Zimbabwe’s mining industry has called for the expediting the legal repeal of the Indigenisation and Economic Empowerment Act (IEE Act) to give clarity to the Government’s policy of exempting mining companies from the local equity requirements of the indigenisation law.
In a recent survey, The Chamber of Mines of Zimbabwe CMZ emphasised the need for a clear and consistent legal framework to replace the indigenisation law, arguing its existence continues to create uncertainty and confusion regarding empowerment.
The IEE Act compels mining companies to cede at least 51 percent to black Zimbabweans.
In 2018, the Government exempted mining companies from complying with the indigenisation requirement to stimulate investment into the sector, but it has not yet enacted a law to regularise the policy. This leaves the mining industry in a state of uncertainty and potential legal challenges, hindering investment and growth.
Recently, the Government announced the consultation of the Economic Empowerment Bill that will repeal the IEE Act and promote broader economic empowerment objectives. Such a law would provide clarity and predictability for investors, fostering a more conducive environment for mining activities.
The mining survey consulted with mining executives to gather their industry perspectives.
“Mining executives indicated that they are fully supportive of the Government thrust to entrench local empowerment as a broad-based development strategy,” said the report.
“They noted with appreciation the current Government efforts to replace the equity model of indigenisation and the ongoing consultations to develop an empowerment-based model.
(However, there is need to) “expedite the finalisation of the empowerment framework to replace the Indigenisation Act to attract investments in the mining sector.”
According to the survey, mining executives cited the lack of clarity on indigenisation and economic empowerment act as a significant challenge to making investment decisions in the mining sector.
However, they also expressed strong support for the government’s Local Content Strategy, which aims to promote the participation of Zimbabwean businesses in the mining industry’s value chain.
“In general, mining executives are supportive of the Government’s Local Content Strategy. Most mining houses are already undertaking initiatives to increase local content in the mining industry through local enterprise development programmes (offtake agreements and letters of support), mining businesses procuring from local suppliers (for exploration, drilling, blasting, loading, haulage), and systematic employment of local community members,” according to mining executives.
“The mining executives underscored the need to align the local content implementation framework for the mining sector in line with ongoing local content initiatives.
In an interview, CMZ economist Pardon Chitsuro expressed concerns about the lack of a comprehensive law to regularise the government’s policy exempting mining companies from the equity model of indigenisation.
He said the current situation, relying solely on a policy announcement, creates uncertainty and potential legal challenges for mining companies.
“Currently, we are operating based on a policy announcement, but there is still a law in place. The repeal of the indigenisation law is still pending. We need a law that formalises the policy announcement to provide clarity and certainty for mining companies,” Chitsungo said.
Government policies are often supported by legal instruments, such as Statutory Instruments, to provide clarity and implement specific measures. Statutory Instruments are a form of delegated legislation, meaning that they are issued by ministers.
They are typically used to provide more detailed regulations and procedures than are possible in primary legislation, which is the law that is passed by Parliament.
“Government policies often need legal backing to ensure their implementation and enforcement,” Carlos Tadya, a Harare-based economist said.
“Statutory Instruments, which are subsidiary legislation enacted by Government ministers, play a crucial role in translating policy intentions into actionable rules and regulations.”
The mining industry plays a significant role in Zimbabwe’s economy, contributing to a substantial portion of the country’s foreign exchange earnings, Gross Domestic Products and employment. A stable and predictable regulatory environment is essential to ensure the long-term sustainability and growth of the mining sector
By repealing the Indigenisation and Economic Empowerment Act and enacting a clear and consistent legal law for empowerment, the Government can provide the industry with the certainty it needs to attract investments in exploration, expansion.
Last year, Zimbabwe’s Cabinet agreed to the principles of the Economic Empowerment Bill, which will be more aligned with the Constitution of Zimbabwe, Vision 2030, national development strategies, the United Nations Sustainable Development Goals, and the African Union Agenda 2063.
The bill also seeks to establish a National Economic Empowerment Fund, to be funded by the Treasury and Corporate Social Responsibility Framework to support local communities.
The formulation of the draft Bill will be undertaken through a multi-stakeholder consultative process under the Whole-of-Government Approach.