Why South Africa’s Extractive Sector Needs Greater Transparency

Case study of Sedibeng Iron Ore mine, by Tafadzwa L. Kuvheya

South Africa is a major minerals producer and host to leading international mining companies. Mining accounts for approximately 18% of the national GDP. The costs and benefits of mining for South African communities, and the impacts of South African mining companies operating elsewhere in Africa, are matters of much concern to civil society.

In May 2017, a community activist and Publish What You Pay member from Kathu in Northern Cape mentioned to Publish What You Pay South Africa (PWYP-SA) that he has led Maremane mining community in trying to obtain information about the Social and Labour Plan for the Sedibeng Iron Ore mine to no avail. The community had started raising questions about the benefits of the mining activities by Sedibeng.

PWYP-SA offered to help find publicly available information about the Sedibeng mine. This case study describes the research undertaken and shows how difficult it can be in South Africa to obtain information relevant to local communities about extractive projects.

This case study is part of Publish What You Pay’s Data Extractors programme, a global initiative which trains PWYP members and activists from across our network to use extractives data. The findings of the report are valid at the time of publishing.

Answering the How? Ploughing back 10% of revenues from mining companies: The case of Solwezi Municipal Council

On the 14 December 2015, Solwezi Municipal Council passed a resolution to “enhance service provision to communities affected by mining activities”. This resolution followed a proposal to invest property rates collected by the council from mining companies within mining host communities.

It is against this backdrop that YAD working with Publish What You Pay Zambia (PWYPZ), decided to initiate the development of this briefing paper, which gives a contextual analysis and provides guidelines for the implementation and realization of the resolution passed by Solwezi Municipal Council.

Policy brief on Double Taxation Agreements: the case of Zimbabwe

Double taxation arises when two or more tax jurisdictions overlap, such that the same item of income or profit is subject to tax in each. Double Taxation Agreements were therefore instituted as an international tax instrument for avoiding double taxation of the same income or capital to the same taxpayer in the same period in two jurisdictions and promoting international tax compliance and information sharing. However, in recent years, there has been increasing global debate regarding the effectiveness of double taxation agreements.

This policy brief provides an overview of DTAs within the international taxation framework with a particular focus on those signed by Zimbabwe and partner countries. It therefore interrogates the implications of DTAs on social and economic rights of citizens of Zimbabwe in particular and developing countries in general as well as key recommendations for Zimbabwe.

Community data literacy for demand driven change

The need for this pilot stemmed from the realisation that calls by CSOs and CBOs for improved transparency and accountability in the management of mineral wealth tends to generally overshadow the use of available data to demand accountability. There was also the realisation that publicly available data from local sources, such as local government budgets and financial statements, has so far not been used to its full extent to empower citizen participation in local public financial management systems. The data from the EU, UK and Canada mandatory disclosure of payments made to governments by Multinational Corporations (MNCs) in the extractives also needs to be used more thoroughly.

The communities involved were equipped with skills to assess local mining tax revenue so that they could use data to ask for LESD finance to come from mineral wealth extraction. The data that was used included local government budget statements, financial statements and mandatory disclosure of payments made to the government by AngloAmerican’s Unki Mine project in Zimbabwe.

This case study is part of Publish What You Pay’s Data Extractors programme, a global initiative which trains PWYP members and activists from across our network to use extractives data.

Towards a transparent and accountable mineral resources governance framework

PWYP Zimbabwe have published a compendium of research papers on key mining related matters in Zimbabwe.

Rampant corruption in the mineral sector threatens to erode the potential the sector has been contributing to economic recovery and drive socio-economic development in Zimbabwe. This compendium presents abridged versions of research papers from Publish What You Pay Zimbabwe coalition members in their effort towards contributing to a more transparent and accountable mining sector.

Transparency International Zimbabwe (TI-Z) argues that rampant corruption in the mining sector threatens to erode the potential the sector has to contribute to economic recovery. The Zimbabwe Coalition on Debt and Development (ZIMCODD) presents an analysis of the Auditor General’s reports from 2013 to 2015 to assess progress in the implementation of the Auditor General’s recommendations. The Institute for Sustainability Africa (Insaf) presents findings on the extent of compliance with stock exchange requirements on sustainability reporting by public listed mining companies operating in Zimbabwe. The Zimbabwe Environmental Law Association (ZELA) explores the opportunities and pitfalls of the 2016 Mines and Minerals Amendment Act. The compendium closes with an argument over the search for alternatives to mining by the Centre for Natural Resources Governance (CNRG).

EITI and mining governance in Cameroon: between rhetoric and reality

The Extractive Industries Transparency Initiative (EITI) standard among other things prescribes reporting of sub national revenue transfers and social expenditures of extractive companies in
conciliation reports. This study is based on the findings of research conducted by RELUFA on sub national revenue transfers and social expenditures in Cameroon. The exploitation of some natural resources in Cameroon, notably the forest and solid minerals, entitles councils and local communities where the resources are exploited to royalties. Paradoxically, unlike the forest and minerals sector, there are no royalty allocations to councils and local communities hosting oil projects. But despite the legal provision for mineral royalties, the effectiveness of sub national mining royalty transfers to councils and local communities is still shrouded with many inconsistencies. Consequently, since 2011 RELUFA has been interested in exploring the issue of sub national revenue payments and transfers to councils and local
communities in Cameroon.

This study explores the effectiveness of sub national revenue payments and transfers and the social expenditures of companies in the locality of Figuil in the Mayo Louti division of the northern region of Cameroon. Figuil is host to two companies involved in the production of cement and marble. The choice of Figuil was justified as it is the best known town in Cameroon where industrial extraction has been on-going for more than 50 years. Under such circumstances, there is widespread expectation of the social and economic development of Figuil. But the reality is far from it.

In 2011, RELUFA conducted a study whose results were presented in a report titled: Sub National Natural Resource Revenue Management in Cameroon: Forest and Mining Royalties in Yokadouma, East Cameroon. This study drew experience from the forest royalty management and concluded the framework for sub national mining royalty management should be clarified so that the expectations of the local communities for development can be addressed. We can argue that this study contributed to changing public perceptions about the issue of mining royalties. CELPRO, a local civil society organization in Figuil wrote to the minister of finance in 2012 to request clarification on royalties for the council and local communities in Figuil. This made sub national mining royalty payments and transfers a topical issue.

Now that Cameroon has acquired an EITI “compliance country” status at the time a new EITI standard has been approved, RELUFA has opted to deepen the discussion on sub national
revenue payments and transfers and social payments by extractive companies in Cameroon. The aim of this study is to highlight the importance of effective sub national revenue transfers and monitoring of social expenditures of extractive companies. The study explores how sub national transfers and social expenditures can be effectively integrated in the EITI process so 5 Chapter VI. Conclusion and Recommendations
that mining can effectively contribute to local social and economic development.

This report was made possible by the financial support of the Natural Resource Governance Institute (NRGI). We are grateful to Evelyne Tsagué, Francophone Africa Coordinator for the NRGI.

Position paper on mining reforms in Zimbabwe

That mining holds an important locus to Zimbabwe’s economic recovery is well known. Both government and the civil society in the country generally agree that if managed well, the abundant natural resources in the country have the ability to turn the economic fortunes of the country.

The current government’s economic blue print the Zimbabwe Agenda for Socio-Economic Transformation (ZIMASET) state that the judicious exploitation of natural resources will alleviate the country’s economic woes. Although there is huge potential within the mining sector and the existence of a progressive constitution, real development remains illusive. Part of the reason why there is limited economic growth and development is weak natural resources governance that is characterised by limited transparency and accountability, an impious policy and legal environment with a progressive constitution that exists besides many acts that are yet to be revoked and alligned.

Another challenge within the mining sector is the inadequate participation of communities and other stakeholders with an interest in the sector such as civil society organisations. Effective governance systems, capacity to administer and monitor the mining sector, and horizontal and vertical linkages with other sectors of the economy remain prerequisites for resource exploitation to contribute to growth and development.

As a way of outlining some of these obtaining challenges, the Publish What You Pay (PWYP) Zimbabwe Coalition has put together this position paper which outlines some of their key asks on essential reforms that should be considered in the mining sector. Given its diversity, the coalition’s membership has compiled submissions from the perspective of their institutional work and comparative advantage. Given the increasing pressure for foreign direct investments and need for increased revenue, the government needs to ensure that the operational environment allows smart investments that unlock the sector’s potential without undermining human rights and the developmental prospects of the country.

In Good Company? Conversations around Transparency and Accountability in South Africa’s Extractive Sector

This is a collection of submitted articles around mining issues and produced by the Open Society Foundation for South Africa. It includes a chapter on the important role of coordinated and collective actions of
a diverse coalition of organisations for greater impact and influence: The coalition is king! Perspectives on the Publish What You Pay coalition model written by Carol Kiangura, PWYP East & Southern Africa Regional Coordinator.

It is a first edition of what will be an annual publication. Download your copy now.

Human scars – Is there a hidden cost to tax? Case for Zambia and Zimbabwe

Using community testimonies, interviews and experiences, this paper will demonstrate the cost of collected and uncollected tax from extractive industries in Zambia and Zimbabwe. Using casework drawn from work under the aegis of Publish What You Pay (PWYP) , this paper will seek to demonstrate the linkages between tax and human rights. It will argue for the need to locate tax at the centre of the human rights discourse focusing on corporate and state accountability. This is particularly important as the human rights international discourse has largely not looked at taxation issues in the context of corporate accountability.

At first glance, tax and human rights are strange bedfellows. After all every tax system has the same objective to extract funds from companies and its citizens ostensibly for the delivery of public goods that the general citizenry would enjoy. The process of collecting tax from companies mainly looks at how much was collected and how the collected revenue is appropriated. What is at times missing in discussions around tax is the often hidden human cost, how that tax revenue was generated and the human rights impacts- especially on women, associated with how well the tax is collected and allocated.

This paper attempts to demonstrate that the human element is not captured and left missing in the millions of dollars that governments proudly declare as having been collected from the extractive sector. The human element is also often missing in the millions of dollars more that extractive companies do not report as constitutive of the impact of extractivisim on millions of people. The authors argue that there are ‘human’ costs related to extraction that need to be concurrently reported on when governments and mining companies report on the revenues, profits and taxes.

This paper seeks to demonstrate the linkages between tax and human rights. It argues for the need to locate tax at the centre of the human rights discourse focusing on corporate and state accountability. This is particularly important as the human rights international discourse has largely not looked at taxation issues in the context of corporate accountability.

Authors: Mr Edmond Kangamungazi, Mr Gilbert Makore and Ms Carol Kiangura
Affiliations of authors: Publish What You Pay (PWYP) Zambia and Zimbabwe members