Responsible Investment in the Natural Resources Sector: An analytical profile of the mining sector in Zimbabwe

By Rodney Ndamba & LeninTinashe Chisaira

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The call for responsible investments has been rising slowly in the past four years in Zimbabwe. A number of initiatives have been placed and more need to be placed in order to respond to rising corporate failures and poor corporate governance practices by shareholders and investors especially those in the natural resources sector. Some mining companies in Zimbabwe have been accused of unsustainable business practices that ignore community rights and environmental impacts. Above all, the investment environment in Zimbabwe has largely characterised by lack of shareholder activism, unsustainable business values, poor corporate governance and corruption. In an ideal setting, investors must use their collective position to drive sustainable business values in the companies they invest in. 

This paper explores the fundamental concept of responsible investments, gives a contextual analysis of investment practices in the natural resources sector while exploring opportunities for driving sustainable and responsible investing in Zimbabwe. 

The natural resources and extractive sector remains one of the major fiscal contributors, although it is associated with high social, economic, political and environmental impacts. In early 2016, the President of Zimbabwe, Robert Mugabe exposed that amounts going up to US$15 billion have been externalized by diamond mining companies operating in the Marange area. This is highly significant in a country whose annual budget is a mere US$4 billion.

A nation that places people's needs as a priority above private profits should particularly ensure that investments and business decisions are done after thorough assessments of human rights and environmental justice.

However, political inconsistences and doubtful capacities on the part of the Zimbabwean government agencies and authorities have characterised the response to investment in the country. Zimbabwe's legal, policy and political environment has been characterised by glaring inconsistences and political whims. Much study is needed to constantly re-look at the impacts of the legal, policy and political environment on investments in the country.

The existing laws contain some important provisions that should guide responsible investments, however lack of capacity and sometimes lack of political will has hindered progress towards responsible investment. To determine whether responsible investment is effectively catered for and enforced, the existing legal and policy framework on investment needs to be reviewed. The review will further be aimed at ensuring that future investment initiatives result in considerable gains and benefits for the majority of the people surviving in the current set-up of an economy that has been branded as an enclave economy.

PLEASE NOTE: This is the introduction to the research paper. Download the fulldocument free of charge here. You can also get hard copies from the Zimbabwe Environmental Law Association (ZELA). Email: tinashe@zela.org Website: www.zela.org . Call/Whatsapp: +263 775678928 

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[Rodney Ndamba is the Executive Director of the Institute for Sustainability Africa. Lenin Tinashe Chisaira is an environmental lawyer and researcher and tweets at @LeninChisaira]