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and accountability in Government.
Mining experts and anti-corruption lobbyists recently met under the auspices of the office of the Deputy Prime Minister Thokozani Khupe to discuss the Zimbabwe Mining Revenue Transparency Initiative. They expressed varying opinions regarding the discrepancies between the figures presented by Finance Minister Tendai Biti in fiscal policy statements on the mining sector’s contribution and those from the Chamber of Mines.
Chamber of Mines chief executive Mr John Chikombero said the mining sector had contributed more than US$4 million to the fiscus in the form of royalties and taxes in the 2010 period.
“Perhaps what was misleading was the information given to the Ministry of Finance on the returns from mining companies,” he said.
Just last week, he said, miners had paid more than US$1,7 million in gold royalties alone.
“We sent this information to revenue authorities. We don’t know the figures they use to come up with these statistics. We can’t answer for them, they are better placed to respond to this,” he said.
The mining sector contribution to the fiscus, he said, excluded infrastructure development such as those in Mhondoro-Ngezi, Murowa and Zvishavane.
“We have contributed a lot more and it depends on how you quantify the contribution. I think it’s our industry’s fault that we have not disseminated this information,” he said.
“Simple calculations can tell you how much the mining sector has contributed to the fiscus. A total of 9 600kg of gold produced and sold at a rate of US$1 200 gives you roughly US$11,5 million. Apply a tax rate of 3,5 percent, you get a figure for gold alone. What about other minerals produced in the country.”
Reacting to the discrepancies, a cross-section of experts expressed varying opinions as some commended the efforts undertaken by the Transparency Initiative multi-stakeholder group for the first time to closely assess the performance and contributions of the mining sector, something which had never happened before.
“None of them (Reserve Bank of Zimbabwe and Ministry of Finance) has the correct information. From our findings as a Parliamentary Committee on Mines, it’s not clear where they get their figures and how they come up with those figures (statistics outlined in monetary and fiscal policy statements,” said the chairman of the Parliamentary Portfolio Committee on Mines and Energy Mr Edward Chindori-Chininga.
“There are discrepancies and this is largely due to the existence of bad laws on taxation and mining. We have unfair mining and taxation laws which lumps together big and small miners. We need to review these laws.”
The Zimbabwe Mining Revenue Transparency Initiative meeting sought to discuss ways to enhance transparency and accountability in the relations between the mining sector and the Government.
“This initiative is an acknowledgement by the Government of the role that the mining industry plays in the recovery, stabilisation and growth of the economy,” said Mr Thabani Mpofu, a principal director in the Deputy Prime Minister’s Office.
“We have not done much to engage each other in the manner we do business. It is also my view that we have not shared available information in a co-ordinated manner to enable us to work together.”
Economists say efforts to modernise the country’s budget systems so as to effectively achieve socio-economic reforms, limited fundamental financial management systems tended to cripple the budget processes.
They say a deficit in implementing and executing national budgets across most African governments as well as weak laws are undermining the effectiveness of reforms undertaken to promote transparency and accountability in budget processes.
Zimbabwe Environmental Law Association director Mr Mutuso Dhliwayo said relations between key stakeholders – Government, mining companies, civil society organisations and local communities – were full of mistrust, suspicion and hostility. Communities assume that Government and mining companies are trying to keep the economic wealth to themselves.
“They feel strongly that they are undermining economic development of the country through corruption and mismanagement,” he said. “These perceptions are even shared by CSOs.”
On the other hand, he said, mining companies say the Government; citizens, communities and CSOs do not really understand how the mining sector operates.
“They say they don’t understand costs associated with mining, their contribution to economic development through paying taxes, royalties, job creation and infrastructure development,” he said.
The Government, he added, felt mining companies were not contributing enough to economic development as Minister Biti said in the 2010 Budget.
“The Government says mining companies are not doing enough in terms of corporate social responsibility especially in the wake of the Economic Structural Adjustment Programme.
“Relations as of now are characterised by lack of dialogue, lack of information and secrecy and opaqueness of the mining sector. The ZMRT must create a platform for dialogue through the multi stakeholders group anchored on principles of transparency and accountability for it to be successful,” Mr Dhliwayo said.
Zimbabwe, he said, needed to apply principles of transparency and accountability across the whole mineral value chain, issuance of prospecting licences, contracts and disclosure of revenue generated and allocated by the Government to end mistrust, suspicion and hostility.
“We need to broaden this initiative apart from revenue to cover other development aspects. Benefits must not accrue at national level but at the local level as well,” said Mr Cecil Machena, a wildlife and development expert.
“Communities in Mutoko are bearing the brunt of granite rock extraction. Their quality of life has declined and they are not benefiting at all from the mining process. We need to put mechanisms that will enable them to enjoy proceeds from this mining process.”
Some discrepancies highlighted in media reports in the past particularly on the conflicting figures on the amount paid from diamond proceeds to the Government sparked a heated a exchange of words between Minister Biti and Mines Minister Obert Mpofu.
The confusion was on the whereabouts of more than US$300 million generated from diamond mining operations in Chiadzwa.
Economists said there was a possibility that discrepancies do not necessarily mean misappropriation of funds but rather lack of reconciliation of records received from different sources.
“Chances for discrepancies are wide open bearing in mind that the auditor of Government books is different from the one checking these companies’ financial records,” said one economist.
“Since these have not come together to reconcile the accounts, the difference is unavoidable. The ZMRTI should aim to address these anomalies to enhance transparency and accountability in both the Government and the mining sector.”
Discrepancies reveal that records of the amount of royalties paid by companies differ sharply from official Government records.
Economists say weaknesses in planning and implementing systems, the capacities of personnel and lack of political will had led to poor budget implementation and execution, creating shortfalls in service delivery to the people.
“Such discrepancy was indicative of lack of transparency and consistency in record keeping between the extractive companies and revenue authorities. The margin of error is in most cases unacceptably high.
“The level of transparency between extractive companies and Government records is not satisfactory and the ambiguity appeals for better transparency and accountability otherwise millions of dollars end up in the pockets of a few individuals,” he said.
Corruption is both a major cause and a result of poverty around the world. It occurs at all levels of society, from local and national governments, civil society, judiciary functions, large and small businesses and other key economic sectors.
Analysts say corruption affects the poorest the most, in rich or poor nations, though all elements of society are affected in some way as corruption undermines political development, democracy, economic development, the environment, people’s health and more.
There is general consensus that Zimbabwe and most other African countries must take practical steps to fight corruption in all its forms to help benefit the poor who are often prejudiced by corrupt activities.