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

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

Sibandas, Clarity and Mukasiri

It seems like the donation made by the Chinese billionaire, Jack Ma, has given an adrenaline shot to government’s efforts to control the scourge of coronavirus. Without brushing off the significance of Jack Ma’s act of kindness to Africa and other parts of the world, in Zimbabwe, the knowledge that without this aid, we had nowhere to start is quite scary. If you want to look for evidence of resource curse, then look no further than this story of a country endowed with vast mineral wealth, with no internal capabilities to protect its citizens against pandemics. Yes, we have seen developed countries like Italy and Spain getting overwhelmed by coronavirus. So, one can argue easily, what more can a developing country like Zimbabwe do? At the surface, this line of thinking is compelling. Yet if we dig deeper, Zimbabwe has in the past struggled to contain medieval diseases like cholera. This is a country endowed with second largest known platinum deposits in the whole world after South Africa. Under explored, Zimbabwe has over 40 known mineral deposits like gold, lithium, diamonds and chrome.

WP_20140110_020

Even though annual surveys on investment attractiveness of mining sector jurisdictions conducted by Fraser Institute of Canada find our policy framework repugnant, they rate us highly on geological potential. Underlisted are critical points for government, industry and citizens to reflect on mineral resource governance reforms that are fundamental to safeguard the welfare of Zimbabweans,

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

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

Check Also

Call for Consultancy: Gendered analysis of local content policies in the mining sector in Southern Africa

Background The Zimbabwe Environmental Law Association (ZELA) is a public interest environmental law organization working …

Leave a Reply

Your email address will not be published. Required fields are marked *