Legislated CSR too risky for Botswana - Minister Moagi
May negatively impact on the country’s attractiveness
Minister of Mineral Resources, Green Technology and Energy Security, Lefoko Moagi says introduction of mandatory Corporate Social Responsibility ( CSR) Law would impact negatively on Botswana’s attractiveness as a mining destination.
The minister stated that it would seem as another form of tax and additional cost that were not included in the initial investment of the company. He pointed out that having recently engaged with the international and local stakeholders when consulting on the Mines and Minerals Act, it was clear that as much as Botswana is an attractive mining destination, the introduction of additional taxes would not be welcome and would probably result in Botswana’s ranking dropping.
When rejecting the motion by MP for Sefhare- Ramokgonami, Dr. Kesitegile Gobotswang, who was asking Parliament to request government to enact the law, Moagi said it will simply be seen as a tax and Botswana will be seen as a country with too many taxes when compared to other countries.
“My ministry will not support this as it will clearly bring about unnecessary risks and will give the perception that investing in the extraction industry in Botswana is too expensive and has multiple taxes. This will rather tarnish the investment appeal and doing business in Botswana that we are currently peaking elsewhere. The current arrangements have worked well as can be seen by the multiple CSR projects and other benefits that have come from the extraction industry. “We believe the provision in the recent Economic Inclusion Act is sufficient to cater for this CSR requirements,” said Moagi.
The minister told Parliament that Botswana already has a law which regulates social upliftment programmes to ensure that communities benefit from companies, that include those doing mining or extractive industries. This he said is as per the Economic Inclusion Act of 2021 Section 29 ( 4). Mining companies have been doing Corporate Social Responsibility in Botswana as a purely voluntary initiative prior to the enactment of the Economic Inclusion Act of 2021, added the minister.
According to Moagi, subsequent to that the CSR activities are governed by the Economic Inclusion Act of 2021. He said as a result of that it is not yet prudent to amend the law or put another law on top of whatever is being provided for under Section 29 ( 4) of the Economic Inclusion Act so that there is a specific proportion of the profits before tax allocated to CSR as the mover of the motion suggests.
“It is best international practice for CSR activities to be voluntary. Mining companies engage in CSR activities as a contribution towards the society as part of their coexistence with the community, over and above the royalties and taxes they pay to Government. It is my ministry’s strong believe that for our licenced mining operations, the positive social economic impacts outweigh the negative impacts, and that our mining operations are uplifting to the livelihoods of the communities hosting them.”
He said while communities may be affected by impacts resulting from the presence of mines operating in their vicinity, “they benefit from the developments that usually come along with the mines such as schools, hospitals, roads, electricity, among others,” he said, adding that this may have negative unintended consequences especially to the local mining communities as some companies may decide to withhold other benefits that they provide and only pay the mandatory CSR amount which could be less than the other benefits that they may have been provided with.
Moagi, who is also MP for Ramotswa, stated that companies that are already in operation, may react negatively to this because they would see it as moving of goal posts when they have already invested in the country. It may impact negatively on Botswana’s attractiveness.