Local enterprise development hinged on community share ownership: learning and experience sharing

By Emmanuel Chinembiri

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05 December 2017

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  • “US$39 million has so far been received by community share ownership trusts. Almost half has been utilised mainly on social service delivery infrastructure- schools, clinics, roads and irrigation schemes” CEO, National Indigenisation and Economic Empowerment Board- Mr Rangu

  • Out of 61 was established community share ownership trusts, only two have received share certificates, Gowanda and Umuguza.

  • To create value and achieve sustainability, community share ownership trusts must catalyse community enterprise development through participation in mining value chain and beyond mining value chain opportunities. This is in line with the African Mining Vision pillar on linkages, investments and diversification.

  • The proposed reforms to the national indigenisation framework to limit the 51% indigenisation equity threshold to platinum and diamond sectors has brought uncertainty to operations of CSOTs in other mineral sectors like gold.

  • “We started our company in 2014 with 6 farmers doing 1000 birds each per month. Currently, we have 103 farmers producing 360 000 to 400 000 birds monthly” – Brand-Agro, outgrower business model.

  • “people from rural areas do not have access to information on Government loan facilities hence they are marginalized from participating in economic development programs. mechanism and resources should be put in placeto support traditional chiefs to cascade such information "- Chief Mapanzure, Zvishavane

Curbing corruption and rent seeking behaviour in the mining sector

In partnership with National Indigenisation and Economic Empowerment Board (NIEEB), the Zimbabwe Environmental Law Association (ZELA) facilitated a one-day workshop on local enterprise development for Community Share Ownership Trusts (CSOTs). The workshop was held on 24 February 2018 at Crowne Plaza hotel in Harare. Essentially, the workshop aimed to review progress in the implementation of local enterprise development by CSOTs; to facilitate the learning and sharing of experience and good practice on community focused enterprise development project for CSOTs; and to explore possible areas of partnership and collaboration amongst CSOTs, stakeholders and potential investors.

The workshop was held at a time when there is a direct threat to the continuity of CSOTs outside the platinum and diamond sectors. Through the 2018 national budget statement, plans to amend the Indigenization and Economic Empowerment framework providing 51/49 Indigenisation equity in the entire mining sector will be applicable only to diamond and platinum sectors.

66 people (48 males and 18 females) participated during the local enterprise development workshop. Participants comprised of traditional chiefs who are trustees of CSOTs from Zvishavane, Harare East Mabvuku Tafara, Umguza, Bundura, Tongogara and Mhondoro-Ngezi-Chegutu and Gwanda,Civil Society organizations(NIEEB,ZELA,Silvera House), political Party(ZANU PF) and Business Sector(Beefies Nature and Brand-Agro) representatives

In his opening remarks, Mr Shamiso Mtisi, ZELA’s acting director, stressed that policy dialogues are critical to enable sustainable utilisation of natural resources and that CSOTs should be involved in income generating projects that empowers resource rich communities.

“The first CSOT was formed in 2011 and great milestones have been made in empowering communities. The policy behind CSOTs is to ensure that a majority of the indigenous Zimbabweans (70% of whom reside in rural communities) can participate and benefit from economic growth hinged on the exploitation on natural resources. CSOTs are guided by the constitutional provisions to ensure that benefit from natural resources in their areas, Section 13 subsection (4)” NIEEB CEO, Mr. Rangu Nyamurundira

CSOTs Enterprise Development Efforts

This section shares brief profiles of Gwanda, Zvishavane,Mhoondoro Ngezi and Goromonzi. Key issueswhich included in profiling are types of minerals resources, names of major mining companies, seed capital pledged and received.

The CSOTs are making strides to embark in sustainable projects to move from relying on Seed Funding which has depleted for some of the CSOTs such as Goromonzi CSOT.

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.

  • Gwanda CSOT – Gwanda is rich in Gold and Cement with Jessie Mine, Blanket Mine and PPC mining form the region. The trust has so far received $1 million as seed funding from Blanket Mine and 4 million as Advanced dividend loan, 1.5 million seed funding from PPC and 250 000 Advance dividend from Jessies Mine. Having realized the need to ensure growth of capital and being sustainable, the CSOT embraced doing the following projects: borehole drilling, pen fattening, mining and gold milling, pecan nut project, microlending and investing in commercial property.
  • Goromonzi CSOT - After their seeding fund depleted the CSOT engaged Shamiso farm to collaborate on Piggery project to empower communities using a pig production syndication model. The model has managed to create jobs and improved livelihoods of communities in Goromonzi.
  • ZMNC CSOT - The trust was formed in 2011 and have used 50% of their Seed Funding. The trust has ventured in agricultural value chains in poultry (broilers working with Sable), sorghum and apiculture
  • Zvishavane CSOT – The trust was formed in 2012 and they invested money they got from Seed funding into markets. The trust will be venturing into Transport business, Citrus Production and chicken project

Scope for public / private partnerships in local CSOT enterprise development.

The public and private Business sector was represented by Beefies Nature and Brand-Agro. Beefies Nature specialises in cattle and beef production. They highlighted that there is need for CSOTs to consider other models and the importance of knowledge transfer for the benefit of the people. Beefies expressed interest in exploring and investigate the potential to partner with the CSOTs to get access to loans, provide expertise and network national, regional and international. Beefies will support in the CSOTs on the education component sharing information to cover the knowledge gap to improve beef production practise.

Brand-Agro’s major role is to link supplying markets to farmers. They work with different aggregators. The most important component in their operations is grower contracting; they offer technical support, administer growers and do quality management. In 2017 the company has managed to pay approximately 1.5 mil dollars into the community as farmer profits.

Both Business partners applauded presentations that were given by CSOTs and expressed interest in continuous partnership with CSOTs and engage in technical knowledge transfer to benefit the communities.

Way Forward

In order to link enterprise development efforts from CSOTs and the business sector, the following were recommendations from the workshop:

  • Need for Community share ownership Trust to shift mindset from focusing social infrastructure development and entrepreneurial to engage in income generating projects with both Government and private sector.
  • Engage in Business skills and training programmes that equips them to run sustainable community business projects.
  • Branding community empowerment into the Zimbabwe special brand , a brand that can be there for all community trusts
  • Establish local and industry and economic growth hubs on the back of local human and natural resources opportunities