The Sunday Mail
Corruption Watch
Comm John Makamure
ONE of the eight constitutional functions of the Zimbabwe Anti-Corruption Commission (zacc) is “to make recommendations to the Government and other persons on measures to enhance integrity and accountability and prevent improper conduct in the public and private sectors”. The mandate of the Commission is two-pronged. It is prevention of corruption and investigation of corruption cases for prosecution. The function of making recommendations to the Government on measures to enhance integrity and accountability is critical in the prevention of corruption.
The Commission has been undertaking detailed research in a number of areas in order to make well-grounded recommendations to the Government on how to curb corruption. One of the areas of public interest is the mining sector.
The Commission recently examined the impact of corruption in the sector guided by the following research questions:
(1) What are the factors that perpetuate corruption in the mining sector?
(2) How does corruption impact on artisanal and small-scale miners?
(3) What is the nature and forms of corruption within the mining sector?
(4) What is the existing institutional framework that seeks to combat corruption within the mining sector?
(5) What are the existing mechanisms for administering mining activities to enhance the welfare of miners?
(6) What are the best possible recommendations and/or solutions to combat corruption in the mining sector in Zimbabwe?
The zacc study found out that corruption was rampant in the mining sector, and that its social and economic impact was devastating.
According to responses from those interviewed, corruption in the mining sector takes diverse forms including allocation of claims based on one’s ability to bribe Government officials, dispute resolution which favours those that pay kickbacks, tax evasion and transfer pricing.
The main form of corruption in the mining sector is said to be happening at contract awarding stage and issuing of claims.
Furthermore, side selling of minerals, double allocation of claims and unverifiable environmental impact assessments (EIAs) are some other forms of corruption bedevilling this sector, rich with 67 minerals.
In the area of mining licence application, a number of issues have perpetuated corruption.
First, delays in processing and issuing of licences have resulted in potential miners offering bribes to speed up the wheels of the processing wagon.
Second, the fact that ultimate processing is centralised in the Ministry of Mines and Mining Development Headquarters in Harare has contributed to the temptation to offer bribes for one’s application to be processed faster.
Thirdly, manual processing has meant that the whole application system is susceptible to manipulation. Lastly, unavailability of a computerised mining cadastre and digital mining register gives powers to officials to adjudicate, a situation that has fuelled manipulation and corruption.
A mining cadastre is the cornerstone of a secure and effective mineral rights system. It records the geographic location, ownership and time validity of mining rights. The system allows a mineral rights holder and small and large enterprises from other countries to consult and apply for these mineral rights.
This system improves the management of mining in a given country. While Zimbabwe has this system, it is unfortunate that it is still operated manually, hence susceptible to manipulation and consequently corruption.
An examination of the connections between natural resources, corruption and economic growth was made with the following conclusions: capital intensive natural resources are a major determinant of corruption; the existence of corruption always reduced growth, with the effect more pronounced in less developed economies where there is less likelihood of a significant industrial sector.
Furthermore, the study found out that the effectiveness of anti-corruption policies depended on the state of development of the economy. Institution building and improvements in monitoring technology tended to be more effective in developing countries, while stricter enforcement, i.e. increases in penalties, are more effective in more developed countries.
To give credence to these findings, a study by Leite and Weidman (1999) stressed the importance of strong institutions in the wake of natural resource discoveries as a way to curb the negative growth effects of corruption.
This is especially true in less developed countries where natural resource discoveries have a much higher impact on both the capital stock and the extent of corruption, and are confronted with generally weaker and less adaptable institutions.
In terms of recommendations to curb corruption in the mining sector, the zacc study recommends the following:
Revamping mining sector legislation such as the outdated Mines and Minerals Act which was enacted in 1964.
There is a need for strengthening mechanisms aimed at enhancing accountability in all mining activities. The mechanisms should ensure that starting from mining claim acquisition through to the mining of minerals, there are clear processes that should be followed. This will allow easy auditing of the processes, thus ensuring that various offices and individuals along the value chain are accountable for their respective actions.
Most of the corruption that happens in the mining sector is due to, among others, the fact that the majority of the processes are done manually, resulting in too much human interface between the Government officials or offices which process mining papers, and the potential miners. The use of manual systems increases the chances of manipulation by corrupt people. Thus, computerisation is a very good way of reducing human interface, in so doing, reducing corruption. In other words, establishment of a computerised database for mining title management will go a long way in reducing corruption in the sector. The computerisation of the system should include computerisation of the cadastre system, as this is the backbone of efficiencies.
Increasing transparency in mining contracting also entails making public the names of local and foreign investors awarded mining contracts and capacitating citizens to track developments in the sector.
Improvement of corporate governance in the mining sector. The system of rules, policies and practices that dictate how a company’s management and board of directors manage and oversee the operations of a company should meet international standards.
Audit of multinational mining corporations. The Government can enlist the services of international auditors to audit these corporations in order to plug resource leakages.
The capacity of investigation agencies such as zacc and the Zimbabwe Republic Police must be strengthened to unravel the complex corrupt activities in the sector. Those caught on the wrong side of the law must be swiftly prosecuted as a deterrent measure.
Informal mining activities including artisanal and small-scale miners have often been accused of involvement in corrupt activities such as smuggling of minerals outside the country. To curb these corrupt tendencies, their activities should be formalised, thereby enhancing the traceability of the mining activities done by this mining sub-sector.
Naming and shaming of individuals and companies involved in mining corruption is another route that the country should take. Besides naming and shaming, the country needs to go a step further in blacklisting such individuals and companies from carrying out any mining activities in the country.
Enhanced Parliamentary scrutiny will ensure all the mining deals are examined for transparency, accountability and probity on the part of the public officials involved. After scrutiny, all necessary information including the names of the mining shareholders should be made publicly available. This will remove the veil of secrecy involving some of the mining contracts.
If mining sector activities are well managed with limited leakages, the country’s precious mineral resources have the potential to generate export earnings in the region of US$3 billion annually over the medium term and upwards of $5 billion a year in the long-run, thereby making mining both the largest exporter and earner of revenue.
With a targeted US$12 billion mining sector by 2023, the overwhelming potential revenues that can be generated from Zimbabwe’s exports of precious minerals can place the country on a solid trajectory of economic recovery and general socioeconomic development that benefits Zimbabweans as a whole.
Commissioner Makamure is the Zacc spokesperson and chairs the Committee on Prevention and Corporate Governance. Zacc Toll Free Lines: 08010101/08004367; Landline: + 263 242 369602/5/8. Whatsapp: +263 719529483; Whistle-blower reporting app: zacc.online/tipoffs; Email: [email protected] , [email protected]
