Protecting the rights of communities and conserving the environment and natural resources

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Mining vs Wildlife: my opinion

Mining has brought about a lot of Yes, I am a fan of development, development is good I have traveled 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 development 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 extinction is real and it’s not all about climate change . Its our activities in the name of development that are causing it.

 

There is a famous saying that inspires me as a conservationist, “We did not inherit the land from our fathers but we borrowed it from our children “. In my last year working with the ZELA I have had the chance to visit mining communities and listen to their grievances about how much the mining companies have violated their human rights, how much the pollution has resulted in a lot of medical issues, how livestock has been lost to the open pits and the frequency of veld fires that have come about as they clear land for the mining activities.  The components of sustainable development according to the Zimbabwean constitution has three pillars, the social, ecological and economic. although we are striving in the economic component what about the ecological, should we establish a balance among the three.

 

(I probably sound like a broken record but I love wildlife is at the core of my heart) mining does not only affect the human life but it has negative effects on the wildlife of the affected areas. I am going to list the obvious the implications are however far more reaching and it would be great to do scientific research to establish them.

 

Habitat loss

In the process of clearing land for mining activities we are taking away habitat for the wildlife. habitat loss is one of the prime challenges that has been noted to be affecting wildlife populations in Zimbabwe. there also is a lot of habitat fragmentation as result of mining activities. habitat fragmentation has serious implications on the wildlife population that include genetic complications.

Poaching

It has been on the increase in areas where mining is occurring near protected areas especially by the ASSM, they need food to eat while they work as a result more times than often the wildlife fall prey the hungry workers.

 

Human conflict

As the miners move closer in to the animal territory there are increased incidents of them bumping into each other in most cases it results in the loss of both human and wildlife lives or one of the two. human and wildlife had increased as the wildlife is now competing the miners in mining areas for resources and space as.

With the above mentioned it leaves with a few unanswered questions, is extracting the minerals worth it if the price we are paying is with lives of our wildlife, our legacy from our fathers meant for our children.

Have you ever wondered what the dinosaur looked like when you read or hear stories about the them, or the Dodo the only flightless bird that last went extinct? I would love the next generation to be able to experience the beauty we have in wildlife today. Now this is a question to any ordinary citizen of Zimbabwe, is mining worth the lives of people that have been lost? is it worth the wildlife we are driving to extinction? Why can’t we find a balance between the two and wildlife sustainability and development? What policy measures can be put into place to develop a balance? Is the legal and policy framework in Zimbabwe sufficient enough to safeguard the future of our big 5 in Zimbabwe and other fauna and flora?

For now, I am going to leave this here.

By Nobuhle the girl who loved Julius and PJ  the vultures.

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.

Conclusion

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.

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.

Our donkeys are worth saving and not killing!!!!!!!!

According to the Food and Agriculture Organization, the global donkey population is estimated at 44 million. The current population of donkeys in Zimbabwe is estimated to be 150000, a population already low to sustain donkey skin trading. If  allowed setting up of donkey abattoirs will be a contribution to the local extinction of donkeys in Zimbabwe. The donkey’s role depends on the communities which it lives with and works for. Usually, its traditional role includes riding, ploughing and carting, with less roles in entertainment and food production. Donkeys are not conventional sources of meat, and their uses for packing and traction do not fit within the stereotyped perspectives of livestock development agencies. Nonetheless, they are essential to the subsistence strategies of many communities in semi-arid regions, relieving families of repetitive and energy-consuming tasks.

 

A donkey is a resilient animal that provides reliable source of draught power to the people in the rural areas. As a saying says a woman without a donkey is a donkey, without draught power or donkeys the marginalised of the society (i.e. women, youth and disabled people) should work twice as much to complete tusks that can be made easy by donkeys. Donkeys are known to have contributed to the economy of rural people as they are used for farming activities that generate income.  In a research done by FAO Working donkeys, where they are observed, most often suffer from three main things:

  • Wounds – due to poor harnessing and hitching, or otherwise abuse by owners.
  • Ingestion of inappropriate things, such as plastic and sand.
  • Parasite infestation (where this may be detectable, such as in the faeces).

All these are problems of management, not of work proving their resilience which is not what one would say for cattle that can be an alternative form of draught power.

Besides donkeys being a good form of draught power, African countries are the most affected by global warming,  donkeys provide a form of cheap transportation that does not add more gases to the ozone as compared to vehicles. The other challenge of global warming  has been shortage of water and donkeys can travel long distances to obtain that for families.

 

The legalization of the donkey trade will increase the incidences of donkey theft for sale to the abattoir in the rural areas, while on the bright side that increases the value of the donkey it increases     their vulnerabilities to theft. It will be good as well to consider that the communities were not consulted on the sale and export of the donkeys are a probably doing so from an un informed position not taking note of the implications in the future. Additionally, every country that has licensed donkey abattoirs has seen an increase in donkey theft. Botswana closed its operations because complaints from the communities. Trafficking of donkey skins in other countries is often linked to wildlife criminal syndicates, and legitimising the trade could provide new linkages for wildlife poachers

 

Therefore, if we allow the slaughter of donkeys in Zimbabwe we have;

  • Taken away a source of livelihoods form the rural people.
  • We have taken away a source of cheap transport from them.
  • We have increased the chances of donkey theft.
  • In the next 10 years donkeys could be extinct with the unsustainable harvesting/slaughter for trade.
  • The disposal of the carcasses of the donkeys can have environmental implications.

 

Give our donkeys a chance !!!!

 

by Nobuhle The girl who loved P.J the vulture

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.

Engaging Government on Tax Justice, Illicit Financial Flows and Open Data

ZAMI Breakfast meeting

A post dialogue meeting to the 6th edition of the Zimbabwe Alternative Mining Indaba (ZAMI) was held at the Meikles hotel on 07 November 2017. This was a jump start to a series of reflective conversations on ZAMI 2017 Action Agenda that will be jointly facilitated by ZAMI organisers to reach out to key government institutions, business players, Civil Society Organisations (CSO), media and communities.  Primarily, the planned reflective conversations are meant drill down deeper on specific ZAMI Action Agenda items, to influence policy and practice reforms tailored to make mineral resources work for all Zimbabweans. A daunting challenge considering the recent resource curse that struck with discovery and subsequent exploitation of Marange diamonds. Roughly $15 billion was lost according to the President available here.

ZAMI organising team comprises Zimbabwe Council of Churches (ZCC), Zimbabwe Environmental Law Association (ZELA), and Zimbabwe Coalition on Debt and Development. Evidently, ZAMI is not an event but a process that involves district and provincial indabas and a series of policy dialogue meetings at local, national and international level.

The inaugural reflective conversation zeroed in on Tax Justice, Illicit Financial Flows and Use of Open Data to Promote Transparency and Accountability Action Agenda available here. This reflective conversation specifically dovetails with African Mining Vision (AMV) goal which seeks “to create a sustainable and well-governed mining sector that effectively garners and deploys resource rents and contributes to broad-based growth and development.”

Ministry of Finance and Economic Development (MOFED) and the Zimbabwe Revenue Authority (ZIMRA) were the primary stakeholders represented respectively by Melusi Tshuma, an economist and the acting Commissioner General, Happias Kuzvinzwa. Other participants comprised of representatives from Zimbabwe Council of Churches (ZCC), a faith based organisation, CSOs, government representatives from Ministry of Agriculture and Mechanisation and Ministry of Small to Medium Enterprises. Altogether, the meeting was attended by 26 people.

Janet Mudzviti of ZIMCODD facilitated this reflective conversation that was held as a breakfast meeting and she shared the ZAMI journey. ZAMI is a domesticated version of the regional Alternative Mining Indaba (AMI) that takes place yearly in Cape Town, South Africa since 2010. It is a parallel process to the regional Mining Indaba that is investor focused. The AMI created an alternative space for resource rich communities to engage with government and business. She emphasised that ZAMI is not  just about mining but broad based socio-economic development as per the African Mining Vision.

Veronica Zano of ZELA shared ZAMI’s main achievements. Ever since the inaugural ZAMI in 2012, the national multi-stakeholder dialogue meetings on mineral resource governance have been successfully organised annually. This year’s national dialogue meeting was the 6th edition of the ZAMI. Multi-stakeholders’ participation during the ZAMI has grown from strength to strength as evidenced by contributions from key government Ministries, Departments and Agencies(MDAs). Ministry of Mines, ZIMRA, Environmental Management Agency (EMA) and resource rich local governments among others. Business participation through the likes of Zimbabwe Platinum Mines (Zimplats) has been remarkable.

Parliament and independent commissions such as the Zimbabwe Human Rights Commission (ZHRC) are very supportive. Unarguably, one of the major success stories of the ZAMI is the creation of space for mining impacted communities interact with and ask hard questions to relevant government MDAs on challenges they are facing from mining activities. Malvern Mudiwa of Marange Development Trust (MDT), for instance, got a chance to ask the Minister of Mines, Oliver Chidhakwa, on what measures are in place to ensure that the Zimbabwe Consolidated Diamond Mining Company (ZCDC), a state-owned company, contributes a fair share of taxes to Mutare Rural District Council (RDC). ZCDC took over from the 7 diamond mining companies operating in Marange that were barely contributing local taxes to Mutare RDC. ZAMI is no longer an annual event, feeder events such as provincial and district level alternative mining indabas are being held. The ongoing reflective conversations to raise awareness and push for the implementation of the ZAMI Action Agenda evinces the maturation of ZAMI as a process.

Reverend Samuel V Sifelani of ZCC gave a profound and clear presentation on the role of the church in natural resource governance in Zimbabwe available here. Predominantly, Zimbabweans are Christians. Therefore, the church leverages on its huge following to discuss mineral resource governance challenges such as the “resource curse.” He quoted Psalm 140:12 and Proverbs 12:23 “I know that the LORD secures justice for the poor and upholds the cause of the needy.”

Mukasiri Sibanda with ZELA led the conversation on ZAMI 2017 Action Agenda. Some of the major taking points on the Tax Justice, Illicit Financial Flows and Use of Open Data to Promote Transparency and Accountability are highlighted below;

  • The national budget and the revenue performance reports produced by the Treasury and the Zimbabwe Revenue Authority (ZIMRA) should align with international best practice on mineral revenue transparency like the Extractive Industry Transparency Initiative (EITI) . This means that mineral revenue contribution to the national purse should be specifically disclosed under each revenue head like Corporate Income Tax (CIT), Pay As You Earn (PAYE), customs duty, withholding taxes and royalties among others.

This requirement is not too much to ask as data on payments made various government institutions by Caledonia’s Blanket Mine is available courtesy of Canadian Extractive Sectors Transparency Measures Act (ESTMA) report available here. A requirement under the Toronto Stock Exchange (TSX).  Likewise, data on payments made to government by Anglo-American owned Unki mine is public accessible because of the EU mandatory disclosures for listed companies in the extractive sector. Further details on budget transparency available here and tax transparency available here.

Melusi responded that MOF has the data on mining contribution per revenue head.  However, there is need to review the current budget reporting framework to ensure public disclosure of mining contribution per revenue head. Further, Melusi utged CSOs to work with Zimbabwe National Statistics Office (Zimstat) on best practice pertain to government information disclosure. He also urged CSOs to make use of public pre-budget consultations to give their input on national budget. ZELA’s response was that it made written submissions on the 2018 budget public consultations through the Parliament Portfolio Committee on Mines and Energy and Parliament Portfolio Committee on Finance and Economic Development.

  • To fulfil their mandate on Domestic Resource Mobilisation (DRM), both MOFED and ZIMRA should push for open contracts in Zimbabwe which mitigates the risks of corruption and poor mining deals available here. Open contracting in the minerals and mining sector is provided for under Section 315 subsection 2 (c). Melusi’s commented that MOFED and ZIMRA only implement the fiscal side of Mining Agreements (MAs). Multiple Ministries are involved in the negotiation of Mining agreements. Therefore, disclosure of MAs needs requires engagement with multi government MDAs.
  • MOFED and ZIMRA should both disclose tax incentives which are off budget expenditures in nature and a cost to the national purse. This will allow the public to do a cost benefit analysis to sniff out harmful tax incentives and hold government and corporates to account on bad deals like stabilisation clauses. Basically, stabilisation clauses restrict government’s ability to flexibilise its tax rates to capture a fair share of revenue during community price booms. Melusi responded by saying the tax incentives given to investors are a matter of public record as detailed by the Income Tax Act (Chapter 23:06) and ZIMRA’s website available here. In response, ZELA explained that it refers to the actual amount of revenue forgone due to tax incentives. ZIMRA’s acting Commissioner General urged CSOs to engage ZIMSTAT on this issue. Tatenda Mombeyara of Trust Africa remarked that ZIMRA and MOFED should also raise issues discussed here with their counterparts in government like the ZIMSTAT.
  • On progressive tax regimes, Melusi and Kuzvinzwa explained that government has a progressive tax regime. A case in point involves PAYE, the more salary you earn the more taxes you pay. In addition, Kuzvinzwa asked for more conversation to understand what CSOs mean when they imply that they want government to adopt a progressive tax regime. Judith Kaulem of Poverty Reduction Forum Trust (PFRT) opined that whilst government’s taxes on paper are progressive, in practice this may not be the case. The ZAMI discussion during the Tax Justice session revealed that individuals were the highest tax contributors through VAT and PAYE whilst CIT contribution to the treasury is meagre.

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Extracted from ZIMRA’s 2016 annual revenue performance report, available here

  • The 2018 budget must support government institutions to give better services to the mining sector. As an example, a computerised mining title system, a mining cadastre is not operational as the Ministry of Mines allege that there are no adequate resources to roll out the programme. Melusi of MOFED disclosed that the Ministry of Mines and Mining Development included resources for the mining cadastre in their request to Treasury and the 2018 national budget will allocate the required resources.
  • Sharing of the national generated between the national and local governments. The budget must meet the constitutional requirement to allocate at least 5% of national generated revenue to provincial and local governments in each fiscal year in line with Section 301 subsection (3). ZIMRA’s acting Commissioner General urged CSOs to work with local governments to ensure that public resources are channelled towards service delivery. Auditor General’s reports on local government have gory details of abuse of public resources available here. He agreed that the national budget must be aligned with the constitution.
  • The national budget should earmark a portion of other public funds linked with mining like the Rural Electrification Levy (REL) to finance service delivery for communities where such resources are generated. Section 13 subsection 4 of the Constitution directs the state to innovate to ensure that communities benefit from resources in their areas.  Miners are heavy contributors to the REL because they are huge consumers of electricity. In 2016, Blanket Mine paid REL amounting to $466,000. If 20% of the REL is ploughed back in Gwanda community, where Blanket Mine is located, it can contribute to improved rural electrification programme of Gwanda. The definition of Community Share Ownership Trusts (CSOTs) must be wider, to take advantage of the opportunities highlighted above. ZIMRA’s acting Commissioner General’s response was that CSOs should concentrate on pushing for beneficiation and value addition of minerals to ensure meaningful socio-economic benefits that can transform the lives of communities.
  •  Fiscal support should be given to the ASM sector on exploration costs to ensure sustainability and profitability of a sector key to earn the country much needed foreign currency. In addition, the ASM sector directly provides employment and income generation opportunities to 500,000 people.  CSOs should work with the ASM sector on formalisation since government struggles to fund resources to the informal sector according to ZIMRA’s acting Commissioner General. Judith Kaulem of PFRT contributed that its government’s responsibility to ensure that the ASM sector is formalised. The Mines and Minerals Act does not recognise artisanal mining.

 

The breakfast meeting ended with the consensus that more formal and informal conversations are needed with the MOFED and ZIMRA to advance tax justice, to fight IFFs and to promote open data for public accountability.  The facilitator, thanked the MOFED and ZIMRA for their time and contributions as well as other participants. Other future planned reflective conversation will be held focusing on ASM and the ease of doing business reforms: Exploring Opportunities to Empower Communities; Gender and Extractive: Women’s Bodies Violence and Extractivism; Natural Resources, Governance and Development; Towards Climate Justice in Zimbabwe;  Business and Human Rights: BRICS Investments; Investing in Local Communities: Interrogating Community Benefit Schemes; and Competing Land Use in Zimbabwe: Conflicting Between Mining and Other Land Uses in Zimbabwe.

Stakeholder voices: Review of Mineral Rich Tongogara RDC’s Strategic Plan

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Stakeholders attending Tongogara RDC’s strategic planning review meeting

On 23 and 24 November 2017, Tongogara Rural District Council (TRDC) held a multi-stakeholder workshop to review its 5-year strategic plan (2015-2019) at Fair Mile hotel in Gweru. The objectives of the review process were to take social stock of progress- achievements and challenges, to adapt strategies in response to the ever-changing environment and to mainstream the Sustainable Development Goals in council programmes. In line with its thrust to ensure that mineral resources are managed to deliver quality local essential services, the Zimbabwe Environmental Law Association (ZELA) provided both technical and financial resources for reviewing TRDC’s strategic plan. Stakeholders (42 people) who participated during the review of the strategic plan included government ministries, Tongogara Community Share Ownership Trust, Civil Society Organisations, councillors, community representatives and TRDC secretariat.

Find below stakeholder voices;

Tongogara is a mineral resource rich district. We are blessed with significant platinum, gold and chrome deposits. The potential to deliver quality local social services is there if mining companies pay their fair share of taxes to finance local development activities” B Dube, Executive Officer (EO), social service delivery, TRDC .

“This strategic review planning meeting has been an eye opener. I had no idea that the projects being implemented by Tongogara RDC are a result of a long-term plan. Now that we are aware that there are deliverables and targets to be met, it is easier monitor and hold accountable Tongogara RDC” Traditional Chief Nhema

“Women’s needs are being prioritised in local delivery of social services. In 2014, we appealed for maternity wards.  A sizeable number of women were giving birth at home. Progress has been recorded, several maternity wards were constructed” Elen Zinyuke, women representative

“It is sad that mining companies are not participating at this strategic planning review meeting. The corporate social investments they undertake should complement what Tongogara RDC is doing.  Local stakeholders participate in Anglo-American owned Unki Mine’s local stakeholder engagement platform, yet Unki mine does not participate in council driven stakeholder consultations” local stakeholder

“The strategic planning review meeting was an opportunity to mainstream 10 Sustainable Development Goals (SDGs) as prioritised by central government, in Tongogara RDC’s development programmes” Felix Mukosera, local government expert

“Tongogara RDC’s social safety nets are now prioritising the girl child. The bursary scheme and planned campaign to end child marriages will help to promote the realisation of the girl child’s rights.” Social service delivery expert

“I am happy that Tongogara TRDC is consulting disabled people during formulation and implementation of  the council’s development plans. The challenge is that we are not seeing progress in some areas  like income generation projects” Tawanda Muchokoto of Shurugwi Association of People with Disability

“We need government to approve our bylaws on environment and natural resource management to better manage most of the environmental challenges we are facing in Tongogara RDC” Mubaiwa, Executive Officer, environment management, Tongogara RDC. ZELA supported TRDC with public consultations and drafting of the bylaws on environment and natural resources.

“Whilst several local governments have a challenge on timeous production of audited financial statements, I am happy to tell you that Tongogara RDC’s audited financial statements are up-to-date” Treasurer, Tongogara RDC.

“We welcome Tongogara RDC’s programme of auditing council owned schools to promote better handling of local public resources in line with Finance and Administration of Schools Circular 6 of 1994. However, council auditors should work closely with Ministry of Education’s auditors to avoid duplication and to promote better enforcement the recommendations.”

“Synergies between Tongogara Community Share Ownership’s developed plans and Tongogara RDC’s development agenda are critical enablers of improved local service delivery” Mukasiri Sibanda, Economic Governance Officer with Zimbabwe Environmental Law Association.

To conclude, it must be noted that Section 13 (2) of Constitution provides for community participation in  the formulation and implementation of development plans that affect them. ZELA will work with Tongogara RDC to ensure that communities are aware  of and are able to understand council’s development targets. Such a process will enable better community participation during local budget public consultations, ensuring that resources are effectively allocated to achieve set targets as per the development plan. Prior to the review, Tongogara RDC had carried out a stakeholder needs assessment to ensure that the review of the development plan is aligned with community priorities.

Artisanal & Small Scale Mining Women Academy Off The Blocks

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Participants at the ASGM Academy for Women

To help women to better tap opportunities presented by ever-growing artisanal and small-scale gold mining (ASGM) sector, Zimbabwe Environmental Law Association (ZELA) in partnership with Zimbabwe Miners Federation (ZMF), Women in Mining Association-affiliated with Ministry of Women and Zimbabwe School of Mines are currently hosting a one week ASGM Academy for women. 55 women miners are receiving training in fundamentals of mining at Inyathi Training Centre, Bubi running from 02-08 December 2017.

Participants were pooled from major gold producing rural districts, mainly Bubi, Gwanda, Matopo, Mberengwa and Zvishavane. Preference was given to syndicates, widows and youths. Few sponsors were added to the mix to enable women financiers to understand better the technicalities in the mining sector to sure their investments and to attract more capital.

Themed “Yikho Phela We Invest in Women: The Future of Mining” the academy is jointly supported by the Netherlands Enterprise Agency and Christian Aid Zimbabwe. The Academy is part of the big programme to support formalisation of the ASGM sector through; (i) supporting ASGM association to organise and make their hundred thousand voices count for advocacy; (2) to facilitate multi-stakeholder policy dialogues to responsible, profitable and sustainable growth of ASGM that is an integral part of rural economies; and (3) to enhance linkages between large scale miners and the ASGM.

Prior to the commencement of the school of mining training programme, women met for the first two days to reflect and learn on their practice in the ASGM sector. Main challenges reflected upon include inheritance pitfalls for women miners, physical and sexual harassment by the Zimbabwe Republic Police (ZRP), corruption in the award of mineral rights, limited ownership of mining titles, lack of collateral security to access various loans channelled towards the ASM sector, disruptive role of care giving and the dangers of lack of appropriate workers compensation insurance cover for ASGM sector.

The five-day School of Mines course on fundamental in mining for women covers fundamental of mining geology, introduction to mining law, introduction to mining and mineral processing, basic mine finance and planning, introduction to drilling methods, women in mining, basic safety, health and management, and lastly a practical and educational mine trip will be carried out.

According to Mr Gwaze, School of Mines’ training and operations manager, a tailored made training for women came after realising that women are unique clients. They participate freely and better if they not mixed with males. After the training, women should have gained confidence to successful venture into a male dominated ASGM sector. Further, by employing best practice in mining and mineral processing, women miners can boost their mineral yields.

Find below the women voices on the value proposition of the ASGM for Women;

“I have been mining gold since 2001, but I have never been trained on how I can do proper mining. This course will help me to better manage my gold mine. I look forward at last to enjoy rich picking from gold before I die” 62-year-old Maltilda Masia, a miner in Gwanda.

“we are running women empowerment fund and women development fund, yet our understanding of the ASGM processes was weak.  Now i have appreciation of multiple permits which are legal burden to women miners. Our monitoring and evaluation of ASGM projects we are funding is no longer going to be same, we now have a better understanding of some technical details critical for successful ASGM” Murungi with Ministry of Women Affairs

“As a sponsor, I feel embolden to start and operate my own mine. Further, I will be able to assist the people I am working with on best practice to improve mining and mineral processing methods” Mrs Ncube, a sponsor in Bubi district

“It has helped me in a big way, women have so many things to say and they are so emotional, but time is limited. There are so many issues that need to be addressed by various government institutions involved in ASGM. We are going to engage mainly the Ministry of Mines and the police on issues affecting women” Blessing Hungwe, chairperson of Women in Mining Association formed in partnership with Ministry of Women. She was commenting on the first two days of the Academy which allowed women to share and learn from their diverse experiences.

“This course means a lot to me especially on communication strategies. I now understand the purpose of communication, that is to come up with a message that is easy to understand, easy to remember and a message that steers action from primary targets.  It is also interesting to network with colleagues and to listen to different challenges and best practice among women” Shamiso Hozo, President Women in Rural Mining Zimbabwe.

Follow the twitter hashtag #WomenInASM for updates on the ASM Academy for Women, 02-08 December 2017. Let me conclude by sharing comments I received on twitter and on WhatsApp from colleagues.

Kady ASM

The policy briefs are available here at https://impacttransform.org/en/research/policy-briefs/

“It would be interesting to learn how many women have come in via inheriting claims of their late husbands, and how many are full-on entrepreneurs who have come to small scale mining on their own accord and volition. And is there a difference in terms of their productivity, etc. They would seem to be quite different miners” Professor Richard Saunders

Women’s Voices: Gender Based Violence in ASM Sector

Edited by Nyaradzo Mutonhori and Mukasiri Sibanda

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56 women participating at the one week Artisanal and Small-Scale Gold Mining (ASGM) Academy for Women, have noted with deep concern that Gender Based Violence (GBV) linked with ASGM sector, is a major problem that must be addressed urgently. GBV in the ASM sector deserves special attention. This statement is a summary of profound and compelling cases of GBV linked with ASGM and a call to action to different stakeholders, relevant government institution, corporates, media, development agencies and male counterparts in the ASGM sector.

1.       Overlapping mining claims, double or multiple claim allocation increases women vulnerabilities to violence. The lack of a computerised mining title management system coupled with corrupt practices of Ministry of Mines and Mining Development officials and mainly male investors causes arbitrary displacement of women from gold claims. First In First Assessed principle not respected when it comes to women on claims with proven resources

2.       Corruption by the police officers creates conditions were interpersonal violence frequently occurs in the ASGM sector as the police receive bribes and openly harass rightful women claim owners and their workers to hound them off their operations. This wanton disregard of the right to property (mining claims), is a perverse form of human rights violation against women in this sector.

3.       The long delays in settling claim ownership disputes, which delays are often-times unnecessary, by the Ministry of Mines and the courts are a form of Gender Based Violence as they result in women suffering due to loss of livelihoods for them and their dependents mainly children who need school fees, food and clothing. These institutions of the state are equally actors in perpetrating structural gender based violence against women in the ASGM sector.

4.       Women miners frequently face sexual and physical harassment from the male dominated labour-force who threaten to gang-rape them if they are not paid their expected share of proceeds regardless of gold output and expenses.

5.       Illegal arrests and detention of women in ASGM by mostly male police officers on alleged crimes linked with ASGM make women vulnerable to sextortion. Men often possess financial muscle to bribe their way out of police custody but women in ASGM often do not have similar resources.   The police often charge the women with the crime of Illegal possession of gold and when the women produce their mining licences the police change the charge to failure to produce register yet they do not ask for the registers upon arrest. Unrealistic regulations such as the Gold Trade Act which criminalised gold possession creates an enabling environment for the police to seek bribes and forced sex from women artisanal and small-scale miners. Women hurt the most from compliance risks due to high levels of poverty impeding their ability to acquire costly mining claims.

6.       Violence caused by machete wielding gangs is making ASGM unsafe for women miners. Corrupt police officers are not arresting known gang leaders because of bribes.

7.       During administration of deceased estates, where the estate involves a rich gold claim and where the likely beneficiary is a woman, the probability of them being dispossessed of the claim is very high compared to when it is a male beneficiary. This dispossession is coupled with emotional and physical harassment. The impunity for such violence against women points to structural tolerance and causes aggravation of violence against women facing such situations in ASGM.

Mining is one of the key economic sectors of the country and will be one of the sectors to contribute to the economic recovery of our country. The Constitution and the Broad-Based Women’s Economic Empowerment Framework call for gender equality and equal participation of men and women in key economic sectors. Gender Based Violence in ASGM is a way of excluding women from participating in this key economic sector. The state must stop being an aggressor of violence against women in ASGM by putting in place computerized mining title management and purging the Ministry of Mines and ZRP of corrupt elements. The government must sanitize the operating context for artisanal miners, ridding ASGM of violent machete wielding gangs. WE demand a State that that promotes freedoms and rights for all, intervenes where these freedoms and rights are threatened in key economic sectors like mining, and is structured on diversified forms of participative democracy  by its citizens, men and women alike.

An Analysis of 2018 national budget statement: a mineral resource governance view point

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If you want to know government’s priorities, don’t be swayed by eloquent speeches from politicians, take a close look at the budget. Plans on how government intends to generate, allocate and spend public revenue in a manner that can hurt or protect the poor are revealed publicly. As Zimbabwe is endowed with abundant mineral wealth, a depletable public asset, it is critical to scrutinise the budget to see how government is leveraging mineral assets to promote broad based socio-economic development. After all, the theme for the Annual Pre-Budget Seminar, 08-12 November 2017, held at Elephant Hills, Victoria Falls was “Consolidation of Economic Development and Transformation Through Domestic Resource Mobilisation and Utilisation.”

As a member of the Tax Justice Network Africa, the Zimbabwe Environmental Law Association (ZELA), a lead organisation on mineral resource governance at national and regional level, has strong interest in the 2018 national budget statement, themed “Towards a New Economic Order.” A pregnant theme that induces excitement and apprehension at the same time. Change by nature can result in opportunities for progression or threats for regression.  So, what can we learn about development opportunities or threats from the 2018 national budget statement through a mineral resource governance perspective?

Curbing corruption and rent seeking behaviour in the mining sector

The budget missed the opportunity to embrace mineral revenue transparency best practice like the Extractive Industry Transparency Industry (EITI) to fight corruption and rent seeking behaviour in the mining sector. Mining agreements should be made public, including payments made to various government institutions by mining companies and beneficial owners of mining activities. For a government that prides itself on having strong political will to fight corruption, it is regrettable that an opportunity was squandered to help exorcise the ghost of “missing $15 billion” Marange diamond revenue.

By making public mining agreements, citizens can pressure government and mining companies to sign good deals that avoid skewing mining benefits in favour of corrupt public officials and corporates. Disclosure of various payments made to government institutions gives citizens the power to follow the money to hold to account government institutions on service delivery. As an example, through Caledonia’s Extractive Sector Transparency Measures Act (ESTMA) report, taxes paid to Gwanda Rural District Council (GRDC), Rural Electrification Agency, Ministry of Mines and ZIMRA are publicly disclosed.

 Platinum royalty rate reduced from 10% to 2.5%

The budget stated that Special Mining Lease Agreements (SMLAs) provide for a 2.5% royalty rate for some group of Platinum Group of Metals (PGMs) mining companies. Unfortunately, the budget masked the beneficiary mining companies of this fiscal arrangements which undermines the Public Financial Management Act (PFMA) prescribed PGMs royalty rates-platinum 10%, other precious metals 4%-palladium, rhodium, ruthenium, iridium, and osmium, and 2% for base metals like nickel.

To enhance fair competition amongst platinum miners, the budget slashed platinum royalty rate to 2.5% until August 2019. The budget failed to explain why August 2019. However, from Zimplats’ 2017 integrated report, we can learn that the company’s SMLA expires in August 2019. Thereafter, it can be renewed for two periods of 10 years each. The budget left the public in suspense on what will happen after August 2019.  Is government going to continue with tax incentives for PGMs mining houses or not.

If not managed well, tax incentives can be harmful as noted by the blog- Disputes expose poor mining agreements. In 2015, Zimbabwe Revenue Authority (ZIMRA)’s annual revenue performance report revealed massive cost of the 2.5% royalty rate provided by SMLA to the public purse.

2015 ZIMRA Fiscal hole

By making PGMs houses pay 2.5% royalty rates, it means that government has forgone mineral royalties from the exploitation of PGMs since there is a 2.5% export incentive scheme for mineral export earnings. Zimplats received a $14 million export incentive from 1 July 2016 to 30 June 2017 according to the company’s 2017 integrated report.

It is vital to note that the reduction of platinum royalty rate is the last point in the budget. This raises some eyebrows as to the involvement of the new Minister of Mines and Mining Development, Winston Chitando, formerly Mimosa platinum mine’ executive chairman. Mimosa mine is the only producing platinum mine which was not enjoying the preferential royalty rate since it is not a holder of a SMLA. Notably, it was unfair for Mimosa platinum mine to continue paying a 10% royalty rate whilst other platinum mines were enjoying a 2.5% preferential royalty rate. Government was supposed to renegotiate with PGMs houses with SMLA to comply with the 10% royalty rate prescribed by the PFMA instead of slashing the royalty rates to 2.5%.

Export tax to promote mineral value addition and beneficiation

To optimise benefits from mineral wealth extraction, value addition and beneficiation of mineral is critical. Interestingly the budget gave an example of lithium concentrate with a grading of 5 to 6% lithium oxide through off take agreements for US$600 per tonne. When beneficiated, resultant lithium carbonate is sold at prices ranging from US$15,000 to US$20,000 per tonne. From this example, by exporting raw minerals, the country is forgoing foreign currency earnings, tax revenue, domestic investment finance and jobs.

In 2015 government introduced 15% export on raw platinum export to encourage beneficiation and value addition. The export tax was suspended until December 2017 to allow PGMs players to implement agreed plans with government as detailed below.

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The 15% export incentive scheme failed to reward progressivity in beneficiation and value addition of PGMs. For example, Zimplats which exports platinum matte was treated the same as entities exporting platinum concentrates. By promoting a progressive export tax regime, the 2018 national budget statement made a commendable step. However, the sharp drop of export tax from 15% threshold to 5% may not be warranted.

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Another commendable move is that export tax on raw mineral exports was extended to lithium and black granite with effect from 1 January 2019. The export tax on black granite is progressive as shown below.

Dimensional Stone Uncut Cut only Cut and polished
Export Tax (%) 5 2.5 0

Export tax on gross value of exported lithium was pegged at 5%,

Review of mining fees and charges

Ground rental fee applicable to diamond concessions was reviewed from US$3,000 to $225 per hectare per annum. The review of mining fees and charges was only limited to the diamond sector. Artisanal and small-scale gold miners who demanded the review of fees for several permits required in the mining sector like prospecting license ($200), explosives purchase permit ($500), and explosives storage permit ($500) among others.

It is interesting to note that government has strong interest in vast Marange diamond fields through the Zimbabwe Consolidated Diamond Company (ZCDC). This brings to attention the issue of how government is handling conflicting objectives as a regulator and a player. The review of ground diamond ground rental fees could have been motivated by the desire to give ZCDC a life line.

Artisanal and Small-Scale Gold Output Surpasses Output of Primary Gold Producers

17,163 kilograms of gold were delivered to Fidelity Printers and Refineries (FPR) between January and September 2017. Artisanal and Small-Scale Gold Mining (ASGM) accounted for 51% share of the total gold deliveries in the same period. According the budget, ASGM production was boosted by government interventions like $40 million gold mobilisation fund and efforts to plug revenue leakages through joint compliance monitoring.

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In light of the significant contribution of ASGM to the economy, it is unfortunate that the budget failed to respond to the key asks of many players in the ASGM sector as noted during the public pre-budget consultations held by PPCME in Bubi, Zvishavane and Mutoko districts. ASGM players want government to subsidise the costs of exploration by purchasing drilling rigs; to reduce the costs of multiple permits that criminalises a source of livelihood for 500,000 direct beneficiaries and 3 million indirect beneficiaries of ASGM; and to promote mechanisation of ASGM operations.

Indigenisation now restricted to platinum and diamond sector

The 51/49 indigenisation threshold in the extractive sector is now applicable only to the diamond and platinum sectors. Perhaps this came as an admission that the indigenisation scheme has failed to work seeing that only one company, Caledonia’ Blanket mine is fully compliant with the indigenisation model. To date, only 2 out of 61 community share ownership trust received share certificates.

The analysis of Zimplats’ 2017 integrated report: 11 things CSOs can learn makes an interesting observation concerning what to expect if the company is fully indigenised.

Zimplats indeigenisation analysis

Thin capitalisation redefined

To promote investments considering the prevailing liquidity challenges, the budget redefined thin capitalisation to exclude locally contracted debt in the determination of debt equity ratio (3:1) prescribed by the Income Tax Act. The arm’s length principle applies. Meaning there are safeguards on paper to manage abuse through related party transaction.  Interest accrued on debt element above the debt equity ratio is not an allowable deduction for the purposes of calculating taxable income.

When a company prefers to fund its activities through debt than owners’ equity, it leads to thin capitalisation. If not managed well, thin capitalisation erodes taxable income. Instead of investing owners’ equity to earn dividends, owners can make use related party transactions to fund their operations through debt to earn interest whether the company is profitable or not.

Expanding the scope of institutions to be audited by the Auditor General

The Auditor General’s 2016 report on state owned enterprise highlighted the challenges faced in terms of acquiring audited financial statement for Anjin to verify gross annual diamond sales used to compute depleting fees. By proposing expanding the scope of work of the Auditor General in the PFMA in line with Section 309 (2) (b) of the Constitution, to include government controlled entities like Anjin, there is scope for greater transparency and accountability in the management of mineral revenue. According to the 2012 annual report of the Zimbabwe Mining Development Corporation (ZMDC), the corporation has 10% shareholding in Anjin, while Chinese firm Anhui Foreign Economic Construction Company owns 50% and the remainder is owned by the government. However, it is strongly suspected that Zimbabwe Defense Industries (ZDI) owns the mystery 40% shareholding in Anjin.

Conclusion 

In a nutshell, during the pre-budget consultations, ZELA made its written submission to Parliament, particularly the Portfolio Committee on Mines and Mines and Energy titled 2018 National Budget Expectations: The Quest to Make Mineral Wealth Work for All: African Mining Vision (AMV). Main issues that ZELA raised include; adoption or adaption of the Extractive Industry Transparency Initiative (EITI), resources for the mining computerised title, exploration and mechanisation support for  ASGM amongst others. ASGM players also made their contributions during the budget consultations mainly on exorbitant fees for multiple permits which are criminalising their livelihoods. It is sad that feedback from the budget on outcomes of the public consultations is lacking. Whilst input of large scale investors has a significant footprint in the budget like tax incentives, and the review of the indigenisation policy. FDI is needed to turnaround the economy particularly the capital-intensive mining sector. However, there is need for a policy mix that attracts FDI and mobilising much needed domestic finance for development.

Mineral revenue transparency reforms: Priorities for the new government

Yikho Phela

Under the auspices of “Operation Restore Legacy” led by the military, a new transitional phase has been ushered in Zimbabwe. Government has publicly shown its policy intentions to grow the economy, revamp public service delivery and to fight dogged corruption. As the country is endowed with vast mineral wealth, civil society must not miss this opportune moment, to engage government on critical enablers to make mineral wealth anchor “sustainable economic growth and broad based socio-economic development” as contemplated by the African Mining Vision (AMV).

Apparently, this new window of opportunity may not last long, in the next 7 months or so, new elections are to be held if all goes according to the book. Therefore, civil society must engage government on quick wins or low hanging fruits that can transform the landscape of mineral revenue transparency and accountability in Zimbabwe. Mindful of this narrow window of opportunity, this discussion paper is tailored to; (i) galvanise  aggregate public demand for improved transparency and accountability in the management of mineral resources, (ii) to  give traction to multi-stakeholder policy and practice reform dialogue to ensure mineral resources are well managed for the benefit of all Zimbabweans, and (iii) to better focus policy makers on critical areas that require urgent attention to attract much needed “responsible investments”, to curb corruption and deliver socio-economic development hinged on mining.

Attracting Foreign Direct Investment (FDI) is one of government’s main priorities as highlighted in the 2018 national budget statement[1] and the State of Nation Address (SONA), 20 December 2017.  In so doing, some policy interventions have urgently been carried out, in the process undermining transparency and public participation, cornerstones of public accountability which augurs well for “Operation Restore Legacy.” Indigenisation requirement of 51/49 equity in the mining sector was scrapped except for platinum and diamond sectors. Host mining communities, who bear the brunt of mining, were not consulted. They are in the dark as to operationalisation of Community Share Ownership Trusts (CSOTs) outside platinum and diamond mining areas. Likewise, mining workers set to benefit from Employee Share Ownership Schemes (ESOS) have been affected.

Whilst government is under pressure to turnaround the economy through attracting investments, the risk of festering a “resource curse” increases as bad mining agreements can result if the fast-tracking approach is taken. Lessons can be drawn from Marange diamond mining activities in which minerals rights were parcelled without economic consideration of the value of diamond reserves, investors failed to meet required capital contributions, exploration, a life blood of any mining activity was not done and anticipated $50 million to the Marange Zimunya CSOTs failed to materialise amongst other host of challenges. Another case of poor mining deals is the 2.5% royalty stabilisation clause for Special Mining Lease Agreements (SMLA) involving platinum houses which undermined the Public Financial Management Act (PFMA) royalty rates currently pegged at 10%. If well managed, the country’s mineral assets can be a good leverage for Domestic Resource Mobilisation (DRM) to finance development. Avoiding overgenerous tax incentives is a low hanging fruit for DRM. This will ease government pressure to borrow development finance from International Financial Institutions (IFIs).

Ongoing policy reforms like the Mines and Minerals Amendment Bill (MMAB) offers opportunity for government to entrench public disclosure and performance monitoring of Mining Agreements (MAs). This will fulfil Section 315 (2) (C) of the Constitution which requires transparency, cost effectiveness and competitiveness in negotiation and performance motoring of MAs.

Considering that the country is opening to investors, there is urgent need to review various Double Taxation Agreements (DTAs) to mitigate against abuse which can harm the DRM initiatives. DTAs are entered between countries to facilitate cross border investments by making sure income generated by individuals or corporates is not taxed twice. Nonetheless, DTAs can be abused through treaty shopping and permeant establishment definitional issues. According to International Tax Blog, “treaty shopping generally refers to a situation where a person, who is resident in one country (say the “home” country) and who earns income or capital gains from another country (say the “source” country), is able to benefit from a tax treaty between the source country and yet another country (say the “third” country).  This situation often arises where a person is resident in the home country but the home country does not have a tax treaty with the source country.”

Permanent establishment risk can be managed according to PwC when “the permanent establishment (PE) threshold test is contained in many countries’ domestic tax laws and double tax treaties. It determines whether a business has sufficient activity in another territory to create a taxable presence in that other territory from a corporate tax perspective. While multinational groups may have found that PE issues were not a key area of focus for many tax authorities in the past, this position is now changing in light of the OECD’s proposals outlined in Action 7 of the Base Erosion and Profit Shifting (BEPS) project, which relates to addressing the perceived artificial avoidance of PEs by multinational corporations.”

Mining, unquestionable is intertwined with the country’s development prospects as evidenced by its principal contribution to much needed foreign currency earnings and its potential tax contribution and development of within the mining value chain and beyond the mining value chain. It is mindboggling that the country does not have a computerised and open mining title management system. The tender for the mining cadastre was flighted in 2014 and the tender was awarded to Spatial Dimension in 2016. To date, there is hardly any evidence that the open and computerised mining cadastre will be operationalised. There are many claim ownership disputes cause largely by corruption in the award of mining claims. Certainly, such risks are not good for attracting foreign or domestic investment in the mining sector. The Artisanal and Small-Scale Gold Mining (ASGM) sector critical to the country’s agenda to increase foreign currency earnings and to community empowerment is reeling from mine claim ownership disputes. A red flag on mining disputes was raised by women in ASGM during the 16 days of activism against Gender Based Violence (GBV).

Beneficial Ownership (BO) is a critical dosage to fight corruption in the award of mineral and mining operation or investments. Without knowing of the natural persons that are profiting from mining deals, initiatives to curb corruption will have limited success. Whilst disclosure of interest is important in public or private procurement, knowing the real beneficial owner of the deal is a game changer to avoid corruption, transfer pricing abuse and tax evasion. It is a matter of public interest to know whether the new Minister of Mines and Mineral Development (MMMD), Wiston Chitando, a former executive chairman of Mimosa Platinum Mining company, is a beneficial owner in Mimosa mines’ operations through equity or procurement deals. Similarly, there is strong public speculation that Mnangagwa, the president, has vast business interests which also covers the mining sector.

With BO disclosure, transparency and mutual public trust can be built to enable policy makers to operate without unnecessary speculation fuelled by social media on potential conflict of interest. Equally so, BO can have impact in other sectors of the economy including stemming wanton corruption in public procurement contract. A quick win in the mining sector to implement beneficial ownership lies in the finalisation of mining cadastre that includes an online registry beneficial ownership of mining claims. In addition, BO on a multi-sectorial approach can be carried out through the ongoing reforms of the Companies Act (Chapter 23:04). Government’s list of suppliers can be revamped to include beneficial ownership.

The role of the Office of Auditor General (OAG) is without doubt key to strengthening transparency and accountability in the management of mineral resources. Consistently, the OAG has been exposing the rot in the management of Marange diamond resources. Regrettable, the OAG’s reports have not been met with sombre public interest. Unwittingly acknowledging the bad culture of one centre of power and undermining institutions, the public was awakened when the President opined that the state was prejudiced around $13 billion from Marange diamond operations. Given that the Auditor General’s contract has recently been renewed, the public can expect to continue tasting Chiri’s chilli on corrupt practices in the handling of public resources.

Government must be applauded for renewing Chiri’s contract. However, more needs to be done especially ensure that the Auditor General’s recommendations to rectify the misallocation of public resources are complied with in line with Section 309 (3) of the Constitution. Critical, audited financial statements on diamond mining entities in which government had equity in Marange were never made public as they were operating like private companies. Therefore, the alignment of the PFMA with the Constitution as announced in the 2018 national budget statement to expand the institutions to be audited by the OAG must include government controlled entities in line with Section 309 (2) (b).

Since minerals are public assets, the public has interest in how much revenue is generated from the finite resources. Unlike previous budgets statements, it is unfortunate that the 2018 national budget statement missed to the opportunity to clutch mineral revenue transparency best practice like the Extractive Industry Transparency Initiative (EITI).  Apart from mineral royalties, it is difficult to discern mining contribution in other revenue heads like Corporate Income Tax (CIT), Pay as You Earn (PAYE), customs duty and withholding taxes among others. Already, the Zimbabwe Revenue Authority (ZMRA), the country tax administrator is disclosing quarterly and annually revenue performance reports. The revenue performance report shows information per tax or revenue head and they can be twerked to share specifically show mining contribution per revenue head as a quick win. Going forward, it is important to focus on revenue disclosure per mining project. Through Caledonia’s Extractive Sector Transparency Measures Act (ESTMA) report of 2016, data on payments made by Blanket Gold Mine to various government institutions is publicly accessible courtesy on Canadian law on mandatory disclosure by all extractive companies listed at the Toronto Stock Exchange (TSX). Such developments must spur government into action to ensure that Zimbabweans are not starved of information needed to hold government and mining companies to account on management of public resources.

Since the army is responsible for this transitional arrangement through “operation restore legacy”, it is important to draw parallels with “operation hakudzokwe” launched under the guise of restoring order in Marange diamond fields. After the army cracked down artisanal diamond mining in Marange, companies that emerged in Marange like Anjin had a significant footprint of the army in terms of ownership. Similarly, after operations restore order that culminated in Mugabe’s resignation and pruning in government of G40 aligned Ministers, army has moved to occupy key Ministries in Government.

Whilst benefits stemming from the army’s involvement in the exploitation of Marange diamonds are hardly discernible, the army sponsored transitional arrangement anchored on new hope of reforms. To consolidate and sustain the goodwill that was generated from Mugabe’s “resignation”, government must move with speed to implement reforms in the mining sector that lifts mining activities from the veil of secrecy. If government adopts the same approach of Mugabe’s regime which was allergic to mining sector reforms, the ghosts of the missing $15 billion in Marange will not be exorcised. It will leave to haunt the transitional government.

Government must urgently focus its attention on public disclosure of mining contracts, operationalisation of a computerised title management system, beneficial ownership disclosure on mining deals and public procurement contracts, reviewing DTAs to mitigate risk of abuse, disclosure of mining contribution per revenue head, expanding the scope of institutions to be audited by the Auditor General to include government controlled institutions and to ensure that the Auditor General’s recommendations are complied with in line with the Constitution.

All I Want For 2018!

2018 seems to be a promising year, with so many possibilities.  Yes!!!!!!  Whilst we have a new government, we still have the same old challenges that require addressing to bring change to the people of Zimbabwe.

My heart broke on the 31st of December 2018 when I woke up to very  graphic, disturbing pictures of  a man who had been attacked by a lion in the Mbire  district of Zimbabwe. Its is said a picture says a hundred words. If these don’t, I don’t know what will. Be warned this is not a  pretty sight. One can only imagine the trauma  this man’s family has been exposed to after waking up to see their father an able bodied man, whom they loved dearly,had said good night to and had probably made plans for the next day  being reduced to nothing or rather pieces of meat by a lion ( this I say with all respect).

In 2017, it is reported  34 lives of people and more of livestock were lost to wildlife in Zimbabwe. Of these lives many of them were bread winners to families, fathers, mothers, wives, husbands, daughters and sons, well the point I am trying to make is that they were someone dear to someone. Despite the statistics of who has died what made me ponder  is what the government has not done for the families who were unfortunate enough to experience what befell them. In some areas where campfire is active ( sadly there are not many) the family of the injured is given 300 dollars while that of the victims who have died is given the same. Here lays the question, is this enough or can the government do more?. will they do more ? The animals that cause so much havoc are the animals said to belong to national parks. The irony of the system is that the communities are forced to pay fines when their animals graze in protected areas but the parks do not pay when their animals cause havoc in their lives.

Of the 34 that were killed 21 were mauled by crocodiles, two by lions. 393 cases of human and wildlife conflict have been reported in the year 2017. This could have been 393 deaths or more. Can the government work on technological upgrade that will allow national parks to track their animals. It’s not only the life of people that’s I am worried about, but the welfare of the wild animals is also critical to safe guard if Zimbabwe wants to boost its tourism

All I want for 2018 (well for the 1st part of 2018) can our new government look into developing a human wildlife conflict compensation scheme that will assist families of the victims of the HWC. Historically, humans have battled with wildlife in Zimbabwe and regarded wild animals as vermin, crop-raiders, livestock predators or vectors of disease. A change of attitude came about in the 1960’s as the aesthetic and economic values of diminishing wildlife populations became apparent. In recent years, much progress has been made to reduce human-wildlife conflict with methods far more creative than simply shooting ‘problem’ animals. The conflict mitigation methods included costly investments in tsetse fly control, electric fence construction, planting of chilli peppers to deter elephants and sophisticated game management with harvest quotas to keep animal numbers at optimal carrying capacity. In many areas around the country without sophisticated barriers or conflict mitigation measures, wild animals cause significant damage. For example, in one communal area near Hwange in 2002 elephants destroyed up to 90% of people’s crops and trampled 21 people to death. However, CAMPFIRE (Communal Areas Management Programme for Indigenous Resources) programs in the area that helped local communities to reap financial benefits associated with living with dangerous animals on their land primarily by selling strictly regulated quotas of animals to foreign hunters and then dividing the proceeds within the community, thus easing the economic burden of living alongside wildlife.

I think I can t not stress this enough there need to for the realignment of the Parks and wildlife act. We are still being guided by an act that was passed in the colonial era and there have been so many changes up to date for us to still manage our wildlife based on colonial era principles. Times have changed, and so have governments, we have a new constitution but we are still stuck on using that of the colonial. While we demand change in Zimbabwe with the new government, let it be change on all fronts including the wild enchanted forests of Zimbabwe.

In short:

  1. We need a compensation scheme in Zimbabwe for the human and wildlife conflict victims
  2. Government need to invest more in technologies that allow us to track animals.
  3. We need to align our parks and wildlife act with the constitution of Zimbabwe of 2013.

By  Nobuhle the girl who loved  PJ the vulture.

2017 Annual state of the Artisanal and Small-Scale Mining Report and 2018 Outlook

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By Mukasiri Sibanda and Munyaradzi Hwengwere

The Artisanal and Small-Scale Mining (ASM) sector has gained world attention for its potential to transform lives of impoverished but resource rich communities. Largely informal, very little is publicly known about the ASM sector. Often, the public is quick to judge artisanal miners based on negatives-environmental degradation, violence and spreading HIV and AIDS. Policy makers are sometimes guilt of failure to align their policy and practice reforms with what is happening on the ground.  Positives from ASM are a blind spot to many.  For example, medicines, fuel, raw materials for industry and other imported goods are being powered by gold mainly from the ASM sector. People’s lives are being transformed in rural areas and the stories are untold. Directly, the ASM sector support around 500,000 people and 3 million people indirectly. Yet what dominates in most news headlines are news of unsafe and irresponsible mining practice and murders. Policy makers have been accused of aligning their policy and practice reforms with what is happening on the ground.

Cognisant of the power coming with innovative products to enable the realisation of the African Mining Vision (AMV) ASM goal: “To create a mining sector that harnesses the potential of artisanal and small-scale mining to advance integrated and sustainable rural socio-economic development” an Annual State of the ASM Sector Report and 2018 Outlook will be produced. The report is coming at an opportune time when ASM gold production has outpaced primary gold producers.

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Sometimes there is no need to reinvent the wheel.  The Chamber of Mines of Zimbabwe (CoMZ) for example, annually produces a report on state of the mining industry report. Mainly, the CoMZ report covers performance of the mining sector on areas like mineral productions, contribution to the fiscus, challenges facing the industry, linkages and beneficiation, safety, health and environmental issues, fatal accidents and perception on policy among others. Much as the CoMZ report is an important source of public information on what transpired in the mining industry in the past year, the ASM sector is barely covered.

Since the Annual State of the ASM sector is being produced for the first time, a stakeholder sensitisation meeting has been pencilled on Thursday, 11 January 2018 at Jameson hotel. Invited stakeholders from government side include Ministry of Mines and Mining Development, Ministry of Finance, Fidelity Printers and Refiners (FPR), Environment Management Agency (EMA), Zimbabwe Republic Police (ZRP) minerals and boarder control, Mineral Marketing Corporation of Zimbabwe (MMCZ), National Social Security Authority (NSSA) and the Standard Association of Zimbabwe (SAZ). Private sector players mainly banks, suppliers of equipment and consumables are also invited. Development partners and civil society organisations, media and skills development institutions have also been roped in.

Basically, the sensitisation meeting will seek to harvest ideas from various stakeholder groupings on how to enhance the value proposition for the Annual State of the ASM Sector Report. Further, discussions are going to zero in on how information will be collected from different stakeholders and key milestones for producing the report. Government institutions will be tasked with compiling key policy and practice reforms for 2017 and what to expect in 2018 as well as challenges and opportunities in the ASM sector. Other stakeholders will also share their key products and services introduced in the past year and expectations for 2018. The media will compile key stories that shaped the ASM sector in 2017 as well as their expectation for 2018.

Zimbabwe Miners Federation (ZMF) will produce the report with support from Zimbabwe Environmental Law Association (ZELA) and Mejrkh Media Advisory and Consultancy. Formed by the Ministry of Mines, ZMF is the umbrella board for all artisanal and small-scale miners’ association in Zimbabwe.

ZELA is a lead organisation on mineral resource governance which has been quite active in 2017 supporting artisanal small-scale gold miners through several activities; multi-stakeholder dialogue on ASM at local, provincial and national level; a skills development training for women in ASM; Gender Based Violence in ASM sector, input during national budget consultation process  and work on proposed artisanal mining special permit along with other activities.

Mejrkh Media Advisory and Consultancy, is knowledge based company with a wide range of expertise in both large scale mining and ASM sector. The company is behind the annual Mining and suppliers Handbook and Minex and Mining Media Awards.

An ear to the ground: artisanal and small-scale gold mining in the new dispensation

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Mining has played an economic shock absorber role, never mind the squandering of Marange alluvial diamond wealth. The Artisanal and Small-Scale Gold (ASGM) sector which has recently eclipsed production of large scale miners has been instrumental, not only in earning the country much needed foreign currency, but creating employment and income generating opportunities for over half a million people directly.

A compelling case is made for ASGM as a front door way of empowering poor but resource rich communities. Certainly, ASGM has its ugly side. Negative externalities like damage to the environment, disrespect for property rights, violence, alcoholism, spread of diseases, injuries and deaths, all deserves to be mitigated to better account for ASGM benefits.

Repeated calls have been made by the new government that Zimbabwe is now open for business, what opportunities and challenges does this policy direction mean to ASGM sector? A new Minister of Mines with strong mining industry background is now in charge, will he be pro large-scale mining or be considerate to ASGM? from the architects of command agriculture, is command mining on the cards? How government is fairing on curbing illicit financial flows with ASGM production eclipsing large scale miners? And given the unsustainable nature of ASGM, is diversification of rural economies a priority? The following ten points helps us to have a pulse feel of ASGM in the new dispensation.

Foreign direct investment and ASGM

Government has made attraction of Foreign Direct Investment (FDI) in the mining sector a priority in its quest to enhance economic revival. Attraction of FDI in the mining sector is closely linked with large scale investors who may view growth of ASGM as a threat. An expression of interest has been published by Ministry of Mines which include investments into the Zimbabwe Mining Development Corporation CZMDC)’s gold assets, Jena Gold Mine in Kwekwe and Evington in Chegutu. Taking advantage of ZMDC’s moribund operations and vast idle claims, ASGM is thriving in these areas. Artisanal miners have pinned hope on government to reallocate some of the unutilised gold claims owned by ZMDC, including other large-scale miners.

There is an inherent risk that government’s inclination to attract FDI may lead to the displacement of ASGM. If not handled well this can cause conflict and threaten a way of livelihood for many people residing in rural areas. With the impeding drought this year, predictably, ASGM will attract more players in rural areas.

New Minister of Mines with Large Scale Mining DNA

To make an impression on investors, a new Minister of Mines with a solid mining industry background was appointed. Honourable Minister Winston Chitando is a former executive chairman of Mimosa platinum mine, equally owned by Implats and Sibanye, both listed at the Johannesburg stock exchange. So, the Minister may have a soft spot for large scale mining operations but he must avoid playing “step mother” to the ASGM sector. Without a doubt, large scale miners offer less administrative burden when compared to ASGM.

That said, ASGM is not a matter of impressive macro-economic indicators disconnected from livelihood of many people residing in resource rich areas. When large scale miners exxperience windfall revenues, evidence of increased community purchasing power is barely notoceable. Along with agriculture, ASGM is the nerve center for rural economies who are susceptible to climate change risks, droughts and floods.

It is noteworthy to say the Mimosa platinum mine has been exemplary though their Corporate Social Investments (CSIs) by providing equipment support to ASGM in Zvishavane and Mberengwa. In 2015, Mimosa donated compressors, jack hammers and a vehicle to Zvishavane- Mberengwa small scale miners’ association to the tune of $150,000. Hopefully, Chitando who was at the helm of Mimosa during that time can use his newly acquired influence to spur greater cooperation between large scale miners and ASGM.

Softening of indigenous laws in the mining sector

The indigenisation requirement for ceding at 51% equity to indigenous partners is set to apply only to platinum and diamond sectors. Without considering its effectiveness on the ground, ideally, indigenisation seemed to have a better package for empowering resource rich communities through Community Share Ownership Trusts (CSOTs). Mining companies were required to cede 10% equity to communities around mining areas. However, only two out of sixty-one established CSOTs were given share certificates – Gwanda and Umguza rural districts. According to the National Indigenisation and Economic Empowerment Board (NIEEB), $39 million has been paid to CSOTs as seed capital. 3 platinum mines anchor contributions with a combined total contribution close to $30 million,

Restricting indigenisation to platinum and diamond sectors leaves government with pressure to come up with empowerment strategies for resource rich communities. There is no need to reinvent the wheel. Formalising ASGM is a front door way to empower directly over half a million people who are engaged in the sector. It would be highly regrettable for government, after scrapping softening of indigenous laws, to side step ASGM in its policy interventions in the mining sector. Already small-scale miners in gold and chrome sectors are being squeezed out mainly by Chinese nationals. In Bubi, the Chinese owned custom milling services have taken business away from indigenous millers. Government must deliberate consider limiting foreign participation in the ASGM sector and help the players to acquire appropriate technologies.

African Mining Vision and ASGM

Government has shown willingness to reform. Although it has its own faulty lines, the African Mining Vision (AMV) agreed to by the African head of states in 2009 offers a framework that countries can customise. AMV recognise ASGM as an indispensable sector, which must co-exist with large scale miners because some deposits are not economically viable for large scale mining. Furthermore, ASGM can be an integral part of rural economies as it can potentially stimulate growth of within and beyond ASGM supply chain opportunities.

As government moves to reform the archaic and colonial Mines and Minerals Act, it is important recognise artisanal mining through a special permit which enables easy of doing business for poor communities whose livelihoods have been criminalised. The Ministry must leverage of the work done by the mining Technical Working Group (TWG) on ease of doing business which came up with proposed terms and conditions for a special mining permit for artisanal mining.

Curbing Illicit Financial Flows Linked with ASGM

Informality and economic lucrativeness have conspired to make ASGM susceptible to illicit financial flows (IFFs). To stifle side marketing of gold, government must address cash shortages which make it difficult for artisanal miners to access the 30% payment through bank transfer or bond notes. The other 70% payment is made in cash – US dollars. Broadly, foreign currency shortage has elevated the significance of gold as a substitute currency to US dollars.

Businesses resort to buying gold which is highly liquid in countries like South Africa to finance importation of goods and services when they fail to access foreign currency. Although production of ASGM has outstripped large scale producers, government must not be blind folded by this success, a lot more must be done to curb syphoning of gold from the official market

Claim Ownership Disputes and Mining cadastre

High levels of corruption and outdated mining title management system have triggered numerous claim ownership disputes. This is affecting ASGM production. Prominent women miners in Matebeleland South have stopped mining for 2-3 years because of claim ownership disputes. Normally, ownership disputes are tied to rewarding mines. Government must urgently prioritise resources for a computerised and open title management system to enable transparency and accountability.

From the architects of command agriculture, is command mining on its way

For a long time, players in ASGM have been envious of government’s mechanisation and input support to agriculture. Now that Mnangagwa is the President, the champion of command agriculture, a man deemed to have a soft spot for ASGM, expectations have ballooned for a command mining scheme. President Mnangagwa has strong roots in Kwekwe, a town whose economy is pivoted on ASGM.

Interestingly, Zimbabwe Artisanal and Small Scale for Sustainable Mining (ZASMC) president, Engineer Murove, has compiled a blue print on command mining. Expectations are that government will roll out mechanisation and input support to the ASGM sector like command agriculture to boost gold production, ease the foreign currency shortages, create employment and stimulate community enterprise development.

Environment management

Widely known for its poor environmental management practice, the regulators have not been helping matters either through imposing burdensome Environment Impact Assessments (EIAs) to ASGM. It is heartening to note that the Environment Management Agency (EMA) is moving in the positive direction to enhance formalisation of ASGM through tailor made environmental regulations. Lessons can be learnt from Tanzania, a country with simplified environmental regulations for ASGM.

Technical capacity building for ASGM

Learning institutions like School of Mines, University of Zimbabwe and Midlands State University have commendable programmes for equipping players in the ASGM sector with skills to improve mining and mineral processing methods. Because of the huge demand, the is need for civil society players to innovate in order to address the yawning skills gap particularly for women miners. For example,the Zimbabwe Environmental Law Association (ZELA) is in the process of setting up a professional club for women in mining which will be carrying outreach visits to women miners from time to time.

ASGM is not a sustainable economic activity

By nature, minerals are finite resources. Hence economic gains from mining, ASGM included are not sustainable unless revenue generated from mining is reinvested into productive sectors of the economy like agriculture and manufacturing. It becomes fundamental to come to encourage innovative savings schemes and community enterprise development exploiting both ASGM supply chain opportunities and diversification of rural economic activities.

Some positives can be seen already. In Shurugwi, a small-scale miner has diversified into hotel and catering services. It is common for players in the ASGM invest in cattle and farming activities. Largely, gold producing areas are famed for consumptive expenditure, luxury cars and alcohol. Wealth is often squandered. Stakeholders, government, civil society and business must join hands with players in the ASGM sector to promote a sector which is an integral part of rural economies as envisages by the AMV.

Conclusion

Formalising ASGM presents great opportunities for government to comply with the constitutional requirement that mechanisms must be put in place to ensure communities benefit from resources in their areas. This becomes more pressing considering that government has moved to soften indigenisation framework for all minerals, except for platinum and diamond.

Government must break away from urgently from colonial Mines and Minerals Act and recognise artisanal mining through a special permit as recommended by the Mining TWG on ease of doing business reforms. Since some mineral deposits are not viable for large scale mining, there is room for having ASGM as an integral part of the mining sector as encouraged by AMV.

Of course, formalising ASGM goes beyond legalistic measures, that is why government must be at the fore front of promoting mechanisation of the ASGM sector and provision of scarce finance. We must not lose sight though that ASGM is not sustainable, so initiatives to enable diversification of rural economies must be prioritised soon rather than later.

Analysis of the 2018 monetary policy statement: a focus on mineral export incentives

  • RBZ’s export incentives from 05 May 2016 to 31 December 2017 sterilised mineral royalty revenue by a discounting factor of nearly 86%. This obviously hurts the government’s desire to create fiscal space, when revenue generation is constricted my toxic incentives

Themed “Enhancing financial stabilisation to promote business confidence” is the 2018 monetary policy statement tooled to support mining sector led contribution to socio-economic development? This monetary policy was crafted in the context of cash shortages that chocking the ASGM formal trade; RBZ gold support fund, although a welcome development, it is only benefiting a few and there is no clarity on how men and women are benefiting from the fund; moratorium to facilitate recoupment of externalised money and assets; ballooning government debt crowding private sector access to capital; and complaints by Civil Society Organisations (CSOs) that export incentives have sterilised mining royalties. This articles specifically focuses on rationality of the export incentive scheme concerning mining. It builds on two prior articles- How Helpful or Harmful is RBZ’s MINING Export Incentive Scheme and Does RBZ’s Export Incentive for Mining Need a Re-think .

To stimulate export earnings, RBZ introduced a 5% export incentive scheme in May 2016. Mining as the largest exporter automatically became the largest beneficiary of export incentives. During public pre-budget consultations, CSOs like ZELA raised concern that export incentive in the mining sector have sterilised mineral royalties. Furthermore, export incentives are an unnecessary sweetheart deal to a sector that largely exports raw minerals. A sector whose resource base is finite which treasury and civil society accuse of not fairly contributing to development finance, illicit financial flows are a major concern.

Cumulative export receipts and incentives amounts (05 May 2016- 31 December 2017)

Sector Export Receipts (USD) Incentive Amounts (USD) Bond Notes Issued to Banks (USD)
Mining excluding gold $2,645,809,356 $58,268,089 $56,000,000
Gold producers $1,282,023,093 $59,313,208 $59,200,000
Totals $3,927,832,449 $117,581,297 $115,200,000

Extracted from the 2018 Monetary Policy Statement page 8

From the above table, the mining sector received export incentives amounting to $117,581,297 from 05 May 2016 to 31 December 2017. Looking at annual revenue performance reports produced by Zimbabwe Revenue Authority (ZIMRA), the only distinct mineral revenue stream is royalty income. In 2016 and 2017, mineral royalties’ contribution was $62,901,509.54 and $136,013,3018.23 respectively, amounting to $136,013,3018.

Considering that mining sector received $117,581,297 as export incentives from 05 May 2016 to 31 December 2017 and paid $136,013,308.23 mineral royalties almost in the same period, January 2016 to 31 December 2017, in real terms, mining paid mining royalties amounting to $18,432,011.23 as royalties. Effectively, mineral royalties were discounted by nearly 86% if we factor in export incentives. Royalties are a reliable and predictable income stream which is less sustainable to tax evasion and tax avoidance unlike profit based taxes. RBZ’s move to sterilise mining royalties hurts government’s fiscal abilities to finance service delivery from the country’s huge mineral wealth endowment.

According to RBZ, the rationale for export incentives is to drive export earnings. In the mining sector, export earnings can be boosted by several factors which include either price or production increments or a combination of the two. Also export earnings can be boosted by mineral value addition and beneficiation and access to capital among others.  The monetary policy contends that world commodity prices for base metals and precious metals are firming, platinum being an exception. A positive development on export earnings which is not related to export incentives.

Ferrochrome production has spiked mineral export earnings, the lifting of the ban on raw ferrochrome exports is the main driver increased production in addition to favourable market prices. Gold, the lead export earner in the mining sector is anchored by Artisanal and Small-Scale Gold Mining (ASGM) whose production has eclipsed large scale miners in 2017.  ASGM accounted for 53% of the country’s total gold production, 24,843.87 kgs.  A combination of factors can be credited for this success story. The “no questions asked policy on gold deliveries” and RBZ’s gold production support fund are some of the prominent factors. $74 million was disbursed to 255 small scale gold miners in 2017 and RBZ has doubled the fund in 2018 at $150 million.

If the above factors are to be considered, RBZ must surely come up with a sensible justification on how the incentives scheme in the mining sector has boosted mineral production. Failure to access cash at the bank is rapturing trust between ASGM and government, a condition that festers illegal trade of gold. RBZ pays 70% cash in form of US dollars and 30% through a bank transfer or bond notes, the latter getting a 5% premium. The export incentive regimen will continue according to RBZ. Gold export incentives have been increased to 10%, but without addressing persisting cash shortages, more gold in the ASGM will find its way to the black market which is prepared to pay 100% cash in foreign currency.

The drive to boost exports through incentives can better be addressed by a progressive export incentive regime. Exports of raw minerals should not be rewarded, but with increased mineral value addition, the export incentives accruable to the mining sector should also increase. As it stands, there seems to be policy discord, on one hand government is incentivising miners for exporting raw minerals. And on the other, government has export taxes to discourage the beneficiation of raw minerals. Minerals are a finite resource.

The opportunity to garner taxes to fund social service delivery will not last forever. It disheartening to note that RBZ has discounted mineral royalty revenue by 86% for the past 2 years. To finance the Sovereign Wealth Fund (SWF), 25% of mineral royalty revenue was ear marked for this exercise. RBZ’s puts into jeopardy intra and intergenerational of mineral wealth, a violation of constitutional principle on public financial management.

Anjin Return? An Acid Test For The New Dispensation

In the rear-view mirror of Zimbabwe’s political and socio-economic narrative, Mugabe image looms large. But is the windshield clear enough for accelerated progress? One important clue which can help to unravel this puzzle relates to how the new government is managing the country’s mineral wealth- platinum, diamonds, lithium and gold among others.

Of all minerals, developments in the diamond sector warrants a close examination. This is hardly surprising though. Diamonds, because of their characteristics, items of high value which are easy to carry makes the stones attractive to criminals. Money laundering risk exposure in the trade of diamonds is well articulated by the 2013 Financial Action Task Force (FATF) report .

Early this year, the blog I wrote on mineral revenue transparency reforms: priorities for the new government made an interesting analogy centred on 2017 “Operation Restore Legacy” and 2008 “0peration Hakudzokwi” (no return to artisanal mining) in Marange. In both instances, the army moved in to restore order. In the end, the army gained significant stake in diamond mining and government. The army had a 40% stake in one of the biggest diamond mining companies operating in Marange, Anjin diamonds. The remaining stake was owned by Anhui Foreign Economic Construction (Group) Co Ltd (Afec) from China and 10% stake owned by Zimbabwe Mining Development Company (ZMDC).

Unarguably, the army’s involvement in Marange did not deliver any tangible development outcome, the $100 million defence college being the only exception. Likewise, the army gained key positions in the new government. Key office positions among other include the offices of the vice president, minister of agriculture and minister of foreign affairs and trade.

The history of Anjin’s diamond mining activities is quite murky. From the Auditor General’s 2011 report, it can be gleaned ZMDC was not committed to recover money from the proceeds of disposing 40% equity in Anjin to the army. In her 2016 report, the Auditor General failed to verify Anjin’s diamond earnings because the company could not avail its audited books. During the peak period diamond exports by value and volume, in 2012,  the former Minister of Finance, Tendai Biti singled out Anjin for not paying taxes. Zimbabwe exported 14,957,648.98 carats worthy $740,998,088.16 in 2012 according to Kimberly Process public statistics.  In July 2017, the Independent Newspaper reported that Chinese investors syphoned US$255 million from Anjin.

Arguing that the nation was not fairly benefiting from her rich Marange alluvial diamonds, easy pickings, not so difficult to mine, government decided to consolidate the diamond mines in 2015. A process made easy because of the expired mining rights for all the seven diamond mining companies that operated in Marange. Government then saw it fit not to renew the expired mining rights. All this was done under the former Minister of Mines, Chidhakwa.

Some argued that the move was to constrain the Lacoste faction that was deemed to be profiting from Marange diamonds through the army’s involvement. Lacoste was a ZANU PF faction allegedly led by Mnangagwa which was backed by the army and war veterans that was contesting with the G40 faction backed by the first lady, Grace Mugabe, to take over from Mugabe.

Chidhakwa, however, maintained that the main objective of forming ZCDC was to bring transparency and accountability in the management of Marange diamonds. That said, the objective was tainted by poor corporate governance as the Ministry of Mines through its former Permanent Secretary, Francis Gudyanga, baby seated state owned enterprise-ZCDC as the chairman of the ZCDC board.

On 20 April 2018, the Zimbabwe Environmental Law Association (ZELA) accompanied EU Ambassadors during their field visit to ZCDC diamond mining operations in Marange. One interesting observation was the fresh fence erected on Anjin diamond’s concession, air strip clearance and the presence of the Chinese on the ground.  A worrisome development. Is Anjin coming back?

A colleague and mentor Shamiso Mtisi remarked that the involvement of the army in business is not a challenge. In other countries, for instance the army is an active player in the economy. What matters is a strong dosage of transparency and accountability which is critical to deliver benefits to citizens and not to a few powerful individuals.

To win public trust and confidence, government must move with speed to align mining legislation with Section 315 (2) (c) of the Constitution to deliver transparency and accountability in the negotiation of mining contracts as well as performance monitoring of the mining contracts. In addition, government must urgently embrace the Extractive Industry Transparency Initiative (EITI) to enable the public to track various taxes paid to government institutions by mining companies. Transparency and accountability reforms in the mining sector are a key indicators to whether government is committed to curb corruption, to abide by the Constitution and to leverage the country’s abundant mineral wealth for socio-economic turnaround.

Is RBZ’s Gold Mobilisation Fund a Jack Pot for Artisanal and Small-Scale Miners?


Gold from Mberengwa

“Most beneficiaries are not aware that $74 million was disbursed in 2017 and that the funding has been doubled to $150 million in 2018. Furthermore, there is need for awareness raising on issue of collateral, especially acceptance of cattle as collateral security” Themba Sibanda, Zimbabwe Miners Federation organising secretary
Faced with severe foreign currency shortages, the Reserve Bank of Zimbabwe (RBZ) is banking on the propulsive role gold to drive export earnings. In its 5-year plan, RBZ has a target to produce 30 tonnes of gold annually by 2020 (2015 Monetary Policy Statement). Previous peak gold production was 27 tonnes, produced in 1999, at a time when contribution from Artisanal and Small-Scale Mining (ASM) was meagre, around 5%. As part of the measures to boost gold production, RBZ identified the need to harness the potential of ASM by funding mechanisation of small scale mining. Through the 2018 Monetary Policy Statement (MPs), RBZ announced that ASM gold sector funding has been doubled to $150 million. The same MPS revealed that in 2017, $74 million was disbursed to 255 small scale miners. Remarkably, last year (2017), ASM gold production surpassed that of large scale producers, accounting for 53% of the total gold production: 24,843.87kgs. Along with the “no questions asked policy” on gold deliveries to Fidelity Printers and Refineries (FPR), gold mobilisation fund is credited for boosting gold production in the ASM sector.
Find below some basic facts in numbers that can help to answer whether increased funding by RBZ to the ASM gold sector is a jack pot for miners: an analysis of the 2018 Monetary Policy Statement;

  • 1 symbolises that RBZ through FPR is the sole gold buyer and exporter in Zimbabwe
  • $74 million was disbursed to small scale miners in 2017 255 small scale miners benefited from $74 million disbursed in 2017
  • The number of women who benefited from the RBZ’s loan facilities is not known as the number of beneficiaries is not disaggregated to show how many women and men benefited from the facility
  • There are about 10,000 registered small-scale miners in the country according to Zimbabwe Miners Federation (ZMF). Percentage wise, RBZ fund was accessed by 2.5% of the registered small-scale miners.
  • Averagely each miner got around $290,000 from the $74 million disbursed by RBZ to 255 small scale miners.
  • 2,960 is the number of small scale miners that would have received support from the RBZ since most small-scale miners need around $25,000 to mechanise their operations. Basic equipment includes a compressor, jack hammer, generator, small hammer mill and a water pump.
  • $75 million is supposed to be received by women in ASM gold sector If RBZ comply with constitutional requirement, Section 13 (3) to afford women equal development opportunities, because $150 million funding is earmarked for 2018.
  • The number of opportunistic investors who shifted into gold mining to take advantage of the loan facility is not known as beneficial ownership of the loans was not disclosed. The risk being that some businesses which benefited from the loan could be driving illicit financial flows by illegal using gold as a currency to finance their imports due to foreign currency shortages.
  • No amount has been set side to encourage rehabilitation and closure of gold mines. Much as the nation experts to benefit from increased gold production by earning much needed foreign currency, generation of jobs and incomes, environmental challenges should not be a blind spot. Innovation is needed, for instance, the conversion of 10% export incentive scheme to a fund that can be used to incentivise mine rehabilitation.
  • $150,000 is the value of equipment support given to Zvishavane-Mbrengwa small scale miners association in 2015 by Mimosa Mines’ corporate social investments. Can RBZ take a leaf from this and help to strengthen small scale miners’ associations who are critical players to formalisation of the ASM sector through self-regulation.

Impacts of Mining to Host Communities

A Report on a Monitoring Visit to Mhondongori, Zvishavane

1.1 Introduction and Background

In early 2016, the Zimbabwe Environmental Law Association commissioned a research into the social, economic and environmental impacts of mining to rural communities that host mining investment in Zimbabwe. One of the driving factor for the research was seen as the high levels of unmonitored chrome mining activities in Zvishavane. Some of the recommendations from the ZELA/OXFAM research directly related to the promotion of Social Licensing, promoting community consent and decentralisation of key reporting institutions.

In February 2018, the Zimbabwe Environmental Law Association (ZELA) in partnership with Norwegian Peoples Aid (NPA) commissioned a separate, independent monitoring visit to Zvishavane, in Mhondongori village. The primary purpose of the visit was to follow up on community members’ activities and reflections that were being put in action after the members had visited other mining areas in South Africa and Mozambique, and learnt various lessons. Further, the monitoring visit would aim at creating a platform where communities discuss emerging issues from chrome mining and also freely share with the Environmental Management Authority and Runde Rural District Council representatives on these issues.

1.2 The Good

Chrome mining is an important economic activity in Zimbabwe. Indeed, Zimbabwe is the seventh largest producer of Chrome in the world[1]. In 2017 the country earned $293 million and $84,4 million from high carbon ferrochrome and chrome ore respectively[2]. Further, in 2018 the Government projects an output of 1,7 Million tonnes from Chrome, which is a significant 80 percent increase from 2017[3].

Chrome mining has been seen as critical tool in community empowerment and economic development. One way adopted by government to achieve this is to acquire large tracts of land from mining companies and redistribute it to small scale miners in the community through a tributary mining system. For instance, in 2016 the Government announced that ZIMASCO had ceded 22 000 hectares of land containing massive chrome rich deposits while a further 20 000 hectares were ceded by ZimAlloys to small scale miners[4]. This model has empowered local citizens and communities by giving them access to resources occurring in their areas, thus benefitting from their natural resources.

1.3 The Ugly

Despite good governmental intentions in relation to community empowerment through tributary mining, the local communities continue to pay too high a cost out of mining activities. One affected community member pointed this out:

“We are facing harassment from chrome miners in our village. Some of the miners come from outside Mhondongori. They(Chrome Miners) are stealing our livestock when not paid properly by their employers. We have also recorded several cases were local communities are attacked coming from shopping and the victims are dumped in open pits (left from chrome mining) for dead. We are losing grazing land for our livestock through veld-fires as the miners are resorting to poaching wild animals.”

The community members further highlighted cases of sexual abuse of minor girls as young as 12 years from the miners. The mining operations are also leaving open pits as there are no proper rehabilitation plan in place. One villager, a member of the Mhondongori Development Trust stated:

“Last week we stopped the large mining trucks from passing through our community. We detained the truck for three days demanding the mine owners to engage us and hear our grievances. The Police intervened and we released the trucks”.

The trust mobilised other community members to stand against the miners, and this canbe regarded as an innovative way of compelling dialogue and engagement. An EMA officer confirmed community claims, highlighting that:

“The tributary miners are leaving open pits. It is difficult for us to hold these miners accountable. We cannot demand for their Environmental Impact Assessment (EIA) as ownership of their claims is not recognised by Ministry of Mines.”

Yet another official, the Environment Officer of Runde Rural District Council complained:

“Our worry as council is on sanitation. There are no toilets in the proximity of the mining activities”.

 

1.4 Way forward

Women from Mhondongori have gone a step forward in creating women Forums to fight against the negative impacts of chrome mining in their community. The forums give them a collective and louder voice to stand against the abuses of the tributary system and other wrongs of mining in the area. In the context of the discussions and the lessons that communities learnt from their regional experiences the following recommendations were made:

  • The Government should ensure that the tributaries are registered under the Ministry of Mines before such tributaries can commence operations.
  • EMA should make demands on number of open pits to be rehabilitated as opposed to having miners submit their rehabilitation plan.
  • Communities should be consulted on miners who will be mining in the area to create room for accountability.
  • Runde RDC in partnership with EMA must ensure close monitoring on all land degradation activities.
  • The Mhondongori community has to identify opportunities presented by the mining operations such as the currently running fishery project, where the Mhondongori Development Trust converted open mining pits to fish ponds.
  • ZELA should continually support and educate the women forums with legal skills so that they are conscious of their rights, available remedies, legal strategies and approaches to problem solving.

[1] https://www.indexmundi.com/minerals/?product=chromite&graph=production

[2] http://ebusinessweekly.co.zw/zim-mineral-exports-surpass-target/

[3] http://www.czi.co.zw/images/presentations/outlook7.pdf

[4] https://www.herald.co.zw/binding-title-will-be-welcome-chrome-miners/

Disgruntled Fishermen calls for Fisheries Policy reform

Fishermen from the Zambezi valley in Zimbabwe are experiencing frustrations in acquiring fishing permits and having to pay multiple levies due to duplicated procedures from different administrative and licensing authorities. Currently, a number of laws regulate fisheries and these include; the Rural District (RDC) Act, Environmental Management Act (EMA), Water Act and Parks and Wildlife Act. These Acts are fragmented, hence the high licensing costs. In order to interface and engage different authorities responsible for administering these laws, the Zimbabwe Environmental Law Association in partnership with ACTIONAID convened a training meeting to capacitate commodity associations on contract monitoring in command livestock, command farming and command fishing. The ultimate goal for this training in relation to fishermen affected by high costs of business was to have them understand contents of the permits and interface the fisheries regulating authorities so that they can air their grievances. 

A critical aspect for the capacity training was that despite being rich in natural resources, the region around the Zambezi Valley has remained largely very poor and underdeveloped. The communities rely on fishing to sustain their livelihoods. One community member had this to say:

“Fishing is really important for us as it is our only source of income. We are hoping that regulations will be put in place to make it easy for us to acquire a fishing permits which are not costly.”

To some extent, the RDC Act goes some distance in regulating fisheries in certain areas such as the Zambezi Valley. Under this Act, the Council has the mandate to  establish, promote and maintain fisheries and fish farms[1]. Further, the Council facilitates the provision of permits for marketing and sale of fish. In addition, there is also the Parks and Wildlife Act which mandates the Parks and Wildlife Authority to issue to fishermen “permits to carry on business of catching and selling fish”[2]. The overlapping of these Acts means that, for fishermen to be fully recognised, they should be registered under both laws. This is marginalizing local communities from participating in fishing activities since they are already marginalised from the mainstream economic system. At the moment, only the Parks and Wildlife headquarters in Harare is issuing the perm/its. What this consequently entails is that every fishermen would need to commute to Harare to get the permit. One fisherman stated:

“We are having challenges with paying double levies to the Council and to Parks and Wildlife. Other challenges that we are also facing include conflicts with Safari operators for the fishing jurisdiction. We also do not have enough information on the contents of the permits”

Some of challenges that were raised from the deliberations included conflicts with armed Zambians who are poaching from the Zimbabwe side using fishing nets with small holes and others using chemicals which traps all the fish threatening their sustainability.

In response, the RDC outlined the main features of the CAMPFIRE system. According to the RDC, the CAMPFIRE Project is an organ within the Council. The organ generates revenue from hunting concession and used take the cash dividends to beneficiaries who would decide how to use the money. Due to misuse of funds and corruption, cash is now submitted into ward level accounts.

Pertaining to fisheries the following recommendations and suggestions were raised from the deliberations:

  • There is need to train the fisheries to understand the nature and contents of fishing permits
  • There is need for developing specific Act governing fisheries and establishment of a standalone fisheries regulatory board
  • Parks and wildlife should devolve its permit issuing services
  • There is need to address a gap in the RDC Act by advocating for a portion of RDC revenues to be remitted to the community concerned
  • There is need to engagement of Zambian authorities over Zambian poachers fishing in the Zimbabwean jurisdiction and harmonise laws between the two countries.

 

[1] http://www.parlzim.gov.zw/acts-list/rural-district-councils-act-29-13

[2] http://extwprlegs1.fao.org/docs/pdf/zim8942.pdf

SADC Regional Mining Vision Consultative Forum For Civil Society Organisations (CSOs)

PREAMBLE

As Southern Africa Development Community (SADC) gears to be the first regional bloc to craft its Regional Mining Vision (RMV) in order to explore opportunities for optimising sustainable development impact from exploitation of minerals, Civil Society Organisations (CSOs) from seven SADC countries met to give their input into the draft SADC RMV. Countries that were represented during the SADC RMV consultative forum for CSOs include Angola, Botswana, Lesotho, Mozambique, Swaziland, South-Africa Zambia and Zimbabwe. Organised by the Zimbabwe Environmental Law Association (ZELA), the meeting was held at Birchwood hotel in Johannesburg, South Africa on Wednesday, 21 March 2018. The objectives of the meeting were;

  • To raise awareness and understanding of the draft SADC RMV among CSOs to enable pointed contributions which add value to the development of the vision;
  • To discuss ways to cascade conversations around the draft SADC RMV to the citizens of each member state;
  • To share ideas on how to generate political will for and ways to hold government to account on realisation of SADC RMV aspirations.

The meeting was facilitated by Mtwalo Msoni from Publish What You Pay (PWYP) Zambia. Tafadzwa Kuvheya of PWYP South Africa gave the welcome remarks in which she highlighted that high inequality in South Africa makes a compelling case for crafting a SADC RMV that optimises community share of benefits from mining. Dr Oliver Maponga with United Nations Economic Commission for Africa (UNECA) shared the draft SADC RMV which is shaped by the tenets of the African Mining Vision and accordingly is aimed at optimising the sustainable developmental impact of mineral resources extraction across the region whilst being cognisant of the differing maturity of the minerals sector[1] in the Regional Member Countries (RMCs).

In its vision, “the SADC region strives to attain a transparent, equitable and optimal exploitation of regional mineral resources to underpin broad-based sustainable regional growth, socio-economic development and inter-generational equity, through the realisation of all of the mineral linkages, in line with the SADC Regional Development Agenda and other continental and international aspirations”

CSOs CONTRIBUTIONS TO IMPROVE THE DRAFT SADC RMV

Following the review of the SADC RMV, the CSOs present in the seven countries agreed the following to be incorporated into the report ;

  1. On the Glossary of the SADC RMV.
  • A glossary to define key terms used in SADC RMV be included in the framework; for instance, define parameters of “transparency” and “local community”.
  1. On the Tenets as presented in the RMV.
  • There was need to add an addition tenet on “community participation and share ownership” in mining and related business.
  1. On the aspirations of the RMW on Mineral Governance.
  • It was submitted that although the regional mineral revenue transparency framework is desirable, the brand SADC Extractive Industry Transparency Initiative (SEITI) may not be palatable to countries like South Africa and Zimbabwe who prefer home grown initiatives rather than western driven frameworks. As such, the key underlying framework to promote good governance and transparency in the mining sector should be operationalization of the African Minerals Governance Framework (AMGF).
  1. On the RMVs aspirations on Mineral Fiscal Linkages
  • There was need to include domestic investments(investments from within the region) in the RMVs proposed initiative to “develop of a regional agreement to manage foreign direct investment into the region from tax havens and/or secrecy domains and encourage foreign investment from similar tax and transparency jurisdictions”
  1. On the RMVs aspirations on Mineral Forward Linkages for key mineral feedstock
  • There was need for the RMVs to ensure that “Mineral knowledge linkages” are reflective of how SADC intends to deal with policy tension linked with renewable energy and fossil energy.
  1. On the RMVs aspirations on the Mineral Knowledge Linkages
  • There was need for the RMV to include an aspiration on the protection of national heritage into its proposed aspiration on the “harmonization of all mining legislations to include license obligations for corporate local-regional spending on research, development and innovation and on skills development”
  1. On the RMVs aspirations on the Artisanal and small-scale mining sector
  • The vision should inspire regional linkages in ASM sector on issues like innovation, research and development, backward and forward linkages since the sector has unique attributes compared to large scale mining. Focus on ASM linkages is quite critical considering that community participation or participation of indigenous knowledge is very important.
  • Differentiation of artisanal mining and small-scale mining is needed
  • Special permit for artisanal mining which is locally accessible and affordable
  • Demarcated zones for artisanal mining which are well prospected to ensure profitable mining
  • Special inheritance laws for women and the girl child in the ASM sector
  • Fair and equitable access to mining claims, finance and other opportunities for women along the ASM sector value chain.
  1. On the RMVs aspirations on Environment and Social Impacts on Mining

CSOs noted with concern that the draft SADC RMV neither included a specific aspiration on Environment management nor provided sufficient content on environmental management in detail. As such the following were suggested to be included as aspirations of the SADC RMV on environmental management;

  • Harmonization of environmental requirements to avoid race to the bottom. (permitting requirements, independent EIA consultants- with community input)
  • Following harmonization; consider a SADC framework on environmental protection for member countries so as to ensure compliance through interventions of countries with have passive environment protection implementation. SADC should consider having a comprehensive Unit for this
  • Ensure the establishment of Environmental Closure/Rehabilitation Funds in all countries in the region.
  • Consider adding specific aspirations on mitigating the environmental impacts of integrated regional mineral beneficiation
  • Consider regulations on quarantine of use of specific chemicals across the countries
  1. On Communities

CSOs noted that the RMV did not include specific aspirations on communities, as such, it was proposed that aspirations of mining on communities include;

  • A Definition for the parameters of a “mining community” in the SADC region
  • Aspirations on the direct benefits of “mining communities” from the linkages as proposed in the RMV
  • Aspirations on adherence to Free Prior Informed Consent principles
  • Aspirations to ensure adequate participation of women in planning and community ownership processes
  • Aspirations on communities granting a social licence to operate Social licence to operate
  • Develop compensation benchmarks for displaced communities (pollution etc)
  1. On Gender

CSO that the SADC RMV needed to include specific aspirations on gender, as such it was proposed that the RMV include;

  • Aspirations on equal employment opportunities obligations to admit at least a number of women in the training schools.
  • Adequate participation of women in planning and community ownership processes(FPIC)
  • References to the to SADC protocol on Gender and the Sustainable Development Goals on Gender (SDG 6)
  1. On CSR/CSI Codes and Protocols
  • Aspirations to prioritize the supply of services and goods to local community owned business
  • The Development a SADC protocol on CSR and FPIC (include a tribunal where local communities are consulted first)
  • Ensure a legal social and labour plan (SA law can be used as a reference point)
  • Develop a SADC community development agreement plan for all companies to input on.

ACTION PLAN

Anne Mayher with IANRA facilitated the action plan.

A. Actions between 21 March and 31 May 2018. Some of the following activities are to be done before 31 May, while some of them will also continue to be carried out on an ongoing basis, even after the 31st of May.

  1. Timeline – Aim is for the RMV to be tabled with SADC in about 6 months with much back and forth in between in finalising it. AMDC will take our submissions and see how to include them in the RMV and send us back a revised document for our further comments, and then they will finalise the document.
  2. 1st action after the meeting – compile our own input – at this meeting this is what came out. Report will be shared by Mukasiri Thursday the 22nd of March – with this group. We can then give input. Give us 3 days to finalise the report.
  3. 2nd action – Each country present should facilitate the sharing of the AMV and this group’s recommendations to ask for additional input. Comments should be submitted by 30th of April for consolidation by a sub-committee including Mphila, Mukasiri and Tafadzwa. They will compile the report of all the submissions, identifying common threads/issues and major points of difference – this compilation will start by the 20th of April. This document will then be shared with the group, and then it will be shared with SADC via IANRA. Group will make every effort to submit input by 30th of April. If group members need more time, then final deadline will be 31st of May. Everyone should take their own initiative and maximise events and activities to get input on the RMV. Regarding Consultations:
  • IANRA – Teleconference with IANRA members by 4 April to get their input on this plan, develop a strategy/activities/plans. Write an email which shares the draft, action plan, share docs – to give inputs. Make sure members are well aware of developments that are taking place… generate report.
  • Alternative Mining Indaba (AMI) – Share documents on AMI email lists.
  • SADC Coalition of NGO’s – Look at SADC 1 campaign, share documents with its database.. Semere. Also consult with NANGO’s.
  • Documentation of consultation process is needed. It should be captured in the report.
  • Need to ensure inclusivity in consultations with CSO’s.
  • Training/consultation meeting with IANRA, and other CSO’s?
  • A popular version of the draft SADC RMV must be produced and translated to local languages to bring on board community voices
  1. Form an email list for this group – Mukasiri
  2. IANRA could champion the RMV along with attendees at the meeting through a specific country such as Zambia, Lesotho or Swaziland.
  3. Write to AMDC for technical support
  4. In Zimbabwe – parliament is also easily excitable – could work with them to influence RMV processes.

B. Consultation with CSO’s and communities (ongoing even after 31 May 2018)

  • CSOs to hold multi-stakeholder dialogue meeting on regional mineral value chains to hold to account government on implementation of the SADC RMV.
  • Work with Alternative Mining Indaba (AMV on agenda for last 3 yrs) to talk about RMV next year.
  • Use National AMI processes, such as the NAMI coming up. Share dates for national AMI’s.
  • SADC People’s Summit – in August. Tafadzwa will ask EJN re including consultation on RMV there. Also see if Sheilan at AMI could do some coordination of getting input from AMI attendees.
  • Mid-August Forum. Find space there for consultation.
  • Southern African Council of Churches FOCCISA could also be considered for consultation
  • AMDC website – SADC could develop some of the tools that have done by AMDC.

C. Fundraising:

  • ECA funded this process. How do we target those that are funding these development processes – to work with CSO’s.
  • Look at possible donors for additional consultations – NCA? Oxfam Southern Africa?
  • CSOs to popularise the draft SADC RMV in each member state, stimulate discussion and compile country input for the draft SADC RMV before the end of April.
  • International Alliance for Natural Resources in Africa (IANRA) and SADC association on non-governmental organisation to circulate the draft SADC RMV and work-plan to their members and encourage them to popularise the vision.
  • Initiative for Natural Resources in Africa (IANRA) to consolidate comments from each member state for submission to SADC secretariat.
  • A popular version of the draft SADC RMV must be produced and translated to local languages to bring on board community voices
  • CSOs to hold multi-stakeholder dialogue meeting on regional mineral value chains to hold to account government on implementation of the SADC RMV.

[1] “mineral” sector includes all activities related to exploration, construction, mining, mineral processing, smelting, refining, up to the production of mineral-based intermediates ready for consumption in the local/regional manufacturing, infrastructure, agriculture and other downstream sectors.