EITI, government will set itself a strong foundation to gain public goodwill. There are questions concerning the sincerity of the Zimbabwe is open for business agenda, implementation of EITI can help government to prove to stakeholders that government is open about business, the mining sector essentially. More importantly, the supreme law of the country’s principles jives well with EITI. Therefore, the EITI framework is best suited to ensure that government fulfils constitutional requirements. By joining EITI, Zimbabwe will join several countries in SADC like Mozambique, Zambia, Malawi, Tanzania, and DRC that are part of EITI family.

Recent Gold Rush in Bubi: What You Need To Know

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Picture courtesy of Jane Lusinga, Ncube Narrates his family ordeal caused by a gold rush

Two weeks ago, a gold rush was experienced in Bubi district of Matebeleland North at a place which is a stone throw away from Lonely Mine. Gold rushes in Bubi are not a rare phenomenon. Trend analysis from community witnesses revealed that gold rushes are frequently experienced in Bubi. This year alone, Jane Lusinga, informed us that eight gold rushes have so far been recorded in Bubi District. The places which experienced the gold rush are Dromaland, Farmona (twice), Battlefields, Durban mine, Chirisa in Durban, Ingaka and Lonely mine. Jane is a small-scale gold miner in Bubi, and she is also a regional representative for women in Matebeleland North province under the Zimbabwe Miners Federation, an umbrella body for all artisanal and small-scale miners (ASMers) associations.

Written by Rodrick Moyo and Mukasiri Sibanda 

Despite these frequent gold rushes, gold deliveries to Fidelity Printers and Refineries (FPR) have been falling drastically compared to last year. FPR is the country’s sole gold buyer, refiner and exporter. According to the Midterm Monetary Policy Statement (MPS) delivered in September 2019, gold deliveries to FPR fell by 40.6% during the first half of the year compared to a similar period last year.

12.3 tonnes of gold were delivered to FPR between January and June 2019 against 17.3 tonnes delivered during the comparative period in 2018. According to the Midterm MPS “exchange rate, pricing and payment issues, which partly accounted for the decline in deliveries.” Strikingly, gold deliveries from Artisanal and Small-Scale Mining (ASM) accounted for 60% of total gold deliveries to FPR during the first half of 2019.

This article project the Zimbabwe Environmental Law Association (ZELA)’strong interest in promoting responsible and sustainable ASM. Section 13 on National Development, subsection 4 compels the State to put mechanisms to ensure communities benefit from resources in their localities. The Africa Mining Vision regards ASM as an integral part of sustainable and inclusive rural socio-economic development.

Involuntary displacement, loss of agricultural land and uncertainty

Whilst others are furiously trying to dig their way out of poverty, other families are confronted with forced displacement, loss of agricultural land, homesteads destroyed, and future uncertainty. Two families were forced to relocate for safety because of the Lonely mine gold rush.

Ncube’s family had their 2 huts burnt down by artisanal and small-scale miners (ASMers) who then proceeded to dig up the foundations in search for gold. “I lost my property, a wardrobe, double bed, kitchen utensils, clothes among other valuables” said Mr Ncube. Despite the loss, Ncube is not against gold mining, he appreciates that if done orderly, the nation stands to benefit from its rich gold endowment.

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Pictures taken by Mukasiri Sibanda

To compound matters, Ncube’s family field was partly destroyed by the miners. A massive blow because the family relies mostly on dry land crop agriculture as a source of livelihood. Mr Ncube expressed no desire to venture into gold mining. “I have a strong background in farming, I once worked at an agriculture research institution in Matopo” said Mr Ncube

For safety reasons, Ncube was forced to relocate his family, three daughters and wife who are now staying at his father’s homestead. Ncube reported the invasion of his homestead to the police together with the village head. The police responded quickly but had to call for back up and use guns to disperse the bold ASMers who were fighting Open pits back throwing stones. Ncube is now back at his homestead because of the security offered by police officers. With high levels of corruption affecting the corruption experienced in the country, poor salaries for civil servants, police include, there are strong fears expressed by some people we interacted with that the police will soon be digging for gold or taking bribes to facilitate mining activities.

The situation remains tense though as a sizeable number of ASMers are camped in the bush nearby, during the night, they fight running battles with the police. Since the gold rush, Mr Ncube has seen different individuals with cars milling around his homestead holding papers but leaving without engaging him. Ncube fears that the claim owners will forcible move him without any compensation.

If gold is not being mined in an ethical manner and violating rights of communities residing in areas where gold is extracted, as depicted by Ncube’s family situation, there may be severe repercussions. International soft low such as the OECD due diligence guidelines on responsible mineral supply chains can close space for gold from Zimbabwe to find its way on lucrative world markets. Zimbabwe cannot be open for business if it does not create enough conditions to promote responsible mineral supply chains.

To restore order, government must urgently reform the archaic and colonial Mines and Minerals Act to enable legalization of ASM. This should be complemented with other measures like demarcation of zones viable for ASM, better access to finance and technical skills development among others.

Benefits of gold rushes a boost for livelihoods if locals are involved?

Gold rushes are normally associated by a massive influx of people seeking to dig their way out of poverty. Although the accurate numbers of people that participated in recent gold rush that took place at Lonely mine are not known, it is estimated that over one thousand people were involved. This is evidenced by the amount of land degradation, a result of the digging of pits that barely exceed half meters by artisanal and small-scale miners (ASMers).

Fig 3: Open shafts with deforested environment and high land degradation

Within a short space of time, a thousand of people had descended on Ncube’s homestead, furiously digging for alluvial gold. News of a gold rush spread rapidly, and the reaction of teams is quite swift. Just like several gold rushes which occurred in Bubi, the locals are always dominated in numbers by people from far away places. One person we had a conversation with came from Nkayi, which is 100 km away to join the Lonely mine gold rush.

The domination of outsiders during gold rushes is a major source of concern judging by the comments of people we interacted with. “we can control our own local people, but outsiders bring violence, use abusive language and have no respect at all when we try to engage with them… strangers want quick money at any cost” said one of the shop owners at Lonely business center. There was acknowledgment that the Lonely mine gold rush led to a spike in violence amongst the miners. According to the police, cases of violence linked to illegal gold mining activities are rarely reported, AMSers prefer to keep away the police from their activities.

Despite fears of violence, the shop owner conceded though that they record brisk business whenever gold rushes occur. Alcohol and some basic commodities such as mealie meal and dried small fish (matemba) are some of the items that sell quickly.

Gold output and access to quality education mismatched

The impact of gold rushes is not felt at all when it comes to settling school fees at Lonely primary school. Over half of the pupils at Lonely mine have their school fees in arrears. According to the headmistress of Lonely primary school, “parents prefer to buy food when they get some money from gold mining because the area is suffering from a devastating drought.” Obviously, the school is failing to deliver quality services because of school fees are largely in arrears. Because of gold rushes, or increase in gold mining activities, school attendance is a huge cause of concern.

“Most children are now behaving like orphans as they are left to take care of themselves when parents spend time searching for gold” said the headmistress of Lonely mine primary school. On school fees, the Basic Education Assistance Module (BEAM), funded by the national purse to support vulnerable children is quite active. The challenge though is that BEAM only supports 27 pupils out of over 300 people, most of which are struggling to pay school fees. School authorities were not aware of the local service delivery funds allocated in the 2019 National Budget Statement under section 301 (3) of the Constitution. Perhaps, a clear sign that there is need to ensure that school development committees must not only focus on income from fees payable by parents, but to follow the money allocated for service delivery from both national and local budgets.

Conclusion

Gold rushes are a frequent occurrence in Bubi district but there is very little to show for it when it comes to delivery of essential services such as education and health. Government must move with speed to ensure that communities residing in areas where resources are extracted derive meaningful benefits from such activities as required by the Constitution. Despite the havoc caused by gold rushes, it is understandable that people are desperate, poor rainfalls and limited employment opportunities drive more and more people into gold mining. That said, the current chaos must be urgently addressed to ensure ethical gold supply chains by preventing conflict, involuntary displacements and violence associated with disorganized gold mining activities. Government must reform the Mines and Minerals Act, a colonial and archaic piece of legislation which in fact criminalizes artisanal mining.

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