Mining and Indigenization in Zimbabwe – The impact of Community Share Ownerships Schemes

Mining and Indigenization in Zimbabwe – The impact of Community Share Ownerships Schemes

By Calvin Manika

Most of the mineral rich areas have remained poor for decades as companies’ exploit wealth and destroy the environment without compensation and community benefit. Zimbabwe has its fair share of such challenges, and it is not alone. Exclusion of communities has been witnessed all over the world. But, of late some governments such as Zimbabwe, introduced indigenization laws which seek to include and benefit the mined communities.

In Zimbabwe, the Indigenization and Economic Empowerment Act, Chapter 14: 33, a law which seeks to empower the communities introduced the Community Share Ownership Trusts (CSOTs). CSOTs are an empowerment vehicle into which qualifying businesses exploiting the natural resources of a community can dispose 10% of their shareholding towards complying with the minimum 51% indigenization of Zimbabwe’s economy.

In an organized setup, investment experts say, the trusts are an entrepreneurship development which link the communities and potential investors, making it easy to venture into Public-Private Partnerships in business ventures.

 “CSOTs could pursue the Shared Value Concept in creating their business Units. A shared value concept is a management strategy in which companies find business opportunities in social problems thereby turning social problems into opportunities,” said Tapiwa Zhou, an investment consultant.

Zimbabwe’s government in the new dispensation tabled the new Economic Empowerment Act to advocate for the rebranding of CSOTs so that their existence balances the interests of the government, CSOTs, mining companies’ and investments partners beyond 2018. Tapiwa Zhou said, there is need to strengthen the new act to consolidate Corporate Social Responsibility frameworks and mechanisms that could be the alternative route for continued community benefiting from natural resources in view of the 2018 Finance Act.

Economic empowerment is the process of bringing the previously disenfranchised indigenous Zimbabweans into the mainstream economy. Some of the early CSOTs have produced perverse effects on economic empowerment in target communities. One of such trust is the Marange-Zimunya Community Share Ownership Trust (MZCSOT) which was meant to contribute to the empowerment of the Marange – Zimunya community, its development and wellbeing from proceeds of diamonds at Chiadzwa in Marange.  Human Rights monitors cited political interference and corruption, and controversy over the compensation of relocated people in Chiadzwa area.

“The Marange – Zimunya communities have lost their livelihoods, land, livestock; have suffered from water, air, and noise pollution; were relocated without proper compensation; and are struggling to access basic necessities such as water, little development in terms of project implementation by the MZCSOT has been realized,” notes Frederick Shamba, a human rights advocate.

The Mining Vision found out that, despite abundant mineral resources, the indigenous communities living close to the mines have been deprived of the right to benefit from the mineral resources.

In Hwange, the rural areas, are an island of development in a sea of underdevelopment as communities around the mines do not show any evidence of development. The state of many roads is poor and some impassable. When Mining Vision visited the area, it observed that, there is no electricity in the rural communities regardless of the laws in place.

“The Indigenization and Economic Empowerment Act and Statutory Instrument for Community Share Ownership Trust were the pro-poor mining policies that ensured the harnessing of mineral resources for the empowerment of local indigenous communities. However, Indigenization and Economic Empowerment Act needed to be harmonized with the Rural District Councils’ Act, the Mines and Minerals Act, and the Communal Areas Management Act,” said Zhou.

The aim for formulation of Community Share Ownership Trust is for the development of infrastructure and provision of public utilities such as electricity, water, establishing micro-credit to small and medium enterprises and implementing broad-based indigenization policies as strategies of improving rural livelihoods and stimulating entrepreneurship in communities living close to mines.

Speaking to this publication, one of the community members in Gwanda Thabiso Ndlovu said, the Indigenization and Economic Empowerment Act and the CSOT framework helped the Gwanda Rural District Council to carry out community projects.

“The projects include the completion of Guyu – Chelesa irrigation scheme, construction of Sitezi and Mapate clinics, road construction, construction of Silikwe clinic and fencing of Sibhula Secondary School,” said Ndlovu.

In an interview, Garikayi Mumba, a Social Development Officer said proper implementation of the policies can improve the lives of the local communities.

“The challenge facing the effective implementation of indigenization and empowerment legislation in Zimbabwe is the problem of institutional capacity to implement these policies. It is imperative to acknowledge that while policies are well thought out and necessary, the other challenge is that of corruption and elite capture which could be mine grab and mineral looting,” said Mumba

Mining contributions made to the people of Gwanda Rural District seems to be helpful and appreciated by most members of the community with some exceptions.

“The construction of hospitals or clinics and schools were some of the projects undertaken by the mining companies in Gwanda Rural District Council (GRDC). Mining companies helped through the creation of employment opportunities, funding SMEs, provision of electricity, water, improving of housing and provision of transport for the local community. There is also the provision of medical services, sanitation, social amenities to communities living close to the mines as some of the contributions made by the mines.,” Innocent Ncube, a resident said.

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