The archaic Mines and Minerals Act of 1961, which has failed to address issues of transparency and accountability, has been a contributor to the poor performance of the mining sector which has had to contend with corruption and politicisation of the sector.
A Transparency International Zimbabwe (TIZ) report titled US$12 Billion Mining Economy by 2023: What Are the Key Enablers, says the mining sector has remained detached from the rest of the economy.
The mining sector in Zimbabwe is grappling state capture, with resources being vested in the hands of individuals rather than the state. This has raised doubt on whether government can achieve its ambitious target of a US$12 billion mining economy by 2023.
The development comes at a time government is still to complete the amendment of the Mines and Minerals Act which has been on the cards for more than a decade.
The report notes that the sector is characterised by excessive investment incentives, including provisions for carrying over losses indefinitely.
TIZ said such incentives, apart from the harmful tax holidays, limit the capacity of the state to benefit from the sector.
“However, it should be noted that the current scenario benefits the political elites who seem to be content with the status quo considering that the law considers ASM (artisanal and small-scale miners) as illegal, but the proceeds (mainly gold) are sold officially through the government buyer, Fidelity Printers. Despite political pronouncements captured in the 2019 and 2020 national budgets, Zimbabwe has been hesitant to join the Extractive Industries Transparency Initiative (EITI),” TIZ said.
“Further, a domestic version of EITI called the Zimbabwe Mining Revenue Transparency Initiative (ZMRTI), which was launched in 2011, with the aim of promoting the disclosure of mineral revenues and payments, was short-lived due to lack of political will,” the report says.
The lack of policy clarity and potential conflict between mining and agriculture over access to land and miner exploitation further undermines the potential of the sector to contribute to sustainable development.
The existing Act also gives precedent to mineral exploration and exploitation ahead of agricultural usage, in the process, disrupting agricultural activities.
TIZ said the vagueness and discretionary powers create opportunities for corruption and conflict.
The mining sector in Zimbabwe is also faced with the problems of lack of geo-data, exclusion of communities, lack of transparency and accountability, among others.
The vagueness in contract and contract negotiation limits the ability of the state and communities to benefit from the sector with contracts being negotiated behind closed doors, the report observed.
The opacity of these contracts, according to TIZ, leads to tax evasion and avoidance, which drain the country of the much-needed resources.
“They are not open and competitive, and as a result there are stabilisation and confidentiality clauses which limit the ability of the state to review and publish contracts, respectively. Cognisant of the limitations and problems emanating from the 1961 Mines and Minerals Act, civil society, and other key players in the mining sector, advocated for the amendment of the Act and in 2015 parliament came up with a Mines and Minerals Amendment Bill,” TIZ said.
“However, in the Bill, provisions for transparency and accountability remain weak, especially in relation to access to information, restricted access to mining contracts and revenue declaration, unclear provisions regarding closing down of mines which is a subject of interest in view of the open shafts, and lack of transparent and accountable community displacement procedures to pave way for mining operations.”
TIZ believes the US$12 billion mining economy can be realised hinged on government’s willingness to take certain measures that include the enactment of the Mines and Minerals Bill into an Act in order to address transparency and accountability risks and vulnerabilities associated with the Mines and Minerals Act of 1961.
TIZ said government should also formalise and decriminalise the artisanal and small-scale miners to optimise on their contribution to the economy, while also taking measures that promote the attainment of gender equality, equity and women empowerment within the mining sector.