Zim should not draw back on socio-economic concerns
An honest government working as an agent of its citizens is likely to convey socio-economic interests that are divergent, or contest, with an enterprise which is in allegiance to its financial shareholders. This is not a bad thing. Such tension between the two intermediaries should be normalized and expected as a continuous reality.
Unfortunately, a pretext of deregulation and ease of doing business is often exploited to downplay what should be an ever present tension between honest governments and enterprise.
Conceded that regulation should not be cumbersome, a narrative of deregulation and ease of doing business is frequently leveraged to discount the validity of socio-economic interests of people as represented by their governments.
Very few principled incumbents in positions of governance can sustain such a narrative onslaught. Particularly, deregulation and ease of doing business is effectively utilised by global investors to pressure governments of depressed economies to push back and lax socio-economic concerns.
For instance, when a mineral rich but currently slow economy is yearning for capital inflows, it may be unpopular to gesture in a manner that assumes familiarity with further regulation and a difficulty for business.
Thus, it is understandable for incumbents in governments to set aside regulatory topics such as transfer pricing, royalties, efficient cargo checks at border posts, and other topics that may shine light on the bad practices that have existed in Zimbabwe’s mining sector that are contrary to the country’s socio-economic interests.
This is what happened at the just-ended mining conference, which was sponsored by the private sector. Government was more focused on selling Zimbabwe to international investors.
Many mining firms have been evading their fiscal responsibilities by utilizing financial engineering to understate their obligations.
Smuggling and under reporting of extracts has been a significant malpractice of the sector.
Labour and worker treatment in many mining enterprises is deplorable, and to a large extent such treatment is arguably the greatest physical instigator of local miners’ resentment of foreign presence in the sector.
For years, the nation’s monetary outlook has been greatly undermined by externalization carried out by enterprises in the mining sector.
These are matters that should be encompassed into the responsibilities of an honest government which is agent to its people.
Going against the grain, these are matters that exude greater regulation efforts and compliance expectations on business.
Of course not all matters can be discussed on a single platform, and that is not the intent of this commentary.
However, it is crucial to raise an ever present awareness in Zimbabwe over the next few months of the need for government to stand firm on the socio-economic interests of citizens; especially in coherence to the tunes that woe investors.
The two narratives should not be mutually exclusive. It is possible to express an open invitation to financial interests in mining, and concurrently retain the tension that may come with the advancement of socio-economic interests.
In fact, this kind of tension between an honestly agent government and enterprise is necessary to hold both stakeholders accountable to the counterparty’s expectations.
The Zimbabwe Mining Investment Conference this week was a huge success. It appeased, and perhaps further propelled investor interest into Zimbabwe’s mining sector.
What was most impressive, however, was that a number of foreign mining firms took the initiative to express their curiosity and expectation of attending to socio-economic interests. For instance, a number of firms took pride in voluntary communal engagements in terms of infrastructure development beyond their direct mining sites.