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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.

Lockdown not a time for CSOs to hibernate, but to reflect and be creative

By Tsaurai Andrew Kambunda – Oxfam Zimbabwe, Extractives Programme Lead and Mukasiri Sibanda – ZELA’s Economic Governance Officer

Despite posing many challenges, the lockdown, a move to stem the spread of COVID 19, must not lead to the hibernation of civil society actors. Under these difficult times, the lock down delivers a rare opportunity for civil society actors to deeply reflect and explore ways of achieving greater impact on the socio-economic justice front.

Several articles have been generated, all making a compelling case on how poor, but resource rich African countries are incapacitated to respond to fight COVID 19. Most of the articles concur, developed countries are struggling to cope but it can be an apocalyptic scenario for poor African countries.

The World Economic Forum (WEF) in its report warns “malnutrition and disease means COVID-19 could be more deadly in Africa than elsewhere in the world. And health systems in Africa have limited capacity to absorb the pandemic.”

All this evinces that civil society has a mountain to climb in its quest to ensure benefits from extractives cushion citizens from pandemics like COVID. Already, Mukasiri Sibanda, the Zimbabwe Environmental Law Association (ZELA)’s Economic Governance Officer argued in his blog “without brushing off Chinese Aid, where is money from our mineral wealth going?”

Because now is the time to reflect and explore, one area we believe civil society in Zimbabwe can leverage to increase transparency in the governance of extractives, is effective engagement with the office of Registrar of Companies. The Registrar of Companies registers companies and other business entities with a responsibility of making sure companies comply with the Companies and Other Business Entities Act.

More often, emphasis on revenue transparency overshadows the need to understand the DNA of behind mining activities. No wonder why the Extractive Industry Transparency Initiative (EITI), a global standard that elevates open and accountable management of the oil, gas and mineral sector embraced public Beneficial Ownership (BO) registry in its new standard. This goes beyond the numbers. The thrust is about telling a story of the real people who hide behind corporate masks to unfairly benefit through corruption and illicit financial flows.

Importantly, Zimbabwe which appears to have shut its doors on EITI, included a BO registry under the new Companies and Other Business Entities Act. Government’s move on BO registry was necessitated by the desire to comply with Financial Action Task Force (FATF) directives on curbing money laundering and finance for terrorism. A major challenge with the new BO requirement in Zimbabwe is that the BO register is not open to the public, note Anna Sophie Hobbi in her blog post Joyce Nyamukanda, Publish What You Pay Campaign (PWYP) campaign coordinator laments that “Space is closed for civil society to pivot the BO register for accountability purpose when the register is confidential.”

Interestingly, there are data morsels from the Registrar of Companies which the public can digest to improve the advocacy diet for the transparency and accountability in the mining sector. Such an initiative, perhaps, can help to mend the wheels of Publish What You Pay (PWYP) campaign in Zimbabwe. Government’s timid efforts on joining EITI has punctured the campaign.

What is even worse is that the mining transparency framework has not been aligned to the Constitution. Information which the campaign can feed on from the Registrar of Companies’ offices include company details of directors and physical address. On the surface, such information appears to be of less use on fuelling accountability demands. But a close and keen eye can unearth advocacy opportunities from such data.

Because a company is not a natural person, but a juristic person, its intelligences are its directors. Knowing the names of the directors enables civil society and communities to understand the identity of the company’s aspiration, motives and ethics. Knowing and understanding the person making decisions creates avenues for engagement. Such avenues include exploiting social capital, for instance, at church, sports club or bar.

A human touch to the struggle is important. If the director goes to the church, this is an opportunity to reach out to the pastor, for example, to bring out community concerns against the company he or she directs. Knowing the directors of a company shifts gears on engagement with the mining company which is largely focused on the management or other lower level employees.  The management is accountable to the directors who have a fiduciary duty to protect the interest of the company.

By profiling the directors of a company, civil society and communities can gain intel whether the directors have strong political ties or government officials are involved. Pending before the courts is a case in which the former deputy minister of higher education procured computers from a company he directed together with his daughters. What this case proves is, at times, without digging deeper, corruption red flags can easily be raised by gleaning simple publicly available records.

ZELA piloted this work in Mutoko and Marange under its community data extractors project. Malvern Mudiwa, from Marange Development Trust (MDT) made interesting observations after his interactions with the office of the Registrar of Companies in Harare. Malvern explained that “it is costly for a community member to travel to Harare to access the office of the Registrar of Companies.”

He argues “it is important community-based organisations (CBOs) to rely on official documents to cement advocacy initiatives with credible data rather than relying on hearsay.” His regrets were “we failed to access the any details on Mbada diamonds.”

Failure to access documents which are supposed to be publicly available can be an advocacy asset. It is a clear demonstration of the gaps between the law and practice. If such evidence is harvested from different communities and made public, it can jolt the Registrar of Companies into action as she/he becomes increasingly aware the office is being watched publicly.

For companies that are directly listed locally or international like Zimplats, the details of directors can be accessed from their websites. The challenge is that they are very few listed companies operating in Zimbabwe and the bulk of which do not have their own websites. This is also another research opportunity for community data extractors.

Aside from opportunities associated from accessing details of directors, knowing the physical address of the mining company civil society or communities want to engage with is also critical in many ways. A mere glance of the physical premise of the head office of the company can tell a lot in terms of the integrity of the company we are dealing with.

Obviously, we must not loose track of the old wisdom – don’t judge a book by its cover. It can be possible that a company may not be operating at the registered premise or have no legible name of the company at their premises. Simple walk in at the company head office can also create space for civil society actors and communities interact with the top management of the companies. The top management of several mining companies may not be operating at the mining site, but head quartered in big towns like Harare or Bulawayo.

From Malvern’s experiences, community data extractors must be empowered by PWYP to interact with the office of the Registrar of Companies, document their stories on how hard or easy it is to access the data.

Further, community data user stories can be generated to pick and reflect on variety of experiences from different community data extractors. PWYP is in the process of recruiting more members especially from Matebeleland and Midlands provinces. Having a clear value proposition, for instance, work members can do can help to manage expectations and reduce conflicts associated with workshopping opportunities.

COVID 19 is certainly causing mayhem for now, but civil society and communities must be forward thinking. Undoubtedly, strategies to mitigate the COVID 19 are critical. However, they must not drain the focus on the bigger picture. The Punctured PWYP campaign in Zimbabwe must using the lockdown opportunity to find innovative ways to mend its advocacy wheels. ZELA’s community data extractors programme, which drew energy from PWYP international offers interesting learning points for the campaign.

ZCDC must not let the Marange community down on COVID-19

By Fadzai Midzi, Intern Zimbabwe Environmental Law Association

Just like the rest of the world, Zimbabwe is grappling with the challenge of containing coronavirus. So far 7 cases have been confirmed as at 30 March 2020. This is only a tip of an iceberg. With cases on the rise, there is need for Covid-19 preparedness measures to flatten the curve. Zimbabwe is endowed with vast mineral wealth deposits; Diamonds are one of the key strategic minerals expected to contribute to economic recovery. Therefore, the mineral wealth that the country poses should assist in responding to the country’s needs.

Health should not depend on wealth. But far too often it does, and it has a huge impact. The state pf preparedness of diamond mining affected communities’ rests in the diamond wealth they possess. It is important for Zimbabwe Consolidated Diamond Company (ZCDC) to lead in Covid-19 preparedness in the Manicaland area. Diamonds are the only hope the communities have in surviving this health pandemic.

The communities are already vulnerable in terms of remoteness and poverty which makes most of them unable to afford covid-19 prevention measures. The remoteness of these communities limits their knowledge on how to protect themselves from the health pandemic. Efforts have been made by the government by raising awareness through television, radio, newspapers, social media but however there is still a gap in reaching the marginalised communities in remote areas such as Chiadzwa, Marange and Bocha.

The vulnerability of these communities to this virus is unspeakable and it is important to take a gear up towards preparedness, this will bring out the connection between diamond wealth and health amidst this health disaster. Manicaland has not fully recovered from Cyclone Idai disaster which was ill-prepared for therefore it is important to make sure that this time around communities are well prepared to manage the covid-19 public health disaster. To ensure covid-19 preparedness, community participation and involvement is vital. One of the local women in Chiadzwa expressed the community fears on the recent 21-day lockdown and how it will affect their livelihoods when most people live on hand to mouth how will they survive.

“We are concerned about our vegetable farming business which is faced with risk of perishability of our produce which sell fresh (vegetables and tomatoes) there is no market since people are indoors, selling door to door is difficult and puts us at risk”.

These women were selling their produce to ZCDC and they are concerned on how they will move forward given the recent develops on covid-19 prevention. A Chimanimani resident indicated their fear for people living in remote areas being affected the most if the virus hits because they lack preparedness and they do not have clinics. This is an area that has not fully recovered from Cyclone Idai disaster effects.

“Our local health workers have no transportation to raise awareness in the remote areas due to the lock down and their capacity to handle covid-19 cases is questionable’’

Global wide, efforts are being channelled towards stopping the spread of the virus and protecting people it is imperative for ZCDC to take part in the global fight against the virus. ZCDC should take covid-19 preparedness as one of its Corporate Social Responsibility Initiative and join the global movement against covid-19. With the diamond sector being toxic in disappointments due to unmet expectations, it is time for ZCDC to iron out conflicts and disappointments by meeting communities at their time of greatest need. This is also an opportunity for the company to prove that its CSR initiatives are needs driven and sought to solve real community problems.

Through this initiative the company can help to prove that its diamonds are contributing to local sustainable development in communities were resources are extracted. It is a time to prove that diamonds are working for people and that the 12 billion mining strategy “the minerals of hope” brings back hope to the people by helping to solve the public health pandemic and save lives. Community health is at stake and diamonds can provide a source of hope and redemption in this public health pandemic.

Zimbabwe Environmental Law Association (ZELA) proposes that ZCDC takes led in Covid-19 prevention in Manicaland to enhance and reciprocate government efforts to stop the spread of the virus through the following.

Conduct massive radio programmes with Diamond FM covering.

  1. Awareness on Covid-19 prevention measures such as washing of hands using soaps and hand sanitisers. This will bring out the importance of personal protective measures such as washing of hands.
  2. Discussions on the recent developments made by the government on social distancing the 21-day lock down and SI 2020-077 Public Health (COVID-19 Prevention, Containment and Treatment). This can be done with community groups such as Health Centre Committees, Advocacy groups and Community based Organisations.
  3. To encourage Community participation during the awareness programmes, competitions can be conducted were people contest for hand sanitisers, masks and soap. This will encourage people to have knowledge on Covid-19 prevention. The radio programmes will also be critical in harvesting information on what is happening on the ground in terms of covid-19 prevention, bringing out the challenges and opportunities that can be leveraged to improve community preparedness on the disease.
  4. Prepare Manicaland Covid-19 state of preparedness reports covering issues on the ground shared by communities during the radio programmes.
  5. Provide regular updates on covid-19 through social media platforms such as twitter, Facebook, WhatsApp and bulk SMS.
  6. Conduct special radio sessions were Youths, Women and People with disabilities discussions on Covid-19 prevention and the challenges they face in preventing the spread of the virus. This will Encourage participation of the marginalised groups during the awareness campaigns.
  7. ZCDC can assist Mutare General Hospital’s preparedness and setting up response mechanisms and handling of covid-19 patients through providing personal protective equipment for the hospital’s staff members.
  8. There has been a huge concern raised on the issue of ventilators and test kits when the country recorded its first covid-19 death, therefore it would be imperative for ZCDC to provide ventilators and test kits for the hospital.
  9. Ensure that services such as water, electricity are available at the hospital. This will be a good move in making sure that Mutare is prepared to handle the pandemic and not depend on Wilkins hospital in Harare.
  10. Provide Covid-19 test kits to local community clinics and assist local Covid-19 trained health workers with transportation to raise awareness in remote areas such as Bocha.
  11. Provide food hampers to the most vulnerable families such as child headed and poverty inflicted families.
  12. ZCDC can assist by providing transportation to the local health workers to build community capacity on covid-19 prevention.

ZELA is willing to take part and support ZCDC on this initiative through spearheading radio programmes and documenting ZCDC’s work on covid-19 preparedness.

Without brushing off Chinese Aid, where is the money from our mineral wealth going?

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Sibandas, Clarity and Mukasiri

It seems like the donation made by the Chinese billionaire, Jack Ma, has given an adrenaline shot to government’s efforts to control the scourge of coronavirus. Without brushing off the significance of Jack Ma’s act of kindness to Africa and other parts of the world, in Zimbabwe, the knowledge that without this aid, we had nowhere to start is quite scary. If you want to look for evidence of resource curse, then look no further than this story of a country endowed with vast mineral wealth, with no internal capabilities to protect its citizens against pandemics. Yes, we have seen developed countries like Italy and Spain getting overwhelmed by coronavirus. So, one can argue easily, what more can a developing country like Zimbabwe do? At the surface, this line of thinking is compelling. Yet if we dig deeper, Zimbabwe has in the past struggled to contain medieval diseases like cholera. This is a country endowed with second largest known platinum deposits in the whole world after South Africa. Under explored, Zimbabwe has over 40 known mineral deposits like gold, lithium, diamonds and chrome. Even though annual surveys on investment attractiveness of mining sector jurisdictions conducted by Fraser Institute of Canada find our policy framework repugnant, they rate us highly on geological potential. Underlisted are critical points for government, industry and citizens to reflect on mineral resource governance reforms that are fundamental to safeguard the welfare of Zimbabweans,

  • We cannot think of any better way to show that mining can deliver sustainable benefits to communities where resources are extracted than ring fencing mineral tax revenue to fight corona virus. After all, the Constitution, on national development issues, impels the State to put mechanisms to ensure communities benefit from resources in their localities. When a capital city, Harare, has no capacity whatsoever to handle corona virus, what more of remote, marginalized but resource rich rural areas like Marange.
  • Government has a plan to grow annual earnings to US12 billion per year by 2023. An impressive figure constantly punctuating speeches delivered by policy makers. Just to placate the public, government isn’t rudderless on economic challenges, there is light at demise of Mugabe. Export earnings from mining are meaningless to citizens if figures for tax revenues to finance service delivery are unknown. Exactly why government must follow up on its commitment to join the Extractive Industry Transparency Initiative (EITI). Globally, EITI is regarded as benchmark for promoting open and accountable governance of oil, gas and mineral sector. Nearly half (24) of EITI implementing countries are in Africa, and in the SADC region, Zambia, Mozambique, Tanzania and DRC are part of this initiative.
  • Transparency is a genuine indicator for government that seeks to turn the corner under the mantra that “Zimbabwe is open for business” that government real means business. When deals are negotiated in secrecy, the International Council of Mines and Mining Development (ICMM) cautions on Minerals Taxation Regimes, the playing field becomes uneven, companies seek to bargain more. Corruption easily festers in such an environment. Our Constitution is clear, an Act of Parliament is required to guide negotiation and performance of mining agreement under Section 315 (2) (c) in order to promote transparency, honesty, cost-effectiveness and competitiveness. Therefore, all mega mining deals signed by government must be made public to nourish citizens with information on how the deals are constructed to deliver optimal benefits to citizens.
  • The focus on mining sector benefit sharing in these hard times of the coronavirus pandemic intensifies easily because minerals are a finite natural resource, if they deplete without contributing to the welfare of citizens, then, we begin to question, where is the money going.
  • This is an opportunity for a rethink of the whole mineral resource governance framework. How far has Zimbabwe aligned its mining policies and laws with the Africa Mining Vision? A blueprint adopted by African Head of States and Government in 2009. AMV envisages “Transparent, equitable and optimal exploitation of mineral resources to underpin broad-based sustainable growth and socio-economic development”
  • Looking back, on how government faired in the management of the diamond find of the century, Marange diamond fields, we have a US$98 million modern defense college. If these finds were used to invest in modern health facilities, we could have been talking about aid as a complementary rather than being the mainstay support of fighting coronavirus. In 2006 and 2008, government took back platinum claims or mineral rights from Zimplats and Anglo-American owned Unki Mine valued at US$153 million and US$142 million respectively. Recently, we learnt that Mimosa Mines is keen to negotiate with Anglo-American owned Unki Mine to purchase or platinum rights. This proves that if competitive bidding, which is recommended by AMV is followed on disposal of known mineral rights acquired through use it or lose it, mining fiscal linkages can easily be enhanced.
  • Government of Zimbabwe looks up to Rwanda as a success story. It is high time to learn from one of the most famous statements delivered by President Paul Kagame “I would rather argue, that we need to mobilise the mindsets, rather than more funding. After all, in Africa, we have everything we need, in real terms. Whatever is lacking, we have the means to acquire. And yet, we remain mentally married to the idea that nothing can get moving, without external finance.”

Every crisis presents opportunities. From crippled domestic capabilities to respond to the corona virus pandemic, government must rethink on measures to enhance the flow of mining benefits to citizens. Minerals are finite. This cannot be over emphasised. Therefore, we must make hay whilst the sun still shines. Oh, by the way, thunderstorm is already threatening, droughts, cyclone idai, and corona virus have struck us, yet the benefits from mining have been conspicuous. The US$12 billion mining earnings by 2023 does not bring joy to citizens if national benefits like tax revenue that have more to do with their living standards – better health and education remain secretive.

Is the new beneficial ownership register a transparency game changer for Zimbabwe?

By Anna-Sophie Hobi

For the first time, the Zimbabwean law requires to keep a beneficial ownership (BO) register. This came as a pleasant surprise; finally, an important part of the jig saw puzzle for solving the persistent transparency deficits. The significance of the BO requirement in the new Companies and Other Business Entities Act gets added value considering that the Extractive Industries Transparency Initiative (EITI) recently embraced BO disclosure.

No doubt that Zimbabwe is showing little appetite for joining EITI. However, the convergence of domestic legal reforms with EITI gives a signal that Zimbabwe is perhaps not far off the transparency radar.  To help civil society to gain a fair understanding of the new requirement on BO, the Zimbabwe Environmental Law Association (ZELA) organized a half day workshop.

The workshop was held at Cresta Oasis Hotel, Harare on Wednesday, 26 February 2020. The meeting brought together the Registrar of Companies, Zimbabwe Revenue Authority (ZIMRA), Civil Society Organisations (CSOs), the Office of the Auditor General (OAG), and the Chamber of Mines. Unfortunately, the BO register will remain confidential as explained by the Registrar of Companies. It is, however, a step in the right direction.

Why the BO registry is important? Complex and secretive corporate structures and anonymous business entities scattered across various jurisdictions make it difficult to identify who ultimately controls and benefits from a company. The natural person behind it is the so-called beneficial owner.

Too easily, secrecy and anonymity help to facilitate corruption, money laundering, tax evasion and profit shifting to tax havens. It is extremely difficult to “follow the money” and find out where the profits go. To prevent illicit flows of money, it is necessary to gain insights on who owns and controls what, particularly in the opaque, risky and highly profitable extractive sector.

Civil society worldwide has been in the forefront of bringing the issue of BO transparency to the table. Increasingly, international standards require a BO register and various countries have even made the registers public and accessible online, an example is the United Kingdom’s Companies House.

The membership in Eastern and Southern African Anti Money Laundering Group (ESAAMLG) has given Zimbabwe the obligation to be compliant with international standards to prevent money laundering and combat the financing of terrorism. These comprise the recommendations by the Financial Action Task Force (FATF), that urge countries to keep a beneficial ownership register for both companies and trusts.

This is why also the Zimbabwean government had to amend the Companies Act and include a beneficial ownership register. Zimbabwe’s new Companies and Other Business Entities Act [Chapter 24:31] comes to force in the first quarter of 2020. It includes an “obligation to maintain and file beneficial ownership information” (section 72) and the “prohibition of concealment of beneficial ownership” (section 73). In practice, companies will keep an up-to-date list of their beneficial owners and have to frequently update the Registrar of Companies that will also keep a register of beneficial owners.

While the new Companies and Other Business Entities Act does not give full clarity on the accessibility and availability of the register to members of the public, the Registrar of Companies gave clear explanations at the BO workshop. 

“The beneficial ownership is not a public register. It remains confidential unless required to be disclosed”. 

The only way to access it as a citizen, the Registrar elaborated, would be through a court order. This makes it very difficult and cumbersome for civil society, journalists, researchers and the general public to gain more information on companies. Especially community members that live close to mining areas have an interest and right to know, who is their neighbour. Communities are rarely aware of who is operating on their land, who is mining their resources and where those profits go. I

n addition to that, the Zimbabwean government has greatly announced to fight corruption. Only together with the public “watchdogs”, this big task can be tackled. While it is very commendable, that Zimbabwe has made the provision for a BO register, its confidentiality makes it a toothless measure against corrupt practices and money laundering. At least it is a small positive that government institutions like the Financial Intelligence Unit and Zimbabwe Republic Police (ZRP) have access to BO register to support their investigations.

 

Tooling Parliament For Effective Mineral Resource Governance

By Byron Zamasiya and Mukasiri Sibanda

To better track impact of capacity building work with Parliament on promoting transparency and accountability in the mining sector, Zimbabwe Environmental Law Association (ZELA) jointly agreed with Parliament of Zimbabwe to come up with performance targets. This was agreed during a workshop facilitated by ZELA on Mining Fiscal Transparency and Beneficial Disclosure on Wednesday, 26 February 2020, at a local Hotel in Harare.

Participants included; the Registrar of Companies, legislators from the Parliamentary Portfolio Committees on Mines and Mining Development, and the Budget Finance and Economic Development, Civil Society Organisations (CSOs), representatives from the Office of the Auditor General (OAG), Zimbabwe Revenue Authority (ZIMRA), Media, and Civil Society Coalitions.

In this update, we focus on the action plans that emerged from the workshop, with special emphasis on engaging Parliament to promote mining fiscal transparency and accountability.

Tooling Parliament

Participants who attended the Mining Fiscal Transparency and Beneficial Disclosure Workshop  

CSOs are doing a tremendous job in building the capacity of Parliamentarians, therefore it is critical that they conduct performance appraisals to continuously evaluate the effectiveness of their interventions on the work being undertaken by legislators. To achieve this, the following points must be taken into consideration;

  • Parliament Portfolio Committees (PPCs) to share their workplans with CSOs
  • PPCs on Mines to share quarterly performance reports provided by Ministry of Mines and Mining Development.
  • A retreat is required to ensure that performance targets are jointly set out and performance enablers are enhanced.

In the interest of harvesting the low hanging fruits, it was discussed and agreed that the following issues must be raised in Parliament by members of the Portfolio Committee on Mines before the end of March 2020;

  • Progress on implementation of the Extractive Industries Transparency Initiative (EITI). Government, in 2019, revived its interest in joining EITI, a global standard that seeks to promote transparency and accountability in the oil, gas and mineral sectors. In case government is not keen on implementing EITI, legislators must push government to undertake piecemeal mining sector transparency reforms as required by the Constitution. For example, an Act of Parliament is required to guide negotiation and performance of mining agreemens (Section 315 (2) (c) to promote transparency, host, cost effectiveness and competitiveness.
  • Clear milestones are required for the computerization of the mining cadastre. Points to consider: How can a government that seeks to achieve US$12 billion annual earnings from the mining sector by 2023 fail to provide US$2 million for the modernization of the mining cadastre? Foreign currency shortages cannot be used as an excuse because over 60 cents per every dollar generated from exports comes from the mining sector. It is therefore imperative that Government ploughs back foreign currency earned from mining into infrastructure development which enhances the performance of the mining sector like the mining cadastre. Legislators can go a step further to check foreign currency expenditures by government especially foreign trip to make a case for poor prioritization.
  • Monitor whether financial statements and annual reports for mining State Owned Enterprises (SOEs) have been submitted within two months after the end of each financial year to the OAG as required by the Public Financial Management Act (Section 49). Parliament must not wait for OAG’s report which must be produced within six months after the end of each financial year to sift information on which SOE has defaulted on timely submission of annual reports for audit.
  • Performance appraisal of Exclusive Prospecting Orders (EPOs) is necessary. Legislators must ask the Minister to submit a register of EPOs, with progress reports evaluated against agreed plans.

Aside from the targets set for legislators, the following action points targeted at CSOs were agreed;

  • Legal advice on implementation of the “use it or lose it” principle under the current Mines and Minerals Act is need.
  • Engage Parliamentarians on social media or through physical meetings to support them as they prepare for Wednesday Parliament sitting, caucas meetings and ask pointed questions on mining governance issues.
  • CSOs must build the capacity of the committee members to scrutinize and hold the Ministry accountable based on quarterly performance reports submitted to Parliament.

A perfect tone was set by Honourable Anele Ndebele immediately after the end of the workshop.  Speaking in Parliament, Hon Anele Ndebele raised questions on transparency and accountability related to EPOs.

 “… I notice the Deputy Minister of Mines is here present. It is a fact that we are all aspiring towards a US12 billion per year annual budget from mining sector. I therefore wish to invite the Minister of Mines to bring to this house an update on mining sector performance.  Secondly, I wish that the Minister on the same day to bring register of all EPOs by area in this country and also make an indication of the companies that are involved in the EPOs. Finally Mr Speaker, the law so demands that at least every six months, we must have a record of how the EPOs are performing ….. we need to track how they are performing

 

Who wins if Zimbabwe Joins EITI?

Co-authored with Marco Zaplan

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

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

Winner: Government

EITI Blog 1

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

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

EITI Blog 2

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

Winner: Mining investors and companies

EITI Blog 3

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

Should Zimbabwe join the EITI?

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

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