By Wallace Mawire
ActionAid Zimbabwe has recently commissioned a research study on the extractive sector in Zimbabwe.
According to the organization, the Extractive Sector Research Series spans across Liberia, Nigeria, Zimbabwe, Zambia and Kenya uncovering how natural resource extraction is an opportunity for a feminist and just transition.
The series is part of ActionAid Denmark’s Global Program on Climate Justice, and will be recurring, deepening the evidence and momentum for lasting change.
This study commissioned by ActionAid Zimbabwe seeks to assess Zimbabwe’s national fiscal policies and evaluate their readiness to enhance Domestic Resource Mobilisation (DRM) from the extractive industry.
The purpose of the research was to provide evidence-based insights and propose policy reform measures within the intersection of climate action, finance and the extractives sector in Zimbabwe.
The study combined data from a desk review of key international, regional and national legal and policy instruments governing climate, tax and mining; and interviews with key stakeholders, including members of the Parliament of Zimbabwe’s
Portfolio Committee on Mines and Mining Development; the Ministry of Finance, Economic Development and Investment Promotion; Zimbabwe Revenue Authority; Zimbabwe Coalition on Debt and Development; Zimbabwe Institute for Tax Accountancy; Zimbabwe
Environmental Law Association, the Ministry of Environment, Climate and Wildlife and the Environmental Management Agency; and the Ministry of Mines and Mineral Development.
According to the organization ,the extractive industry in Zimbabwe is key for sustainable development and has the potential to enhance domestic resource mobilisation towards climate financing.
They said however, its fiscal contribution towards climate change mitigation and adaptation remains low.
They add that the extractive industries’ fiscal policy and climate finance regime is derived from multifaceted national laws and policies, which are informed by international and regional climate and tax conventions, and is governed by several government ministries and agencies. National laws and policies provide for a range of fiscal instruments – such as CIT, royalties, withholding tax, customs duties, SMLs. In addition, a range of exemptions are provided for under the national constitution as well as in related bills and statutory instruments.
The organization said although frameworks exist to guide climate action, taxation and resource sharing, they contain significant gaps and are often poorly aligned or disconnected.
They said partial domestication of international policies, lack of coordination between national agencies and unharmonised climate change and extractive industry policies, jeopardise domestic revenue mobilisation.
They said as a result, the environmental impacts of the EIs are not well accounted for.
The organization said the situation is further compounded by a lack of transparency on revenue collection and allocation and the absence of binding Environmental, Social and Governance (ESG)-linked compliance frameworks.
ActionAid Zimbabwe said the resulting opacity limits public oversight and access to revenue information, shields the government from scrutiny and fosters corruption, ultimately facilitating illicit financial flows out of Zimbabwe. Consequently, tax revenue is lost, undermining efforts to finance climate action.
They said to maximise Domestic Resource Mobilisation from the extractive industries and ensure that a portion of the revenue supports climate action, we recommend improving the policy, legal and fiscal instruments for revenue maximisation and increasing investment in the mineral sector and the prevention of illicit financial flows, introducing an environmental (green) Tax and implementing an environmental or “green” tax targeting mining operations that have negative environmental impacts.
They said the tax would serve as a deterrent to harmful practices and as an incentive to promote environmentally friendly activities.
The identified responsible stakeholder is the Ministry of Environment, Environmental Management Agency.
Other recommendations include eExtending carbon tax to all sectors including mining to broaden the revenue base for the country.
The responsible stakeholder is the Ministry of Finance, Economic Development and Investment Promotion.
Giving fiscal incentives to miners for environmental sustainability and specific climate actions, responsible stakeholder being Ministry of Finance and the Zimbabwe Revenue Authority (ZIMRA).
Reducing the period of SML from 25 years to 10 years and decreasing years to minimise tax expenditure.The responsible stakeholder is the Ministry of Finance.
Conducting regular cost-benefit analysis of tax incentives and carrying out periodic cost-benefit analyses of existing tax incentives to identify and eliminate those that are ineffective or redundant.
The responsible stakeholder is the Ministry of Finance.
Regulating the Artisanal and Small Sacle (ASM) sector and implementing laws and policies to regulate the ASM sector more effectively to increase remittances from small-scale mining operations.
The responsible stakeholder being the Ministry of Mines.
Finalising a National Minerals Policy Framework to guide maximum resource mobilisation from mining sector. Responsible stakeholder: Ministry of Mines, strengthening legal frameworks, institutional systems and practices to enhance transparency and accountability in the management and use of mineral revenue.
Establishing an interagency committee to negotiate major mining contracts and DTAs, responsible stakeholder being Ministry of Mines, Ministry of Finance, RBZ, Enironmental Management Agency (EMA) and the Ministry of Environment.
Creating a beneficial ownership register for mining, responsible stakeholder being Ministry of Mines.
Facilitating Environmental Social Governance (ESG) disclosure,introducing mandatory ESG disclosure and sustainability reporting requirements for all companies.
The responsible stakeholder being the Ministry of Industry and Commerce.
Consolidating and codifing existing environmental law into a single legal framework responsible stakeholder being Ministry of Environment, Environmental Management Agency.
Strengthening national budget tracking and climate finance expenditure tagging through the Parliamentary Committee on Budgeting and Mines and Mining Development, responsible stakeholder being CSOs.
They said also that data on tax expenditures should be reported publicly and disaggregated, responsible stakeholder being Ministry of Mines.
Improving policies, both legal frameworks and operational mechanisms, including capacity for the equitable use of resource revenue and productive investment to promote broad-based development.
Require Treasury to ring-fence revenue through budget tracking and tagging the climate finance expenditure from EIs, responsible stakeholder being Parliament/Mines and Minerals Parliamentary Committee.
Operationalizing the Environmental Fund by separating its funding from the Consolidated Revenue Fund, responsible stakeholder being Ministry of Finance.
Depositing part of the royalties into the Environmental Fund, responsible stakeholder being Ministry of Finance.
Operationalizing the community fund provided in the Finance Act, 2023, to collect levies from lithium, black granite, quarry stones and uncut and cut dimensional stone. Responsible Stakeholder:
Ministry of Finance, Civil Society Organizations, Rural District Councils.
Codifing the right to Free, Prior and Informed Consent among communities affected by extractives projects, responsible stakeholder being Parliament of Zimbabwe.
Other initiatives include making Community Share Ownership Trusts (CSOTs) mandatory to build climate resilience of host communities, responsible stakeholder being Ministry of Industry and Commerce, Civil Society Organizations.
