04 February 2022
Compiled by Obert Bore (Zimbabwe Environmental Law Association)
On the 24th January 2022, the Chinese Embassy in Zimbabwe issued a Statement in response to a Civil Society statement on Chinese investments in Zimbabwe, wherein a number of civil society organisations (CSOs) expressed discontent regarding the impact of Chinese investments on some communities and the impact of mining operations on the social, economic, cultural and environmental rights. In response to the Statement, the Chinese Embassy makes recommendations to policy makers among other things. These recommendations are worth noting, and in this blog, we briefly discuss key takeaways/recommendations for government.
- Government must develop robust legal and regulatory framework to ensure lawful practices by all investors in Zimbabwe. The principal legislation that deals with investment is the Zimbabwe Investment Development Agency Act [Chapter 14:37]. As per its preamble, the objective of the Act is to provide for, “the promotion, entry, protection and facilitation of investment…” amongst other things. While the Act is progressive and streamlines processes of facilitating investment, there are still some gaps that could be improved. The following are some of the pertinent gaps that should be addressed.
There exists legislative ambiguity regarding procurement of unsolicited Public Private Partnership (PPP) investment proposals which are provided in section 34 of the Act. The procurement process for investors in PPP arrangements is based on either a bidding system, or unsolicited proposal. Some projects are regarded as requiring unsolicited proposals or direct engagement due to their nature. It is not clear from ZIDA Act, nor from the Public Procurement and Disposal of Public Assets Act [Chapter 22:23] (PPDPA), what the guides decision making for unsolicited proposals for PPPs. This offers potential opportunities for diversion of public resources away from the strategic plans of the government, failing to attract competition, and ultimately leading to corruption. International best practices indicate that unsolicited proposals are not compatible with the principles of “clarity, predictability, transparency and accountability” unless certain protections are incorporated into the PPP legal framework in order to address the negative consequences.
Another grey area is that ZIDA does not provide for express disclosure of information on companies that invest in the country. This makes it difficult for it or citizens or government to track operations of foreign companies.
Further, the constitutional provisions that relate to performance monitoring for (i) Joint Ventures (ii) infrastructure projects and (iii) mineral concessions and other rights in terms of section 315(2) of the Constitution have not yet been translated into an Act of Parliament. Section 315 requirement specifies that the purpose of having a law in place to monitor contract negotiation and performance is to ensure transparency, honesty, cost-effectiveness and competitiveness. To give effect to section 315, the law would need to unequivocally provide, through an Act of Parliament for the processes and procedures that guide negotiation and performance of contracts in line with the principles of transparency, honesty, cost-effectiveness and competitiveness. In 2020, ZELA in partnership with the Save Odzi Community Network Trust, filed a case against the Executive where it sought a declaratory order from the High Court in order to compel the government to comply with section 315.
- Establishment of a compliance monitoring mechanism for mining companies to ensure compliance. In the statement, the Embassy stresses that it has proposed multiple times to the government to establish a compliance monitoring mechanism for mining companies to ensure compliance with national legislation. In the absence of a Compliance monitoring system, it is difficult for government and civil society organisation (CSOs) to assess, track, document and hold companies accountable for non-compliance with local legislation.
In terms of section 20 of ZIDA Act, all investors are expected to comply with domestic legislation and their contractual obligations. Section 21 takes it further to stipulate responsibilities and obligations that relate to the preservation of the environment, maintenance of independent accounts and records in accordance with international standards. Several other pieces of legislation such as the Mines and Minerals Act, Environmental Management Act and Companies and Other Business Entities Act, Labour Act, and the Securities and Exchange (Zimbabwe Stock Exchange Listings Requirements) (Amended) Rules, 2019 establish very important obligations relating to licensing requirements, environmental protection, fiscal obligations, labour and corporate social responsibility. Evidently, there are many pieces of legislation that impose numerous obligations for investors, but are silent on compliance mechanisms. It is therefore crucial for regulators to take deliberate efforts to establish comprehensive and effective compliance and monitoring mechanisms. One way of doing this is through developing legislation specific Compliance Assessment Tools that can be used by regulators to investigate conformance with environmental laws and regulations, mining regulations, investment laws, human rights laws, fiscal and tax regulations etc. Essentially, this compliance criteria could take the form of a Checklist design that includes inter alia; legal and regulatory requirements, international standards and norms and guidelines. Reporting provisions may also be infused into the different pieces of legislation to enable government and other actors to obtain mandatory information from investors. Where companies do not comply, the law must empower regulators to issue compliance orders, such as environmental protection orders, which have been used before by the Environmental Management Agency,
- The Chinese expressed that they welcome laws and policies that can increase transparency in all local and foreign companies, including access to information to their contracts, taxes, and beneficial ownership. Access to information is central in pursuit of transparency and accountability, as citizens, CSOs and other stakeholders can only hold institutions accountable if they have access to relevant information on contracts, taxes paid or owed and ownership. One such law that can advance contract transparency is the Freedom of Information Act, which requires public institutions to give effect to the right to information and to promote transparency and accountability through disclosing information to anyone upon request, subject to certain limitations. In the past, non-disclosure clauses have been used by some investors to deny interested parties such as parliament to access information relating to contracts. While non-disclosure clauses are permitted in contractual undertakings, the Freedom of Information Act establishes that these must never be used to deny access to information if the requests is made in the interest of public accountability and transparency, and for purposes of protecting a fundamental right.
From the key takeaways, investments by companies that respect national legislation, labour standards, human rights and environmental standards should be promoted. Policy makers must take conscious and deliberate efforts to promote responsible business investments, by all investors, through establishing apt legal and policy measures. Such legislation must be effectively enforced. CSOs can also play a significant role of promoting compliance and enforcement of laws through public interest litigation. This therefore requires a capacitated judiciary to speedily dispense with matters and provide judgements on time. Additionally, CSOs should invest in research and advocacy initiatives to shape the discourse, raise awareness among citizens on their rights and explore different avenues on how to demand accountability.
 See section 100 of PPDPA.
 Part XI of the Mines and Minerals Act, there are requirements inspection certificates and submission of annual work plans to avoid forfeiture of the mining licence
 Section 73 requires enjoins investors to conduct their businesses in a sustainable manner. In terms of the EMA Act, an environmental impact assessment is required for mining projects, and in addition to obtaining an environmental Impact Assessment certificate (EIA certificate) the certificate holder must make progress reports to EMA on a quarterly basis.
 In terms of section 255 of the MMA, mining title holders may be required to pay royalties to local authorities.
 In terms of section 400 of the Securities and Exchange (Zimbabwe Stock Exchange Listings Requirements) (Amended) Rules, 2019, listed entities must disclose the sustainability policy, including mitigation of risks, sustainability performance data and other material information which deepens stakeholders’ understanding of corporate performance is notable