Zimbabwe to plug revenue leakages in mining

THE government is working on policies aimed at preventing leakages of mineral resources, amid indications that the country is losing an estimated US$1,5 billion annually through illicit financial flows, Mines and Mining Development Portfolio Committee chairperson Edmond Mkaratigwa has said.
Speaking during The Financial Gazette webinar on Corruption in the Mining Sector, Mkaratigwa said the enablers of illicit financial flows include international and domestic legal and economic systems.

“We are addressing the policy inconsistency legacy by creating a market that is friendly to miners including small-scale miners. We are also addressing institutional quality issues, strengthening regulation and perhaps institutional governance while reducing excessive dependence on raw commodities exports and re-engaging into the international legal and economic systems,” he said

“If we divide that figure (US$32,2 billion) by 20 years, we approximately get to US$1,5 billion per annum. There are different estimates in that regard though, remember these illicit finances are not accounted for formally for the estimate to be built as conclusive,” Mkaratigwa said.
He said lack of evidence makes it difficult to fight corruption in the mining sector.

“…hard evidence is hard to come by…hence we are focusing more on institutional and legislative frameworks to discourage corruption in the sector. We are also encouraging communities to … be vigilant in terms of shunning and reporting corruption and we are also looking at whistleblower protection as a way of making sure we curb corruption in government,” Mkaratigwa said.

A 2020 report from the Centre for Research and Development in Zimbabwe (CRDZ), shows that the country has a porous and corrupt aviation security system that is facilitating smuggling at private airstrips, national and international airports.

The report refers to the Henrietta Rushwaya gold smuggling case as “confirmation that Robert Mugabe Airport has a long history of systematic smuggling of precious minerals involving state security agents, security officers and VVIPs,” CRDZ said.

The smuggling resulted in a 31 percent decline in gold deliveries for 2020 to 19,1 tonnes from 27,7 tonnes in 2019, the lowest amount of gold sold to Fidelity since 2014, when 15,3 tonnes were delivered.

Samson Dzingwe, from the Zimbabwe Prospectors Union, said the system used in the acquisition of mining rights creates room for corruption.
He said the ministry of Mines needs to shift to a digital system as some maps currently in use are tattered and obscure, causing disputes in the sector.
“There is a huge backlog throughout the whole country caused by delays in the processing, verification and inspection of applications. If a client or miner …spends two or three years chasing…certification for an application, they end up giving in to corruption because of time,” he said.

Henrietta Rushwaya

Chiedza Chipangura, Zimbabwe Miners Federation Mashonaland Province President, said the Mines ministry should take responsibility for the chaos.

“The buck stops with the ministry of Mines. The moment the ministry does not process the mining licenses within the specified time frame in the act, of which the act says within 90 days, we have problems. …we have people whose applications date back to 2018 and some to 2017. If you follow up on your license today you are told there is a backlog and we are expected to normalize that abnormal situation,” she said.

“The ministry of mines has been the biggest let down as the miner would have been put in a corner. Miners are forced to pay bribes to ministry officials because it would have been difficult to access not only the ordinary mining licenses but … also the issue of exclusive prospecting orders.”

According to analysts, government’s flawed policies around the flow and exchange of foreign currency are to blame for illicit financial flows out of Zimbabwe.

The Reserve Bank of Zimbabwe has since ceded control of its refinery of gold, offering mining companies 60 percent of the refining business of Fidelity Printers and Refiners (FPR). RBZ split FPR into two entities, keeping the coin minting and security printing arm, but keeping 40 percent of the gold refinery side while miners gained control of gold buying.
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