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 Transparency & Accountability:Why it became an important research & advocacy issue in the mining sector 

By Mutuso Dhliwayo-Zimbabwe Environmental Law Association

Transparency and accountability is important for a number of reasons.  Firstly, the mineral resources belong to the people.  The state and the bodies that administers minerals like the Ministry of Mines and Mining Development, the Zimbabwe Mining Development Corporation and the Minerals Marketing Corporation among others, are doing so on behalf of the people. With resources belonging to the people, there is therefore nothing wrong with the citizens demanding a right to know how much their government is selling their resources for, how much they are getting from their exploitation and how the generated resources are being used to fund sustainable development that will result in the improvement of livelihoods and poverty reduction.

Secondly, transparency and accountability contributes towards the empowerment of stakeholders like CSOs, CBOs, media and Parliament to participate effectively in natural resources governance. One of the reasons why the relationship between government and other stakeholders has been characterized by mistrust, suspicion and hostility is due to lack of information. Informed stakeholders make informed decisions, participation and comments on natural resources governance. In the absence of information, stakeholders speculate.  Through information provision, trust and confidence is built between the governing, those that are governed on one hand and those that are exploiting resources. It also helps the role of mining companies in economic development to be appreciated.

Thirdly, transparency and accountability ensures that the exploitation of mineral resources benefits all people and not only a few individuals who may be politically or economically connected.  Natural resources belong to all the people and not to a few.

EVIDENCE OF LACK OF TRANSPARENCY AND ACCOUNTABILITY IN THE MINING SECTOR

Lack of transparency and accountability in Zimbabwe’s mining sector in general and in diamond mining in particular has been alleged by a number of stakeholders. These include Parliament, CSOs, CBOs, the media, the Kimberly Process Certification Scheme, the Ministry of Finance and Economic Development and the Ministry of Mines and Mining Development. More often than not, the work of CSOs on promoting transparency and accountability has been dismissed as sensational and not based on facts and evidence. I will therefore endeavor to provide evidence on the lack of transparency and accountability in the mining sector that spurred ZELA and other CSOs[1] to begin programming on transparency and accountability in the mining sector with a special focus on the diamond-mining sector. Lack of transparency and accountability includes   the manner in which mining licenses are awarded, the way contracts are negotiated, the manner in which revenues are generated and their failure to find their way to the fiscus and the failure to prioritise  using generated revenues to fund economic development.

The quest for transparency and accountability in the diamond-mining sector can be traced to the discovery of massive alluvial diamond deposits in the Marange Diamond Fields in Eastern Zimbabwe in 2006 after De Beers allowed its Exclusive Prospecting Order (EPO) to lapse. This resulted in a rush of artisanal diamond mining which at one time was estimated to involve 35-40 000 illegal diamond dealers from all over the world.  The Zimbabwean government argues that the illegal diamond dealing posed a serious security threat to Zimbabwe given the way in which diamond revenues have been used by rebel groups to oust legitimate governments hence the decision to violently force out artisanal miner from the Diamond fields in November 2008.[2] However, the happenings in the Marange Diamond fields in November 2008 have been interpreted differently by CSOs. While agreeing that there was need to bring law and order in the area, they argue that the manner in which it was done resulted in serious violations of human rights.[3]

The quest for transparency and accountability also coincided with the formation of the Inclusive Government in February 2009.[4]  The formation of the Inclusive Government also gave CSOs an opportunity to begin programming on issues that were until them regarded as very sensitive. 

After forcibly removing the artisanal miners from the Marange Diamond Fields the Government of Zimbabwe announced that two companies had been licenced to operate in a 50/50 joint venture partnership with the Zimbabwe Government through the Zimbabwe Mining Development Corporation.  The two companies were Mbada Diamonds and Canadile. Mbada Diamonds owned by the New Reclamation Group of South Africa through Grandwell Holdings (a shell company registered in Mauritius) while Canadaile was owned by a South African company called Core Mining and Mineral Resources. 

With the coming in of the Government to do mining in the Marange Diamond Fields through joint ventures, expectations were very high that there will be greater transparency and accountability in terms of revenue generated and channeled through the fiscus compared to the era of artisanal miners which was characterized by lack of transparency and accountability which was very understandable. With the entry of the Government, the rules of the game had changed this increased expectations and understandably so. However, these hopes and expectations for greater transparency and accountability were quickly dashed.

The first evidence that hopes for greater transparency and accountability maybe placed was the manner  in which the licences were awarded to the  first two 50/50 joint ventures between the Government of Zimbabwe through ZMDC and Canadile and Mbada diamonds. The awarding of these licences was subject of hearings by the Parliamentary Portifolio Committee on Mines and Energy.[5]  Due to lack of transparency and accountability, the Government of Zimbabwe ended up awarding a licence to Canadile, a company that was not serious about mining, but was just out to make a quick profit. As a result of Canadile’s misrepresentation of its financial capacity, the Government of Zimbabwe alleges that it lost US$ 2 billion and the matter is currently pending before the courts where the former directors are facing fraud charges. This resulted in the Government delisting Candaile and its special grant being taken over by Marange Resources, a wholly owned subsidiary of the Zimbabwe Mining Development Corporation.

The government of Zimbabwe experienced the same problems with Gye Nyame.  Gye Nyame  is a private company that  got the licence to partner with the ZMDC in a joint venture on the understanding that it was it was going to inject US 110 million into the partnership. However, out of the estimated amount, Gye  Nayme only invested US$ 8 million and this shows that it did not have the financial capacity from the beggining.  While the Government ‘s actions of delisting Canadile and awarding its grant to the ZMDC and the cancellation of Gye Nyame’s licence are commendable, it is evident that there was no due diligence in the way the licences were awarded to them in the first place. Had there been transparency and accountability in the awarding of the mining licences to these companies, its possible that their lack of expertise and resources could have been identified rather than them being realized when they had prejudiced the state.

All in all , there are seven companies that had been licenced to operate in the Marange Diamond Fields by the Government of Zimbabwe as joint venture partnerships. These are Mbada Diamonds, Marange Resources, Jinan, Diamond Mining Corporation. Anjin Investments , Kusena Diamonds , Nan Jiang and DTZ OZGEO . Their licencing and shareholding were all shrouded in secrecy. [6]

The Ministry of Finance and Economic Development both during the tenure of the Government of National Unity and after the harmonized elections, had been very consistent in its call for transparency and accountability over the Marange diamonds revenues. The lack of transparency had been alleged by the Ministry of Finance and Economic Development in various policy pronouncements. These include the 2010 National Budget Statement, the 2011 Mid-Year Fiscal Policy Review Statement and the 2014 National Budget Statement. In his 2011 Mid Term Review Statement , the then Minister of Finance noted that :

Zimbabwe diamonds continue to be arrested by problems associated with the Kimberly Process Certification Scheme as well as internal issues of transparency and accountability. The reality of Zimbabwe’s situation is that there is no connection between Zimbabwe’s income from diamonds, its output and international prices. [7]

Lack of transparency and accountability was also reflected in the war of words that erupted between the Minister of Finance and MMMD regarding the exact proceeds from diamond sales. The MMMD said he had given the Ministry of Finance US$174 million worth of diamond sales while the Minister of Finance said he had only received US$62 million. [8] The difference between these two figures left us wondering who was telling the truth and who was not. With transparency and accountability, this would not have happened as the information regarding the volumes of diamonds mined and the amount of money, which their sale generated, would have been in the public domain.

The Parliamentary Portifolio Committee on Mines and Energy during the 7th Parliament was one of the foremost players in calling for transparency and accountability in the Marange Diamond fields beginning with their interrogation on the award of licences to Canadile and Mbada in 2010. The Portfolio Committee even tried on three occasions to access the Chiadzwa Diamond fields as part of their oversight and representative role. However, they were denied permission leaving people to wonder what is it that was in the Diamond Fields that the Government did not want the legislators to see. And if an arm of Government like the legislature was being denied access, what were the implications on other interested and affected stakeholders advocating for transparency and accountability? The Committee was eventually allowed access but after a long struggle.

In one of the its reports, the Parliamentary Portfolio Committee on Mines and Energy made the following observation with regards to the issues of transparency and accountability in the Marange Diamond Fields

Since the inception of formalized mining in Chiadzwa, the Committee observed that the sector has been dogged with issues of transparency and accountability in the production, marketing, fiscal contributions and general administration. The Committee noted with concern that there was lot of work that still needed to be done to improve on transparency and accountability in the entire value chain of the country’s diamonds. The key areas that the Committee observed which touched on transparency and accountability include: the aborted auction sale, the selection process of joint venture partners, corporate governance systems in the joint venture companies, the smuggling and leakages of diamonds from Marange as well the mining contracts signed by Government

The Ministry of Mines and Mining Development especially after 2013, has been in the forefront of calling for transparency and accountability in the mining sector as the Government looks to the sector as the engine to spur economic recovery and development. The harmonized elections resulted in the appointment of a new Minister of Mines and Mining Development[9], has also been on the forefront of calling for transparency and accountability in the Marange Diamond Fields. At one point , he even called for the Marange diamonds field to be shutdown  in a bid to promote transparency and accountability.[10]  The reason for the proposed shutdown was that the country was not meaningfully benefitting from the exploitation of diamond resources from the Marange Diamond Fields due to lack of transparency. Boards of  the ZMDC, MMCZ and Marange Resources were dissolved and reconstituted as a way of promoting transparency and accountability. The management of Marange Resources, one of the mining companies operating in the Marange diamond Fields and wholly owned by the Government, were send on forced leave to pave way for an audit in a bid to promote transparency and accountability.[11]

The media both private and public have also made allegations of lack of transparency and accountability. The work of the private media is usually regarded as being “sensational”. However, even the public media has also reported on these allegations. In one of its editorials, the Herald, a Government owned daily  noted this regarding alleged lack of transparency and accountability over the Marange Diamonds:

There appears to be some confusion over just what money is coming in, how it is distributed, and how it eventually comes into the Government’s bank account, whether as taxes, royalties or dividends. But the industry is far too much important for this to continue.[13]

The Sunday Mail ,a Government owned weekly newspaper also hints on limited transparency and accountability in the mining sector. In one of its editorials, it noted that:

In Zimbabwe, mining companies are not being adequately monitored. This creates room for the deliberate understatement of output and the smuggling of minerals across our borders. Is the State aware of the goings on at these mines? Here is a simple indicator of the sorry state of affairs: the mineral export receipts from the Reserve Bank of Zimbabwe do not tally with the mineral production figures from the other organs of State. [14]

Though diplomatic, these two editorials from the public media indicate serious problems of limited transparency and accountability in the mining sector in general and the diamond sector in particular. The private media have been forthright about this problem.

ZELA ACTIVITIES TO PROMOTE TRANSPARENCY AND ACCOUNTABILITY

It was against this background of lack of transparency and accountability that ZELA began programming on promoting transparency and accountability in the mining sector.  ZELA’s work to promote transparency and accountability was kick started by a Civil Society Dialogue meeting on transparency and accountability in the extractive sector with a focus on the mining sector.[15]  The objective of the meeting was to create a platform for CSOs to openly discuss and adopt strategies that can be used to promote and advocate for transparency and accountability in the mining sector. The meeting looked at the challenges and opportunities for promoting transparency and accountability.  The meeting identified issues for policy advocacy and initiatives that can be used to promote transparency and accountability in the mining sector. [16]

The Civil Society Dialogue meeting was followed by the commissioning of a research on stakeholders’ perception on transparency and accountability in the mining sector. The research which was supported by the targeted CSOs, CBOs, mining companies, donors, Government and Parliament with a view to understanding their perspectives on the Extractive Industries Transparency Initiative (EITI) and its suitability in promoting transparency and accountability in the mining sector in Zimbabwe. The research was commissioned with the support of the Southern Africa Resources Watch (SARW).  The findings of the research were shared at a Multistakeholder Conference on Extractive Industries (mining sector) in Zimbabwe held under the theme Strengthening Transparency and Accountability in the mining sector. [17] The objectives of the workshop were to present findings of the stakeholders’ perception on EITI, discuss different international initiatives of promoting transparency and accountability in the mining sector and to create a platform for all stakeholders to openly discuss existing and perceived problems of transparency and accountability in the mining sector.

The meeting had three major outcomes. The first was the agreement by stakeholders to continue to advocate for the government to adopt the Extractive Industries Transparency Initiative (EITI) so as to promote transparency and accountability in the mining sector. This was based on the encouragement inferred from the address by the then Deputy Minister of Mines and Mining Development, Honourable Chimanakire who in his official opening remarks at the workshop categorically stated that the government’s thrust was to adopt EITI. This was further strengthened by the fact that the Ministry of Mines and Mining Development was already working on implementing transparency and accountability principles in collaboration with the World Bank. While the decision to adopt or not to adopt EITI laid with government, civil society had a role to play by lobbying and advocating for its adoption and ZELA sought to coordinate and lead the process. To that end, a Publish What You Pay (PWYP) Chapter for Zimbabwe was going to be established and launched as a platform for lobbying government to adopt EITI with support from the Southern Africa Resources Watch. Even if government refused to join the EITI, the PWYP campaign would remain relevant as it provided civil society with a platform to lobby and advocate for transparency and accountability on disclosure of mining payments as well as revenue and contracts as it is independent of government.

Secondly, ZELA with other stakeholders agreed to explore the possibility of supporting and implementing a voluntary reporting mechanism for mining companies in Zimbabwe. This mechanism would involve the participation of civil society organisations. The Chamber of Mines had continuously expressed willingness to participate in a voluntary reporting mechanism to publicise the revenues that they were paying to government. The hope was that the government will begin to recognise and appreciate that transparency and accountability was not meant to undermine its authority but to further the economic interests of the nation as a whole.

Thirdly, it was agreed that ZELA together with other civil society organisations should play a leading role in ongoing and proposed legislative reforms in the mining sector including the proposed amendments to the Mines and Minerals Act, Zimbabwe Mining Development Act, the constitutional reform process and the development of the proposed Diamond Act.  The objective was to ensure that the amendments and proposed legislation promoted transparency and accountability in revenue generation, selection of mining investors and respect for human rights. In all this, ZELA would work closely with the Parliamentary Portfolio Committees on Mines and Energy, Environment and Natural Resources and Public Accounts and Budget and the media.

The Government of Zimbabwe responded to the CSO advocacy efforts on promoting transparency and accountability through by specifically committing itself to the adoption of the EITI as a means of promoting transparency and accountability in the mining sector through the Medium Term Plan (MTP).[18] To give impetus to the outcomes of the Multistakeholder meeting, the Publish What You Pay Zimbabwe Chapter was launched on the 26th August 2011. This was done with the support of the Southern Africa Resources Watch (SARW) and the support of the Publish What You Pay Secretariat.  

The Zimbabwe Government followed its policy pronouncements to adopt the EITI in the Medium Term Plan, adopting the Zimbabwe Mining Revenue Transparency Initiative  (ZMRTI), which is domestic version of the EITI, on the 8th of September 2011[19]. ZMRTI had three main objectives, which were to:

  1. create a participative and multistakeholder process to promote dialogue and build trust by creating an effective forum for addressing mining sector issues and potentially provide concrete recommendations to national policy makers
  2. generate independently reconciled information for public dissemination setting out all significant mining sector revenue flows paid by the industry and received by the Government
  3. create a platform for ongoing policy reforms designed to advance good governance of the nations’ mineral resources and promote investment for the benefit of the country , including adopting and implementing the EITI Standard

The ZMRTI was seen as the first step towards joining the EITI. The objective was to build trust and confidence among the various stakeholders. In recognition of ZELA’s leading role as a leading CSO in promoting transparency and accountability in the mining sector, it was invited to make a presentation at the inaugural meeting of the ZMRTI.[20] The title of the presentation was “ How do Government of Zimbabwe, Zimbabwe Mining Development Cooperation, mining industry and CSOs work together on ZMRTI”. Further recognition was through the role that was assigned to ZELA to coordinate the participation of CSOs in the ZMRTI.  ZELA was also a member of the multistakeholder group in the implementation of ZMRTI called the Zimbabwe Mining Revenue Transparency Initiative Oversight Group (ZOG). The multistakeholder group was made up of 18 members consisting of 6 members from CSOs, Government and mining companies.

SUCCESSES / ACHIEVEMENTS

There are a number of developments on promoting transparency and accountability in the natural resources sector in general and mining sector in particular that can be attributed to ZELA’s work in collaboration with other CSOs.

Firstly, the response by the Government in adopting the ZMRTI though short-lived is evidence that ZELA’s work in advocating for transparency and accountability was not in vain.  The death of ZMRTI is not in any way a reflection of its shortcomings but that of politics. It was a product of the Inclusive Government and ZMRTI ended with the end of the Inclusive Government in 2013 after the harmonized elections.

Secondly, there is increased national discourse on the need for transparency and accountability in the mining sector today than there was when ZELA began work on promoting transparency and accountability in the mining sector.  While initially, transparency and accountability was mainly the language of CSOs, it is now widely discussed among all the stakeholders that have an interest in the mining sector including politicians that include the Ministry of Finance and Economic Development and Ministry of Mines and Mining Development. The former President was also on record calling for transparency and accountability.[21] This development is a far cry from those times when efforts by CSOs to promote transparency and accountability were viewed by Government as being influenced by ulterior motives.  Business also was also wary of our work. However, today there is increasing understanding of the CSO work on transparency and accountability

Thirdly, there are number of initiatives by Government to promote transparency and accountability in the mining sector. One of the reasons for the merger in the diamond sector was to promote transparency and accountability.  There are also a number of reforms that have been done by Government that promote transparency and accountability. The 2013 Constitution of Zimbabwe is replete with principles on transparency and accountability that are applicable to the mining sector. Both the Diamond Policy and the Draft Minerals Policy are anchored on transparency and accountability.

Fourthly, the capacity building provided by ZELA to the Parliamentary Portfolio Committee on Mines and Energy during the seventh session of Parliament laid a very strong foundation for the work that the Committee did on promoting transparency and accountability.

Lastly, transparency and accountability especially in the mining sector is now being seen as important to Zimbabwe’s democratization process with most programming by CSOs now focusing on natural resources governance. This was not the case before. Catch last week’s edition here


[1] Other CSOs that has a long history on programming on transparency and accountability in the mining sector including the Center for Research and Development, the Center for Natural Resources Governance and Chiadzwa Community Development Trust.

[2] Honourable Walter Chidhakwa , the Ministry of Mines and Mining Development in his key note address at the 76th Annual General Meeting of the Chamber of Mines that was held in Victoria Falls from the 21st -23rd of May, 2015.  Evidence has often been cited on how rebels groups in Sierra Leone used revenues generates from diamond mining activities to wage war against a legitimate government.

[3] Partnership Africa Canada,   2010. Dimaond and Clubs: The militarized control of diamonds and power in Zimbabwe. See also Global Witness, 2010.   Return of Blood Diamonds : Race to control Zimbabwe’s new found diamond wealth

[4] The Inclusive Government was as a result of the Global Political Agreement that was signed between the Zimbabwe African National Union Patriotic Front and the two Movements for Democratic formations on the 15th of September 2009. This paved way for the formation of the Inclusive Government in February 2009.

[5] Oral Evidence for the Committee on Mines and Energy meeting held on the 1st of February 2010.

[6] Global Witness, 2012. Diamonds – A good deal for Zimbabwe?

[7] Biti, T. Minister of Finance in the 2011 Mid Year Fiscal Policy Review Statement, pgs.30 -31

[8] Timba,J. Minister of State in the Zimbabwean Prime Minister’s Office. Statement made at a reception on the eve of the eve of the EITI Global Conference, I March, 2011, Paris

[9] Honourable Walter Chidhakwa was appointed the new Minister of Mines and Mining Development in 2013 replacing Honourable Obert Mpofu

[10] The Sunday Mail,  March 16, 2014 “Shut Down Chiadzwa”

[11] http://www.herald.co.zw/govt-orders-diamond-firms-audit/

[12] http://www.herald.co.zw/diamond-firms-agreeable-to-merger/

[13] Herald Editorial. Clear policies for diamond sector vital, 21 July 2011.

[14] Sunday Mail Editorial. Lets maximize on our mining sector. July 10-16,2011

[15] The national dialogue meeting was held on the 10th of June 2010 at Monomotapa Hotel. It was supported by the International Alliance for Natural Resources in Africa through Action Aid International Zimbabwe.

[16] The policy issues included the need to reform the Mines and Minerals Act and to ensure that principles of transparency and accountability were included in the then ongoing constitutional reform process while the initiatives that can be used to promote transparency and accountability included the Extractive Industries Transparency Initiative, the Kimberly Process Certification Scheme and the Publish What You Pay Campaign

[17] The meeting was held on the 22nd-23rd of September 2010 at Monomotapa Hotel. The hosting of the workshop was supported by the Southern Africa Resources Watch and the then Revenue Watch Institute

[18] The Medium Term Plan was an economic blue print that was adopted by the Inclusive Government in July 2011 and was supposed to run until 2015. However, it was abandoned in  July 2013 after the outcomes of the harmonized elections which ended the tenure of the Inclusive Government

[19] While the Zimbabwe Mining Revenue Transparency Initiative was an initiative of the Inclusive Government , it was coordinated by the Office of the  then Deputy Prime Minister , Thokozani Khupe. The end of the Inclusive Government signaled the death of ZMRTI although the 2015 National Budget Statement makes reference to intention by the Government of Zimbabwe to revive it.

[21] The Herald, 9 November 2013.

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