Fortune Nkosi
Bulawayo—Zimbabwe’s community share ownership trusts (CSOTs), once hailed as a ‘revolutionary’ tool for empowering local communities through the exploitation of natural resources, are now facing significant challenges that have seen them struggling to stay afloat.
A report compiled by the thematic committee on Indigenisation and Empowerment reveals a grim picture of mismanagement, lack of funding, and poor governance, which have stifled the potential of these trusts to transform communities.
The CSOTs were established under the Indigenisation and Economic Empowerment Act (IEEA) of 2007, which sought to make sure that local Zimbabweans benefited from the country’s natural resources.
Section 14(1) of the Zimbabwe constitution underscores this mandate, stating the State must take measures to empower marginalised groups and communities through transparent and just affirmative action.
Stark contrast
However, the committee’s report, based on fact-finding visits to eight CSOTs across the country—Mhondoro-Ngezi, Gwanda, Tongogara, Bubi, Zvishavane, Bikita, Marange- Zimunya and Bindura—last June paints a stark contrast between the policy’s intentions and its implementation.
The report notes that up to 60 CSOTs were established nationwide during the initial implementation of the indigenisation policy.
These trusts were funded by qualifying companies, primarily mining firms, which contributed seed capital for community development projects.
However, the enactment of the Finance Act (No. 1 of 2018) marked a turning point.
The statute amended and, in some cases, removed key provisions of the IEEA, leading to the withdrawal of funding by most qualifying companies.
As a result, the majority of CSOTs collapsed due to a lack of capital.
Of the eight CSOTs visited by the committee, only Mhondoro-Ngezi, Gwanda, and Zvishavane, were still operational, though at a reduced capacity.
These trusts continue to receive funding from their respective qualifying companies under corporate social responsibility (CSR) initiatives.
However, even these trusts are struggling to sustain their operations and fulfill their mandates.
The Mhondoro-Ngezi CSOT, funded by Zimplats with an initial capital of US$10 million, stands out as a relative success story.
The trust funded several community projects, including the construction of a piped water system, a classroom block, and a clinic.
It also owns assets such as trucks, a tractor, and shares in Sable Chickens Private Limited.
To sustain its operations, the trust ventured into income-generating projects, including a trucking and a joint venture with Delbrands Private Limited.
Similarly, the Gwanda CSOT, funded by Blanket Mine with US$6.9 million, constructed classroom blocks, drilled boreholes, and built a rural healthcare centre.
The trust also owns a double-storey building and residential stands, with plans to lease out office space.
In contrast, the Bikita CSOT, which received US$193,000 from Bikita Minerals, constructed classroom blocks but has no remaining assets or income-generating projects.
The Tongogara CSOT, funded by Unki Mine with US$10 million, built a school, drilled boreholes, and constructed a hospital mortuary but owns only a broken drill rig and a few vehicles.
Collapsing
The Zvishavane CSOT that was bankrolled by Mimosa Mine with US$7.3 million, constructed classroom blocks, clinics, and an irrigation scheme. It also runs a poultry project and owns a truck and a house.
However, the Bindura CSOT, funded by Freda Rebecca Mine with US$2.2 million, saw its assets, graders and tractors, fall into disrepair after being taken over by the Bindura Rural District Council (RDC).
The Zimunya-Marange CSOT, which was promised US$50 million by Mbada Diamonds, Anjin Investments and Zimbabwe Consolidated Diamond Company (ZCDC) but received only US$550 000, managed to construct a clinic, a community hall, and a footbridge.
However, it has no remaining assets or income-generating projects.
The report identifies several challenges plaguing CSOTs such as lack of funding sustain operations or fulfill their mandates.
The withdrawal of funding by qualifying companies following the Finance Act of 2018 has left many trusts dormant.
The report cited how the management of CSOTs has been compromised, with no proper governance structures in place and some of them lacking proper documentation, holding no board meetings and failing to conduct annual general meetings or audits.
Interference by RDCs is another challenge leading to poor asset management.
For example, the report cited how Bindura RDC took over functioning graders and tractors without a formal agreement, resulting in the assets falling into disrepair.
A restrictive legal framework was cited as a challenge as Statutory Instrument 21 of 2010 mandates CSOTs to use their funds for social services such as education, healthcare, and infrastructure, limiting ability to invest in income-generating projects and making it difficult to sustain operations in the absence of funding.
Call for reforms
Meanwhile, senators have also called for reforms in the CSOTs amid concerns over poor local benefits, criticising lack of community participation, weak legal frameworks and dominance of government officials in decision-making.
During a debate in the senate last week, Matabeleland South senator, Sithabisiwe Moyo, former chairperson of the thematic committee on indigenisation, empowerment and economic development, highlighted how CSOTs in other African countries such as the Mwadui Community Diamond Partnership in Tanzania and South Africa’s Bafokeng Trust have successfully incorporated local communities in economic activities.
However, she lamented how Zimbabwe’s model, introduced in 2011, has largely failed to deliver similar benefits.
“Why are we failing as a country?” Moyo asked. “The problem is the trust is not clear on what the locals should benefit, what they should participate in as a community, and what they should own.”
She pointed to Bikita CSOT, which was meant to benefit from lithium and other minerals at Bikita Minerals, as an example of a trust that lacks transparency and fails to empower locals.
Moyo accused the government of using the Indigenisation and Empowerment law as a political tool rather than a genuine effort to uplift citizens.
“Decisions are made at the top and handed down to communities without consulting them,” she said, adding that locals were often used in “token” consultations to appease the international community while the actual decision-making power remains with politicians.
She suggested communities should have real decision-making power over CSOTs, including control over budgets, policy formulation, and negotiations with investors.
Moyo also called for clear legal guidelines to prevent situations like in Bikita, where a change in ownership saw a new investor refusing to honour the pledges of the previous owner, leading to financial challenges for the trust.
Deep poverty
Uzumba Maramba Pfungwe-Mudzi senator, Jerry Gotora, expressed deep concern over the poverty in communities surrounding major mining operations.
He pointed to Mberengwa where, despite large-scale mining activities, the adjacent villages remain underdeveloped.
“If you move around the country, you will see that where a lot of mining is taking place, the adjacent villages are in total poverty,” Gotora said. “I do not understand why we stopped the operationalisation of these CSOTs because they have brought a lot of development in some of the most neglected areas.”
He insisted that CSOTs should be revived or corporate social responsibility (CSR) legally enforced in the upcoming Mines and Minerals Bill.
“The current situation where we expect communities to sign Memorandums of Understanding (MoUs) with these large mines is not tenable. These MoUs are not legally binding, and in many cases, it is difficult to even track who signed them,” he said.
Gotora also criticised the two percent mining levy that was supposed to benefit local authorities, stating it has failed to deliver tangible benefits in its second year of implementation.
He cited Mutoko as a glaring example, where black granite mining has enriched foreign markets while leaving local infrastructure in ruins.
“In Venice, Italy, roads are now lined with Zimbabwe’s black granite, yet the roads in Mutoko, where this stone is mined, are a disaster.
“Miners destroy the roads with their heavy trucks and do not contribute to maintaining them. We need to put corporate social responsibility into law,” he added.
Manicaland senator, Irene Zindi, echoed Gotora’s concerns, focusing on the diamond-rich Chiadzwa area, describing the local infrastructure as deplorable despite years of diamond mining in the province
“If you go to Chiadzwa, you would feel pity for the people there. Diamonds are being mined day in and day out, yet the community remains in abject poverty. The roads are so bad that bus operators no longer want to ply those routes.”
“We need a template that specifies what mining firms must do for communities before they are granted licences,” she said. “This template should be developed with input from local communities, not just government officials.”
Zindi added: “We must ensure that our people are part of the entire mining value chain.”