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Nqobile Bhebhe, Senior Business Reporter
Illicit Financial Flows (IFFS) in the mining sector are depriving Zimbabwe of huge potential revenues, a challenge that affects many mineral resources in African countries, Speaker of Parliament, Advocate Jacob Mudenda, has said.
The mining industry is one of the top foreign currency earners with the sector working on establishing more gold service centres across all mining regions as a strategy towards attaining the US$12 billion milestone by 2023. Under this drive, the gold sub-sector is expected to contribute US$4 billion.
In his address during a capacity building workshop for African Parliamentarians Network against Corruption in Bulawayo last Friday, Advocate Mudenda said illicit financial flows were bleeding the national fiscus, further buttressing the need to curb the plague.
“Closer to home, it is estimated that in 2019 alone, Zimbabwe lost US$684 million through illicit financial flows (IFFs),” he said.
“Although the mining sector has become the anchor of our economy accounting for close to 60 percent of the country’s export receipts, there is no doubt that huge revenue is not finding its way to the fiscus.
“A study by the African Development Bank and the Global Financial Integrity, estimates that in the past three decades, Zimbabwe lost US$12 billion through illicit financial flows.
“This challenge affects most resource-rich nations in Africa and is most prevalent in the extractive industry, particularly in mining, oil and gas,” said Advocate Mudenda.
He said the cancerous move was confirmed further when APNAC and Civil Society Organisation representatives engaged President Mnangagwa in December 2020.
“During that conversation, His Excellency revealed that $60 million worth of gold annually finds its way to Dubai. It is my hope that the presentation from Transparency International Zimbabwe on the Illicit Financial Flows will add luminance to our cause of curbing the rampant illicit financial flows that have bled our fiscus,” said Adv Mudenda.
Speaking to Business Chronicle on the sidelines of the workshop, Mines Parliamentary Portfolio Committee chairman, Mr Edmond Mkaratigwa, said there was an intricate web of illicit financial inflows engineered by big mines.
“In terms of transparency and accountability, it is easy to monitor and evaluate the performance of large-scale mining operators,” he said.
“They employ professionals and the bulk of them are Zimbabweans, and when they do data collection, what they produce per month and the grade of products, it’s information that is ordinarily accessible and made public.
“So plugging leakages is not a problem.”
However, he said with closer scrutiny on the nature of some of the companies, it could be realised that they have appendages that spread to international jurisdiction.
“They belong to multi-national groups worldwide and that becomes a back rock for illicit financial flows where they do money laundering within their groups.
“For example, when a Zimbabwean mine is developing a project they need consumables, spares, equipment, they buy from a member of the same group internationally.
“So, in terms of transparency and accountability that poses a challenge. That is where huge amounts of money leak,” said Mr Mkaratigwa.
He further said there was a huge appetite by big mining houses to hire foreign consultants ahead of locals.
“A lot of money is also gobbled on salaries and wages and most of it goes towards consultancy work.
“When one looks at the nature of the consultancy, it’s a highly skilled task and usually, they do not trust local consultancy.
“They bring in international ones and that becomes a way of spiriting away a lot of money from the fiscus which can be difficult to trace,” he said.
Mr Mkaratigwa added that the sprouting of hammer mills that are not accountable has also posed a huge challenge as it is a source of leakage through the black market.
“We need an integrated approach to grow the mining sector and enhance transparency and accountability,” he said.
“We will meet and surpass the US$12 billion target but if there is no plugging of leakages it would be a tall order.” — @nqobilebhebhe
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