New mining account feasible: Experts

mineral revenueZimbabwe is on the verge of establishing a centralised mining revenue account, in a bid to monitor income from its minerals as well as improve accountability and transparency within the mining sector.
Experts say the proposed account will see the country realise more revenue from mineral operations as the current set-up is flawed since many players are handling various types of proceeds from the mining sector.

The Sunday Mail has gathered that at least five Government arms — Ministry of Mines and Mining Development, Zimbabwe Revenue Authority (Zimra), Minerals Marketing Corporation of Zimbabwe (MMCZ), Fidelity Printers and Refiners, Zimbabwe Mining Development Corporation (ZMDC) — are currently processing mineral revenue for onward transmission to Treasury.

ZIMRALast week, University of Zimbabwe economics chairman Dr Phineas Kadenge said the creation of a separate account and tasking Zimra to handle all mineral revenue inflows would minimise leakages.

“By removing many channels (to collect mining revenue), we will minimise leakages which were being caused by the middle agents, since we did not know who is handling how much,” he said.

“Collecting revenue is the core business of Zimra because they have the expertise and know how, so they might be better placed to collect the money alone.”

Dr Kadenge said under the current arrangement, licence fees were paid to the Ministry of Mines and Mining Development for onward transmission to Treasury.

Mining companies are currently paying licence fees pegged between US$100 000 and US$1 million depending with the mineral being extracted.

The companies also pay standard revenues like royalties and taxes to Zimra while marketing fees go to MMCZ.
On the other hand, ZMDC is responsible for collecting fees for depletion of resources, dividends from mineral sales and company profits.
While investigations revealed that no other revenue authority in the region has ever operated a dual national account, experts in Zimbabwe say the country should take its chances.

Dr Kadenge said it was prudent to allow one agent to collect all revenue accruing from mining and there was nothing amiss with having two accounts.

“I think there is no problem with investors paying their licence fees to Zimra and then take a receipt or proof of payment to the Ministry of Mines for them to get the licence,” he said.

“On the other hand, Zimra can run two accounts and there is nothing wrong with that.”
Dr Kadenge said a centralised system was easy to monitor and manage.

“There is no doubt that there are many advantages with adopting a centralised income-collection system. We have cases where Treasury has been saying they are yet to receive their dues from mining companies and the million-dollar question is where is the money?” he said

“Has the money been paid? Is there someone who is speculating the money before it is transferred to Treasury? These cases can be solved if one account is created so that everyone knows who is not remitting to Treasury.”

Last week, a senior official in the Ministry of Finance and Economic Development told The Sunday Mail that as a result of lack of transparency especially in diamond mining, the ministry has stopped projecting income from the gems.

“We can’t even predict what we are going to receive because in most cases the money will not come and we do not know whether the companies have paid ZMDC or other agents handling money from minerals. The proposal of one account might make people accountable for their actions,” he said.

Over the years, the Finance Ministry has been saying mining companies are remitting less money to Treasury.
In an address at the official opening of the First Session of the Eighth Parliament in Harare last year, President Mugabe said mining was the centre piece of the country’s economic development.

According to the World Bank, the country’s mining sector has the potential to attract US$12 billion in Foreign Direct Investments.
Statistics show the country’s mineral exports were US$1,7 billion in 2010, but the figure stood at US$719,9 in 2013 contributing 71 percent of the total income from exports last year.

 

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