sharing in governance of extractive industries
For Zimbabweans, mineral revenue transparency reforms have proved to be a mirage. Possibly hope evaporated with the domestic version of the Extractive Industry Transparency Initiative (EITI), the Zimbabwe Mineral Revenue Transparency Initiative (ZMRTI) failing to take off since 2011. Without transparency in the mining sector, it is difficult for the public to have a hard talk with government and mining companies on how their mineral wealth is being managed to deliver better schools, clinics and roads.
The 2017 Resource Governance Index (RGI) by the Natural Resource Governance Institute (NRGI) buttresses this notion. Countries that have not embraced international best practice on resource revenue disclosure like the Extractive Industry Transparency Initiative (EITI) are less likely to manage their resource wealth for the benefit of their citizens. This paints a gloomy picture for Zimbabwe which is ranked at number 81 out of 89 countries in the 2017 RGI.
Marange alluvial diamond wealth, a squandered opportunity evinces “the resource curse.” $15 billion was lost from the exploitation of Marange diamonds according to the President. Whilst the plundering of diamonds was taking place, the Treasury was sounding “like a broken record” on opacity in the management of Marange diamond revenue.
Through use of “alluvial data” as a colleague Jed Miller labels it, opportunities to influence mineral revenue transparency policy and practice reforms are gaining traction. Alluvial data refers to data which available on the public domain, like alluvial gold, you do not need to dig deeper to access the data. Such data include mining companies published integrated annual reports, national budget statements and Auditor General’s reports.
ZELA has a seat at the table as a stakeholder to the Mining Technical Working Group (TWG) on ease of doing business reforms. Through Publish What You Pay (PWYP) data extractors programme, ZELA is making its voice count in the mining TWG. ZELA is in the subcommittee that is working on a special artisanal mining permit meant to contribute to formalisation of artisanal mining. Another issue on the agenda of the TWG that ZELA is seized with relates to the review of local mining taxes.
A subcommittee being led by ZELA involving the Ministry of Rural Development and Chamber of Mines has been formed to advise the TWG on review of local mining taxes. The Chamber of Mines is pushing for harmonisation of local taxes and the reduction of tariffs paid to local government by mining companies.
Working with the Ministry of Rural Development, Association of Rural District Council of Zimbabwe (ARDCZ) and Rural District Council, ZELA has proposed a framework that RDCs can use to make a compelling case on why mining companies must pay a fair share of local taxes. Mainly, ZELA has presented a weighty argument that the lack of transparency around mineral revenue transparency erodes the power of local governments to negotiate fair local tax deals with mining companies.
Basically, tax is a tool that is used to finance development. RDCs derive their “power to levy rates and taxes and generally to raise sufficient revenue for them to carry out their objectives and responsibilities” from the Constitutions, Section 276 (2) (b). Always, it is important for RDCs to link tax revenue and its impact on development.
If communities are not aware of policies concerned with how RDCs are generating mining tax revenue, the tariff agreements between RDCs and mining companies, the allocation and utilisation of mineral revenue to promote the progressive realisation of their Socio-Economic Rights (SERs), concomitantly, RDCs loose a key alley to hold to account central government and mining companies. It is also noteworthy that by promoting mineral revenue transparency, RDCs can solve information asymmetry within government ministries and departments. Furthermore, tax transparency will expose some mining companies that are quick to publicise their Corporate Social Investments (CSIs) at the same time defaulting on their obligation to pay a fair share of taxes to finance local development.
By taking some of the following steps, RDCs can enhance greater transparency through local budget public consultation processes to make mineral revenue information easier to understand to different users;
Kurai Kingsley, the Trade Commissioner of the Canadian Embassy in Zimbabwe encouraged RDCs to push for the adoption of a free online tool, Towards Sustainable Mining, developed by Mining Association of Canada. The platform promotes public online access to key mineral revenue information different sources. Botswana has adopted the tool. This tool will assist to solve information asymmetry within government departments and allow for greater public access to mineral revenue information.
ZELA has learnt the lesson that whilst the push for adoption of EITI is critical, there is need to work with individual progressive government agencies on mineral revenue transparency such as RDCs and Zimbabwe Revenue Authority (ZIMRA). Use of mandatory disclosures for listed mining companies in EU, UK and Canada can also be a game changer to Zimbabwe’s stalled mineral revenue transparency reforms. ZELA is now working with ARDCZ to come up with a standard template that RDCs can use as a best practice to promote mineral revenue transparency. This is one of the outcomes on the meeting involving RDCs, ARDC and Ministry of Rural Development held at the Rainbow hotel on 15 September 2017. The ongoing 2018 local budget consultations offer exciting opportunities to start rolling out this exercise.
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