News / National
Govt to plug revenue leakages in mining sector
24 Mar 2016 at 05:22hrs | Views
Zimbabwe has not benefited much from current mining deals despite abundant natural resources due to lack of transparency and accountability in the sector that has seen some proceeds of the country's precious stones being externalised, Vice President Emmerson Mnangagwa said yesterday.
Officiating at the Inaugural Minex Conference and Expo organised by Buy Zimbabwe Campaign in Harare yesterday, VP Mnangagwa said the sector was also using a lot of money to import products, some of which were available locally.
"It is a fact that while Zim-Asset has identified mining as the chief driver of economic growth, the reality on the ground is that the true potential of natural resources in unlocking our developmental challenges is yet to be realised.
"Mining thus continues to be characterised by concerns over the extent of its transparency, accountability and conflicts within communities in which resources are found.
"Monetary authorities also bemoan the fact that our mining sector remits out of the country, through transfer fees and other illicit practices, more money than is being retained for use in the domestic market," he said.
As such, VP Mnangagwa said it was imperative that the country pursued value addition and beneficiation before exports to ensure the country produced products that fetched premium prices on the international markets.
"This will result in job creation, expansion of the economy and leading a better standard of life for Zimbabweans. This is in line with Zim-Asset."
VP Mnangagwa said the country should promulgate laws that facilitated reforms that included the setting up of an Exploration Unit to enable Government to know the exact quantity, quantity type and true value of its mineral endowments and to rationalise and consolidate the mining sector.
He said in the case of diamonds, Botswana, Angola, Namibia and South Africa among countries that produce the gems, had come up with laws that benefited their people.
"The mining sector has the potential to create other areas of national economic development with enhanced value addition and beneficiation, spiralling into infrastructural development," he said.
VP Mnangagwa expressed concern that Diaspora remittances were ranking higher than the lucrative mining contributions to the national economy.
"We are advised that Diaspora remittances by hard suffering Zimbabweans domiciled outside our country rank higher than mining contributions to the national economy.
"The 2016 Mining Survey Report notes that over 70 percent of the goods and services currently utilised in the mining sector are imported. Instead of using the opportunity of mining to generate income for Zimbabwe, the country continues to lose valuable income," he said.
He acknowledged mining companies perceived Government as reluctant to put in place policies that enhanced their ability to reduce the cost of doing business and increase production.
Mining companies argue that the sector had the ability to increase both domestic and foreign investment, employment creation as well as attending multiple concerns that stifle their ability to unlock the true value of mining.
VP Mnangagwa said there was need to urgently amend the country's mining law and address shortcomings of the "current Mining Act", which was crafted in 1963.
He said the shortcomings of the Act should be addressed by aligning it to the new developments in the mining sector to meet the aspirations, demands and expectations of Zimbabweans against a background of global practices.
"Once the Act is amended, it is our wish as Government to promote investment and sustainable development as it will guarantee security of tenure and efficient utilisation of lands as well as solving land conflicts between miners and farmers.
"The Act, in its current state, has lost relevance as it no longer speaks to the development of the resources sector in the country," he said.
The amendment of the Act will be backed by a national policy framework that defines the national vision for the industry, and sets benchmarks to measure the impact of the mining reforms, while promoting coherence of laws that govern mining.
"Lack of a well defined, effective and globally benchmarked framework, legislative and institutional arrangements regarding issuance, management and handling of mining investment and provision for addressing potential disputes all created loopholes across the mining sector.
"I believe that future legislation should take cognisance of all identified pitfalls and derive useful lessons from the chaos and controversies that had dogged Chiadzwa diamonds. Failure to provide adequate regulation may result in expensive disputes that attract negative attention to the country and result in serious prejudice and plunder of its wealth," he said.
Government has since created the Zimbabwe Consolidated Diamond Company after realising that some firms mining the gems in Chiadzwa were short-changing it.
Officiating at the Inaugural Minex Conference and Expo organised by Buy Zimbabwe Campaign in Harare yesterday, VP Mnangagwa said the sector was also using a lot of money to import products, some of which were available locally.
"It is a fact that while Zim-Asset has identified mining as the chief driver of economic growth, the reality on the ground is that the true potential of natural resources in unlocking our developmental challenges is yet to be realised.
"Mining thus continues to be characterised by concerns over the extent of its transparency, accountability and conflicts within communities in which resources are found.
"Monetary authorities also bemoan the fact that our mining sector remits out of the country, through transfer fees and other illicit practices, more money than is being retained for use in the domestic market," he said.
As such, VP Mnangagwa said it was imperative that the country pursued value addition and beneficiation before exports to ensure the country produced products that fetched premium prices on the international markets.
"This will result in job creation, expansion of the economy and leading a better standard of life for Zimbabweans. This is in line with Zim-Asset."
VP Mnangagwa said the country should promulgate laws that facilitated reforms that included the setting up of an Exploration Unit to enable Government to know the exact quantity, quantity type and true value of its mineral endowments and to rationalise and consolidate the mining sector.
He said in the case of diamonds, Botswana, Angola, Namibia and South Africa among countries that produce the gems, had come up with laws that benefited their people.
"The mining sector has the potential to create other areas of national economic development with enhanced value addition and beneficiation, spiralling into infrastructural development," he said.
VP Mnangagwa expressed concern that Diaspora remittances were ranking higher than the lucrative mining contributions to the national economy.
"We are advised that Diaspora remittances by hard suffering Zimbabweans domiciled outside our country rank higher than mining contributions to the national economy.
"The 2016 Mining Survey Report notes that over 70 percent of the goods and services currently utilised in the mining sector are imported. Instead of using the opportunity of mining to generate income for Zimbabwe, the country continues to lose valuable income," he said.
He acknowledged mining companies perceived Government as reluctant to put in place policies that enhanced their ability to reduce the cost of doing business and increase production.
Mining companies argue that the sector had the ability to increase both domestic and foreign investment, employment creation as well as attending multiple concerns that stifle their ability to unlock the true value of mining.
VP Mnangagwa said there was need to urgently amend the country's mining law and address shortcomings of the "current Mining Act", which was crafted in 1963.
He said the shortcomings of the Act should be addressed by aligning it to the new developments in the mining sector to meet the aspirations, demands and expectations of Zimbabweans against a background of global practices.
"Once the Act is amended, it is our wish as Government to promote investment and sustainable development as it will guarantee security of tenure and efficient utilisation of lands as well as solving land conflicts between miners and farmers.
"The Act, in its current state, has lost relevance as it no longer speaks to the development of the resources sector in the country," he said.
The amendment of the Act will be backed by a national policy framework that defines the national vision for the industry, and sets benchmarks to measure the impact of the mining reforms, while promoting coherence of laws that govern mining.
"Lack of a well defined, effective and globally benchmarked framework, legislative and institutional arrangements regarding issuance, management and handling of mining investment and provision for addressing potential disputes all created loopholes across the mining sector.
"I believe that future legislation should take cognisance of all identified pitfalls and derive useful lessons from the chaos and controversies that had dogged Chiadzwa diamonds. Failure to provide adequate regulation may result in expensive disputes that attract negative attention to the country and result in serious prejudice and plunder of its wealth," he said.
Government has since created the Zimbabwe Consolidated Diamond Company after realising that some firms mining the gems in Chiadzwa were short-changing it.
Source - the herald
