STRENGTHENING EXTRACTIVE AND NATURAL RESOURCES SECTOR TRANSPARENCY AND ACCOUNTABILITY THROUGH CITIZEN ACTION AND PARLIAMENTARY OVERSIGHT IN ZIMBABWE (STACAP)
April 2020
As the country is adopting a cocktail of economic measures to contain the impacts of the Coronavirus, it is important for civil society organisations (CSOs) and citizens to understand why transparency and accountability in the Extractive Sector can be a game changer in Zimbabwe’s fight against its current and future social development problems. Over a long period of time, the Extractive Sector in Zimbabwe has been opaque, secretive and not transparent hindering its potential to contribute to sustainable development.
Just shortly before the COVID -19 pandemic was declared a national disaster in Zimbabwe, the Zimbabwe Environmental Law Association (ZELA) organised a meeting in Bulawayo from the 18th to the 19th of March 2020 with the objective of building or strengthening the capacity of CSOs and mining affected communities to effectively hold state actors and mining companies to account through knowledge and skills sharing on mining sector transparency issues. Get a snippet of the questions raised by participants and answers thereof.
- Frequently Asked Questions
Why has extractive sector in Zimbabwe, especially mining been opaque, secretive and not transparent thereby hindering its potential to contribute to sustainable development over a long period of time?
Answer
Indeed, there is secrecy in the way mining contracts and agreements are signed with foreign governments and entities. The terms of such deals are not known and rarely benefit the country or contribute to sustainable economic development due to poor governance systems, political factors and corruption. Even parliament is sometimes sidelined from approving the mining deals, while corrupt individuals are involved in negotiation of such deals and demanding bribes. The deals are normally in favour of the investor. Therefore, there is no transparency in the allocation of mining rights which in turn affect revenue generation and limits the sector’s potential to promote social and economic development.
- 2. Frequently Asked Questions
Why are mining deals announced by Government under the ‘Zimbabwe is open for business’ mantra not being made public?
Answer
What we have observed is that Government only publicly announces a few deals and agreements signed with foreign governments or company on national TV, but does not publish the details, terms and conditions of the contract which gives an indication of the fiscal terms and other obligations of the investor and Government. Examples include the Karo Resources deal. Contract transparency is lacking. This is an important aspect of mineral resource governance. Over the years, Zimbabwe has used its mineral wealth as collateral in exchange for credit lines. An example is the line of credit that was secured using gold exports as collateral in 2017 by the Afreximbank. Several loan agreements signed by Government with foreign investors show that Zimbabwe has been virtually mortgaging its mineral resources. Therefore, Parliamentary oversight on such ‘mega deals’ remains critical.
- Frequently Asked Questions
Why is it that Zimbabwe has failed to realise maximum benefit from its vast mineral resources?
Answer
When deals are negotiated in secrecy then the playing field becomes uneven, companies seek to bargain more and have good negotiators. Corruption, illicit financial flows, criminality and smuggling affect the sector. All mining deals signed by the Government must be made public so that the citizens are able to follow up and monitor the fiscal terms to critically assess if the country is realising optimal benefits. There is need for State -Owned Companies involved in the mining sector to be accountable if the mining sector is to contribute significantly to the growth and development of the country’s citizenry.
- Frequently Asked Questions
Is it easy to take a legal route to demand transparency and accountability?
Answer
Indeed, it is possible and easy to take the legal route through public interest litigation to demand transparency and accountability. An example could be taking a case to court against government or a state-owned company demanding access to information or access to a mining contract. However, litigation has its own limitations in a country where the judiciary is not entirely independent and not prepared to use its powers to call government to be transparent and accountable. Some judgements are reserved for a long period.
Litigation is not the only strategy that citizens should use in holding the government and mining companies to account on human rights violations and mineral revenue transparency. CSOs should also make use of other complementary strategies such as engagement.
- Frequently Asked Questions
Corporate Social Responsibility (CSR) is not meaningfully benefiting local communities. What could be the reason?
Answer
Currently, there is no specific legal framework mandating companies to deliver on CSR although other sector laws in the environment or indigenisation sector can be interpreted as providing for CSR. Corporates must understand the intricate relationship between the environment they operate in and the social responsibilities thereof. As Zimbabwe continues its call to lure investors, the bait must be on how they are going to contribute towards Corporate Social Responsibility (CSR).
Constitution of Zimbabwe Amendment (No. 2) Bill
Frequently Asked Questions
What’s this talk about amending the Constitution, what does the Constitution of Zimbabwe Amendment (No. 2) Bill contain?
Answer
The Constitution of Zimbabwe (Amendment) Bill No. 2 was gazetted on 17 January 2020 with the aim of amending several sections in the Constitution. Constitutional amendments are allowed in Section 328 of the Constitution, but many of the proposed amendments will effectively result in consolidation of power in the office of the President and will have significant impacts on different sectors including the mining sector. Some of the proposed amendments relates to appointment of Vice Presidents than their election together with the President as joint running mates, succession in the event of death, resignation or incapacity of the president, increasing number of Ministers to be appointed by President from unelected MPs, removing public interviews for Judges and increasing tenure of Judges, changing some functions of the Human Rights Commission and changes to definition of foreign organisations and entities to International Organisation in relation to approval of international agreements.
- Frequently Asked Questions
I have heard several people saying this Constitutional Amendment Bill will have an impact on approval of fiscal obligations of the country by parliament, how?
Answer
If passed into law the role of parliament to approve agreements or contracts signed with foreign organisations or entities which are not defined as international organisations will be removed, even if they impose fiscal obligations on the state. The proposed Amendment of Section 327(3) means Parliament will no longer have the constitutional power to approve loan agreements with foreign non-state institutions or entities giving sole discretion to the Executive. This may also apply to any Government guarantees imposing fiscal obligations on the State. The consequences are drastic. What it also means is that the Government of Zimbabwe can enter into a loan agreement with institutions such as Credit Suisse, the Export-Import Bank of China, the China Construction Bank or the Industrial and Commercial Bank of China without Parliamentary approval since their membership does not include two or more independent states. Most contracts normally entered by Government are with non-State organisations and private entities. Such contracts include multi-million-dollar investment contracts in areas like mining, energy, trade finance and infrastructure among others. These contracts will be protected from public scrutiny by the Executive.
- Frequently Asked Questions
Is there any effect on mining or extractives if we retain Clause 23 in the Amendment Bill?
Answer
Although all Clauses in the Amendment Bill will have some form of effect on the mining sector, Clause 23 if retained in its current form will have the biggest impact. It affects the negotiation, review and monitoring of mining contracts in Zimbabwe. Clause 23 seeks to amend Section 327 of the Constitution which provides for the signing, conclusion, execution and approval of international conventions, treaties and agreements and their approval by Parliament. Clause 23 appears to be meant to put beyond parliamentary scrutiny mining related financing agreements or loans between Zimbabwe and foreign credit banks or other companies. The role of Parliament is to play an oversight role over executive functions and taking away agreements with foreign organisations and entities beyond the scrutiny of Parliament defeats the principle of separation of powers, public accountability and good governance. The Parliament of Zimbabwe needs to analyse whether or not the ‘mega deals’ being negotiated will actually translate into tangible benefits for the general populace. Putting mining related loan agreements or other agreements with fiscal obligations beyond Parliament creates a shade of grey and opportunities for illicit financial flows, contraction of illegitimate, criminal debts that involve corruption and kickbacks to government officials or broadly odious debts.
- Frequently Asked Questions
In as far as the proposed Amendment Bill is concerned, what should we do, to ensure that we as Zimbabwean citizens we are not short-changed?
Answer
There is need for Parliament and Citizens to advocate for a review or total rejection of Clause 23 of the Constitution of Zimbabwe Amendment (No. 2) Bill which intends to take away the power of Parliament from approving loan agreements and contracts with foreign entities and organisations. It is highly likely that the Government wants mining deals and agreements signed with non – state entities (such as Credit banks or other foreign companies) to remain secret and unchecked even though the deals impose fiscal obligations on the State. Citizens and communities should actively participate in all the public hearings on the Bill to be conducted by parliament and oppose the Bill in its current form.
STRENGTHENING EXTRACTIVE AND NATURAL RESOURCES SECTOR TRANSPARENCY AND ACCOUNTABILITY THROUGH CITIZEN ACTION AND PARLIAMENTARY OVERSIGHT IN ZIMBABWE (STACAP)
As the country is adopting a cocktail of economic measures to contain the impacts of the coronavirus, it is important for CSOs and citizens to understand why transparency and accountability in the Extractive Sector can be a game changer in Zimbabwe’s fight against its current and future social development problems. Over a long period of time, the Extractive Sector in Zimbabwe has been opaque, secretive and not transparent hindering its potential to contribute to sustainable development.
- The State is failing to bring the mining sector investors to account on human rights violations because there are allegations that some political figures are also participating in the sector;
- The Government must urgently adopt the Extractive Industries Transparency Initiative (EITI). The government demonstrated renewed interest to do so during the 2019 Budget Statement and 2020Pre Budget-Statement. The opportunity to put words into action is now;
- The Government’s argument that they cannot adopt Extractive Industries Transparency Initiative (EITI) because it is being driven by Western countries does not hold water. Zimbabwe needs to adopt EITI to improve transparency and accountability in the extractive sector
How about the mining cadastre system?
- Delays in the implementation of the mining cadastre system to regulate mining titles is suffocating the contribution of the Artisanal and Small-scale miners to the social and economic development of the country.
- It is a positive development that Zimbabwe’s new Companies Act [Chapter 24:31] is now making it mandatory for companies to disclose ownership information (Beneficial Ownership Register). However, there is need for the Act to impose stricter conditions to restrict potential culprits from starting businesses under different guises to circumvent the stipulated regulations.
Compiled by the Zimbabwe Environmental Law Association, 26B Seke Road, Hatfield,Harare,Zimbabwe
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