Min­ing steps into the fu­ture

The Sunday Mail (Zimbabwe) - - ANALYSIS & OPINION - Mukasiri Sibanda Mukasiri Sibanda is a re­searcher and blog­ger on nat­u­ral re­source gov­er­nance is­sues

THE cre­ation of a con­ducive pol­icy en­vi­ron­ment to un­leash the po­ten­tial propul­sive de­vel­op­ment ef­fect of min­eral wealth was one of the great out­comes of the 2019 Na­tional Bud­get. The Bud­get was pre­sented af­ter a se­ries of sub­mis­sions by stake­hold­ers.

Min­ing sec­tor stake­hold­ers made their pro­pos­als on Oc­to­ber 22, 2018, in line with Sec­tion 13(2) of the Con­sti­tu­tion of Zim­babwe, which says the peo­ple must be in­volved in for­mu­la­tion and im­ple­men­ta­tion of de­vel­op­ment plans and pro­grammes af­fect­ing them.

In line with tech­no­log­i­cal trends where so­cial me­dia give a voice to cit­i­zens, the Fi­nance and Eco­nomic De­vel­op­ment Min­is­ter, Pro­fes­sor Mthuli Ncube, ac­knowl­edged he con­sid­ered sub­mis­sions that came via Twit­ter, Face­book and blogs.

The sub­mis­sions made by some play­ers in the min­ing sec­tor in the preBud­get con­sul­ta­tions were mainly har­vested from the Al­ter­na­tive Min­ing Ind­aba.

Th­ese ind­abas were held at district, provin­cial and na­tional level, and were de­signed to strengthen the voice of com­mu­ni­ties on mat­ters re­lated to the en­vi­ron­ment, econ­omy, and so­cial and cul­tural rights.

In the con­sul­ta­tions, we de­manded that the Bud­get must em­brace the Ex­trac­tive In­dus­tries Trans­parency Ini­tia­tive (EITI) or the Zim­babwe Min­eral Rev­enue Trans­parency Ini­tia­tive (ZMRTI) — a home grown ver­sion of EITI which failed to take off in 2011.

EITI is a tri­par­tite ar­range­ment in­clud­ing Gov­ern­ment, busi­ness and civil so­ci­ety.

Trans­parency in the min­ing sec­tor is fun­da­men­tal to al­low cit­i­zens to con­nect the dots between mega deals and sus­tain­able de­vel­op­ment, as well as hold Gov­ern­ment and in­vestors to ac­count.

Com­mend­ably, the 2019 Na­tional Bud­get State­ment ex­pressed Gov­ern­ment’s ur­gent de­sire to adopt EITI.

There are four steps re­quired to join EITI: the prepara­tory, dis­clo­sure, dis­sem­i­na­tion and sign-up phases.

To sign up, Gov­ern­ment must: ◆ Is­sue an un­equiv­o­cal state­ment of its in­ten­tion to sup­port EITI im­ple­men­ta­tion;

◆ Make a com­mit­ment to work with Civil So­ci­ety and com­pa­nies on EITI im­ple­men­ta­tion;

◆ Ap­point a se­nior in­di­vid­ual to lead the EITI ef­fort; and

◆ Pub­lish a cost-work plan with mea­sur­able tar­gets and time-frames for im­ple­men­ta­tion and as­sess­ment of con­straints on ca­pac­ity of stake­hold­ers to par­tic­i­pate.

By ex­press­ing com­mit­ment to join EITI through the 2019 Na­tional Bud­get State­ment, Gov­ern­ment has taken the first step.

A long road lies ahead. But a jour­ney of thou­sand miles be­gins with a sin­gle step.

It must not be lost that this is not the first time that Gov­ern­ment has ex­pressed com­mit­ment to em­brace EITI or re­sus­ci­tate ZMRTI.

This time, our en­thu­si­asm is fu­elled by our part­ner­ship with Par­lia­ment, es­pe­cially the Par­lia­men­tary Port­fo­lio Com­mit­tee on Mines and Min­ing De­vel­op­ment which re­quested a train­ing work­shop on EITI.

Fur­ther, we have started to en­gage the Fi­nance Min­istry and Zimra on ca­pac­ity-build­ing around EITI.

Strangely though, a coun­try with de­vel­op­ment plans hinged on min­ing is us­ing an ar­chaic min­ing ti­tle man­age­ment sys­tem which en­cour­ages cor­rup­tion and claim own­er­ship dis­putes.

By al­lo­cat­ing $1,8 mil­lion and promis­ing to pri­ori­tise for­eign cur­rency al­lo­ca­tion for a com­put­erised min­ing sys­tem, a foun­da­tion has been laid to bring san­ity to the man­age­ment of min­ing claims.

As such, Prof Ncube must be com­mended for the pos­i­tive re­sponse to one of our key con­cerns.

Dur­ing our par­tic­i­pa­tion at the min­ing Tech­ni­cal Work­ing Group on ease of do­ing busi­ness in 2017, the Mines Min­istry in­di­cated that $2 mil­lion was needed to fully com­put­erise the min­ing ti­tle man­age­ment sys­tem.

So the $1,8 mil­lion will go a long way to mak­ing the project fea­si­ble.

Track­ing the dis­burse­ment of funds from the Con­sol­i­dated Rev­enue Fund to the Mines Min­istry, and ex­pen­di­ture re­ports from the min­istry, will in­di­cate if whether the pro­gramme is on track or not.

Sov­er­eign Wealth Fund

The Bud­get made a com­mit­ment to op­er­a­tionalise the Sov­er­eign Wealth Fund.

The SWF al­lows in­ter­gen­er­a­tional shar­ing of bur­dens and ben­e­fits of re­sources as re­quired by con­sti­tu­tional prin­ci­ples on pub­lic fi­nan­cial man­age­ment, so en­shrined in Sec­tion 298(1)(c).

One source of re­sourc­ing the SWF is com­pli­ance with the obli­ga­tion to al­lo­cated 25 per­cent of min­eral roy­al­ties to the SWF.

The mon­i­tor­ing of in­come from roy­al­ties into the CRF and dis­burse­ments made to the SWF are ar­eas where civil so­ci­ety can work with Par­lia­ment on bud­get track­ing.

Whilst Prof Ncube must be com­mended for the in­ten­tions to un­lock Zim­babwe’s min­eral po­ten­tial to catal­yse sus­tain­able de­vel­op­ment, the bud­get fell short of meet­ing one of our de­mands on com­pet­i­tive bid­ding to dis­pose re­leased claims.

Com­pet­i­tive bid­ding brings trans­parency in al­lo­ca­tion of min­ing claims with huge po­ten­tial, a crit­i­cal mit­i­ga­tion to cor­rup­tion risk.

Fur­ther, com­pet­i­tive bid­ding cre­ates op­por­tu­ni­ties for choos­ing an in­vestor who of­fers a greater de­vel­op­ment div­i­dend from min­ing — taxes, skills de­vel­op­ment, tech­nol­ogy trans­fer, in­fra­struc­ture and de­vel­op­ment of lo­cal sup­ply chains.

As part of the tax jus­tice cam­paign, we are ex­cited to note that the Bud­get pro­posed to de­velop a “tax in­cen­tives mon­i­tor­ing and eval­u­a­tion frame­work to fa­cil­i­tate the man­age­ment of timed tax ex­pen­di­tures as well as to in­form Cost Ben­e­fit Anal­y­sis of tax ex­pen­di­tures by Trea­sury, on an an­nual ba­sis, with ef­fect from 1 Jan­uary 2019 …”

The frame­work should fac­tor in the dis­count fac­tor to tax rev­enue brought by ex­port in­cen­tives which have neg­a­tively dis­counted min­ing roy­alty in­come over the past few years.

The bud­get state­ment called for link­ages between fund­ing to the ar­ti­sanal and small-scale min­ing sec­tor from Fi­delity Print­ers and Re­finer­ies and Min­ing Loan Fund (MLF).

Although the MLF is no longer op­er­a­tional, FPR has in­creased its fund­ing from $20 mil­lion to $150 mil­lion this year.

In­creased ar­ti­sanal and small-scale min­ing gold out­put from 3,9 tonnes in 2014 to 19 tonnes in Jan­uary-Septem­ber 2019 is mainly at­trib­uted to fund­ing from the RBZ.

But the threat posed to the en­vi­ron­ment and sus­tain­abil­ity of other so­cio-eco­nomic ac­tiv­i­ties like agri­cul­ture can­not be ig­nored. Thus, in­no­va­tion is key. The cen­tral bank runs an ex­port in­cen­tive scheme for gold pro­duc­ers. This scheme can be adopted or adapted to come up with in­cen­tives for re­ha­bil­i­ta­tion.

The RBZ can also pro­vide crit­i­cal re­ha­bil­i­ta­tion equip­ment to key gold-pro­duc­ing dis­tricts.

It is our be­lief that by em­brac­ing EITI, al­lo­cat­ing re­sources for a com­put­erised min­ing ti­tle man­age­ment sys­tem, de­vel­op­ing a frame­work to mon­i­tor and eval­u­ate the cost and ben­e­fit of tax in­cen­tives, and by pro­mot­ing link­ages between fund­ing to small min­ers, the 2019 Na­tional Bud­get is cer­tainly for­ward-look­ing on ef­fec­tive re­source gov­er­nance.

Im­ple­men­ta­tion of this will is now key.

Newspapers in English

Newspapers from Zimbabwe

© PressReader. All rights reserved.