Momentum forthe adoption of the Extractive Industries Transparency Initiative builds in Zimbabwe
By Mutuso Dhliwayo& Joyce Machiri
The Zimbabwean Government was among the participants at the 8thExtractive Industries Transparency Initiative ( EITI) Global Conference held in Paris, France from the
18th -19th of June 2019. The meeting’s theme “Open Data, Build Trust”was very apt as it underpins the need for building trust between stakeholders that are involved in the implementation of the EITI Standard through the Multi Stakeholder Group (MSG) namely government, business and Civil Society Organizations(CSOs). Information or data that is timely, accessible and credible is key to building trust among stakeholders.
Information helps to build trust and confidence between the governing, those that are governed and those that are exploiting mineral resources. Data helps the role of business in economic development to be appreciated. Furthermore, it helps in the management of expectations by stakeholders. Lack of information results in suspicion and mistrust between stakeholders. Without information stakeholders tend to speculate resulting in unnecessary tensions and hostilities. The EITI Global conference was held at a time when trust in government globally is under strain as evidenced by shrinking civil society space which is undermining the realization of Sustainable Development Goals ( SDGs).
The Government of Zimbabwe was represented by officials from the Ministry of Mines and Mining Development. These included the Permanent Secretary Mr. Onesimo Mazai Moyo, the Principal Minerals Development Officer, Mr. Rangarirai Mhazo and the Senior Legal Officer, MsNolwazi Muchinguri. During the EITI Global conference, the Ministry of Mines and Mining Development held a side meeting with the EITI Secretariat that included the Deputy Head,Mr. Eddie Rich and Matthew McKernan , the Country Officer for Eastern and Southern Africa. The discussion centered on the utility of the EITI Standard in the management of natural resources that include oil, gas and minerals and the steps of joining the initiative. The Permanent Secretary also made a statement on Zimbabwe’s commitment to joining the EITI in Plenary session 6. Further side meetings were also held with the GIZ to explore the technical support that can be given to the Zimbabwe Government to poromote transparency in the mining sector especially through the negotiation of better deals.
The participation by the Ministry of Mines representatives in Zimbabwe is very significant. This is only the second time that Zimbabwean Government officials have attended the EITI Global Conference. The first was during the 5th EITI Global conference when Zimbabwe was represented by Mr. Jameson Timba during the tenure of the Inclusive Government in 2011. He was the Minister of State in the then Office of the Prime Minister. Ironically, the meeting was in Paris. To that end, Paris holds a lot of significance in Zimbabwe’s efforts to adopt the EITI. During that period Zimbabwe was in the process of adopting the Zimbabwe Mining Revenue Transparency Initiative (ZMRTI) a domestic version of EITI which was supposed to be a stepping stone towards the adoption of EITI.
ZMRTI was ended abruptly after the harmonized elections of 2013 which ended the Inclusive Government.Since then, successive Ministers of Finance and Economic Development have made reference to EITI in the National Budget Statements but without follow up actions on how to implement / operationalize it. However, with the appointment of technocrats by the new administration of President Emmerson Mnangagwa both in the Ministry of Finance and Economic Development and Mines and Mining Development, there seems to be a new sense of urgency to adopt EITI.The foundation was laid in the 2019 National Budget Statementwhich indicated Zimbabwe’s plans to adopt the EITI. These intencsions are also reflected in theTransitional StabilisationProgramme (TSP) and Vision 2030Document when Zimbabwe hopes to become a middle-income economy.
The objective of the government of Zimbabwe in attending the EITI was to learn and understand more about the EITI as a mineral resource governance framework including its advantages and disadvantages. As the old adage goes, ‘seeing is believing’. With that information the Government of Zimbabwe will then decide whether it will join the EITI or not.
Understanding the EITI
While there are many mineral and natural resources governance frameworks that include the Natural Resources Charter (NRC) and the Africa Mining Vision (AMV), the EITI is the most globally renowned framework implemented by the World Bank.The EITI is a global standard for transparency in the extractive sector. It is currently being implemented by 52 natural resource rich countries. The EITI centers on the reconciliation of company payments with government receipts and disclosure of that information to the public. The goal is to identify potential discrepancies between payments made and receipts received,investigate and address the underlying causes.
What are the potential benefits of EITI to Zimbabwe
There are a number of benefits that are associated with EITI that Zimbabwe can reap from joining it. Zimbabwe is a country that is not getting maximum benefits from its significant and diverse mineral resource base. This mineral resource base is expected to be thecatalyst for economic revival, stabilization and eventual growth. While there are a number of reasons for this state of affairs, lack of transparency and accountability in the mining sector are among some of the factors. Reports from the Parliamentary Portfolio Committee on Mines and Energy, Office of the Auditor General and the Government itself including confessions by the former President that Zimbabwe lost USD 15 billion from Marange diamonds , confirms this.According to the 2018 Corruption Perception Index produced by Transparency International, Zimbabwe is ranked 160 out of 180 countries. Against this background, the EITI can have a number of positives to the natural resources sector in general and the mining sector in particular. These include the following:
- Helps to fight corruption;
- Improves revenue collection for improved service delivery;
- Enhances chances of attracting Foreign Direct Investment through international recognition;
- Can promote transparency and accountability in the sector hence the country can acquire resource revenues that can be used for economic development and poverty reduction;
- Promotes access to information and public participation in the extractive sector;
- Gives the public opportunity to understand how the resources are being governed;
- Strengthens democracy and good governance;
- Informs legal and fiscal reforms;
- Empower CSOs and Community Based Organisationsso that they become more effective in their work as theypartake in informed advocacy;
- Important for preventing resource conflicts;
- Helps in building trust among stakeholders
Why Could Zimbabwe be interested in joining the EITI?
The dictum of the new administration under President Mnangagwa is that Zimbabwe is “Open for Business”. This is reflected in the Transitional Stablilisation Plan and the desire for Zimbabwe to become a Middle-Income country through Vision 2030. The Ease of Doing Business Reforms and major policy shifts in the Indigenisation and Economic Empowerment programme as ushered in by the Finance Act of 2018 and the Zimbabwe Investment Development Bill are all evidence of this new thinking. The Zimbabwe is openfor business dictum is heavily dependent on attracting Foreign Direct Investment and the mining sector is perhaps the only sector in Zimbabwe that is capable of attracting FDI because of its mineral portifolio.
Another reason could be the need for effective Domestic Resource Mobilisation. Zimbabwe is currently inward looking in terms of resource mobilization. Effective domestic resource mobilization is not possible in the absence of an effective resource mobilization framework and the EITI Standard can provide this. Thirdly, Zimbabwe is in the overdrive to reengage the international community. Joining the EITI is one of those avenues of rejoining the community of nations. There are also ongoing discussions with development partners and International Financial institutions that have resulted in a Staff Monitoring Programme (SMP) by the World Bank and the International Monetary Fund. Joining the EITI will confirm how Zimbabwe is serious about its economic reforms after decades of stagnation.
What are the key takes from the EITI Global Conference
The 8th Global conference was held after the EITI Board meeting held in Kiev, Ukraine. The meeting made a number of major changes to the EITI Standard that were adopted at the conference. These include:
- Environmental reporting which requires reporting of material environmental payments to government to be disclosed and the encouragement of disclosure of information related to environmental impact and monitoring. This requirement is very much in line with the requirements of the Zimbabwe Stock Exchange (ZSE)gazzetted through Statutory Instrument 134 of 2019.ZSE requires sustainability information disclosure which includes environmental, social and economic reporting by companies that are listed on the Zimbabwe Stock Exchange.
- Contract and licence transparency – implementing countries are required to disclose any contract and licences that are granted, entered into or amended. This is very much in line with the requirements of section 315 (1) and (2) of the Constitution of Zimbabwe on Procurement and other Government contracts.
- Commodity trading transparency – This requires the reporting on revenues from the sale of the state’s share of production of oil, gas, minerals and these should be disaggregated by sales contracts rather than by the buyer. Disclosure on the process for selecting buyers and of sales contracts are also encouraged. Buying companies are also encouraged to disclose their payments to the state for purchases of oil, gas and minerals.
- State Owned Enterprises Transparency – In Zimbabwe just like many countries in Africa and the world over, State Owned Enterprises (SOE) play an important role in managing natural resources. These include the Zimbabwe Consolidated Diamond Company (ZCDC), Zimbabwe Mining Development Corporation (ZMDC)and Minerals Marketing Corporation of Zimbabwe (MMCZ). Implementing countries are required to describe the rules and practices governing transfers of funds between SOEs and the state, including joint ventures and subsidiaries. Information about loans or loan guarantees provided by government and SOE to mining, oil and gas companies should be disclosed including the repayment schedule and interest rate. SOEs are expected to publish their audited financial statements timely.
- Gender balance- This requires the participation of women and other marginalized groups in the extractive sector.MSGs are required to consider gender balance in their representation and the access challenges and information needs of different genders and subgroups. This is also in line with section 17 of the Constitution of Zimbabwe which requires gender balance.
The next steps / upcoming opportunities
The momentum on Zimbabwe joining the EITI will continue with the planned stakeholders’ meeting to be held on the 15th of July by the Ministry of Mines and Mining Development. The focus of the meeting is on the prospects of Zimbabwe joining the EITI. There are also other ongoing initiatives by CSOs to encourage the government to join EITI in a move to improve mineral resources governance.
The efforts by the Government of Zimbabwe to understand the EITI Standard with a view to consider the merits and demerits of joining it, should be applauded by all stakeholders that are working to improve mineral resources governance in Zimbabwe. While it has its own weaknesses just like any other mineral resource governance framework, it has some advantages that can be used as a building block to improve the governance of the mining, oil and gas sectors in Zimbabwe. The Government of Zimbabwe through the Ministries of Finance and Economic Development and Mines and Mining Development, deserve all the encouragement and stakeholder support.