BY KUDZAI KUWAZA
THE move to amend a clause in the constitution, which subjects government’s agreement with non-state entities to parliamentary scrutiny, serves as testimony to the state’s continued aversion to transparency and raises fears that it will enhance corruption.
Clause 23 of the proposed Constitution Amendment Bill (No 2), seeks to amend Section 327(3) of the constitution, to give the executive exclusive powers to approve loan agreements with foreign non-state institutions or entities without being subjected to parliamentary and public scrutiny.
Currently, Section 327(3)(b) of the constitution prohibits the state from entering an agreement which is not an international treaty without the approval of parliament.
The Zimbabwe Environmental Law Association (Zela) has raised alarm over plans by the state to dodge scrutiny over its agreement with non-state enterprises.
The proposed constitutional amendments, according to Zela, violate Section 119 of the constitution, which provides for parliament to play its role of promoting democratic governance.
“This may also apply to any government guarantees imposing fiscal obligations on the state. The consequences are drastic,” Zela noted. “What it also means is that the Government of Zimbabwe can enter a loan agreement with Credit Suisse, the Export-Import Bank of China, the China Construction Bank, the Industrial and Commercial Bank of China or the African Export-Import Bank without parliamentary approval since their membership does not include two or more independent states.”
Zela said the proposed Constitution Amendment Bill (No 2) would have adverse effects on the mining industry since Zimbabwe used its minerals as collateral in exchange for lines of credit.
“Without any parliamentary oversight and approval of agreements that impose fiscal obligations on the country, Zimbabwe might further fall into a debt trap drawn from secretive projects that may include punitive repayment terms, certain immunities, or exemptions to foreign companies,” the environmental watchdog said.
The government has always preferred to operate under a veil of secrecy raising suspicion of underhand dealings which include mortgaging the country’s minerals which has a detrimental impact on the country.
Zimbabweans have become accustomed to announcements of “mega deals” over the years that never come to fruition.
The opaque nature of the deals has been a breeding ground for corruption and looting.
President Emmerson Mnangagwa’s remarks at the signing ceremony for the US$4,2 billion platinum investment deal between the government and Cyprus-based company Karo Resources in 2018 indicated as such.
“I am happy that this day has come. This has taken more than six years to reach this day. Had we embraced their intention to invest in this country in platinum the year they came and I took them to then President (Robert Mugabe), we should have been on the sixth year of the programme, but because of bureaucracy and other unnamed vested interests which are corrupt, this could not happen,” he revealed.
Ironically, Mnangagwa was presiding over a deal which is also opaque.
The full beneficial owners of the deal are not declared beyond half disclosures. There was no explanation and detail of how the investment added up to US$4,2 billion.
This is in stark contrast to Mnangagwa’s pronouncement that the country is open for business as well as his declared fight against corruption
The move to evade scrutiny spells doom for the country, according to business consultant Simon Kayereka.
“This amendment puts the country in the back pocket of the executive. It is drawn to exclude public scrutiny as their representatives have been disempowered. Why is Zimbabwe moving away from transparency at a time the rest of the world is moving towards it?” Kayereka said. “From a business point of view, we leverage on the nation’s resources to develop the country. So if our resources are mortgaged and we are in debt, what remains? Our creditworthiness as a country is also dependent on transparency. Business in the short and long-term will suffer as we continue to transfer resources.”
The dodgy diamond deals in Chiadzwa also exemplify the opaque nature of agreements made by the government. Two of the largest companies which operated in Chiadzwa had controversial and murky structures.
Mbada Diamonds, for instance, was a joint operation between the Zimbabwe Mining Development Corporation (ZMDC), through its subsidiary Marange Resources and Grandwell Holdings, partly owned by South African company New Reclamation Group (Pty) Ltd (Reclam).
Grandwell is a limited liability company incorporated under the laws of Mauritius in July 2009. Grandwell was owned 50,1% by Reclam, while a consortium of Chinese investors owned 49,99% of the company.
A mysterious Hong Kong-registered company, Transfrontier Mining, later acquired 49,99% of Grandwell. The beneficial owners of Transfrontier remain unknown.
The government’s refusal to join the Extractive Industries Transparency Initiative (Eiti), an international organisation, which champions transparency and accountability in the mining sector also speaks volumes of its discomfort with transparency and accountability.
In his 2020 budget presentation, Finance minister Mthuli Ncube indicated that he would allocate resources to ensure that Zimbabwe joins the Eiti. However, this objective is dead in the water given the reported stiff resistance the proposal has met in government.
The move to remove parliamentary supervision of government agreements makes a mockery of the government’s mantra that the country is open for business, according to economist Prosper Chitambara.
“I think it weakens transparency and it also weakens accountability,” Chitambara said. “This affects our image as a country as an open for business destination.”