HARARE – Government has deleted Section 36 of the Finance (No 2) Act of 2020 which it says had caused some misconception to some investors and stakeholders in the mining sector.
In a joint statement the Ministries of Finance, Industry and Mines said the clause has been misinterpreted as a departure from government policy of “Zimbabwe is open for Business” and opening up the mining sector.
“The provision 36 of the Finance (No 2) Act of 2020, to the effect that the minister responsible with Indigenization and economic empowerment Act (IEE) may, in consultation with the ministers responsible for Mines and Finance prescribe a mineral, the extraction of which would be subject to 51% shareholding by the designated entity has be interpreted by some to represent a departure from Government stated position to open the mining sector to investment without the requirement for 51%of the shareholding being held by the designated entity,
“To enhance certainty in relation to investments in the Mining sector and consistent with Government policy, this insertion will be deleted,” read the statement.
Government was accused of bring the indigenization policy through the backdoor with legal watchdog civil society organization Veritas describing it as “legislation by stealth”
“The way the amendment was slipped through Parliament is deplorable. Finance Acts are enacted each year to provide a legal framework for the Government to raise revenue through taxes, customs duties and other imposts.
“Finance Acts are supposed to deal with taxation and the collection of revenue by the State, not with broad matters of economic policy such as indigenization. Members of Parliament cannot be expected to scrutinize Finance Bills to check that there are no clauses that stray outside the Bills’ legitimate scope,” said Veritas in a statement.
However, The Chamber of Mines, in a recent note to members, says the changes had intended to lift empowerment requirements on platinum and diamonds.
“This amendment brings into force the policy to remove diamond and platinum from complying with the equity provisions of the IEE Act. This brings to closure the Chamber appeal to ensure that the policy is enshrined into law,” the Chamber of Mines says in an advisory to its members.
This however has not allayed the fears of miners that the wording of the Finance Act leaves the industry exposed to expropriation.
If maintained the clause would give the government the prerogative to indigenise a controlling equity in any mineral in the country taking the country back to the indigenization policy of the old dispensation.
Soon after assuming power in 2017, President Mnangagwa undertook to relax a 2008 law that required majority local shareholding in all major businesses. The government amended the Indigenization and Economic Empowerment Act through the 2018 budget.