Mukasiri Sibanda's Blog

articles on mineral resource governance

Curbing IFFs & use of open data to promote transparency and accountability

IFFs ZAMI session.jpg

Key takeaways

  • Illicit Financial Flows are simple theft of public resourcesBriggs Bomba on definition of IFFs
  • We are all consumers of goods and services. So, everyone pays consumptive tax through Value Added Tax (VAT).” Cephas Makunike speaking on why the public must engage on tax justice issues
  • We are not concerned now with the missing $15 billion from Marange diamonds, we want government to account for the local share of $2 billion that was realised from Marange diamond proceedsMalvern Mudiwa, a community data extractor.

To help to turn the African Mining Vison (AMV) into reality, a reflective and recurrent national conversation on how government transparently and efficiently garners and deploys development finance from the country’s huge mineral asset base is a main feature of the Zimbabwe Alternative Mining Indaba (ZAMI2017). Running under the theme “Promoting responsible and accountable governance of minerals”, the 6th edition of the ZAMI was held on 04 and 05 October 2017 at Holiday Inn Bulawayo. The ZAMI is a multi-stakeholder engagement platform involving communities, CSOs, government and business. ZAMI pivots on policy and practice reforms focused on amplifying community benefits from mining and the mitigation of community rights violations. Organisers of the ZAMI are the Zimbabwe Council of Churches, Zimbabwe Coalition on Debt and Development and the Zimbabwe Environmental Law Association (ZELA)

The breakaway session on Tax Justice was moderated by Chipiwa of Action Aid International Zimbabwe (AAIZ). On the panel was Briggs Bomba (Trust Africa), Cephas Makunike (Tax Justice Network Africa) and Malvern Mudiwa (Marange Development Trust). Briggs Bomba opened the conversation by saying “We are dealing with a situation of incredible mineral wealth and terrible performance in terms of human development. Illicit Financial Flows (IFFs) weakens government’s capacity to finance human and economic development programmes” Bomba highlighted that Zimbabwe is a mineral rich country. Its Platinum Group of Metals (PGMs) and high-grade chromium deposits are world class, ranking second best after South Africa. Yet according to UNICEF, 70% of Zimbabwe’s population is living under extreme poverty. Hospitals and clinics lack basic drugs, the education sector is poorly funded. Virtually, tertiary education has collapsed.

Bomba shared that the Global Financial Integrity (GFI) defines IFFs and OECD as “illegal movements of money or capital from one country to another. GFI classifies this movement as an illicit flow when the funds are illegally earned, transferred, and/or utilized’. However, he emphasised that IFFs flows simply means theft of public resources. Generally, there are three main sources of IFFs, base erosion and profit shifting (BEPs), criminality and corruption. BEPs accounts for the largest share of IFFs through mis invoicing. Whilst corruption accounts for 5% of attributable loss to IFFs, it is notable that Zimbabwe is the most corrupt country in Southern Africa. Zimbabwe is ranked number 154 out of 175 according to Transparency International, Corruption Perception Index (CPI) available here.

Briggs cautioned that there are different figures being thrown around on estimating the amount of IFFs. Since IFFs are an underground economic and criminal activity, estimates are simply based on what people can calculate. Look at the value chain to appreciate the risks of IFFs.

Some of the major drivers of IFFs in Zimbabwe include poor knowledge of the quality and quantity the country’s mineral assets. What this means is that, the country fails to leverage on economic rationale for disposal of mining rights. In other words, there is no relationship between how much is paid to acquire mineral concessions and value of the minerals acquired. Overgenerous tax incentives are also a major challenge. The $3 billion investment by the Russians in platinum mining is a welcome development available here. However, no taxes will be received until the investors recoup their capital.

Lack of disclosure of beneficial owners of mining deals is another driver of IFFs. It is difficult to stem corruption if natural persons benefiting mining deals can hide behind faceless shell companies. It is possible to register a company in Zimbabwe without the disclosure of the beneficial owner. Massive under invoicing of the quality and quantities of minerals exports is also a challenge. A case in point concerns the under-valuation of Marange that was noted the Financial Action Task Force (FATF) report (October 2013) on Money Laundering and Terrorist Financing Through Trade in Diamonds available here. Huge consultancy or management and brand fees paid to companies domiciled in tax havens also contribute to thinning of taxable income.

Bomba also highlighted that it is problematic that OECD is leading the fight against IFFs whilst they are a major destination of IFFs, they should not champion’ Africa’s fight against IFFs. Africa though is not investing enough to fight against IFFs. Africa only has the High-Level Panel report on IFFs known as the Mbeki here. Whereas OECD look has heavily invested in documentation and institutions set up by OECD Africa only has HLP report. As for Zimbabwe, it’s highly regrettable that the Ministry of Foreign Affairs rather than the Ministry of Finance is the major participant at African Union discourse on curbing IFFs.

In his presentation, Cephas Makunike of the TJNA implored the Zimbabwe Revenue Authority (ZIMRA) to set up a special unit to deal with abuse of transfer pricing, a major driver of IFFs. Other African countries like SA, Ghana, Nigeria and Kenya, have set up transfer pricing real time monitoring units. He emphasised that Parliament should have real teeth on oversight role, reviewing of mining agreements and audits for SOE. Section 315, subsection (2) (c) of the Constitution requires Parliament oversight in contract negotiation and performance of mining agreements to ensure transparency, honesty, cost-effectiveness and competitiveness.

Makunike also shared the four important roles of taxation known as the 4Rs, Revenue raising, Redistribution, Repricing and Representation. Taxes are an important tool to raise revenue to fund government activities. It is important for government to have a progressive tax regime. Those that earn more should pay more. It is disheartening to note that Corporate Income Tax contribution to the national purse is meagre. Through taxes, government can redistribute wealth through financing service delivery programmes such as health and education. Government expenditure must be pro-poor.

Taxation is also used to reprice goods. For instance, government imposes “sin taxes” to discourage the consumption of alcohol and tobacco. People may think that they are not paying taxes, but is important to note that Value Added Tax is paid by consumers, one way or another we are consumers of goods and services. As tax payers, citizens therefore have a right to question government on the handling of public funds to fulfil their Socio-Economic Rights (SERs). The 4 Roles of taxation give enough cause for public participation in tax justice issues. It is fundamental that the subject of taxation which is often deemed highly technical, must be simplified to make it easier for citizen to meaningfully participate in the management of public funds.

Another area that Cephas raised what the need to create and sustain a tax justice campaign in Zimbabwe. At regional and international level, campaigns that have taken off include the stop the bleeding campaign and follow the money campaign. For this to happen in Zimbabwe, a strong tax justice network is needed. A platform to promote tax dialogue at different levels just like policy or political dialogue meetings at SAPES Trust must be established. He also flagged that the discussion on taxes must be linked with government’s failure to provide basic services like health, education, clean portable water is a violation of the constitutional rights, human rights. International commitment like Abuja declaration on health which sets a minimum threshold  for investing into the health sector are useful to hold government accountable of pro poor expenditure.  At least 15% of the budget should be invested in the health sector.

Malvern Mudiwa of MDT, a community data extractor under the PWYP pilot project with ZELA on community data literacy for demand driven change available here shared his experience. Through accessing and analysing Mutare RDC’s financial statements for 2014 and 2015, MDT noted that diamond mining companies were barely contributing taxes to the local government. MDT also analysed the Auditor General’s 2015 report on local authorities which was silent on problems around mineral revenue generation by Mutare RDC. However, the same report exposed the challenges that Mutoko RDCs was facing on revenue collection. MDT is in the process of doing a comperative analysis of Mutare RDC’s budget with total proceeds of diamond sales from 2009 to 2016. This will establish if there is a relationship between diamond proceeds and the local fiscal muscle. For instance, in 2012, diamond sales peeked to $741 million and it would be interest to see if this Mutare RDC’s revenue spiked in that year. Whilst the nation is ceased with the missing $15 billion issue available here, MDT wants government to account for the local share of $2 billion that was realised.

The following issues were discussed and agreed;

  • We need legal reforms to address regressive tax regimes and ensure policy amendments are implemented and tracked. To achieve this, tax incentives that constitute off budget expenditures should be publicly accounted for to enhance budget transparency in line with international best practice. Harmful tax incentives must be eliminated to enable corporates to pay a fair share of mining taxes. Government must invest in quality geological data to enable economic rationale in the disposal of mineral rights to investors. ZIMRA must set up a real-time price transfer monitoring unit to curb mineral revenue leakages just like its regional counterparts like Kenya, South Africa and Ghana.  The Companies Act must have a provide for public registry of beneficial ownership of mining deals and real beneficiaries other government procurement contracts.
  • There is need for activists to build knowledge to effectively make use of data driven advocacy initiatives through research and simplifying and repackaging of raw data. By doing so, we open previously technical platforms for citizens to engage. To achieve this, the PYWYP pilot project on community data literacy for demand driven change must be rolled out in all mining communities in Zimbabwe. There is need to invest in data visualisation to make information on mining revenue easily understood by different stakeholders including communities.
  • Establishment of a working tax justice network to monitor and advocate against IFFs in Zimbabwe. To achieve this, a monthly dialogue platform of tax justice issues like the SAPEs Trust policy dialogues must be established. The PWYP campaign must be broadened to include other CSOs that are not directly working on mineral resource governance but concerned with service delivery issues. This will strengthen the chorus on campaigns such as stop the bleeding.




The US Withdrawal from EITI: A Note from Africa


Gilbert Makore*

The US formally communicated its decision to withdraw from the Extractive Industries Transparency Initiative (EITI) on the 2nd of November. This was hardly surprising and was expected given an earlier decision to remove Section 1504 Dodd Frank Act that would have required mandatory disclosure of project level payment data by extractive companies.

The EITI allows for the public disclosure and reconciliation of payments made by extractive companies and those received by governments. Ordinarily, the US withdrawal should only really draw the ire of US citizens who, as a consequence of this decision, will be deprived access to this public disclosure. However, the US withdrawal has political implications for Africa and the EITI as a whole.

Withdrawing from EITI and doing away with the Section 1504 of Dodd-Frank regrettably sends the message that-in 2017- big oil is still winning. It has been reported that big oil companies such…

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Mining vs Wildlife: my opinion

Interesting read from Nobuhle

nature with Nobuhle thelma

By Nobuhle  Mabhikwa the girl who loved   PJ the vulture

Mining has brought about a lot of Yes, I am a fan of development, development is good I have travelled to the concrete juggles and have admired what development had created for them. however more often I find my self wanting to hear a bird beside the crows found in city centre garbage, to see the different species of indigenous trees and the culture related to them and of cause the various stories of wildlife. I love wildlife growing up in the city centre made me realise nature makes life beautiful, with nature there is something new to learn every day and nature communicates with us.

My greatest fear is that with the develop taking place in the world, with the different mining activities happening nature will disappear, nature will stop talking to us wildlife will disappear. the 6th

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Snippets of national dialogue on artisanal and small-scale gold mining

IMG_20161010_125430The artisanal and small-scale gold mining (ASGM) session was one of the main topical sessions of the 6th edition of the Zimbabwe Alternative Mining Indaba (ZAMI2017), held on 04 and 05 October 2017 at Holiday Inn, Bulawayo. Rightly so, the session was themed “Ease of Doing Business Reforms: A Focus on Artisanal and Small-Scale Gold Mining.” A Mining Technical Working Group (TWG) on ease of doing business reforms, comprising of government, business and civil society organisations, is keen on recommending removal of impediments to ASM. This policy thrust is motivated by the indispensable contribution of ASGM to the country’s total gold production, a key foreign currency earner. Recently, ASM gold production has surpassed the output of primary or large-scale gold miners.

Given that directly, 500,000 people depend of ASGM, grassroots participation in policy making process becomes fundamental. It is within this context, the session on ASGM was sculptured to amplify the voices of ASM associations on ease of doing business reforms at national level. It is worthwhile to note that at district level, ZELA helped ASM associations of Bubi (ASMinBubi), Gwanda (ASMinGwanda) and Zvishavane-Mberengwa (ASMinZvish) to compile their key asks on ease of doing business reforms. At provincial level, a similar process was undertaken for Matebeleland North and South Provinces (ASMinMatSouth : ASMinMatSouth). Key asks for Matebeleland South ASM ease of doing business reforms are available here.

The ASM panel comprised of the Reserve Bank of Zimbabwe (RBZ), Zimbabwe Miners Federation (ZMF), Women in Mining of Bubi district and the Zimbabwe Environmental Law Association (ZELA). PACT moderated the ASM session. RBZ is the sole buyer, refiner and exporter of gold, a key player spearheading the “no questions asked policy” to support artisanal gold miners. In addition, RBZ is supporting ASGM through a $40 million loan facility to boost gold production. Therefore, the presence of RBZ on the panel was a welcome development.

ZMF is the national mother board to all ASM associations in Zimbabwe. Women’s voices were represented by Bubi women in mining. ZELA as a member to the mining TWG on ease of doing business, was on the panel to share key developments on policy and practice reform proposals targeted at ASM.

Below are key highlights of ASM session on ease of doing business reforms;

  • RBZ should rethink its policy to pay gold by from by artisanal and small-scale miners, 60% cash in US dollars and 40% as bond notes. Suppliers of goods and services needed for gold production are demanding payments in US dollars or charge a premium for paying in bond notes. Artisanal and small-scale miners are therefore cornered and may find solace in selling gold at the parallel market which offers 100% foreign currency payment for gold, boosting illicit financial flows (IFFs). RBZ explained that the ASM sector should understand that foreign currency is needed to finance other critical sectors like health and manufacturing.  60% payment in foreign currency is the best that government can afford now. Miners recommended that RBZ should set up stores that supply inputs to artisanal and small-scale gold producers to guarantee supplies at favourable prices.
  • The $40 million gold mobilisation fund has only benefited a few. So far, $30 million has been disbursed and less than 180 people have benefited. The loan requirements, mainly collateral, are too steep for majority artisanal and small-scale gold miners. The miners recommended that RBZ should review the requirements and use documents on gold sales to the RBZ as collateral. RBZ should also disclose how many men and women have benefited from the loan scheme.
  • Decriminalise gold possession. According to the Gold Trade Act (Chapter 21:03) it is illegal for one to be in possession of gold without a valid mining permit or a licence to buy gold. This piece of legislation was inherited from the colonial regime. It was recommended that artisanal gold mining should be legalised through a special permit that is accessible and affordable.
  • The costs of compliance are impeding ease of doing business for many artisanal and small-scale miners. Artisanal and small-scale miners lamented that they are supposed to folk out $4,000 to pay a consultant undertake Environmental Impact Assessment (EIA), $500 for a permit to purchase explosives and another $500 as storage fees for explosives. RBZ representative, Mr Masawi encouraged ASM associations to take advantage of the on-going national pre-budget public consultations on reduction of various fees paid by the miners.
  • Violence is hurting women participation in the ASGM sector. There are frequent cases of violence mainly carried out by machete wielding people known as “MaShurugwi.” Women feel unsecure and are afraid to walk in the forests to access their mining sites because of proximal attacks done by MaShurugwi.
  • Operationalise the computerised mining cadastre system to stifle corruption and disputes in the allocation of gold mining claims.

2018 National Budget Expectations: The Quest to Make Mineral Wealth Work for All: AMV

“Much as government prides itself as a champion on broad based economic empowerment through indigenisation programmes, without access to information, citizens are blindfolded to see how their mineral wealth is being accounted for.”

MK Ndugu Pic.JPG

For a country replete with mineral wealth, the national budget is a vital tool to make mineral resources work for all citizens. “Follow the Money” where is the Great Buck from the mineral rich Great Dyke? As the country formulates its 2018 national budget, there is an opportunity to advance one of the African Mining Vision (AMV)’s goals; “to create a sustainable and well governed mining sector that effectively garners and deploys resource rents and contribute to broad based growth.” Surely, the country must take advantage of its significant but finite mineral wealth to generate domestic finance for development. An immense challenge that must be tackled by the 2018 national budget.  Time and again the treasury has decried that mining is not contributing a commensurate share of tax revenue. Yet mining is the lead sector in terms of export earnings, contributing over 50% to the country’s overall export earnings. This blog shares some pointers on how the 2018 national budget can improve mining tax contribution, enhance transparency and accountable management of the country’s mineral wealth.

Embrace mineral revenue transparency best practice

AMV urges African Union member states “to mainstream governance best practices such as the Extractive Industry Transparency Initiative (EITI) into their respective policies, laws, regulations, codes and standards; and expand the initiative to address upstream and downstream issues such as licensing, procurement, ownership, and sustainable development and call for its urgent operationalization.”

It is a plus that national budget statements from 2010 to date have signalled the intention of adopting or adapting EITI. The downside is that no material progress has been recorded on the ground. A domestic version of EITI, the Zimbabwe Revenue Transparency Industry Initiative (ZMRTI) suffered still birth in 2011. Fundamentally, the 2018 national budget should walk the talk on implementation mineral revenue transparency best practice. To kick start the process, the budget should show disaggregated data on mining contribution to the national purse per revenue head. This entails specific disclosure of mining contribution to various revenue streams like corporate income tax, pay as you earn, withholding taxes, royalties and custom duties among others.

Much as the government prides itself as a champion on broad based economic empowerment through indigenisation programmes, without access to information, citizens are dislocated from the accounting of their mineral wealth. EU, Canada and USA mandatory disclosures of payments made to government institutions by listed mining companies in their jurisdiction are certainly helpful. Information such as payments made to government by Blanket mine’s Caledonia is found courtesy of the Canadian Extractive Sector Transparency Measures Act (ESTMA) reports. How ironic is that a Zimbabweans should rely on outsiders to understand what some mining projects are contributing to finance development.

Disclosure of tax incentives

Tax incentives are a cost to the fiscus, they discount or reduce taxes paid by mining companies to government. Tax incentives constitute off budget expenditures, it is critical that the budget should disclose how much government is paying to the mining sector inform to enhance public scrutiny of the budget through Parliament as required by the Constitution. This will enable the public to identify harmful tax incentives and push for their eradication. It is unfortunate that government is freely giving away its taxation rights to a sector that is notoriously leading on illicit financial flows according to the High Level Panel report known as the Mbeki Report.

Curb illicit financial flows

It is incomprehensible that on one hand, government is paying export incentives to the mining sector for largely exporting finite raw materials to earn the country much needed foreign currency. Mining companies are receiving 2.5% export incentives from the Reserve Bank of Zimbabwe. Government on the other hand advances export tax as a tool to encourage local beneficiation and value addition of minerals. In the platinum sector, government suspended a 15% export tax on raw platinum exports which will resume on 1 January 2018.  This is sending mixed signals and government surely must stop giving export incentives for raw mineral exports if it serious about beneficiation. In one of my blogs, how harmful or helpful is RBZ’s export incentives scheme, I argued that mineral royalty revenue has been sterilised by such practice. For instance, Zimplats, one of Zimbabwe’s biggest mines has a 2.5% royalty stabilisation agreement with government. By giving Zimplats 2.5% export incentives, it means on paper that Zimplats is not paying any royalty revenue. Other base and industrial mineral like nickel pay 2% royalties to government whilst government is paying 2.5% export incentive on the same minerals.

Honour constitutional revenue sharing between the national and local governments

Section 301 subsection 3 of the Constitution prescribe that at least 5% of national generated revenue must be distributed to provincial and local governments and this must be honoured by the 2018 national budget. Since the new Constitution was put in place in 2013, government is yet to honour this constitutional requirement.

Allocate enough funds for the mining cadastre

A computerised mining title management system is needed to promote transparency and accountable management of the country’s mineral rights. This is important to woo investors as incidence of multiple claim ownership disputes can be reduced or if not eliminated. Corruption in the allocation of claims will also be stifled if the mining cadastre system is prioritised.

Subside exploration costs for artisanal and small-scale miners

Artisanal and small-scale gold miners are indispensable to the country’s agenda to earn foreign currency through increased gold production. Gold contribution by artisanal and small-scale miners has surpassed production of large scale gold miners. Apart from the impressive contribution of the ASM sector to the economy, the sector is a direct source of livelihood for about 500,000 people and indirectly it supports over 2 million people.  Sustainable ASM production is hampered by the gambling nurture of their operations.  Exploration costs are beyond reach for most players in the ASM sector. Government must take lead and buy exploration equipment for each gold mining province to help with exploration for all ASM sites.

Plough back Rural Electrification Levies (REL)

Mining companies are significant contributors to the REL because they are heavy electricity consumers. Through Caledonia’s ESTIMA report for 2016, we can pick that Blanket mine of Gwanda RDC contributed over $466,000 to the REL whilst no dividends were paid to Gwanda Community Share Ownership Trust (GCSOT). To broaden opportunities to share mineral benefits with communities as required by Section 13 subsection 4 of the Constitution, the 2018 national budget must plough back at least 25% of rural electrification funds to resource rich communities.

Operationalise the Sovereign Wealth Fund (SWF)

Although government is struggling to raise revenue, it is important for the budget to honour its obligation to allocate 25% of mineral revenue to the SWF. Minerals are a finite resource which must be shared fairly between current and future generations.


To conclude, the Ministry of Finance and Economic Development should be guided by the African Mining Vision when crafting the 2018 national budget. This can be progressively achieved in many ways. The budget must embrace best practice on mineral revenue transparency like EITI, stop harmful taxes incentives, capacitate key institutions to play their regulatory roles in the mining sector eg on mining cadastre, support the ASM sector with exploration costs and to honour the constitutional revenue sharing mechanism between the national and local government.


Getting a mine in Zimbabwe: How to get started

Analysis of Zimplats 2017 Integrated Annual Report: 11 Things That CSOs Can learn

  • Zimplats is domiciled in Guernsey, a tax haven
  • Zombie data, Zimplats’ $86 million payment to government institutions in form of corporate income tax, additional profit tax, pay as you earn, royalties, withholding tax and customs duty cannot be used effectively for accountability
  • PWYP Australia’s call for mandatory disclosure for all mining companies listed at the Australian stock exchange deserve the support of resource rich but information starved Zimbabweans.
  • Women constitute 7% of Zimplats’ total permanent employees
  • Stylised fact: Zimplats does not declare other minerals except for platinum
  • Zimplats’ mining agreement is expiring in August 2018, CSOs must call for transparency in contract negotiation including scrapping off the harmful 2.5% royalty stabilisation agreement

There are strong allegations against proponents of the transparency agenda, there is “a wealthy of information and poverty of attention.” To dispel this strong notion, CSOs especially the Publish What You Pay (PWYP) campaign in Zimbabwe must make use disclosed data like Zimplats’ 2017 integrated annual report for evidence based transparency and accountability advocacy. Already, a research paper produced by USAID’s Strategic Economic Research Analysis (SERA) program in 2016, “Gap Analysis of Mineral Revenue Disclosure and The Information Needs of Various Stakeholders” cautions CSOs to back their transparency appetite with ability to consume data already in public domain.

 Personally, I feel challenged as a PWYP data extractor and also working for a lead organisation on mineral resource governance, ZELA, to showcase the linkages between transparency and accountability.  More so, the fact that Zimplats is publicly inviting stakeholders with queries or comments concerning their integrated report to address them to or is an opportunity that cannot be missed by transparency activists.

Below are 11 things that CSOs can learn from Zimplats’ 2017 integrated annual report;

Zimplats is domiciled or registered in a tax haven

Tax havens, generally, are secretive tax free or low tax jurisdictions notoriously known for helping companies to avoid paying a fair share of taxes to countries they are generating their wealth from. Zimplats is domiciled in Guernsey, a tax haven. Panama Papers revealed that tax havens facilitate nefarious activities like corruption and tax evasion which erodes the finance muscle of resource rich countries to build better schools and clinics. PWYP campaign in Zimbabwe must have push for a public register of all companies operating in Zimbabwe that are domiciled in tax havens that can be used by tax collectors to profile exposure to illicit financial flows risks.

Disclosure by listed companies a silver lining but more needs to be done

In an environment where limited access to information is a major cause of concern, publicly listed entities which raises their capital through the stock exchange are compelled to publicly disclose consistently their operational and financial performance data.  Even if a mining company like Zimplats private limited is not publicly listed in Zimbabwe, courtesy of its parent company Zimplats holdings limited, listed at the Australian stock exchange (ASX), information disclosure is still mandatory. Hence the reason why Zimbabweans just like any interested party in this world have access to Zimplats information disclosed courtesy of ASX. Another route to Zimplats’ data is through Zimplats Holdings limited’ largest shareholder, Impala Platinum Holdings, a South African based company that is listed at the Johannesburg stock exchange (JSE) which owns 87% of Zimplats holdings.

Noting the transparency deficits in the mining sector, it is creditable that the Mines and Minerals Amendment Bill provides for mandatory listing of all mining entities at the Zimbabwe stock exchange (ZSE). If successful, this will transform the disclosure landscape in the mining sector. Although more still needs to be done like mandatory public disclosure of payments made to government institutions by mining companies or projects. Canada, EU and USA have embraced such mandatory disclosure practices for listed companies. As a result, disclosure of payments made to government by Unki mine and Blanket mine, have been made possible because of Anglo-American and Caledonia’s listing at London Stock Exchange (LSE) and Toronto Stock Exchange (TSE) respectively. Therefore, a call by PWYP Australia for mandatory disclosure of payments made to government institution for all ASX listed extractive companies deserve the support of all resource rich but information starved citizens. The second point below helps to shed more light on the value of mandatory disclosure of payments made to government institutions.

Stylised fact: Zimplats does not declare other minerals it produces except for platinum

 Platinum mining companies are commonly accused of only declaring platinum and for being silent on other minerals they are producing. Zimplats’ report is quite clear that the mine generates revenue from the sale of Platinum Group of Metals (PGMs) and other minerals like gold, silver, nickel, copper and cobalt. PGMs comprise of platinum, palladium, rhodium, iridium, ruthenium and osmium.

Zimplats summerised financial results

The main reason why platinum is the reference point to Zimplats’ mineral production is that it contributes over 50% to overall revenue generated from mineral sales.

$86 million paid to government institutions in 2017 financial year, is it Zombie data or what?

Payments made to government have been lumped up. $86 million was paid to government institutions in from 1 July 2016 to 30 June 2017. The payments were made in respect of Corporate Income Tax (CIT), Additional Profits Tax (APT), Pay As You Earn (PAYE), withholding tax and custom duty. To Zimplats’ host communities of Mhondoro-Ngezi and Chegutu rural districts, disclosure of lumped up data on payments made to government institutions is Zombie data. It is not possible for them to track how much was paid to their local government to finance local economic and social development. This is not the case with Caledonia’s 2016 ESTMA report which discloses how much was paid to various government institutions including local government.

Disclosure of payments made to Ministry of Mines will help to hold to account the Ministry on the overdue implementation of the mining cadastre which requires roughly $2.5 million.

Ministry of Mines has one vehicle

Certainly, following the money paid to Ministry of Mines by mining companies is critical to enhance accountability of service delivery in the mining sector. Of course, Ministry of Mines must remit the funds it receives from the mining sector to the treasury.

Government also must disclose various revenue streams from mining companies

Revenue transparency is not only the responsibility of mining companies, government must also disclose various revenue streams from mining companies. Interestingly, the 2013 National budget statement disclosed disaggregated data of Zimplats contribution to the fiscus from 2009 to 2012.

Zimplats contribution to the fiscus 2009 to 2013.PNG

However, this is an isolated case of budget mineral revenue transparency disclosure. Hence, “Now you see it, now you don’t: Budget transparency and volatility problem” argued by International Budget Partnership (IBP) is clearly evident in Zimbabwe. It is important for Zimbabwe to adopt or adapt best practice such as the Extractive Industry Transparency Initiative (EITI) to solve such challenges.

Shareholders got a 1% share of $5,3 billion cash utilisation from 2002 to 2017

Zimplats $5.3 Billion

Out of $5,3 billion generated for 15 years, shareholders got a 1% share amounting to $67 million. Suppose that the community had a 10% equity in Zimplats as per the indigenisation thrust, the share of dividend revenue will be a shrill 0.01% of $5,3 billion, the other 0,01% accruing to Employee Share Ownership Trust (ESOT) and the remainder 0,08% accruing to 80% shareholders in Zimplats private limited. Clearly, the equity route may not have a transformational role in financing community development programmes. The fact that shareholders got a share of 1% from $5,3 billion generated over 15 years raises the fears that they could be gaining elsewhere through misuse of transfer pricing.

Corporate social investments

Further to contributing taxes to finance development, Zimplats voluntary undertakes Corporate Social Investments (CSIs) to develop communities near mining activities.

Zimplats CSI 2017

The disclosure of CSIs presents an opportunity for communities to carry out social audits to verify whether disclosed expenditure is matched with benefits on the ground. It would be interesting to compare CSIs with taxes paid to local governments, Chegutu and Mhondoro-Ngezi Rural District Councils (RDCs). This is important to check if Zimplats prefers to invest more through CSIs than to pay a fair share of taxes to finance local economic and social development.

Women left behind on employment opportunities

Women are not getting a fair share of employment opportunities from mining activities. Out of 3,065 people permanently employed by Zimplats, only 215 are women, a 7% share of employment opportunities. This is a major cause of concern and it must be transparency concerning how Zimplats is addressing this issue to allow community monitoring on progress. The Zimplats board and management are male dominated, with one women representation at management and board level. Zimplats has 9 board members and 8 members in the executive management structure.

Employees by gender
Female    215
Males 2,850
Total 3,065

 Employee by gender

Business risks and stakeholder sustainability matters

Mining companies need the social license to operate on top of legal compliance issues. It is noteworthy that Zimplats acknowledges the social license to operate as a sustainability issue. To gain and maintain its social license to operate, Zimplats is implementing CSIs to contribute to community development as well to engage with stakeholders on the same. Community concerns captured in the report include employment opportunities, equity stake in Zimplats and houses cracking from blasting activities. Concerns for NGOs are limited to the cracking of community houses. Well, it is critical for CSOs to influence Zimplats to acknowledge other vital concerns such as the harm caused by 2.5% royalty stabilisation agreement running from 1994 to 2019, disclosure of the Mining Agreement (MA), disclosure of payments made to government institutions and Zimplats’ registration in  Guernsey, a tax haven.

Mining agreement expires in August 2018

Zimplats’ 25-year mining agreement is expiring next year, August 2018. Optionally, this agreement can be renewed over 2 periods of 10 years each. It is important that CSOs push for contract transparency in the renegotiation of the new mining agreement including scrapping off the harmful 2.5% royalty stabilisation clause.

RBZ export incentive

Zimplats received $14 million from the RBZ export incentives from 1 July 2016 to 30 June 2017 for the 50% foreign currency earnings that it brought into the local economy. It is difficult to reconcile the fact that the treasury decried that mining is not fairly contributing the fiscus whilst government proceeds to pay export incentives to mining companies.

Matabeleland South Key Asks on ASM Ease of Doing Business Reforms

Mat South Indaba 2.jpg

Matabeleland South Province held a two-day Artisanal and Small Scale Miners (ASM)   indaba under the theme “influencing ASM ease of doing business reforms to empower communities.” The indaba was held on 6 and 7 September 2017 at a district club in Gwanda town was fully subscribed with delegates from 13 associations.  148   people participated during the indaba, comprising of 74 females and 74 males, largely dominated by artisanal and small scale miners from the province.

The province has nearly 5000 registered small scale miners, 3 995 gold, 892 base metals and 113 semi-precious metals. These miners came from Matopo, Insiza, Mapisa, Shangani, Mpoengs, Filabusi, Mangwe, Gwanda, Bubi and Mpoengs.  Other stakeholder groupings that participated at the indaba include relevant government ministries and agencies, CSOs, CBOs, suppliers and the media.  Three ASM associations from Gwanda, that is, Youth in Mining, Women in Mining and Lushonkwe were the lead organisers. Technical and financial support was provided by the Zimbabwe Environmental Law Association (ZELA). Expected outcomes of the indaba were;

  • Documented specific asks of Matebeleland South ASM associations on ease of doing business reforms.
  • Improved knowledge on emerging and best practice concerning responsible and profitable ASM
  • Improved information sharing on regulatory development, investments and supply chain opportunities concerning artisanal small-scale miners

Find below the Mat South Key Asks on Ease of Doing Business in the ASM sector



Impediment Suggested solution Responsibility



High prospecting licensing fee $200 To be reduced to$50 Ministry of Mines
2. High mining title registration fee $200 To be reduced to $100 Ministry of Mines
3. High cost of explosives purchasing $500 and storage permit $500 p/a Suggested fees $50 per each permit Ministry of Mines
4. High cost for change of ownership $500 and 1% of the selling price. Reduced to $200 Ministry of Mines
5. Custom milling permit too high at $5000 per annum Proposed cost $2000 Ministry of Mines
6. Carbon movement permit too high $500 per 6months $100 Ministry of Mines
7. Elution plant permit $500 per months $100 Ministry of Mines
8. Mining blasting licencing $200 and First Aid certificate $70 $100 and First Aid to be $10 Ministry of Mines
9. Approved prospectus licence $5000 $1500 Ministry of Mines
10. Ore removal permit, eg in Matebeleland south , miner from Mpoengs one has to 700km to and fro Permit to accessed at district level Ministry of Mines
11. Waiting period for mine registration takes up 6months- inefficiency If 30 days lapses one must deemed to have the permit Ministry of Mines
12. Dispute resolutions taking too long in the Ministry of Mines Urgent establishment of Mining Affairs Board at Province and Mining Districts Ministry of Mines
13. High court taking time to resolve disputes eg more than 2 years Special courts for mining disputes and court judgements to be delivered within 6 months Judicial Service Commission
14 Multi claim ownership Stem corruption (eg a whistle blowing facility) and a computerised mining title Ministry of Mines
15 Mining registration certificate replacement $150 $50 Ministry of Mines
16 Timeframe for replacing the lost certificate taking about 6 months At least two weeks Ministry of Mines
17 Mining title revocation communication poor Use SMS to communicate when the title expires Ministry of Mines
18 Revocation period short- 30 days

If the title expires through non-inspection, one must renew within 30 days

90 days Ministry of Mines
19 Reregistration of a revoked mining title costs $1000 $500 Ministry of Mines





Progress reports for the Environmental Management Agency should be done in 3 months



Payment of an EIA registration $253





           Methods of submitting

To introduce online method of payment






Environment Management Agency
22 High costs of EIA consultants it can be $5,000 Popularising group EIAs to reduce the fees Zimbabwe Miners’ Federation and ASM associations
23 High affiliation fees to ZMF 500 per year per association $200 Zimbabwe Miners’ Federation
24 ZMF is competing with associations that it representing Individual members should be registered with ZMF Zimbabwe Miners’ Federation
25 Taking the roles of mines inspector, therefore fuelling corruption, like we have an operation for Filabusi we need fuel, launch Stick to their mandate since we have the mining inspectors ZRP
26 Unscheduled visits even at night which expose miners to robbery Provide a list of all operating officers like in the Midlands and also give schedule for visits ZRP
27 60% payment in US$ and 40% payment in bond notes is not working 100% US$ payment to miners except for the 5% incentives RBZ
28 Poor access to loan funds from FPR eg $30 million has so far benefited 179 people nationally. Copy the Agric and farmers model where loans are accessed at nearest Agri Bank


Our own miners bank

Allocation per province


Maximum loan threshold should be pegged at $15,000


29 No value for money on service delivery like roads Value for money deliver public utilities like roads


Harmonisation of all RDC fees

Rural District Councils
30 Too many hands involved in the administration of rebates and it takes time eg 30 days One stop shop  
31 ZMF board restructuring, it must include other public stakeholders which includes Min of Mines, MMCZ, EMA, MBCU (police) RDC, lands, ZIMRA, RBZ, Fidelity One stop board from national, provincial and district MMMD, ZMF


Can data driven advocacy change the mineral revenue transparency landscape in Zimbabwe?

For Zimbabweans, mineral revenue transparency reforms have proved to be a mirage.  Possibly hope evaporated with the domestic version of the Extractive Industry Transparency Initiative (EITI), the Zimbabwe Mineral Revenue Transparency Initiative (ZMRTI) failing to take off since 2011.  Without transparency in the mining sector, it is difficult for the public to have a hard talk with government and mining companies on how their mineral wealth is being managed to deliver better schools, clinics and roads.  

The 2017 Resource Governance Index (RGI) by the Natural Resource Governance Institute (NRGI) buttresses this notion.  Countries that have not embraced international best practice on resource revenue disclosure like the Extractive Industry Transparency Initiative (EITI) are less likely to manage their resource wealth for the benefit of their citizens. This paints a gloomy picture for Zimbabwe which is ranked at number 81 out of 89 countries in the 2017 RGI.

Marange alluvial diamond wealth, a squandered opportunity evinces “the resource curse.” $15 billion was lost from the exploitation of Marange diamonds according to the President. Whilst the plundering of diamonds was taking place, the Treasury was sounding “like a broken record” on opacity in the management of Marange diamond revenue.

Through use of “alluvial data” as a colleague Jed Miller labels it, opportunities to influence mineral revenue transparency policy and practice reforms are gaining traction.  Alluvial data refers to data which available on the public domain, like alluvial gold, you do not need to dig deeper to access the data. Such data include mining companies published integrated annual reports, national budget statements and Auditor General’s reports.

 ZELA has a seat at the table as a stakeholder to the Mining Technical Working Group (TWG) on ease of doing business reforms. Through Publish What You Pay (PWYP) data extractors programme, ZELA is making its voice count in the mining TWG. ZELA is in the subcommittee that is working on a special artisanal mining permit meant to contribute to formalisation of artisanal mining.  Another issue on the agenda of the TWG that ZELA is seized with relates to the review of local mining taxes.

A subcommittee being led by ZELA involving the Ministry of Rural Development and Chamber of Mines has been formed to advise the TWG on review of local mining taxes. The Chamber of Mines is pushing for harmonisation of local taxes and the reduction of tariffs paid to local government by mining companies.

Working with the Ministry of Rural Development, Association of Rural District Council of Zimbabwe (ARDCZ) and Rural District Council, ZELA has proposed a framework that RDCs can use to make a compelling case on why mining companies must pay a fair share of local taxes. Mainly, ZELA has presented a weighty argument that the lack of transparency around mineral revenue transparency erodes the power of local governments to negotiate fair local tax deals with mining companies.

Basically, tax is a tool that is used to finance development. RDCs derive their “power to levy rates and taxes and generally to raise sufficient revenue for them to carry out their objectives and responsibilities” from the Constitutions, Section 276 (2) (b). Always, it is important for RDCs to link tax revenue and its impact on development.

If communities are not aware of policies concerned with how RDCs are generating mining tax revenue, the tariff agreements between RDCs and mining companies, the allocation and utilisation of mineral revenue to promote the progressive realisation of their Socio-Economic Rights (SERs), concomitantly, RDCs loose a key alley to hold to account central government and mining companies. It is also noteworthy that by promoting mineral revenue transparency, RDCs can solve information asymmetry within government ministries and departments. Furthermore, tax transparency will expose some mining companies that are quick to publicise their Corporate Social Investments (CSIs) at the same time defaulting on their obligation to pay a fair share of taxes to finance local development.

By taking some of the following steps, RDCs can enhance greater transparency through local budget public consultation processes to make mineral revenue information easier to understand to different users;

  • Actual amount paid by each mining company to the local authority and how it is calculated. That is the agreed tariff and number of units used to calculate taxes paid by mining companies. The number of unskilled labour and production volume are respectively as units for computing local taxes paid for extracting precious and base or industrial minerals.  Of course, through budget transparency initiatives provided in the RDC ACT, local authorities have been publicly disclosing this info. Transparency, however, transcends disclosure. The highest measure is when various stakeholder groupings including communities must understand the data.
  •   Mineral income per capita. As an example, local government can divide the total annual revenue paid by mining companies with the official number of the population size in their district. According to 2012 Zimstat population census data Mhondoro-Ngezi had a population of 104 342 people.  Suppose that Zimplats paid taxes amounting $1 million dollars to Mhondoro-Ngezi RDC in 2016, the income per head for Mhondoro-Ngezi translates to $9.58 in the same year and 80 cents per month. So if basic income grant is adopted by local authorities for all the local taxes paid by Zimplats, each head will receive 80 cents per month.
  • Mineral revenue as a percentage of total revenue generated by the RDC.
  • Mineral revenue linked with socio-economic development outputs like schools, clinics. This is important to demonstrate the important link between tax and development. By taking this path, RDCs can help to manage stakeholder fears of abuse of public revenue. Indeed, the Auditor General’s Reports for local authorities have consistently highlighted wanton abuse of public resources by several local governments.
  •   Comparing corporate social investments (CSIs) undertaken by mining companies with their tax contribution to local government. The table below shows data on CSIs undertaken by Zimplats from 2013 to 2017 available from Zimplats’ 2017 integrated annual report. Thus, Mhondoro-Ngezi and Chegutu RDCs can make use of such data to publicly compare with Zimplats’ tax contribution to local government.

Zimplats CSI 2017

  • Disclosure of contribution to Community Share Ownership Trusts (CSOTs) by mining companies in their jurisdiction. Some, mining companies argue that they contribute to community development through CSOTs in addition to local tax revenue and CSIs. For instance, Gwanda CSOT did not receive dividends from Blanket Mine in 2016 according to Caledonia’s ESTMA report.

Kurai Kingsley, the Trade Commissioner of the Canadian Embassy in Zimbabwe encouraged RDCs to push for the adoption of a free online tool, Towards Sustainable Mining, developed by Mining Association of Canada. The platform promotes public online access to key mineral revenue information different sources. Botswana has adopted the tool. This tool will assist to solve information asymmetry within government departments and allow for greater public access to mineral revenue information. 

ZELA has learnt the lesson that whilst the push for adoption of EITI is critical, there is need to work with individual progressive government agencies on mineral revenue transparency such as RDCs and Zimbabwe Revenue Authority (ZIMRA). Use of mandatory disclosures for listed mining companies in EU, UK and Canada can also be a game changer to Zimbabwe’s stalled mineral revenue transparency reforms. ZELA is now working with ARDCZ to come up with a standard template that RDCs can use as a best practice to promote mineral revenue transparency. This is one of the outcomes on the meeting involving RDCs, ARDC and Ministry of Rural Development held at the Rainbow hotel on 15 September 2017.  The ongoing 2018 local budget consultations offer exciting opportunities to start rolling out this exercise.

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