Community share ownership schemes crumble

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THE government’s decision to repeal the Indigenisation and Economic Empowerment Act in a bid to woo foreign direct investment into the mining sector has rendered community share ownership schemes across the country dysfunctional, Parliament has heard.

Industry permanent secretary Mavis Sibanda told a joint sitting of the Senate’s thematic and parliamentary portfolio committees on industry on Thursday that owing to the repealing of the law, companies in the extractive industry were no longer legally obliged to support local communities.

“Presently out of the about 61 community share ownership trusts, only 21 are actually functional. The companies are no longer mandated by law to support the trusts. There is no legal framework for communities to benefit so there is need for a subsidiary legislation for the obligations provided for in the Constitution to be implemented and come up with a win-win situation,” Sibanda said.

The committee chaired by Zanu PF’s Chimanimani East MP Joshua Sacco was gathering evidence on the status of community share ownership trusts after receiving a petition from the Mhondoro-Ngezi Community Share Ownership Trust complaining about lack of support from companies mining platinum in the area.

Sibanda said the government was still consulting on the modalities of coming up with a legal framework to make companies legally obliged to support community share ownership trusts.
In the end, the committee concluded that then Industry minister Mangaliso Ndlovu was better placed to give them the evidence they wanted.

“This committee resolves that we create some time to invite the minister to also give us an update on what progress has been made so far,” Sacco said.

However, MDC senator for Harare Morgan Femai felt that it was prudent to direct all extractive firms to stop operations until such a time the government has come up with the legal framework.

“If we wait for the government to come up with the requisite laws, the minerals will be plundered. In the meantime, while we wait for that, let us just direct them to stop their activities,” Femai said.
President Emmerson Mnangagwa’s government replaced the Indigenisation Act, which required foreign companies to cede 51 percent shares to locals, with a more “business-friendly” Economic Empowerment Act.

The government argued that the Indigenisation and Economic Empowerment Act discouraged much-needed foreign direct investment.

In 2016, when the Indigenisation Act was still operational, Zimplats Mhondoro-Ngezi-Chegutu-Zvimba Community Share Ownership Trust realised more than $1 million return on investment over two years.

It was after part of the $10 million paid out by Zimplats as its pledge to the Trust was invested largely on the money market.

The Trust realised $560 000 in 2014 and a further $886 000, bringing the total to $1,46 million. According to the then National Indigenisation and Economic Empowerment board, Mashonaland West regional manager Adrean Dumbu, the Trust was successful largely due to co-operation from Zimplats.

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