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Transparency and the challenging path to accountability, lessons from Gwanda mining community

Mukasiri Sibanda, Emily Nickerson, and Bekezela Maduma

Giant strides, in the past decade, have been made by Publish What You Pay (PWYP) campaign to improve the extractive sector transparency landscape world over. The results are quite telling. 51 countries are now implementing the Extractive Industries Transparency Initiative (EITI) – a global best practice on promoting open and accountable management of the extractive sector. In addition to EITI, Canada, EU and Norway now have mandatory disclosure rules which compel extractive companies listed in their jurisdictions to disclose payments made to local, regional and national governments per project per country. With all this progress, focus is shifting to how citizens and civil society are making use of disclosed information to improve development, fight inequality and strengthen accountability.

To confront this conundrum or challenge, the Zimbabwe Environmental Law Association (ZELA), Gwanda Residents Association (GRA) and Publish What You Pay (PWYP) Canada are currently working on a joint study, assessing the impact of Caledonia’s Extractive Sector Transparency Measures Act (ESTMA) reports in Gwanda district, Matebeleland South province of Zimbabwe. The focus of this article is to share preliminary findings from the field study which was conducted last week in Gwanda, 22 to 26 January.

“I hear I forget, I see I remember, I do I understand” Confucius.

One of the main challenges when collecting and analysing data from communities on development issues is to ensure community ownership and buy in of the whole process. A challenge we tried to mitigate by deliberately working together with community-based organisations to conduct key informant interviews (KIIs), Focus Group Discussions (FGDs) and to assess emerging patterns from the collected data. We worked with Gwanda Residents Association, Gwanda Economic Justice Network Community Trust (GEJNCT), and Gwanda Youth in Mining. With GRA, we went a step further and we are working together on compilation of research. The benefits are mutual. Working with community-based organisations (CBOs) enabled us to have a more nuanced understanding of the local context, to leverage existing relationships to strengthen participation and to overcome the language barrier risks. Working with the CBOs on this study was also a mechanism to do on the job training for research skills. Before we started the data collection, we spent a half day going through the conceptual framework for the research to check for blind spots together with CBOs.

Gwanda not benefiting fairly from mining activities: mixed reactions

To try and loosen up the conversation on assessing the impact of Caledonia Mining Corporation’s ESTMA reports, we sought to find out the general perceptions of residents on their take concerning mining contribution to local development. Generally, most people interviewed were clear that Gwanda is not benefiting from mining activities. There was wide acknowledgement that Gwanda Community Share Ownership Trust (GCSOT) has made noticeable strides to improve health and education services, an achievement made during the first years of its operations. Communities now barely see the contribution of GCSOT on improving local service delivery. The GCSOT administrator concurred with the observations, and further explained “GCSOT has shifted its focus on local social service provision to support income generating projects to address sustainability concerns. We have not abandoned altogether the thrust to improve service delivery.” Whilst most interviewed people in Gwanda rural lamented little benefits from mining activities, they acknowledged GCSOST’s tangible contribution to local service provision – health, education and water infrastructure. A striking observation is that few people interviewed outside Gwanda knew that interventions made by the GCSOT were funded through dividends from the mining companies.

The opposite is true for residents in Gwanda town. They are clear that mining companies, Caledonia’s Blanket mine particularly, finance the operations of GCSOT. Residents of Gwanda town are not happy that they are directly affected by the impacts of mining activities due to their proximity to the town, yet they are excluded from the benefits of the GCSOT which is focused on rural development.

Upon seeing the payments made by Blanket mine to Gwanda Rural District Council (RDC), a woman artisanal and small-scale miner (ASMer) remarked “we ASMers are not encouraged to pay taxes to Gwanda RDC as communities are not seeing any development from what is contributed by large scale miners.” This clearly demonstrates the far-reaching consequences of how a lack of transparency and accountability in the management and utilisation of mineral revenue can impact on domestic resource mobilisation buy in.

Transparency matters according to communities

Virtually all respondents solidly agreed that transparency in the mining sector is crucial. Several respondents were clear that transparency matters to them because the gold being mined is owned by the communities and they want to know the details of how much is gold is extracted, value realised, royalties, taxes and levies paid, what is received by various government institutions and how the mining revenue is spent since it impacts not only this generation but future generations.

“Leaders must be just as transparent as companies.”

Only a few demanded to know the terms and conditions for the mining agreements so that they could check if the deals were well negotiated to deliver on local development and for monitoring purposes as well. There was limited reference though to the Constitution. Only one respondent revealed that access to information is guaranteed under Section 62 of the Constitution, therefore, public access to information on mining is their right. There was no reference to other constitutional provisions like Section 298 (1) on principles of public financial management which calls for transparency and accountability in all public financial matters. Transparency and accountability during negotiation of mining agreements and for performance monitoring purposes is provided under Section 315 (2) (c) of the Constitution.

Another pattern that emerged from the KIIs and FGDs was that transparency is critical to build public trust and confidence among stakeholders – mining companies, government and civil society. Several allegations were raised mainly against Blanket mine which were hinged on transparency issues.

“The gold mined by Blanket Mine is used to develop Canada, we want the gold to be sold in Zimbabwe and proceeds used to develop this country.”

“We heard that some people from Canada visited Gwanda to see the mine which is behind the development of their country.”

“Gold is sold in foreign currency, we want to know if Blanket mine is paying dividends to GCSOT in foreign currency as well as local tax payments to Gwanda RDC.”

“We do not know how much gold is produced, how much is earned, and taxes paid by Blanket Mine.”

“If the Blanket Mine achieves record gold production and with the gold price soaring, does this mean more dividends to the community trust and taxes paid to government?”

Even though they are several large-scale mines operating in Gwanda, largely, the focus of respondents was on Blanket mine, because of its leadership role in gold production and recent media coverage. From the above comments or questions on Blanket mine’s opaque operations, effectively, it can be discerned that transparency is not only about disclosure but making data to be more accessible and easily palatable for communities. This is so because Blanket Mine on its notice boards displays monthly its performance data related to tonnage milled, gold recovered, gold price, earnings, profits and bonuses paid. Further, Caledonia’s ESTMA reports available online reveal various payments made to government institutions on annual basis. The company is also listed at the Toronto Stock Exchange (TSX), therefore, it is compelled to public release its operational and financial performance data which is available online. On paper, you can hardly ask for more from such as mining company, especially in Zimbabwe, a country that is not part of EITI, so the data produced by Blanket mine is gold. The main challenge though is, the company is failing to make use of transparency as a currency to engage with communities, build public trust and confidence. Civil society organisations (CSOs) have been found wanting on making data as widely accessible and easily understood by the communities.

Gwanda ESTMA FDG

Figure 1: Following the focus group discussion, participants discuss how to find ESTMA data online at www.resourceprojects.org

According to Gwanda CSOT administrator, when Blanket mine achieves record gold production, dividends paid to the community trust also spike. However, since GCSOT received an advance dividend payment of USD4 million as seed capital, the dividends are used to offset this loan and interest that has accrued – it was mentioned that the loan will likely take another 12-15 years to pay off.

Transparency alone is not enough, communities want to see clinics, schools and roads

There was special emphasis by communities that transparency is only a first step – what is critical is to see the development impact stemming from taxes paid by mining companies. Even though we are not sure that the companies are paying their fair share of taxes, it is important to see development from the little resources that are being paid.

Respondents had a wider view of transparency beyond mineral revenue. There was also interest in employment data, to see how many locals were employed and push for preferential local labour recruitment. Another area of interest was openness of procurement to enhance the development of community enterprise development, for example, provision of catering services, personal protective equipment, and security services. Additionally, some respondents mentioned they wanted to understand safety procedures that are in place to protect employees, how minerals are process, how waste is disposed, the environmental impacts of the mine’s operations, and the CSR investments that are made (since these may be exempted from paying taxes).

Gwanda Bridge

Figure 2: Bridge that leads from Gwanda to Blanket Mine.

Community members lamented about how the bridge has weathered with heavy use by trucks from mines, and described challenges of flooding. When it floods, respondents described how people cannot get to work, children cannot get to school, and pregnant women and those that are ill cannot reach the hospital.

Devolution can provide answers to the mismatch of impact of mining activities and poor local economic and social development

From majority of the key informant interviews, the demand for devolution, to enable provincial and district structures to have more control, responsibility and power to participate in decision making processes was echoed. A notion which firmed up more when the respondents noted after being shown Caledonia’s ESTMA reports that local government received a meagre share of revenues compared to central government. For example, in 2018, Blanket Mine paid a total of US$5,227,855 to various government institutions out of which the local government, GRDC received a 2.77% share which amounted to US$144 760. This evidence shows that despite having constitutional powers to mobilise revenue through taxes and levies, Section 276 (2) (b), resource rich local governments struggle to get a fair share of mineral tax revenue.

Caledonia ESTMA report 2016

Figure 3: Re-printed from Caledonia Mining Corporation 2018 ESTMA Report (https://www.caledoniamining.com/wp-content/uploads/2019/05/Extractive-Sector-Transparancy-Measures-Act.pdf)

For Ward 22 which host the key gold mines, Blanket and Vumbachikwe, a key informant interview showed a clear demand that revenue sharing arrangements between the host community and the local government are needed. “We want to get an allocation from what the local government receives from mining companies operating in our Ward. That way, the host communities can be guaranteed of getting some benefits from the mining activities in their area.”

ESTMA data must inspire domestic legal reforms to enhance transparency in the mining

Upon seeing the ESTMA data, several respondents were clear that Zimbabwe must have legal reforms which delivers on open and transparent management of the mining sector. They indicated that this should include a requirement for all companies operating in Zimbabwe to disclose information including production, revenues, and the payments made to governments as well as compel local authorities to share how these revenues are used.

What it takes to make data more accessible

“The biggest challenge is that communities do not know this data exists.”

One of the key research questions was how to make Caledonia’s ESTMA data more accessible and easily palatable for women, youths, and men. Responses varied it was suggested that fact sheets, newsletters, newspapers, radio, ward level local information hubs, WhatsApp groups, twitter, Facebook, and meetings should be used to achieve wider distribution of information. There was emphasis that the fact sheets should have figures and explanatory notes in local languages. As for the meetings, the suggestions were that local accountability structures at village and ward levels must be utilised to ensure wider sharing and greater usage of the Caledonia’ ESTMA reports. One councillor lamented that “…the local planning structures are not effective because they lack information which is useful to effectively plan for development which is hinged on mining revenue…”. It was also mentioned that community-based organisations can be a key channel for information.

It was also revealed that due to lower levels of education, women need more attention when it comes to understanding the meaning of various payments made to government institutions by Blanket mine. Traditional beliefs in the area have not prioritised the girl child when it comes to education. The impact of early child marriage was noted but its severity could not be established. Another important factor as to why the transparency drive must be women focused was that because of their care giving role, they are more affected by service delivery challenges compared to men and they further cannot travel as far for meetings given the many responsibilities. Channels to share information are important and should consider how best to reach women in the community. It was emphasized however by a number of respondents that men and women should get the information in the same way so that they can share the information together, and the information source will not be challenged.

It is a struggle to take the next steps to demand accountability based on ESTMA data

Majority of the Community Based Organisations (CBOs) showed knowledge of Caledonia’s ESTMA which was gained through workshops organised by ZELA. Only one CBO, Gwanda Residents Association (GRA) gave an account of how they have tried to use ESTMA data to demand accountability. Using ESTMA data, GRA followed the money paid to Gwanda Rural District Council (GRDC) and to the Rural Electrification Agency (REA). GRDC management confirmed awareness of the reports but councillors lacked awareness of the reports. Further, GRDC was not keen on discussing opportunities and challenges hinged on disclosure of Caledonia’s ESTMA data. After GRA approached REA, the agency asked them where they accessed the data and general lack of awareness on the contributions made by mining companies in Gwanda to RDC. Beyond this engagement, GRA has yet to follow-up to attempt to assert its right to this information, as outlined in the Constitution.

“When information is limited on what you can do, you are limited.”

Artisanal and small-scale miners have their own version of transparency

Apart from revenue transparency, opacity in the allocation of mining claims especially tributes from large scale gold mines like Blanket mining was also topical according to majority of the respondents. A mining tribute is a result of the allocation of a mineral right or a claim to a third party in exchange of a fee, an arrangement the is recognised under the Mines and Minerals Act. There were strong allegations that senior politicians are the main beneficiaries of lucrative tributes from large gold mining companies in Gwanda. ASMers clearly expressed disappointment that as the largest contributors of gold deliveries to government, automatically they contribute significantly to royalties, but the plough back in producing communities is lacking. In Gwanda, infrastructure deficits, poor road and power networks are hampering productivity of ASMers.

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