ABOUT $96 million in funding pledged by mining companies to community share ownership trusts (CSOTs) is yet to be released, a government report has indicated.
The Zimbabwe Interim Poverty Reduction Strategy Paper (I-PRSP) 2016-2018, which was recently unveiled by government, said nearly 1,500 companies from 2010 to date had applied to have their plans to meet Zimbabwe’s 2008 empowerment law targets approved.
Zimbabwe’s Indigenisation and Empowerment Act of 2008 requires foreign owned companies valued at over $500,000 to cede 51 percent to black locals. However, a recent pronouncement by President Robert Mugabe indicated that compliance to the policy could take several forms, with emphasis being placed on companies retaining earnings in Zimbabwe.
Of the applicants, 536 were operating in the mining sector, and pledged to inject $134 million into CSOTs.
However, by the time the report was released early last month, only $38 million had been released.
“From 2010-2015, more than 1,470 companies were successfully processed for indigenisation in all sectors of the economy,” said read the I-PRSP.
“More than 536 mining sector companies were successfully processed for indigenisation. As such, transactions in the mining sector resulted in the disposal of 10 percent shareholding to 21 CSOTs with pledges of US$134 million of which US$38 million has been paid as seed capital. Notable progress was also recorded in promoting the empowerment of employees through (employee share ownership trusts) ESOTs,” it added.
A mining industry official who declined identification as he is not authorized to speak to the press said on Tuesday that the economic difficulties made it difficult for miners to release pledged funds.
In some cases, boards of directors for some companies had yet to approve the release of funds.
“It is important to note that mining companies have never had problems with CSOTs,” he said.
“We have been very happy to work with the communities around us, but the economic difficulties, especially the decline in commodity prices on the international markets, has made it difficult for mines to release the funds.”
So far, only Canadian listed Caledonia Mining Corporation has successfully indigenized, with 51 percent of its Blanket Mine owned by the community, workers and other local entities.Advertisement
As of December 2014, Zimbabwe had 72 registered CSOTS, but only 16 were operational.