Why Zimbabwe needs transparency in mining

By Darlington F. Muyambwa (@fariedarlie)

Barely two weeks after the global conference on the Extractive Industry’s Transparency Initiative (EITI) from February 24-25 in Lima, Peru, President Robert Mugabe of Zimbabwe publicly stated that an estimated $15 billion of diamond revenue from Marange diamond operations had been lost.

In the same statement, he quantified that the government might have received less than $2 billion since the onset of formal diamond mining in 2009.

He stated “…our people who we expected to be our eyes and ears have not been able to see or hear what was going on and lots of swindling, smuggling have taken place and companies that have been mining…I want to say robbed us of our wealth and that is why we have decided that this area should be the monopoly area and only the State should be able to do the mining in the area”.

mines chidhakwa
Zimbabwe’s Minister of Mines and Mining Development, Walter Chidhakwa

The president’s statement is particularly concerning, given that the government had at least a 50% stake in all the six joint ventures that were operating in the diamond fields.

When the biggest shareholder complains about corruption, lack of accountability and leakages of revenue meant for government, it is very unsettling.

The EITI global conference is arguably the biggest conference where issues of transparency and accountability in the extractive sector are discussed. Despite the challenges of secrecy in Zimbabwe’s extractive sector, government and industry representatives were conspicuous by their absence.

The absence of these two key stakeholders was also witnessed during the 2015 UN Forum on business and human rights, a forum that is hosted annually to reflect on the UN guiding principles on business and human rights. Both platforms are key in that they promote tri-focal discussions among civil society, industry and the government on extractives.

The government seems to be conveying the sentiment that such platforms yield no meaningful results, overlooking how there is immense benefit from learning and sharing with others that are in the same situation or adopting and domesticating experiences of others that have gone through the same experiences.

The dismissal of these initiatives, despite the evidence of them enhancing mineral resource governance in many countries, may result in the country failing to benefit from its resource endowment.

The EITI is an international standard for transparency in the extractive industry. In countries participating in the EITI, companies are required to publish what they pay to governments and governments are required to publish what they receive from companies.

Would Zimbabwe be in its current deplorable situation if EITI principles were being implemented in country?

The 2016 EITI conference, which ran under the theme From Reports to Results focused on how the progress registered in publishing EITI reports now needs to be elevated to ensure there are more results and actual reforms in the EITI implementing countries.

Currently there are 51 implementing countries and among these, 31 are compliant with EITI requirements. For both the EITI candidate and compliant countries, almost half (23) are from Africa.

In Zimbabwe, the challenges of opacity in the extractive sector, particularly in diamond mining, have come to a head at a time when there has been a continued decline of international mineral commodity prices, a review of indigenisation guidelines and proposals for new mine laws.

Nevertheless, the fall of diamond prices and the reported depletion of alluvial diamond reserves, presents Zimbabwe with a unique opportunity to take time to pause, reflect and structure the industry in the best way possible, given that the country has so many best practices to learn from to improve mineral resources management.

To chart a new course, the government has to be open to ideas and shun the thinking that solutions of choice are always those that reject international best practice. Contrary to some positions that have been shared before, the EITI has three key processes that allow the government to still maintain self determination within the framework:

A national multi-stakeholder group (government, industry and civil society) decides how their EITI process should work.

This presents room for a tailor- made initiative that is contextual to match the country’s aspirations. Having the three stakeholders engage is important in creating a shared understanding of the extractive industry sector. This ensures that expectations are managed and sets a basis for accountability.

Government revenue and company payments are disclosed together with other information about the extractive sector.

The importance of this process for Zimbabwe cannot be overemphasised. The country needs to know the revenue mining companies are paying to government, as well as any other information on the sector. Otherwise, if government is not willing to disclose the revenue they are receiving from mining companies, then the question is; who is benefitting from this secrecy?

It is important to note that information that should be disclosed should cover the whole value chain of mining, which includes contacts and licences, production, revenue collection, and social and economic contribution of the sector.

The findings are communicated to create public awareness and debate about how the country should manage its resources.

Progress and development is nested in a country’s ability to promote multi-stakeholder engagement, public debate and the flourishing of ideas. There is a need to break from a culture that believes government leaders have a monopoly on ideas.

In Zimbabwe a version of EITI was once set up in 2011 under the name the Zimbabwe Revenue Transparency Initiative (ZMRTI). This points to a general consensus on the benefits that such initiatives can offer to a resource-rich country like Zimbabwe.

The ZMRTI comprised three stakeholders, including the government (office of the deputy Prime Minister, Mines minister, Reserve Bank of Zimbabwe), mining companies (ZMDC, MMCZ and the Chamber of Mines) and civil society (Zimbabwe Environmental Law Association and Chiadzwa Community Development Trust and universities). Since its inception the government noted that there were two major challenges to overcome —the mistrust between government and civil society, and the lack of financial resources.

In conclusion, it is important to restate the late Justice Louis D. Brandeis of the United States’ words that “sunlight is the best disinfectant”. Zimbabwe more than ever needs to shine the light on the mining sector and one possible path to follow is the EITI.

From the lessons learnt from countries implementing EITI to the strong recommendations in documents such as the AMV, the high level panel on illicit financial flows and the shortcomings of the current mining regime, all seem to point to the need for Zimbabwe to consider implementing the EITI.

[Darlington Muyambwa is the current coordinator of the Publish What You Pay Coalition Zimbabwe. The views expressed in this article are his own. You can reach him for comments on fariedarlie@gmail.com. The article was first published on The Standard and is re-posted by AfricaFightNow.org!  with permission from the author]


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s