Debt and inequality: The two cardinal sins in the Zimbabwe’s extractive industry
By Calvin Manika
Extractives industry in Zimbabwe is the major contributor to the country’s Gross Domestic Product (GDP). The industry in Zimbabwe has been also accused of environmental damage and lack of commitment to Corporate Social Responsibility (CSR).
The neglect of women and girls in the sector has been raised by Civil Society Organisations (CSOs) in the sector. In March 2022, during the 6th Edition of the Gender And Extractives Symposium held by the Gender and Extractives Platform comprising AAZ and its partners, Zimbabwe Environmental Law Association (ZELA), Zimbabwe Coalition on Debt and Development (ZIMCODD), Centre for Natural Resources Governance (CNRG) and the Women and Law in Southern Africa (WLSA) in Mutoko, stakeholders urged the government to enact policies and laws that ensure a climate-resilient natural resource sector, that is responsive to the needs of women and girls in the mining sector and communities.
While addressing the delegates, AAZ FCG Project Coordinator, Darlington Chidarara said communities affected by mining activities highlighted that revenue generated from taxation must be channeled towards initiatives that will improve the lives of women and young girls through gender-transformative public service delivery.
“This symposium thus created a platform for women and girls to develop advocacy strategies for the transformation of the extractive sector in Zimbabwe.”
Mining communities have for years urged the government and local authorities to prioritise value addition of minerals. The export of raw minerals without value addition has been sighted as one of the factors depriving the country of much-needed revenue from end products of the minerals in the country.
“There is need to put laws which promote Cooperate Social Responsibility and must legally bind players, where mining companies will be required to plough back to communities and ensure community development as this is currently voluntary and not mandatory,” reads part of the communique.
ZIMCODD and other partners like ZELA hold an annual Alternative Indaba guided by the principle of inclusivity and is primarily dedicated to amplifying community voices, giving them an occasion to ask pertinent questions and hold duty-bearers to account.
Through Alternative Indabas, ZIMCODD has been taking the platforms to magnify demands for accountability on Environment, Social and Governance obligations of the mining sector. Findings show the impacts of mining on climate change, water use, labour rights, health, safety, and corporate governance. The Indaba advocates and shows the importance of society and the environment to natural resource developers.
A social development expert, Tafadzwa Mutisi said most of the engagement strategies by mining companies lack meaningful consultations of communities during decision-making processes over natural resources.
“There is limited clarity of roles among local level institutions pertaining authority and power over devolution funds, outdated development plans in rural districts, rising allegations of abuse of workers by mining companies including foreign owned mining companies, limited environmental monitoring initiatives, increase in land and environmental degradation. This has amounted to Gender Based Violence (GBV), school dropouts, child labour, child marriages, and deepening forms of inequality,” said Mutisi.
In Zimbabwe, the high levels of inequality have persisted despite successive growth rates and accompanying rise in domestic revenue mobilisation over the years. The low tax revenue amid high gross financing needs have also seen Zimbabwe accelerating borrowing from both domestic and external sources to finance development expenditure.
Although the G20 debt service suspension initiative (DSSI) has alleviated debt service pressure under Covid-19 and protecting social expenditure for participating SADC countries, the initiative merely postpones the debt burden which will affect social expenditure in the future. Zimbabwe also need to sustain efforts to grow their economies to enhance tax capacity, debt carrying capacity and boost domestic revenues for financing social expenditure and other developmental needs, while maintaining debt sustainability.
“There in need to put measures which boost tax and debt carrying capacity and help finance social protection schemes for reducing inequality,” added Mutisi.
A former banker and Social Justice and Development expert Maxwell Hudini said there is need to boost economic growth and put measures that ensures inclusivity is fundamental in expanding the tax base, reducing debt burden and ultimately poverty, unemployment and inequality.
Hudini said improving tax capacity will boost the ability of countries to increase social expenditure on, health, education, infrastructure and other social spending necessary to reduce inequality.
“At the end, you would see that, there is no proper accountability and audit of proceeds by big mining companies. Therefore, curbing of illicit financial flows, removal of tax holidays, reducing tax evasion and avoidance, improving capacity for revenue collecting agents is also important in improving tax capacity. In this regard, Civil Society Organisations (CSOs) and Labour unions have an important role to play in lobbying for improved budget transparency, effective debt management systems and fair distribution of income,” said Hudini.