A leading global financial institution has reiterated calls for reforming the country’s archaic mining laws to modern international standards to protect investments in the murky but lucrative sector.
In a report on the macroeconomic outlook of the country the World Bank Group (WB) says Zimbabwe not only needs to modernize its mining laws but also adopt a competitive licensing regime by offering improved security of tenure and sanctity of contract.
The current governing law in the mines sector is the Mines and Minerals Act [Chapter 21:05] of 1961, which has become outdated and out of touch with the new national and international mining law developments.
World Bank recently launched the Zimbabwe climate and development report launched in Harare where recommendations focus on the need to adopt key sovereign decisions on macroeconomic policy, debt, mining sector governance, agricultural policy, and social protection.
The report, which the Weekly has gleaned, states that proactive decisions will keep the country on a lower-middle-income country development trajectory or open the door to an upper-middle-income country path.
It also called for greater investment into renewable energy across the industrial complex in the country, as firms are currently focusing only on energy efficiency.
“High on this list are foundational decisions on the governance of the mining sector, itself comprising one of Zimbabwe’s comparative advantages and a driver of foreign exchange, foreign direct investment tax.
“Together with addressing macroeconomic aspects of the investment climate, putting in place a robust governance framework for mining that meets international best practices is critical for Zimbabwe to balance risk and reward for investors and to attract high-quality investors to its mining sector and downstream value-addition opportunities.”
“Firms across Zimbabwe are investing in energy efficiency but only one-quarter of them are investing in renewable energy.”
Under Vision 2030, the country’s economic development will be largely underpinned by activities in Ministry of Mines and Mining Development such as exploration, opening of new mines, resuscitation of old mines and enhancing the mines that are currently operating.
The Mines and Minerals Act has been under review since 2013 and a draft bill failed to get a presidential nod due to oversights on the perennial miner-farmer conflict and the lack of a benefit-sharing scheme for locals.
In 2018, President Emmerson Mnangagwa sent the Mines and Minerals Amendment Bill back to Parliament saying it had sticking issues that needed to be addressed before he could sign it into law.
The new legal framework is also anticipated to introduce a comprehensive cadastre system to resolve multiple ownership wrangles on mine claims across the sector.
Parliamentary Legal Committee’s chairperson Jonathan Samukange also lambasted the proposed clauses saying laws passed by Parliament must leave no discretion to the people who are to apply them as this opens them to abuse.
Samukange, as quoted in the mainstream media, said clause 6(4)(a)(ii) provided that any person who wishes to mine strategic minerals should satisfy the minister that he or she could invest a sum equivalent to or at least US$100 million.
“The benchmark of the US$100 million is on the high side and appears to be a thumb-suck figure such that the majority of ordinary citizens will be unable to mine strategic minerals,” he said.
Samukange further noted that the clause in question violates the principles of equity and inclusiveness by setting a figure that excludes other classes of society based on economic status. He said the discretion of the minister to increase or decrease the amount defeated the tenets of the rule of law that state that laws must be certain, objective and unambiguous.
The World Bank report also weighed in on the 2022 policy changes supporting grid-connected independent power purchase agreements, saying this legislation falls short as it did not include similar incentives for off-grid investments.
As such, the bank said reforms to incentivize off-grid renewable energy, including lifting exchange restrictions, import taxes on renewable energy equipment, and allowing the off-setting of renewable energy investments against tax liabilities, would be an important interim step to resolving the current crippling electricity shortages.
“In the medium term, providing assurances that these investments can be connected to the grid on a net-metering basis would further incentivize investment.”
The bank said the path the country took would have very real consequences for development and its resilience to climate variability and climate change, especially for the poor in rural areas.
Unlocking the UMIC path would unleash foreign direct investment in export sectors and enable investment in human capital, agriculture, infrastructure and land restoration that would set Zimbabwe on a resilient low-carbon development path.