By Byron Mutingwende
The enhancement of mining revenue transparency and good governance will spur Zimbabwe’s economic growth which is anchored by that sector and agriculture.
This emerged during the multi-stakeholder breakfast dialogue forum that was held by Zimbabwe Environmental Law Association (ZELA) with support from the European Union that was held at the Meikles Hotel on Thursday, 14 July 2016.
Mutuso Dhliwayo, the Executive Director of ZELA said that the mining sector is central to Zimbabwe’s economic turnaround, with an estimated 15% contribution to GDP, 58% to total exports, and 13% of the country’s fiscal revenues.
The sector employees more than 45 000 people and accounts for 50% of the country’s foreign direct investment. The mining sector remains a resourceful sector, with opportunities for enhanced contribution to GDP through mineral beneficiation.
“ZIMASSET’s the country’s Economic Blueprint prospects rests squarely on leveraging mining sector growth and contribution to foreign currency earnings. Furthermore, the sector also has significant impacts on revenue generation, poverty alleviation, empowerment and has effects on environmental justice,” Dhliwayo said.
It emerged that mineral revenue transparency can be enhanced through making available, on a timely basis, information on production, profitability and exploration among other key parameters.
Thus, improving the mining sector’s governance, oversight, transparency and accountability guarantees effective natural resource management, and hence anchors the sectors’ contribution to inclusive growth and poverty alleviation.
The dialogue was meant to marshal the collective voices of multi-stakeholders in order to strengthen the credibility of possible mining sector related policy reform initiatives, and hence the prospects for successful implementation.
Current mining public policy and regulatory reforms include the Mining Fiscal Regime; Mining Exploration Bill, Mines and Minerals (Amendment) Bill. These can benefit from tools such as research and open dialoguing for a broader consensus building processes to engender some measure of policy inclusivity in economic governance.
The Permanent Secretary in the Ministry of Economic Planning and Investment Promotion, Dr. Desire Sibanda said that it was important for the government to identify how it could leverage on mineral resource governance.
He said that in most African countries, economic growth is based on extractive industries. In 2011, the World Bank stated that six of the top ten fastest growing economies were in Africa. In that regard, it is estimated that Africa has 10% of the world’s deposits, 40% of gold deposits, 90% of platinum/chromium deposits and a host of other minerals.
However, there are documented problems of transparency in terms of mining in Africa. Sibanda said that companies operating in Africa are given too many incentives and tax subsidies. This raises the question of who benefits from abundant mining resources. In the process, may multinational companies are flocking to Africa in search of investments because the returns are very high,
The other problem is that there is a very high incidence of tax avoidance by mining companies as well as many secret mining contracts in Africa. Coupled with this is the lack of institutional capacity to enforce tax compliance.
On the other hand, tax authorities are ill-equipped to tax huge multinational companies who boast of international accountants and tax accountants, yet African institutions are not well-equipped to enforce compliance.
Sibanda bemoaned the irregularities in the administration of tax subsidies where tax evasion has robbed African treasuries of millions of dollars. The lack of transparency in the mining sector is evidenced when the accounts of mining companies are not published for all to see where the resources are going to.
In addition, the legislative oversight institutions are weak. They do not have powers or skill and knowledge to provide the oversight in the mining sector. Neither are there researchers to research on what is going on in the sector and, to assist the legislatures in their oversight functions.
As recommendations, there was the need to reform the mining fiscal policy regimes in many African countries so as to meet the fiscal revenue targets. The issue of value addition should be emphasized to avoid being exploited by multinational companies.
“We need to ensure proper accounting for all the minerals. Zimbabwe is one of the richest countries in mineral wealth. Mining policies should encourage the understanding of geological formations. We should invest heavily in exploration. We need to partner with reputable international exploration companies to know with confidence what is underground.”
Since artisanal miners, do not go for illicit financial flows, they should be supported by the government as part of the empowerment programmes and to initiate economic growth. The establishment of a sovereign wealth fund through which mineral resources can be used to finance priority programmes such as infrastructure, education and health was encouraged.