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Mining & Sustainable Development

articles on mineral resource governance

SADC Countries Should Draw Lessons From Each Other’s Experiences to Harness the Extractive Industry for People’s Benefit

By Veronica Zano, Regional Governance, Research and Policy Officer, SARW and Mukasiri Sibanda, Advisor on Tax and Natural Resource Governance, TJNA

The drama of the U.S election, previously lauded as the beacon of democracy, has grabbed the world’s attention as the incumbent, President Trump, has refused to accept defeat. In electoral processes, every vote must be counted to avoid backsliding on democracy. In the same way, to avoid backsliding into poverty and inequality, Africa must account for every dollar earned from her resource wealth. If revenues for Africa’s mineral wealth were well accounted for, Africa would have a fair escape route out of its totemic developmental challenges. To do this, key actors in the natural resources discourse such as multi-national corporations (MNCs) and politicians should allow for a fair playing field by not rigging the financial systems to stash profits away from tax authorities in Africa.

The recent socio-economic crisis due to the global health pandemic of Covid-19 has offered an opportune moment to discuss the role of taxation in Africa’s extractive industry.  This is due to the critical conversations that have been raised between the sector’s contribution towards domestic resource mobilization (DRM) juxtaposed against many countries’ poor provision of social services in the areas of health, education, water and sanitation in emergency situations and beyond.

Last week 18 civil societies hosted a week-long conversation on illicit financial flows under the title ‘The Pan African Conference on IFFs and Taxation (PAC).’ While the platform brought together the public, academics, politicians, tax authorities and civil societies, there is always a niggling question that must be confronted when influencing developmental processes – so, what has changed? Of course, Africa continues to still grapple with the weight of harnessing her natural resource wealth into a broad-based development dividend which can be equitably be shared and be enjoyed by all her people. Under the weight of such expectations, it is quite fundamental, therefore, to publicly share and reflect on some of the emotive but very critical discussions that took place during PAC 2020. The main idea behind this is to leverage the PAC 2020’s rich conversations for sustenance of public discourse on what it takes to stop the perennial bleeding of natural resource revenue from the continent. A quick win is the contribution to the conversation on Global Day of Action for Action for Tax Justice in the Extractive Industry, Thursday, 19 November 2020 #StopTaxDodging #TaxJustice

PAC 2020 ran from Monday, 9 November to Friday, 13 November 2020, under the theme “The Africa We Want Post COVID-19: Optimizing Domestic Resource Mobilization from the Extractive Sector for Africa’s Transformation.” The global pandemic, Covid-19 has greased the pole that Africa must climb to achieve the UN’s Sustainable Development Goals (SDGs) by 2030, hence the inspiration behind the theme. Before Covid-19, Africa’s infrastructure and service delivery deficits were quite huge characterized by crippled health, education, water and sanitation services.

As a way of ensuring broader public participation during PAC 2020, country and sub regional events were organised on the 9 and 10 November 2020. These events were the building blocks of the continental conversations which happened from the 11th to the 13th of November 2020.  With this motivation, Southern Africa Resource Watch (SARW) and Tax Justice Network Africa (TJNA) convened an online discussion on Trends on IFFs and Taxation in SADC’s natural resource sector on 10 of November 2020. Countries that anchored this discussion comprised of Tanzania, South Africa, Zambia and Zimbabwe. Janet Zhou, the Director of the Zimbabwe Coalition on Debt and Development moderated this session.

SADC has a significantly diverse and rich mineral wealth portfolio which gives the region a strategic lever for lifting the region from the development dungeons. Prices for gold and platinum are currently buoyant. Platinum mines in South Africa and Zimbabwe, for instance, declared bumper revenue in defiance of the economic spell cast by Covid-19 which disrupted production, fractured global trade, and depressed market demand. Further to this, as the global demand for clean energy spikes as a result of heightened pressure to move away from carbon fuels, on paper, SADC’s minerals assets remain in the mix. The abundance of large volumes in copper, cobalt, lithium and nickel, for example, are part of the strategic minerals that are required to spur the just transition to clean energy agenda in the production of key components such as batteries for electronic vehicles.

The discussion kicked off with Dr Claude Kabemba, SARW’s Executive Director decrying the fact that not many inroads have been made since independence on transforming mineral wealth into meaningful development for the continent. Despite an array of initiatives, awareness raising, research, multi-stakeholder engagements and campaigns, the problem is growing. In 2015, the report of the High-Level Panel on IFFs out of Africa estimated that Africa was losing US$50 billion annually. Recently, UNCTAD estimated that Africa was losing close to US$89 billion to IFFs annual. All reports concur that the extractive sector is the major driver of IFFs.

Recent gold rushes in Malawi and Zambia portend well for development prospects yet there are no clear and transparent frameworks in place governing the extraction, presenting room for loopholes in IFFs according to Dr Kabemba. Zimbabwe is said to be losing roughly US$1 billion annually to gold smuggling alone, further emphasized Dr Kabemba. The collateral regional damage caused IFFs is seen in intensification conflicts evidenced in Cabo Delgado, Mozambique. Mukupa Nsenduluka, Oxfam Zambia’s lead person on extractives echoed Dr Kabemba’s sentiments that lack of formalisation of artisanal and small scale mining (ASM) in the gold sector is most likely to haunt Zambia.

Outside the gold sector, Dr Kabemba gave another example on ASM cobalt mining in DRC.  At the peak of cobalt prices, in 2016 and 2017, roughly US$1.8 billion was generated annually by artisanal and small-scale miners (ASMers). However, not even a tenth of it has impacted positively on the livelihoods of these ASMers. In Zimbabwe, over the past three years from 2017 to 2019, official gold deliveries from ASMers surpassed large scale producers. Despite this phenomenal achievement, commensurate socio-economic development in areas where these resources are extracted is hardly tangible. Recognising the growing threat of illicit gold trade in SADC, SARW has prioritized the tracking and monitoring of the gold sector as a key project under its natural resource governance work in the region.

Unable to leverage Zambia’s mineral wealth for development, Ms Nsenduluka indicated that the country had amassed a significant debt burden over the past ten years and that due to mismanagement of resources, Zambia was on the way to becoming the first country, post-Covid-19, to default in terms of loan repayments. This highlighted the corrosive impact of IFFs according to Ms Nsenduluka. The report produced by Zambia’s Financial Intelligence Corporation (FIC) revealed that Zambia annually loses US$3 billion to IFFs.  To shine light on the economic significance of copper mining in Zambia, Mukupa highlighted that copper contributes 10% to the country’s GDP, and 78.4% to total export earnings. Despite these challenges, significant progress has been made on legal reforms critical to curb IFFs, but institutional weakness remain a huge challenge according to Mukupa. Zambia is part of the Extractive Industry Transparency Initiative (EITI) which has resulted in tightened of transfer pricing regulations and public beneficial ownership disclosure under the new Companies Act.

Speaking to Zimbabwe’s situation, Josephine Chiname, a legal officer with Zimbabwe Environmental Law Association (ZELA) indicated that in January this year, Zimbabwe included beneficial ownership disclosure in the new Companies and Other Business Entities Act as well but this registry is not publicly accessible. Additionally, Zimbabwe has been going around in circles on the adoption of EITI according.

In Tanzania, Silas Olan’g, Africa’s Co-Director of the Natural Resource Governance Institute (NRGI) spoke of several reforms that have been undertaken in the past 5 years which aimed at repositioning the country to benefit more from its mineral wealth. This has resulted in the enactment of laws to reinforce the country’s sovereignty over its mineral wealth, mining contract renegotiations, the upward review of mining royalties, and an end to perpetual carry over of mining losses and free state equity participation (16%) in mining. Some of the renegotiated contracts included 3 for Acacia with Barwick,  1 with Anglo-Gold Ashanti and a production sharing arrangement in the gas sector. In the re-negotiated contracts with Barwick, the country and Barwick will get 50:50 benefit sharing arrangement. It is not clear though, whether the new arrangement will deliver improved revenue flows because the definition of economic benefits was broadened to include labour, cautioned Olan’g. Political will to renegotiate the contracts is there but technical capacity constraints may prove to be a hinderance on how to amplify benefits from contract renegotiations.

Josephine Chiname opined that Zimbabwe seems to have taken the opposite path to Tanzania: (a) Mining companies can still carry over their losses in perpetuity; (b) government missed the opportunity to renegotiate contracts in the platinum sector after the expiration of the 25-year stabilization agreement; (c) and government is reversed the indigenization drive under the Zimbabwe is open for business mantra. South Africa which started the Black Economic Empowerment (BBE) years before Zimbabwe has not reversed its policy direction. Communities are required to get 5%, likewise with employees and 20% for local businesspeople. The portion for local business, however, has been taken by a few greedy and politically well-connected people said Thembinkosi Dlamini, with Oxfam South Africa.

Past studies led by religious leaders in Tanzania for the period of 2012-1016 depicted how tax incentives had resulted in a loss of US$288 million amounting to 16% of government revenue loss. In Zimbabwe, the true picture of the impact of tax incentives is a blurred one. Despite a commitment to improve transparency and accountability of tax incentives in the 2019 national budget, tangible results have not been realized to date. Whilst data on tax incentives is opaque, the 2015 revenue performance report generated by the country’s tax collector, the Zimbabwe Revenue Authority (ZIMRA) disclosed that US$100 million was lost due to the 25-year stabilization clause on platinum royalties.

From the various country experiences on curbing IFFs and strengthening tax linkages in the extractive sector, SADC countries must surely learn and profit from each other’s experiences. Tanzania has renegotiated major mining agreements whilst Zimbabwe passed on the opportunity to do the same in the platinum sector. A careful learning on what worked well, what must be improved and what did not work in the case of Tanzania’s thrust to renegotiate mining contracts is needed. If not careful, SADC might squander the opportunity to obtain a commensurate share of government revenue from a boom for gold and platinum group of metals. Zambia has laws that provide for public disclosure of the beneficial ownership registry whereas the reforms in Zimbabwe fall short on making beneficial ownership disclosure public. As for gold rushes in Malawi and Zambia if the governance process fails to draw lessons from developments in Zimbabwe, a similar fate of rampant smuggling will be encountered. The ASM sector, a key component of mining in SADC must be supported to ensure that ASMers and communities were the resources are extracted are not short- changed on benefits. Tax incentives must be monitored and evaluated to ensure they achieve a fair balance between attracting investment and filling of government coffers. More importantly, the risk of regional harmonization of taxes is vital to avoid harmful tax competition, the race to the bottom among SADC member states in the quest to attract investment.

2021 national budget must use mining as a lever for domestic resource mobilisation

A case for public participation during budget formulation

As a concerned citizen, and a socio-economic justice activist, I am severely disturbed by how the pandemic, COVID-19, is piling more pressure on progressive realisation of socio-economic rights. Prior to COVID-19, developing countries like Zimbabwe were struggling to provide access to quality, reliable and affordable  essential services like education, health, water, food and shelter are part of the basic rights guaranteed by the Constitution. Openly, the Constitution acknowledges that the provision of essential services to the public is subject to the limitation of resources available.

Obviously, how government intends to mobilise and utilise revenue has a huge bearing on the realisation of the socio-economic rights. Citizens must therefore hold government accountable by actively participating in the design and implementation of fiscal policies that has a direct bearing on the fragility or strength of the State to provide them with essential services. And public pre-budget consultations are an important space for stakeholders, particularly citizens, to influence how government plans to raise and spend revenue.

Taxation critical to address the widening inequality gap

Government’s primary source of revenue is taxation, citizens and corporates are the contributors. Before we jump to the expenditure side of the budget, taxation is the first port of call when it comes to the agenda of fighting inequality in line with the Sustainable Development Goal (SDG) number 10. For those who love soccer, the jersey number 10 is imperatively reserved for the most creative and influential player in the team like Lionel Messi for Barcelona. This is just to illustrate how important the fight against inequality is, hence the symbolic number 10 of the team of UN’s Sustainable Development Goals (SDGs).

Understanding the roles of taxation a critical ingredient for public participation

The 4 roles of taxation are quite crucial for Citizens to understand its massive influence to their standard of living. Taxation is a tool of revenue raising for government to fund the delivery of essential services to its citizens; it can be used to redistribute wealth; it can be used to discourage the consumption of toxic goods like alcohol and tobacco; and it gives citizens a voice in the generation and utilization of public funds. If the wealthy individuals and corporates are not paying their fair share of taxes, the poor citizens are incidentally saddled with the burden of contributing a higher proportion of their income as taxes compared to the rich. In this case, tax is deemed to be regressive and the opposite scenario is deemed as a progressive tax regime. Taking into consideration that Zimbabwe is a mineral rich country, and increasingly the economy is dependent on mining and minerals, a finite resource, domestic resource mobilisation from this sector deserves greater public attention in the formulation of the national budget.

ZAMI influencing budget input

Rightly so and as used the information gathered from the 9th edition of Zimbabwe Alternative Mining Indaba (ZAMI) held at Holiday Inn, Bulawayo from 30 September to 02 October 2020.  ZAMI has emerged of the past decade as an important platform for communities and citizens to engage with stakeholders- government, industry and Parliament on how mining can deliver a sustainable national dividend.  Befittingly, the 9th edition of ZAMI was themes “Towards an inclusive and equitable US$12 billion mining industry anchored on sustainable mineral resource management.” Resource dependent growth, as highlighted by the report of the high level panel on illicit financial flows (IFFs) out of Africa faces is prone to huge revenue leakages. Challenges highlighted in the report are “… transfer mispricing, secret and poorly negotiated contracts, overly generous tax incentives and under invoicing.” The fact that for the past decade, mining contributed over 50 cents to every dollar earned from total export earnings makes the country taxation regime highly regressive – greater likelihood of mineral wealth not contributing a proportionate share of taxes from mineral revenue because of huge IFFs risk. 

Platinum royalties must be reviewed to be a progressive tool for domestic resource mobilisation

In 2015, the country’s purse suffered a hemorrhage of US$101 million after the Zimbabwe Revenue Authority (ZIMRA) lost a court battle against one the country’s biggest mines, the Zimbabwe Platinum Mines (Zimplats). The battle was on the legality of the 25 year (1994-2019) stabilization clause, pegging the royalty rate at 2.5%. ZIMRA had proceeded to garnish funds from Zimplats using the 10% royalty rate prescribed by the Finance Act. The court ruled that royalties are principally administered under the Mines and Minerals Act and the agreement between the Minister of Mines and Zimplats takes precedence over the Finance Act.

 A commitment was made in the 2019 national budget that platinum royalty rates were going to be reviewed in August 2019, the period marking the lapse of the 25 year royalty stabilization agreement. This opportunity was missed by the 2019 midterm budget review and subsequent fiscal policies have been mum on the issues. Given the multiplied pressure on government to raise revenue under the strain of COVID-19, accordingly, government must review platinum royalty rates upwards using a sliding scale. The royalty sliding scale is self-adjusting, the higher the mineral prices, the higher the royalty income and vice versa is true. In the gold sector, a royalty sliding scale was introduced in October 2018.

Although generally referred to as platinum, the mineral is a group of metals, in addition to platinum, comprising of palladium, rhodium, ruthenium, iridium and osmium. Other by products include gold, silver, copper, nickel and cobalt. Despite COOVID-19 related challenges, platinum mines in Zimbabwe recorded bumper revenues. This was attributed to favourable market prices for palladium, rhodium, nickel and gold. The sliding royalty regime for the platinum sector must target specific minerals that are part of the Platinum Group of Metals (PGMs) as other related minerals are high performers compared to platinum.

Weed out harmful tax incentives

Another commitment that the Treasury has not fully complied with is transparency and accountability of tax incentives – tax revenue forgone in the quest to attract Foreign Direct Investment (FDI). Tax incentives, if not well administered, can deflate government’s domestic resource mobilisation drive. The 2021 budget must disclose tax revenue forgone and carry out a cost benefit analysis of tax incentives to weed out toxic tax incentives.

No backsliding on mining sector transparency reforms

Another commitment that government must not backslide on is to improve transparency and accountability in the mining sector by joining the Extractive Industry Transparency Initiative (EITI). Focus on EITI must not overlook low hanging fruits to improve transparency in the mining sector. ZIMRA’s revenue performance reports that are produced quarterly and annually can be improved to show mining sector performance per each tax revenue head – Corporate Income Tax (CIT), customs duty, withholding taxes, Value Added Tax (VAT) and Pay as You Earn (PAYE). Currently, royalties are the only mineral revenue stream that is separately accounted for. Further disaggregation is required to show mining sector performance per each major mineral sector like platinum, gold, nickel, diamonds, chrome and lithium. These reforms are aligned to the principles of public financial management included under Section 298 of the Constitution requiring revenue and expenditure transparency and accountability.

Embrace contract disclosure and competitive bidding

Existing contracts and those that are in the pipeline must be subjected to Parliament and made public as required by the Constitution under Section 315 (2) (c). Such a move is crucial to ensure that bad deals are avoided as both government and corporate negotiators will be aware that there is a third eye to the contract negotiations. Competitive bidding, when disposing mineral rights in areas with high geological potential, like the Great Dyke, must be harnessed to ensure investors that offer a higher development dividend are selected. Areas for assessment include tax linkages, technological transfer, local procurement, employment and skills development and infrastructure linkages.

Investments from tax havens are a poisoned chalice

Competitive bidding is also an opportunity to quarantine investors that are linked with tax havens who carry a high risk of shifting profits from producer countries to lower tax or no tax jurisdictions that are secretive. As Leonard Wanyama, Coordinator of East Africa Tax and Governance Network (EATGN) aptly sums up his article,   secretive, aggressive and extensive jurisdictions help multinationals escape paying taxes, eroding revenue collection measures in other countries. To root out endemic corruption, the budget must push for beneficial ownership disclosure. Knowing the real beneficiaries behind the mega deals sealed in the mining sector and recipients of public procurement contracts who use the mask of corporate bodies and trustees to hide their shameless acts is quite critical. It is a positive step the in January 2019, the Companies and Other Entities Act accommodate beneficial ownership as part of the new legal require. However, it fell short as the beneficial ownership registry not publicly accessible. Countries like Nigeria have made beneficial ownership disclosure as part of the reforms to step corruption and illicit financial flows.

Open for business but don’t shut the door on community benefits

Under the Zimbabwe is open for business drive, the indigenization and economic empowerment framework was dismantled, with it, legal backing for Community Share Ownership Trusts was affected.  To redress this situation which conflict with Section 13 of the Constitution on national development, impelling the State to put mechanisms for communities to benefit from resources in their localities, the budget must plough back a portion of resources to areas where the resources are extracted. To respond to this threat, the budget must promote transparency in the mining sector – tax revenues, contracts and beneficial ownership disclosures including monitoring and evaluation of tax incentives must be part of the measures adopted to curb corruption and IFFs. The royalties for all minerals, particularly the PGMs must have a sliding scale to capture a proportionate share of revenue during the commodity price boom. Investors are needed to unlock the growth potential of the mining sector. However, investments channeled through tax havens like Mauritius are a poisoned chalice and must be quarantined.

Placing a finger on the pulse of public participation during a pre-budget public consultation

By Learnmore Nyamudzanga & Mukasiri Sibanda

Elevated significance of the budget consultations

COVID-19 pandemic is putting enormous pressure on human rights, and the huge strain is being felt on both socio-economic rights and civil and political rights. The widespread impact on socio-economic rights is not debatable, more so for developing countries. As economic opportunities shrink, government revenue streams are thinning against heightened COVID-19 induced pressure to modernize essential services – health and education. UNICEF, has launched the What If campaign #ForEveryChild, using COVID-19 as an opportunity to finally bridge the digital divide in the education sector. More than ever, citizen and human rights activists must therefore be fully alert on how government is trying to preposition itself to address the spiraling inequality and poverty levels. Against this background, 2021 pre-budget consultations were undertaken in Zimbabwe.

The national budget is one of the most prominent public documents produced by any government. Basically, a budget shows the revenue target, how government intends to raise revenue and government’s plans to utilize funds against competing priorities. As part of our civic duty, my colleague and I participated at a public hearing for the 2021 national budget, held at St Mary’s hall in Chitungwiza, Thursday, 15 October 2020. Our intentions were broader than contributing to the public hearing on the budget, we sought to put our finger on the pulse of public participation. To achieve this task, we carried out a short survey before and after the public hearings. My colleague sat though out the public hearings to observe the proceedings.

In conducting the mini-survey, we were strongly guided by the 10 Principles of Public Participation in Fiscal Policies as approved by the Global Initiative for Fiscal Transparency (GIFT), 13 March 2016. GIFT is a global network that facilitates dialogue between governments, civil society organizations, international financial institutions and other stakeholders to find and share solutions to challenges in fiscal transparency and participation.  Its 10 principles comprise accessibility, openness, inclusiveness, respect, timeliness, depth, proportionality, sustainability, complimentary and reciprocity. Although these principles apply to the design and implementation of fiscal policies, we distilled their relevance insofar as the pre-budget public consultations are concerned.

Public participation refers to the variety of ways in which citizens and the general public, including civil society organizations and other non-­‐state actors, interact directly with public authorities with respect to the design, implementation and review of public policies by any form of communication. Participation ranges from one-­‐off consultations to on-­‐going and institutionalized relationships that leave records subject to access to information (Principles of Public Participation in Fiscal Policies). Pre budget public hearing is good example that can help us to understand the term public participation. Below is an assessment of the pulse of public participation during the formulation of the 2021 budget.

1. Accessibility: facilitate public participation in general by disseminating complete fiscal information and other relevant data, in formats and using mechanisms that are easy for all to access, understand, and to use, re-use, and transform, namely in open data formats.

The only document shared as a hardy copy shortly prior to the commencement of the public consultation was the 2020 Citizen’s Budget. An official with Parliament’s Budget Office explained that a Citizens Budget “… tries to define what a budget is, the budget process, summary of revenue sources and expenditure lines, main policy proposals, contribution made by citizens versus what was included in the budget.” He went on to explain that the idea behind the sharing of the Citizens Budget was to motivate citizens to participate in the public hearing. Much as the sharing of the Citizen’s Budget was a huge plus, the major gap was that the pre-Budget Strategy Paper (BSP) was launched a day after the public consultation at St Mary’s Hall. Reading the 2021 BSP, one gets a clearer picture why this document is an important stimulant for public participation during the formulation of the budget. According to the 2021 BSP it is “… a valuable tool, meant to guide consultative discussions and sharing of ideas on national priority policies, programmes and projects for the forthcoming 2021 National Budget.” Both the 2020 Citizen’s Budget and the 2021 BSP are accessible online.

2. Openness: provide full information on and be responsive with respect to the purpose of each engagement, its scope, constraints, intended outcomes, process and timelines, as well as the expected and actual results of public participation.

The chairperson explained the purpose of the pre-budget public consultation by referencing Section 141 of the Constitution which impels Parliament to involve the public in formulation and implementation of policies that affect them. Indeed, reference was made to the 2020 Citizen’s Budget to give feedback on public views that we accommodated in the 2020 national budget just to encourage people to participate. What lacked depth was the scope of the budget consultations, Parliament should have explained that contribution must cover revenue raising – taxation issues and expenditure priorities. Civil society organisation probably also missed the opportunity to educate citizens about the scope of pre-budget consultations as most contributions were slanted towards expenditure.

3. Inclusiveness: pro-actively use multiple mechanisms to reach out to engage citizens and non-state actors, including traditionally excluded and vulnerable groups and individuals, and voices that are seldom heard, without discrimination on any basis including nationality, race, ethnicity, religion, gender, sexual orientation, disability, age or caste; and consider public inputs on an objective basis irrespective of their source.

Public pre-budget consultations were done using blended strategies and various media tools. For instance, in addition to newspapers, radio and television, the advertisement for the consultations was also shared via posters, on social media – WhatsApp, Facebook and Twitter. Actual consultations were carried out through physical meeting and on radio. The meeting was apolitical, marginalized groups like women, youth and people living with disabilities were represented.

4. Respect for self-expression: allow and support individuals and communities, including those directly affected, to articulate their interests in their own ways, and to choose means of engagement that they prefer, while recognizing that there may be groups that have standing to speak on behalf of others.

Basically, challenges confronting Chitungwiza residents include poor water and sanitation, and poor roads. Participants were given the opportunity to articulate their concerns and interests in their own ways. Participants were encouraged to use the languages that they felt comfortable to express themselves – English and local languages. We realised that more than half of the youths and women present were from CSOs who represented other in addition to sharing their own opinions.

5. Timeliness: allow sufficient time in the budget and policy cycles for the public to provide inputs in each phase; engage early while a range of options is still open; and, where desirable, allow for more than one round of engagement.

From the surveys we conducted, it appeared time allocated was not adequate and they were fears that the process was going to be hurried. However, time was fairly enough for participants to contribute their views judging by the repetition of challenges like water and sewage. Participants were encouraged to air their views using email provided and other virtual platforms lined up to took place in the remaining days.

6. Depth: support each public engagement by providing all relevant information, highlighting and informing key policy objectives, options, choices and trade-offs, identifying potential social, economic, and environmental impacts, and incorporating a diversity of perspectives; provide timely and specific feedback on public inputs and how they have been incorporated or not in official policy or advice.

There were glaring gaps on depth considering that the BSP was not shared in advance. Lack of tax transparency was another challenge as the citizens lacked information to hold government to account for instance cost benefit analysis of tax incentives. Taking into account that Zimbabwe is not part of the Extractive Industry Transparency Initiative (EITI), citizens are not adequately informed on how mining, the driver of economic growth, is contributing in terms of resources to finance the progressive realization of their socio-economic rights. The only plus on depth was the sharing of the 2020 Citizen’s Budget that constituted a feedback mechanism although it could have been more helpful had the document to been shared well in advance.

7. Proportionality: use of engagement mechanisms proportionate to the scale and impact of the issue or policy concerned.

This area was performed fairy well. Public consultations were mainly carried out as physical meetings and radio dialogues. Further, the public was urged to contribute virtually through email. Rural District Councils (RDCs) were used for the first time instead of District Development Coordinators to mobilise the people having noted participation gaps during previous consultations. The meetings were also advertised on social media – WhatsApp, Facebook and Twitter.

 8. Sustainability: all state and non-state entities conduct on-going and regular engagement to increase knowledge sharing and mutual trust over time; institutionalize public participation where appropriate and effective, ensuring that feedback provided leads to review of fiscal policies decisions; and regularly review and evaluate experience to improve future engagement.

There were both state and non-state entities, some interviewees confirmed that was not their first time to attend, meaning they are ongoing engagements. There is room for improvement concerning feedback mechanisms. Apart from the Citizen’s Budget, there is need for continuous engagement on quarterly public income and expenditure reports, the mid-term budget review and on the reports generated by the Office of the Auditor General (OAG).

9. Complementarity: ensure mechanisms for public participation and citizen engagement complement and increase the effectiveness of existing governance and accountability systems.

Linkages between public participation for both local and national budget formulation process are not being utilized. Lack of trust in other democratic process like elections is eroding public confidence in the pre-budget public consultations. Government’s failure to respond to the growing threat posed by corruption has damaged public participation as citizens feel they are being taken for granted. Shrinking civic space was also given as another drawback because journalists are persecuted for speaking out against corruption.

10. Reciprocity: all state and non-state entities taking part in public engagement activities should be open about their mission, the interests they seek to advance, and who they represent; should commit to and observe all agreed rules for engagement; and should cooperate to achieve the objectives of the engagement.

Participants were free to identify themselves, the organisations represented and the meeting was apolitical. Women, youth, men, PWDs, and technical experts were all present and freely gave their views. However, outside the venue, there were informal traders and it was business as usual. There were not aware of the event or not concerned that they were missing out from this important process to formulate the national budget. Even after informing them they chose not participate. Some said they were not prepared, or it was no value to them, year in year out they had expressed water and sewer problem but they feel the issues are not being addressed.

Injecting an adrenalin shot for boosting public participation

Given the scale of pressure induced on progressive realization socio-economic rights by COVID-19, public participation during the formulation of the budget has gained, certainly, some elevated significance. Therefore, it is critical to assess the effectiveness of the public consultations, and pick lessons to inform continuous improvement. Some of the positive lessons to pick include the use of social media to mobilise citizens, public sharing of the Citizen’s Budget, participation of marginalized groups – youth, women and people living with disabilities and emphasis on use of local languages that people are comfortable with.  Areas that require huge attention include: timeous sharing of information like the BSP; the need to improve tax education to avoid one sided contributions focused on expenditure; depth on explanation of the scope and limitations of the budget consultation process; and mobilizing the informal sector to participate. The GIFT principles offer a clear guiding template for making sure that public participation during formulation and implementation of fiscal policies is robust, effective and sustainable. Enablers of effective public participation such as transparency are not negotiable. For example, Zimbabwe’s economy is increasingly dependent on mining.  As such, the country must adopt and implement global acceptable standards on promoting open and accountable management of the finite mineral resources such as EITI. Citizens must connect the dots between mining and mobilisation of tax revenue to finance essential services like health and education for budget consultations to make sense.

Zimbabwe plans to grow annual earnings to US$12 billion by 2023, what is at stake for communities?

Mukasiri Sibanda delivering welccome remarks, Holiday Inn, Bulawayo, 02 October 2020. Picture by Clarity Sibanda

Roughly a year ago, government announced a plan to grow mining sector annual earnings to US$12 billion by 2023, a 344% spike from US$2.7 billion earned in 2017.  Gold, platinum and diamonds are earmarked to fuel this growth, contributing respectively US$4 billion, US$3 billion and US$1 billion to the US$12 billion target. If well harnessed, the US$12 billion target for mining earnings can be a propeller for socio-economic development post COVID-19. Evidently, COVID-19 overstretched poor public service delivery, increasing poverty levels and inequalities. For instance, the rich could afford e-learning while the poor where quarantined from access to education. With this background, the 9th edition of the Zimbabwe Alternative Mining Indaba (ZAMI) was befittingly themed “Towards an inclusive and equitable US$12 billion mining industry anchored on sustainable mineral revenue management.” The ZAMI was held at Holiday Inn, Bulawayo, running from 30 September to 02 October 2020

Over the years, ZAMI has grown into a formidable multi-stakeholder engagement platform that places communities right at the heart of the agenda of how mining can be tilted to fight poverty and inequality. Rightly so, the Constitution on national development issues, under section 13 subsection 4, compels the State to put mechanisms to ensure communities benefit from resources in their localities. ZAMI brings together mining affected communities, civil society organisations, faith based organisations, relevant government institutions and industry.

As the board chairperson of one of the convening organisations, the Zimbabwe Coalition on Debt and Development (ZIMCODD), i was given the opportunity to give welcome remarks during the main event of ZAMI. Other convening organisations are the Zimbabwe Council of Churches (ZCC) and the Zimbabwe Environmental Law Association (ZELA). In my welcome remarks, i challenged stakeholders to give a laser focus on what is at stake for communities in light of government’s plans to grow annual earnings from mining to US$12 billion by 2023, and here are the snippets of that speech;

  • The target of US$12 billion is about foreign currency generation, a macro-economic indicator whose impact is minimal on uplifting the standards of living of majority  people living in poverty that reside in areas where the minerals are extracted.
  • Therefore, in line with the Africa Mining Vision (AMV), government must clearly harness mining for mobilisation of domestic resources to finance the delivery of essential services – health, education, water and sanitation. As such, a clear target for tax revenue generation is fundamental to ensure the anticipated mining sector growth relates to the development aspirations of communities and citizens.
  • If government is not transparent on national debt, some of which has been securitized against gold and platinum future earnings, the US$12 billion target might be a pie in the sky. Citizens are in the dark on how much has already been gobbled in advance through debt. Probably, the real earnings with be three quarters (US$9 billion) of half (US$6 billion) with the reminder ring fenced for debt payment.
  • Lessons from agriculture must apply to the mining sector. With a good season, a bumper harvest is experienced by communities. Whereas when the mineral prices spike, as currently is the case with gold, palladium, rhodium and nickel, there are no bumper tax revenues recorded from mining sector. “Give us this day our daily bread” that’s what the Lord’s Prayer says. Citizens cannot wait for 2023, they must benefit from the bumper revenue recorded by platinum and gold miners in Zimbabwe.
  • This is why government must improve transparency and accountability in the mining sector, for existing contracts and those that are in the pipe line as required by the Constitution, Section 315 (2) (c). Citizens must be able to scrutinize the fiscal terms and conditions, to understand how well the mining sector is used to scaffold domestic resource mobilisation agenda.
  •  Government must publicly disclose the tax revenue gone through tax incentives, undertake a cost benefit analysis to weed out harmful tax incentives. Such a commitment was made in the 2019 national budget statement, implementation through, remains a big challenge. The challenge posed by tax incentives is real, the export incentives given to the mining sector at one point virtually obliterated revenue from mining royalties, the only predictable revenue stream from mining.
  • The insidious virus, corruption and illicit financial flows that weaken government’s fiscal capabilities must be dealt with. Government must practice social distancing on investments that are associated with tax havens that encourage multi-national corporates to shift profits to lower or no tax jurisdictions. Significant investments in the mining sector are increasingly channeled through tax havens, and this is quite problematic.
  • When it comes to mining, there is a danger of counting the benefits and forget about environmental, social and cultural costs. Pollution, land degradation, and involuntary displacements can leave communities worse off that before if they are not well attended to. Hence US$12 billion can be a mirage if these challenges are no addressed.
  • Artisanal and small scale mining must be decriminalized and supported with access to productive mining claims, financial inclusion, and genuine fight against corruption and pervasive violence is needed.  With more than 1 million direct beneficiaries, artisanal mining has grown to be an important source of job creation, income generation and a stimulant for community enterprise development.

Disputes expose poor mining agreements

This blog initially featured in Resource Future Zimbabwe #Throwback from 2015

In Zimbabwe, Mining Agreements (MAs) or contracts are not publicly available and accessible. This is so despite that constitutionally speaking; minerals are public assets and must be publicly accounted for. Secretive MAs may have harmful tax incentives which may prejudice mineral revenue flows to the public purse and consequently inhibit broad based socio-economic development.

In 2014, Zimbabwe was ranked 156 out of 175 countries on Global Corruption Perception Index released by Transparency International. Given such high levels of corruption in the country, the secrecy surrounding MAs presents opportunities for corrupt public official and corporates to benefit at the expense of the nation. Secretive MAs have been identified as one of the causes for the failure of resource rich countries to leverage on natural resources to attain socio-economic transformation that lifts the poor out of poverty.

The news surrounding the tax dispute between Zimbabwe Platinum Mines (ZIMPLATS) and the Zimbabwe Revenue Authority (ZIMRA) clearly demonstrates the imperative for full disclosure of mining contracts or mining agreements. Zimplats is one of the largest platinum mining companies in Zimbabwe and operates out of Mhondoro-Ngezi. The company is listed on the Johannesburg and Australian Stock Exchanges and is largely owned by Implats. A local weekly newspaper, the Financial Gazette, carried a story on 26 February titled “ZIMPLATS Wins Tax Dispute”.

According to the story, ZIMPLATS entered into a Mining Agreement (MA) with government in 1994 which stipulated that royalty rates will be paid at 2.5% of fair market values. Further, the MA exempted ZIMPLATS on payment of Additional Profit Tax. These fiscal incentives are known as stabilisation clauses which are used as a tool to attract investments in a sector through the insulation of tax incentives from potential future changes in legislation.

ZIMRA argued that the MA agreement clause on stable 2.5% royalty rates was not binding since  requisite Statutory Instrument (SI) was not issued as stipulated by the Income Tax Act (Chapter 23:06) whereas Zimplats argued otherwise (case number 12292/11). Justice Lavender Makoni in favour of Zimplats citing that “the definition of taxes under Income Tax Act (Chapter 21:05) does not include royalties under the Mines and Minerals Act (read with Chapter VII of the Finance Act (Chapter 23:04).

The period under consideration in this dispute is 1 January 2004 to 30 September 2010. ZIMPLATS argued that it had paid royalty rates at 3% and 3.5% which were above the stipulated 2.5% in its MA with government. The overpayment amounted to US$6,057,146.00. It must be noted that royalty fees for platinum have since been further repeatedly revised upwards to 5% on1 January 2011 and 10% on 1 January 2012. Experts estimate that ZIMPLATS may claim up to US$120 million from ZIMRA. It is, however, noteworthy that ZIMRA has been complying with the reviewed royalty rates and has not demanded restitution as Justice Lavender Makoni noted in her judgement.

On another separate note the dispute between ZIMRA and ZIMPLATS on Additional Profit Tax (APT) payment amounted to $50.4 million from 2002 to 2011.

Royalties

These stabilisation clauses pertaining to flat royalty rates of 2.5% and the waiver of APT when added up shows that the public purse is at risk of losing over $176million. This becomes glaring when one considers the 2011 national budget statement which lamented poor royalty revenues despite booming mineral prices.

It is interesting to note that the MA that ZIMPLATS had with government was concluded in 1994. During this period, agriculture and manufacturing were the mainstay sectors of Zimbabwe’s economic growth. This has since changed as mining is now the lead economic sector after surpassing agriculture and manufacturing based on its contribution to both the Gross Domestic Product (GDP) and export earnings.

The country’s 5 year (2013-2018) economic blueprint, the Zimbabwe Agenda for Sustainable Socio Economic Transformation (ZimAsset) is anchored on judicious exploitation of mineral assets. Yet MAs that were entered into over 2 decades ago are likely to encumber whatever plans are in place of fully capturing mineral resource rents and fully beneficiating the country’s mineral assets. These unbeneficial tax incentives should be put in the context of the fact that mineral resources are wasting assets that cannot be recovered once exploited. In addition, the failure to judiciously exploit the country’s mineral resources means that treasury is starved of much needed revenue and this has the knock-on effect of stifling much needed investments in creating social safety nets to ameliorate the plight of many poor Zimbabweans.

Reviewing of MAs to unlock the mining sector’s potential in line with the new economic status of mining is critical to the realisation of ZimAsset’s transformation agenda. MAs should be publicly accessible and it is disheartening to note that the details of the much touted recent $3 billion platinum MA between Russian investors and government are not public. Do we have to wait for disputes to start exposing the malcontents of this MA as is the case with Zimplats? Zimbabwe should follow the lead of countries such as the DRC and Guinea in publishing mining contracts or mining agreements. This helps plug opportunities for corruption and ensures that public officials negotiate in good faith knowing full well that the mining agreements will be subjected to public scrutiny.

* Mukasiri Sibanda is an Economic Governance Officer at the Zimbabwe Environmental Law Association ( a member of Publish What You Pay Zimbabwe)

Transparency, illicit financial flows and accountability issues in the diamond sector, what we can learn from ZCDC’s annual reports

Roughly two weeks ago, i received a WhatsApp message from the Zimbabwe Consolidated Diamond Company (ZCDC)’s Head of Public Relations and Community Development, “….true to your advice, we have put annual reports and other documents on website for transparency. You can check.” Firmly, this conversation is rooted in my previous work with the Zimbabwe Environmental Law Association (ZELA), where we sought to strengthen transparency and accountability in governance of the mines and minerals sector in Zimbabwe. Given that opacity is almost synonymous with Marange diamond mining operations, relentlessly, ZELA engaged with ZCDC, Minerals Marketing Corporation of Zimbabwe (MMCZ), government and Parliament to improve transparency in the diamond sector.

ZCDC is State Owned Enterprise (SOE), is wholly owned by government of Zimbabwe through the Zimbabwe Mining and Development Corporation (ZMDC). Formed in March 2015, government’s main drive for establishing ZCDC “…was to ensure that there would be transparency, accountability and optimal commercial exploitation and marketing of Zimbabwe’s diamonds that would benefit ordinary Zimbabweans.” An objective that jibes with the African Mining Vision (AMV) which envisages “Transparent, equitable and optimal exploitation of mineral resources to underpin broad-based sustainable growth and socio-economic development”

Weighing the significance of disclosure

According to Natural Resource Governance Institute (NRGI)’s Guide to Extractive Sector State Owned Enterprises Disclosures, “Transparency, driven by enhanced disclosures, constitutes a major component of an SOE’s accountability to shareholders, potential investors and business partners, and an increasingly engaged civil society.”

At the behest of International Monitoring Fund (IMF)’s Staff Monitored Programme, the only audited annual reports which extensively covered the diamond sector were publicly released in 2013, comprising of 2011 and 2012 annual reports. So considering the seven year information drought on audited annual reports, the disclosure by ZCDC in 2020 comes as a huge relief. Also important to note is that, this time around, it was civil society organisations (CSOs) that influenced ZCDC to disclose, and not IMF. Perhaps this is indicative of the fact that local CSOs are quite relevant to the agenda of strengthening transparency and accountability of Zimbabwe’s extractive sector. The term extractive sector is used generally to refer to oil, gas and mineral sector. Using narrative reports generated by OAG, CSOs like ZELA, in previous years, had lambasted ZCDC for failing a transparency test.

As government stumbles on adoption and implementation of the Extractive Industries Transparency Initiative (EITI), a globally recognized standard on promoting openness and accountability in the extractive sector, it is crucial, therefore, for CSOs to unbundle the push for transparency.  Small victories such as this one on disclosure of annual reports by ZCDC are needed energizes the struggle for transparency. It must be noted though, the Office of the Auditor General (OAG) had been consistently sharing only narrative reports on governance challenges besetting State participation in the diamond sector.

Whilst the disclosure by ZCDC is laudable, it must be highlighted, ZCDC’s peer, MMCZ publicly releases its audited annual reports on regular basis. Equally so, OAG had been consistently sharing information of state participation in the diamond sector. This evinces, therefore, that ZCDC had been lagging compared to its peers on transparency. Considering that ZCDC is owned by ZMDC, a SOE which lacks a culture of disclosure, will the entity breakaway from opaqueness and consistently disclose publicly its annual reports. After complying with IMF’s SMP in 2013, ZCDC ceased to disclosure publicly its annual reports in the preceding years. Now that ZCDC has heeded that call by CSOs to disclose, will this be part of the new culture by ZCDC. Only time will tell however. But what is clear is that CSOs must no rest in their laurels, constant pressure is needed to ensure that mining SOEs like ZCDC embrace a culture of disclosure.

Another huge minus on ZCDC’s disclosure is that the information is stale. Only audited annual reports for 2016, 2017 and 2018 were released. Up to date information on ZCDC’s 2019 audited annual reports is still not publicly available. Unarguably, ZCDC is flouting the constitutional basic values and principles governing public administration, particularly, Section 194 (1) (h) “transparency must be fostered by providing the public with timely, accessible and accurate information.”

Sources of revenue leakages and illicit financial flows revealed

With allegedly US$15 billion missing from Marange diamond mining operations, as opined by the former and late President Robert Mugabe, the diamond sector is a harbinger for corruption and illicit financial flows (IFFs) prejudicing resources for investment in essential services and infrastructure. IFFs are defined as money that is illegally earned, transferred and spent by the Global Financial Integrity. The Report of the High Level Panel on IFFs from Africa cautioned that African countries that heavily depend on extraction of natural resources for their exports and tax revenue, as the case with Zimbabwe, are prone to IFFs. Such IFFs occur through “transfer mispricing, secret and poorly negotiated contracts, overly generous tax incentives and under-invoicing.”

The report’s findings jibes with highlights from ZCDC’s annual reports on sources and enablers for diamond revenue leakages such as “Lack of adequate skills and capacity in sorting and valuation also contributed to loss of value through undervaluation. An inadequate marketing framework further exacerbated the value loss as it failed to attract a diversified pool of international buyers to participate at local diamond auctions. Resultantly the country was losing significant value due to inefficiencies in cleaning, sorting, valuation and marketing of diamonds.”

To help curbing diamond revenue leakages and IFFs, “ZCDC acquired a Diamond Processing and Deep boiling facility with modern technology and appropriate intellectual property to facilitate the cleaning of Zimbabwean diamonds which had been undervalued due to poor cleaning.” Explain the impact of inefficiently cleaning and sorting rough diamonds, “…in some instances resulting in diamonds which could otherwise have been classified as Gem or Near Gem diamonds, being classified and sold as Industrial diamonds due to failure to properly clean the diamonds with the appropriate technology and systems. To back this assertion, a comparative analysis of the average rough diamond price per carat for annual diamond sales conducted by ZCDC  shot to US$62.27 in 2018 from US$49.69 earned in 2017, a 25.33% increase in value. It is important though to note that, according to Kimberly Process (KP)’s public statistics, average price of rough diamonds per carat rose from US$110.13 in 2017 to US$116.78 in 2018, a 6.04% increase in value. At minimum, this helps to show that ZCDC’s interventions have improved the average price of rough diamonds sales.

To what extent is ZCDC fulfilling its mandate?

There are 5 anchors of ZCDC’s mandate that consists of; (i) to enhance adequate investment in diamond mining beyond alluvial, (ii) to explore for kimberlitic resources and build bankable mining reserves, (iii) to enhance contribution to the fiscus and community development (iv) to enable Government to manage more efficiently operations and exploitation of the country’s diamond resources; (v) to achieve better accountability and transparency. A quick evaluation of how ZCDC has fulfilled its own mandate a fundamental exercise of stimulating citizen participation and accountability in the diamond sector.  Notably, CSOs working with Community Based Organisations, mining companies and relevant government institutions organized multi-stakeholder engagement platforms branded as alternative mining indabas (AMIs) at district, provincial and national level. For Mutare district AMI, community evaluation of ZCDC’s mandate, fundamentally, must be one of the topical issues for engagement.

To enhance adequate investment in diamond mining beyond alluvial

In its annual reports, ZCDC reveals that the company has managed to successfully transition from alluvial diamond mining to conglomerate diamond mining. Diamonds expected to contribute at least US$1 billion annually by 2023 according to government’s target of annual earnings of US$12 billion by 2023. Although not included in the annual reports, Anjin Investments and Alrosa have come in “to work with ZCDC to boost diamond exploration and production.” In 2018, ZCDC produced 2,766,576 carats, a far cry from 12,060,162.7 produced in 2012 earning $740,998,085.16 according to KP’s rough diamond pubic statics. This was peak period of Zimbabwe’s rough diamond production. ZCDC’s 2018 rough diamond production figures show that the entity has a mountain to climb if it to help with the attainment of US$1 billion annual earnings from diamonds by 2023.

The return of Anjin Investments, partly owned by the Chinese and the military points to a failure by ZCDC to attract responsible investment in the diamond sector.  Along with other 7 companies that were mining diamonds in Marange, Anjin Investment was given a boot in 2016 for being part of the opaque management of diamonds and huge revenue leakages. Considering that ZELA was on the ground in March 2018, where it witnessed that Anjin Investment was active, it is amiss that ZCDC in its 2018 annual report failed to report on Anjin Investment’s activities. To gain more insights on Anjin Investment’s rogue past in Marange, read Mukasiri Sibanda’s opinion piece, The return of Anjin to Marange, the blindside of “Zimbabwe is open for business” agenda, NewZWire, 10 February, 2019. It is pertinent for ZCDC to disclose contracts the company entered into with Anjin as well as Alrosa for publicly scrutiny if ZCDC is to fulfill its mandate on delivering better transparency and accountability in the diamond sector.

To enhance contribution to the fiscus and community development

There was no disclosure of various payments made to government by ZCDC.  It is important for ZCDC publicly disclose payments of taxes, charges and levies paid like royalties, local taxes to Mutare RDC and levies paid to Ministry of Mines and Mining Development (MMMD), for example. Such levels of transparency are quite critical given the legacy issues around failure by the previous miners to pay a fair share of taxes to government.

ZCDC’s 2017 annual reported noted that “The known rich alluvial deposits had been mined out and the remaining alluvial deposits were largely uneconomic for mechanised mining” according to its former CEO M Mpofu. There is an opportunity for ZCDC to allow artisanal diamond mining in Marange as encouraged by AMV and the Kimberly Process through the Washington Declaration on Integrating Development of Artisanal and Small Scale Diamond Mining with Kimberly Process Implementation. Artisanal mining is hymned by the AMV because of its ability to create employment since it is lowly mechanised and highly labour intensive. If well managed artisanal diamond mining can balloon the community spend, enhance community enterprise development, and mitigate violent conflicts which tarnish Zimbabwe’s diamonds on the international market. If ZCDC seriously seeks to enhance community development, artisanal diamond mining must be a top agenda item.

Whilst it commendable that unlike its predecessors, ZCDC paid “US$5 million” to Marange-Zimunya Community Share Ownership Trust (CSOT), the net effect is that ZCDC acted no differently from its duplicitous predecessors who failed to honor their commitments on community development. Due to the country’s currency woes, the payment was accounted for as local currency and this heavily eroded the value of the fund.

Disclosures are welcome but there is room for improvement

ZCDC must be commended for releasing its annual reports for publicly scrutiny which augurs well with its mandate to deliver better transparency and accountability in the diamond sector. Similarly, efforts by ZCDC to curb diamond revenue leakages through improved sorting and valuation of diamonds are quite commendable. Average rough diamond price per carat rose by 25.33% in 2018 compared to 2017, all thanks to efforts made by ZCDC. However, there are areas for improvement. ZCDC must ensure share timely, accessible and accurate information as required by the Constitution. From its peers like MMCZ, ZCDC must take a leaf and consistently share publicly its annual reports.

Government might be stumbling on joining EITI, however, CSOs must take heart that there are important small victories that are needed to improve the mining transparency landscape. To move the needle on delivering transparency in the diamond sector, ZCDC must disclose joint venture contracts with Anjin Investment and Alrosa. On community development, it is vital for ZCDC to support artisanal diamond mining. This will also go a long way to remove the bad publicity around Marange diamonds because of recurring violent conflicts between the company’s security and artisanal miners.

Analysis of New Gold Buying Framework in Zimbabwe With a Special Emphasis on Artisanal and Small-Scale Gold Mining

Introduction

Fidelity Printers and Refiners (FPR) announced a new gold trading framework on Tuesday, 26 May 2020. Mainly, the new measures relate to different gold payment arrangements for deliveries from Artisanal and Small-Scale Gold Mining (ASGM) and Large-Scale Mining (LSM). With effect from 26 May 2020, FPR is now paying a flat fee of US$45 per gram of gold from ASGM. Gold deliveries from LSM are now being paid 80% in US$ transferred to the relevant company’s nostro bank account and the remaining 20% being liquidated to local ZW$ at the prevailing official exchange rate.  The changes are not limited to payment arrangements for gold deliveries but include new requirements for gold buyers. Large gold buyers must now produce a minimum of 50kgs of gold per month to get a gold buying license from FPR. Small gold buyers need to be licensed as agents for FPR with attendant terms and conditions which were not specified.

FPR’s press statement on new gold trading arrangements did not disclose the reason for the changes. One would assume though that FPR and by default the Government of Zimbabwe intends to take advantage of the rising gold prices in the midst of the Corona virus pandemic.  While gold has taken some hit as a result of the impact of COVID19 on the commodity supply and demand chain, its price has risen as investors sought a safe haven due to the low returns in US$ denominated securities. According to Bloomberg data, gold has risen by 5.3% so far this year and may go higher still. It is worthwhile for Civil Society Organisations (CSOs) like the Zimbabwe Environmental Law Association (ZELA) to analyse the significance of the new gold trade arrangements in terms of how much they will impact on gold mobilisation and curbing rampant gold leakages with a special emphasis on ASGM. Further attention is to be paid to gaps in the new arrangement and recommendations to government, artisanal and small-scale miners (ASMers) associations like Zimbabwe Miners Federation (ZMF) and CSOs, on realising full benefits to the nation from gold.

The bias on ASGM is hinged on the fact that the sector, for the past 3 years, from 2017 to 2019, delivered more gold to FPR than LSM. ASGM sector accounted for 63 percent (17 478,74kg) of total gold deliveries (27 650,26kg) to FPR in 2019. Directly, the sector directly benefits over 1 million people and over 3 million indirect beneficiaries. This makes ASGM an important shock absorber to Zimbabwe’s lack of formal employment challenges, making it a critical source of income generation amidst economic contraction and unreliability of rain fed agriculture. A big red flag on ASGM has been raised by COVID-19 pandemic which has doubled down pressure on health challenges which were generally problematic to the sector. ASMers lack capacity to disinfect their overcrowded working areas and to buy masks and hand sanitisers.

Understanding the role of FPR in gold trade

It is significant to note that FPR via the Reserve Bank of Zimbabwe (RBZ) enjoys a monopoly in gold buying, refining and export. This monopoly was established by the 2014 National Budget Statement with effect from 01 January 2014. More details on the necessity of FPR’s gold monopoly are disclosed in the RBZ’s Monetary Policy Statement (MPS) of 2014. RBZ explained that this arrangement is an important step for Zimbabwe to refine gold and seek for readmission at the London Bullion Market Association (LBMA) in order to directly export gold without going through the Rand Refinery. Prior to 2006, Zimbabwe was an accredited member of LBMA. Its membership was lost when gold production fell below the required annual production of 10 tonnes in 2007. In addition to FPR’s monopoly in gold trade, RBZ directed that small scale gold producers will benefit from being paid in a transparent manner based on the ruling international gold price. To date, Zimbabwe’s accreditation to LBMA remains in limbo. Gold from Zimbabwe is still being exported via South Africa’s Rand Refinery.

What made FPR to bend?

For the first time in more than 5 years in Zimbabwe, annual gold deliveries to FPR from ASGM plunged in 2019 by 20%. In 2018, gold deliveries from ASGM peaked to 21,678.42 kgs and fell by 4,289.68 kgs in 2019 to 17,478.74 kgs. Prior to this plunge, annual gold deliveries from ASGM phenomenally grew from 3.9 tonnes in 2014 to 21.7 tonnes in 2018, a whopping 556% increase. The decline of ASGM gold deliveries in 2019 was attributed “…to electricity shortages, coupled with inadequate equipment for small scale miners to access deep gold reefs and gold leakages through smuggling” by RBZ’s MPS, 2020. However, ASGM players felt that the decrease of foreign currency retention threshold of 70% from 55% introduced in 2019 mainly contributed to the plunge in gold deliveries.

Whilst FPR referenced its gold price to international market gold price, foreign currency withheld by FPR was liquidated at the prevailing market rate. Therefore, in real terms, prices offered by FPR were not competitive because the official exchange rate has always been eclipsed by black market rates. Latest gold delivery data from FPR shows that between January to April 2020, ASGM delivered 4,300.61 kgs of gold, a 19% decline over a comparable period in 2019; 5,332.37 kgs. If we are to compare the gold delivery figures between January and April for 2018 and 2019, ASGM deliveries plunged by 14% from 6,169.29 kgs to 5,332.37 kgs respectively. Thus, the sharp decline in gold deliveries for the first four months in 2020 forced FPR to bend to the demands of Artisanal and Small-Scale Miners (ASMers) who have always appealed for a 100% cash payment in US$.

 The accelerating decline of gold deliveries from FPR comes at a time when black market exchange rate for US$ and ZW$ has been spiralling out of control. When the new gold trading arrangements were announced, the black-market rates were offering roughly 200% more in comparison with the official exchange rate pegged at US$ = 25 ZW$.

 Given that from the illicit gold market, payments are done 100% using US$, price offered by FPR were becoming less and less competitive. Furthermore, the boom in international gold equilibrium market price which offered US$54.8 per gram gold at a time when FPR announced the new gold trading measures eroded the competitiveness of FPR’s gold payment methods. The changes made by FPR, also, are closely aligned with changes brought by RBZ which removed restrictions for local trade transactions in US$ as part of a cocktail of economic measures to respond to COVID-19 pandemic.

Sifting the impact of the new gold trading arrangements

The US45 flat fee per gram of gold for deliveries from ASGM mining has already been applauded by the Zimbabwe Miners Federation (ZMF) in their press statement issued on 27 May 2020. However, ZMF raised concerns that FPR deviated from its promise for transparency in gold pricing hinged on what is obtained from the international market, LBMA rates. Therefore, the fixed rate of US$45 will not be responsive to gold price movements on the international market. On the day that FPR announced the new gold trading measures, the international market offered $54.8 per gram of gold. Thus, FPR is paying 17.88% less than what is offered on the international market bearing in mind the price can change?

The price difference is quite significant, and it leaves a gap for illicit gold trade to continue thriving. It appears that FPR wanted to match the illicit market price per gram of gold of US$45. As is the norm, the illicit market responded by hiking its price from US$45 to US$48 per gram. If the changes on the international market remain buoyant, unless adjustments are made timely, the impact of the new trading requirements are less likely to achieve the intended results of mobilising more gold deliveries to the formal market. As it stands, FPR is likely to reverse the trend of falling gold deliveries from ASGM although it might fall short of extinguishing the illicit gold market. Already, ZMF during their press conference delivered a day after FPR came up with the new gold trading framework demanded the following options;

1. A ratio framework as is the case for large scale producers is recommended as it enables scientific tracking of mineral prices. We also propose the fair compensation of any surrendered portion in line with market developments in order to converge the world and local price of gold to minimise side marketing and gold leakages; or

2. Full compensation in US dollars in line with prevailing world gold price.

The commitment by FPR to pay ASMers 100% cash in US$ for gold deliveries while well intentioned, it can present huge challenges. Before this announcement was made, FPR was struggling to pay 55% cash in US$ for gold delivered by ASMers citing COVID-19 impact on importation of cash. Therefore, FPR’s capacity is likely to be further stretched and result in delays for gold payments to ASMers. If this happens, the illicit market is ready to pounce and may offer prices below US$45 per gram offered by FPR because ASGM is heavily a cash business – cash payment upon delivery of gold is the norm.

There are arbitrage risks created by FPR’s new gold trading arrangements. Large scale gold producers can funnel their gold as small scale producers in order to get payment US$45 per gram that is offered to ASGM. In the past, different royalty rates for AGM and LSM including different payment arrangements for gold deliveries created arbitrate opportunities for LSM to funnel their gold under ASGM. In response, the 2019 Midterm Budget Review Statement increased royalty rates of ASGM from 1% to 2% to narrow the gap of 3% royalty fee for gold below US$1,200 from LSM.

Further to the press statement released by FPR on 26 May 2020, FPR explained during a press conference that the new gold buying requirements are designed to flash out foreign buyers who have no interest in gold production. It is important to understand that licensed foreign buyers were fingered in illicit gold trade.  As part of the new gold buying requirements for large scale gold buyers, one must have a mine producing not less than 50 kgs of gold per month. FPR will also license small scale buyers to mop out gold deliveries from artisanal miners. If implemented, the flashing out of foreign buyers can deliver a critical blow to the illicit market for gold in Zimbabwe. It remains to be seen if the foreign gold buyers who have been affected by the new changes are going to invest in gold production in order to retain their gold buying licenses.

It is also worth noting that prior to this press statement by FPR, RBZ had since 2016, directed FPR to buy gold from artisanal on a no questions asked basis. Without discounting the positive intentions of buying gold on no questions asked benefits – de facto decriminalisation of artisanal mining, the measure created huge risks. Examples include the disregard of the country’s Gold Trade Act and the international frameworks on Due Diligence on Responsible Mineral Supply Chains and for failing to curb the flow of blood gold into the formal market.  The new FPR makes no reference on whether this policy would continue or not.  As ZELA we believe this could be an ideal opportunity for RBZ to reverse on this policy position and instead push Government to formally recognise the ASM sector which directly involves over 1 million people and indirectly benefits around 3 million people. A formal recognition of the ASM sector and a move to license them would allow for responsible mineral resource sourcing and tracing.

Gold price alone is not enough to remove oxygen for illicit gold market

While the move by FPR to improve prices offered for gold deliveries from ASGM is quite important, it is not enough to remove oxygen for illicit gold market. Ministry of Mines and Mining Development (MMMD) must chip in by enhancing transparency and accountability in the administration of mining titles through computerisation of the long overdue mining cadastre system. Ease of doing business in ASGM must be given priority by government. For instance, the gold mobilisation committee is accused of chocking ASGM due to its rent seeking behaviour motivated by the knowledge that the bar of compliance for ASGM is too high. Artisanal mining must be prioritised in the long overdue reform of the old Mines and Minerals Act with compliance burden being distinguished with those of LSM.

Recommendations

  • FPR must align price for gold deliveries from ASGM with international market to promote transparency and responsiveness of its gold price. Instead of coming out with a flat fee of US$45 per gram of gold, FPR must offer prices aligned to the international market as demanded by ZMF.
  • FPR must not only care about the golden eggs but the goose that lays them too. Considering the vulnerabilities of ASGM in COVID-19 times, FPR must push for ringfencing of a portion of royalties for investment in COVID-19 prevention mechanism in ASGM – disinfection of hot spots, provision of hand sanitisers and masks.
  • Arbitrage opportunities must be removed by ensuring that the gold payment arrangements for ASGM and LSM are not differentiated except that FPR must continue paying ASGM in cash and LSM through bank transfers.
  • A comprehensive reform package is needed to remove oxygen from the illicit gold trade by expanding focus to include legal and financial support to formalise ASGM. Therefore, reform of the Mines and Mines and Mineral Act must carter for ASGM and undue delays to this reform process must be avoided.
  • FPR must have established clear milestones for re-joining the LBMA to ensure the country benefits from refining and export of gold directly to the international market as was the case before 2007.
  • FPR must seize the opportunity to align its gold trading practice in line with OECD’s Due Diligence Guidelines on Responsible Mineral Supply Chains.

Capitalisation of Artisanal and Small Mining In Zimbabwe Post COVID19 Pandemic

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Picture courtesy of Mukasiri Sibanda, tosated gold being smelted in Shamva

Presentation by Henrietta Rushwaya, ZMF President during a one and half hour Mining Webinar held on Thursday, 14 May 2020, organised by Bakertilly and Financial Markets Indaba

Capitalisation of the mining sector is a very broad topic. But a fundamental one to tackle. Depending on the mineral concerned, a nuanced understanding of disincentives and incentives for capitalisation across the value chain is needed. I will not delve much on this because I must pay a special focus on a marginalised sub sector of mining, artisanal and small-scale mining (ASM). On that note, I want to thank the organisers of this online discussion for acknowledging the importance of ASM by inviting me, the leader of ASM through the Zimbabwe Miners Federation (ZMF), a mother board of all ASM associations in Zimbabwe. The topic asks us to reflect on capitalisation issues post COVID-19. To move forward, obviously the windshield is essential, equally so, the rear-view mirror. Therefore, we must start by taking stock on lessons learnt from various capitalisation initiatives in ASM, reflecting on challenges, success and progress recorded. The main talking points revolving on the following issues;

Mining is a capital-intensive business and the same applies for ASM.  However, we must be grounded in our understanding that ASM is a front doorway of empowering indigenous people to directly benefit from mining activities through ownership and control unlike large scale mining. After the removal of the indigenisation and economic empowerment requirements for all minerals, excerpt for diamonds and platinum.  Artisanal mining was designated for indigenous participation. More importantly, the Constitution on National Development, under Section 13 (4) compels the State to put mechanism to ensure locals benefit from resources in their localities – ASM, obviously fulfils this requirement. So, as we seek to open Zimbabwe for business, to attract Foreign Direct Investment in the mining sector, it is critical to ensure that foreigners must not crowd out locals across the whole value chain of ASM – from ownership of mining titles, provision of equipment and consumables, mining, mineral processing and trade. Among the functions of the Ministry of Mines according to the government website is to promote ASM and indigenisation. All this cannot be feasible outside ASM judging by the directing our government has taken. ASM must be reserved for indigenous people post COVID-19, and foreign investors must not displace but partner with locals in ASM from mining, mineral processing and trade. The agreements must be regulated to ensure that they are not lopsided in favour of foreign nationals. For instance, 60% ownership by locals and 40% by foreigners. Other policy measures are needed to enable the feasibility of such arrangements. These include;

  1. Riverbed mining titles allocated to ASM because the operations have a quick turn around and low risks compared to other mining activities. This must also be extended to all alluvial mining operations.
  2. Mineral rights released the implementation of use it or lose it principle must be given first preference to ASM.
  3. The use it or lose it principle must not be aggressively implemented in ASM and compliance costs must be softened to ensure the bar is not high for locals to participate.
  4. Foreign investors must not own gold custom milling centres but must partner with locals so that existing local players do not find themselves lockdown from operating after COVID-19 as they cannot compete with well resources foreign players.
  5. Capitalisation must focus on local manufacturing of equipment, tools and consumables required in ASM instead of sourcing the goods and services outside our borders. For instance, scrap metals disposed by large scale miners can be earmarked to support fabrication of equipment and tools used in ASM like ball mills made of rims from heavy duty vehicles.

A conducive policy, legal and institutional framework is required to support capitalisation of ASM post COVID-19. Before COVID-19, government decimated local capital in ASM by indiscriminately arresting artisanal and small-scale miners (ASMers), confiscating their equipment like jack hammers, generators and compressors among others. This was all done to curb machete gang violence, fine. By the victims of machete gang violence were further victimised by being painted with the same brush with machete gang members. As a result, gold deliveries to ASM plunged.

 

History repeats itself, doesn’t it. Operation Chikorokoza chapera (an end to artisanal mining) in 2006 was catastrophic, gold deliveries plummeted. And Zimbabwe lost its membership under the London Bullion Market Association (LBMA) for failing to meet the minimum 10 tonnes annual production. It is sad that foreigners participating in ASM were spared but locals were victimised. The Mines and Minerals Act reform must support ASM and differentiate the burden of compliance between large scale an ASM.

Fighting corruption and over regulation of the ASM is critical, of course this is linked to the previous point, but it deserves special attention. The gold mobilisation technical committee is now a rent seeking outfit in ASM as they know that the current compliance burdens are beyond ASM. Rather than  resourcing the gold mobilisation committee, focus must be placed on adequately supporting the Ministry of Mines and Mining Development which is under staffed to service the ASM – mining title applications can take up to 3 years, the back log places an anvil on capitalisation of ASM, lack of a modern title management system leading to multi claim ownership disputes, technical expertise that the ministry is supposed to offer ASM in areas like geology, metallurgy, SHE, are hardly available. All this can help to support capitalisation of ASM post COVID-19 as the services are beyond reach in ASM.

Gold Development Initiative Facility (GDIF) is another vehicle run by FPR which is already in place to support capitalisation in ASM. However, the facility is not fine-tuned enough to support financial inclusion in the ASM – marginalised groups like women, youth and people living with disabilities. Of course, in September 2018, FPR earmarked US$20 million for women in mining. Only 7 women manged to benefit from this facility as at 31 December 2019. Therefore, post COVID-19, it is important to address barriers for financial inclusion in ASM to unlock finance for marginalised groups of people.

Corporate Social Responsibilities (CSR) activities of large-scale mining companies must be fine-tuned to support mechanisation of ASM.  Past lesson can be borrowed from Mimosa Mine. In 2015, Mimosa supported miners with equipment worth US$150,000. Our current Minister of Mines, Hon Chitando, then oversaw Mimosa. Why not ride on his powerful influence and experience to ensure ASM growth is supported by large scale miners.

ASM is also supported by local sponsors and they must not be forgotten as they are key players in partnering with mine owners to finance mining operations. Research is needed to understand the role of local sponsors, regulate the sector to ensure finance is not illicit and leveraged against at desperate ASMers.

Fidelity Printers must pay fair gold prices to ASMers to support productivity and growth of ASM. Currency challenges must be resolved. 45% foreign currency retained by FPR for gold deliveries is liquidated at a pegged rate of US$1 = 25 ZWL which a 50% discount to what is obtaining at the parallel market where US$1 = 50 ZWL. Thus, as it stands, FPR is eroding profitability of ASM, in turn, opportunities for plough back of profits are shrunk by government.

Missing in action, why CSOs must be solid social media influencers

Ms Nyanzi, a Ugandan and a trained medical anthropologist once said in a story posted by The New York Times “…social media is very elitist, by using it, i know we are excluding a huge majority of the population, but it scares the powerful…” Although Nyanzi was challenging a Ugandan ruler, civil society organisations (CSOs) which seek to challenge abuse of power by government and corporates must find resonance in her words. Considering measures taken to control the spread of corona virus world over – social distancing, self-quarantining and lockdown among others, this is a perfect opportunity to talk about missing in action for CSOs and why it is important to grow influence on social media. Last week, i shared an article that I wrote with a colleague – Lockdown not a time for CSOs to hibernate, but to reflect and to be creative. This article is profoundly shaped by my experiences as an activist and a social media influencer on mineral resource governance issues.

What motivates me to share my journey is the desire to challenge civil society actors to grow their influence on social media to reinvigorate advocacy initiatives. In the mining sector, whilst the action is location specific, the whole operations are denominated by global value chains (GVCs) – access to capital, finance, markets, goods and services. So, what does it take to ensure our voices are heard in those spaces thousand miles away from physical action? There are many stakeholders who are keen to keep track of the work that we do, how do we ensure that we are our activities are not picked by their radar screens? In an environment where space for civil society is shrinking, governments label our work as at cross purpose with national interests, how do constantly tell our stories as builders in society? We seek to build networks, create and grow demand for our advocacy messages in an era where there is an avalanche of information, how do we navigate this terrain? These are some of the questions that I seek to tackle, like I said, based on my curiosity and experiences.

Influencing the big guys from far away places

Mining operations are certainly location-based. Communities close to where mining operations are taking place, therefore, are saddled with environment, economic, social and cultural costs of extraction of minerals. While mining is location specific, the business is fastened on GVCs for access to capital, markets, goods and services. The community struggle for mitigating the costs of extraction and for amplifying local mining benefit must expand its scope to influence players along the GVCs, especially investors and the market. Big players in the capital market for mining are found in countries like USA, Canada, Australia, South Africa and UK. Shareholders, financiers, asset managers and potential investors must be informed of the impact of their investment on communities were resources are extracted. I have come to realise that each time when I write a story on Zimplats and share it online. The story ends up being shared to Zimplats shareholders, investors and interested parties on the Australian Stock Exchange (ASX) where the company is directly listed. For example, my blog post Should We Celebrate The Government- Zimplats land Deal or Worry. In this post, I lamented corruption risks associated with the secrecy around the land deal and lack of competitive bidding in the disposal by government of mineral rights with high geological potential. This development was contrary to the aspirations of the Africa Mining Vision.

Missing in action

If CSOs are not careful, they can easily self-quarantine from their stakeholders whom they seek to influence. Only to interact with their stakeholders for what they deem essential to their agenda, conferences or meetings mainly. Social media helps to ensure CSOs are regularly touch with stakeholders. By so doing, CSOs are mitigating the risk of evanescent or quickly fading advocacy initiatives. There are instances when CSOs are accused of missing in action by stakeholders like communities, funding partners, media and legislators. In fact, some CSOs will be on the ground doing what they know best. Visibility is a huge challenge. most of the hard work done by CSOs is suffocated by poor communication. In the game of influence, advice can be borrowed from the legal fraternity – justice must not only be served, but is must be seen to be served.

When tragedy struck the artisanal and small scale (ASM) on 13 February 2019, at Cricket mine in Kadoma, known as the battlefields, was not missing in action. Representing ZELA, regularly using twitter, i publicly shared information pertaining to the rescue efforts. On top of twitter updates, I then published a blog to share lessons learnt from the Battlefields disaster. The blog was published in one of main daily newspapers in Zimbabwe.

The missing in action part is not only pronounced when disaster strikes, or emergence cases arise. It also pertains to topical developments in the area of interest in which CSOs are supposed to stimulate or enrich the public discourse. Because there is an avalanche of information, it is vital for CSOs to ensure that where known patterns of key developments exist in an area of interest, the voice of CSOs must not be missed. A case in point from my experience is the fiscal policy trail. One important lens of mineral resource governance is fiscal linkages. As such, my blog is clued-up on prebudget public consultations, national budget statements, midterm budget reviews, reports generated by the auditor general, and tax revenue performance reports generated by the Zimbabwe Revenue Authority (ZIMRA).

Build networks, create and grow demand for information

Nowadays relations can be created virtually using social media with like-minded organisations, funding partners, media, academia, public officials, and private sector players. Because i started and sustained a blog on mining and sustainable development since 2015, I used to get numerous requests from media houses who sought permission to publish what I posted. Some have sought to contract me to write weekly for a fee. Usually, my response was that my blog is an open source, feel free to pick what you like, so long you acknowledge the source. At times i don’t wait for their requests, rather i try to proactively share every fresh blog post via WhatsApp and twitter direct message, giving a soft nudge to journalists to publish the blog.

Not all blogs I generated get to be published by journalists, however, i have enjoyed an encouraging success with the press. Both private and public media often fish from my blog for stories. It is significant to flag, in Zimbabwe, generally, public media is viewed as aligned to the ruling party. Whilst views on private media oscillate between neutrality and being pro opposition. Having work which features in both private and public media can be taken as a sign of established credibility of my bog, for opinions and reports on key events in mining sector.

Each time when I have a fallow period on my blog, two-three weeks or a month, normally I get request from public officials, peers and journalists on why i am so quiet. It is good sometimes, to take a break, to refresh, reenergise and reset to ensure my blog does not mis its punch. Aside from media, I have received requests from academics seeking to mine information from my blog. Some colleagues in civil society tell me privately that we may not acknowledge your work publicly, but we use the blog to get creative ideas for framing our interventions and for developing proposals. The blog has also served as an inspiration to my peers to start blogging.

Public accountability goes beyond contractual obligations with funding partners

Underpinning the mission statement of most CSOs is, to bridge the gap between government and its citizens, and to play a watchdog role on government and corporates from a rights-based approach. With funding partners, CSOs have written contractual obligations to fulfil. Among the contractual obligations, CSOs must account for the work they do – progress, challenges, lessons learnt and results. In real terms, CSOs have a social contract with citizens and stakeholders they work with when it comes to accounting for their action. Social media presents opportunities for CSOs to publicly account to stakeholders. Examples include, giving frequent updates on progress regarding interventions via social media, challenges, opportunities, results and most significant change stories.

Peter Sigauke, CEO Mutoko Rural District Council (MRDC) once remarked during one of the ZELA’s annual retreat “we also need opportunities to participate in international conferences where current trends on resource governance are shared. Even though we are missing out, we are grateful to get regular updates from Mukasiri Sibanda’s blog.” Chief Mapanzure, a traditional leader echoed similar statements that “the blog is playing a critical role to keep community members and other stakeholders informed on key developments in the sector.” When i write on my blog, I take time to share the post on various WhatsApp groups for communities affected by mining operations that we work with.

By so doing, even funding partners can see weight in the reports submitted by CSOs as the issues reported to them are not secretive, but open for public scrutiny. When I am entrusted with the responsibility to write a narrative report to a funding partners, usually, I use my blog to put links on workshop reports, contextual developments, challenges and successes. Certainly, there is always room for improvement. The feedback though has always been awesome.

Bridging the gap between perception and reality

Because of poor communication, interested parties can be in the dark in terms of operations undertaken by CSOs. In an environment denominated by suspicion, CSOs viewed as having a nefarious agenda to undermine national development interest. CSOs, in the case of Zimbabwe, get significant funding from countries that have imposed “sanctions”  or restrictive measures on Zimbabwe, depending on one’s view. Government, in some instances, has openly labelled CSOs as regime change agents. By openly communicating the work that CSOs do via social media, it narrows the gap between perception and reality. Those that have ulterior motive of labelling the work of CSOs as being at cross purpose with national development interests are easily exposed. Several times, I have been asked by officers from the President’s office pertaining to the work that we do as ZELA. Always, in my response, I do not miss the opportunity to proudly tell them that we are not an underground operation, our work is publicly shared online, via WhatsApp groups, twitter, blog, website, email lists and newspapers.

It is also interesting to step aside to borrow inspiration from the bible when it comes to communication issues. In Mathew 16: 13-20, Jesus asked his disciples, “who do the people say that I am?” And later, he asked his disciples that “who do you say that I am?” Suffice to say, on the first question, the responses were quite varied. Having a social media footprint allows CSOs to drip feed the public with information on what the organisation stands for hinged on the work that they do. Equally so, employees of CSOs is they lack a digital footprint, they fail to answer publicly to stakeholders how they view the organisation that they work with. The Director of Action Aid Zimbabwe, Joy Mabenge often remarks that “don’t be a none googleable individual (NGI)” when challenging civil society actors to have a strong digital footprint.

Not leaving behind communities

There is always a risk that CSOs can be a barrier to change by speaking on behalf of affected communities. Rather, CSOs must empower communities to own, articulate and drive the change they want to see. To counter this risk, at ZELA we piloted the community data extractors programme in 2015, which included a component on community journalism. Basically, the community data extractors programme seeks to empower community monitors with skills to extract, analyse and use data to cement their demands for change in the management of mineral resources in their localities. Tunatazama, administered by Bench Marks Foundation, a networking platform for communities affected by mining operations in Southern Africa, is anchored by stories generated from the community monitors that ZELA works with in Zimbabwe.

The likes of Sophia Takuva, a woman artisanal and small-scale miner have become powerful social media influencers through blogs and twitter. For example, using her twitter account, Sophia boldly challenged lack of transparency and accountability in the management of the gold mobilisation funds set aside for women miners. Remarkably, this set the stage for engagement with Fidelity Printers and Refiners (FPR), who administer the gold mobilisation fund. FPR refuted the allegations, arguing that there is more to the challenges that affect women miners than financial inclusion. Challenges raised include access to mineral rights, and violence among others.

This is not a full view, but an interesting angle, nonetheless.

My experiences do not represent a full picture of why and how CSOs must grow their social media footprint but an interesting angle, nonetheless. I am sharing my experiences, to show that one does not need to be a media professional to be able to document and write articles for public consumption. Social media has lowered the barrier of communication and revolutionised the roles at work. From my experience, the burden on communicating and influencing mineral resource governance issues is not for the communications officer alone to carry. With curiosity, passion and commitment, every professional can be a social media influencer. In this work, we must labour hard to ensure community data journalism drives the advocacy agenda. CSOs must not speak on behalf if the affected but motivate communities to tell their own stories.

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