13 October 2020

The Portfolio Committee on Budget, Finance and Economic Development is conducting national consultations for the 2021 budget which are running from the 12th to the 16th of October 2020. This comes at a time when the PWYP Zimbabwe coalition is running a campaign to enhance community benefit sharing from mining revenue[1]. Transparency and accountability are key tenets that guarantee community benefits and development from mining revenue. The mining sector has a number of issues affecting governance, transparency and accountability in the sector. However, as PWYP we believe the budget is a planning tool that will also help address governance challenges affecting the mining sector. This write up seeks to present a few tips for PWYP members, communities hosting mining activities and other stakeholders to raise as they participate in the budget national consultations. Below are thematic points which can be included in the 2021 National Budget to address mining sector governance challenges and improve the capacity of the mining sector to contribute towards sustainable development in Zimbabwe.

1. Mining cadastre

The Artisanal Small-Scale Mining Sector has been associated with a number of disputes arising from multiple claim ownership. There is no transparency in the awarding of claims, and this has fueled corruption leading to loss of claims by women and men in the sector. Ultimately, this has affected livelihoods for a number of women. This was revealed in a study that was done by the Zimbabwe Environmental Law Association on criminality in the ASM sector. The 2021 National Budget must ensure that this system is operational and implemented.

2. Extractive Transparency Initiative (EITI)

Through the 2020 National Budget the government indicated that it was going to pursue stakeholder discussions on EITI adoption. However, the Mid Term Budget review was silent on the progress with regards to EITI adoption in Zimbabwe In terms of budget transparency rankings for Zimbabwe released in July, 2020, the country recorded an increase in its Open Budget Survey  (OBS) score from 23 in 2017 to 49 in 2019 and has been ranked number three in Africa after South Africa and Namibia. OBS is conducted by International Budget partnership (IBP) and provides transparency information on three elements namely access to budget documents, participation of people in the national budget and the oversight role of oversight institutions such as parliament and the Auditor General’s office. Despite this improvement, the country’s OBS figure is still below 61 which is considered the minimum level of budget transparency that allows meaningful public engagement throughout the budget process. The ability of any country to score very good figures on the OBS rankings depends on the level of public disclosure of information on economic management among other issues. Current research has shown that countries that have adopted EITI have been performing well on the Open Budget Survey (OBS) rankings[2]. This is not a big surprise because there is disclosure of very important information such as mining contracts. The PWYP Zimbabwean Chapter views that the adoption of EITI will add value to OBS rankings for Zimbabwe. In July, 2020, the Minister of Mines and Mining Development, Honorable Chitando indicated that there is need for in-depth knowledge fair on the EITI concept before joining implementation of EITI[3]. The 2021 National Budget must provide a way forward on the mining transparency reforms.

3. Formalization of ASM sector

Policy reform process must support and decriminalize the ASM sector. The Mines and Minerals Amendment bill must recognize and formalize the ASM sector. There is need to speed up the review and finalize the bill. 60% of the country’s foreign earnings comes from mining. In 2019, ASM accounted for 63% (17,478.74kgs) of total gold deliveries (27,650.26 kgs) to Fidelity Printers. Formalization of the sector will help to reduce revenue illicit flows from the sector. There are low levels of tax compliance in the ASM players largely because they are treated to be illegal and there is no adequate financial support to the sector. The informality of the ASM activities has jeopardized the capacity of the sector contribute towards domestic resource mobilization of the country.

4. Community benefits

Mining communities have a constitutional right to benefit from extraction of mineral resources in their communities. The government of Zimbabwe established the Community Share Ownership Trust Schemes (CSOTs) in 2010 through the Indigenization Economic Empowerment (IEE) Act. CSOTs no longer have a legal backing, because government reversed the IEE Framework. The 2019 Midterm budget review statement and supplementary budget confirmed an end to the Indigenization Framework. A proposal was made in the 2019 mid-term budget review that a new empowerment framework will be formulated after the IEE framework was reversed. Up to date there is no new policy framework that the government has come up with. There is need for the Ministry of Finance and Economic Development to speed up the formulation of the new policy framework.

About Publish What You Pay

Publish What You Pay (PWYP) is the worldwide campaign for an open and accountable extractive industry. We are the only global movement working to ensure that revenues from oil, gas and mining are used to drive development. With more than 700-member organisations and 45 national coalitions, our strength lies in our ability to coordinate action nationally and globally, maximizing our collective impact, so everyone benefits from their natural resources – today and tomorrow.

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[1] https://263chat.com/minerals-benefit-program-launched/

[2] https://eiti.org/blog/twelve-years-of-transparency-how-eiti-implementing-countries-are-progressing-in-open-budget

[3] https://miningzimbabwe.com/what-is-eiti-i-dont-know-it-chitando/