CORRUPTION'S IMPACT ON ZIMBABWE’S MINERAL ECONOMY: ENHANCING CORPORATE GOVERNANCE FOR SUSTAINABLE ECONOMIC GROWTH

Abstract

Context of the study

Zimbabwe is a developing country that is blessed with abundant mineral resources, which have great potential to transform its economy and improve the livelihood of its citizens. Despite substantial mining activities in Zimbabwe, economic growth has remained weak, with corruption identified as one of the major governance factors negatively affecting business innovation and hindering economic growth. In 2024, Zimbabwe ranked 158th out of 180 countries on Transparency International's Perceptions Index and scored 21 out of 100, indicating a high level of perceived corruption. While research has been conducted on the extractive sector, the economy continues to be exploited due to illicit financial flows. The current study seeks to explore the impact of corruption on Zimbabwe’s mineral economy, with the ultimate goal of developing evidence-based strategies to combat corruption and promote sustainable economic growth.           

Research Methodology

The study used a qualitative and quantitative approach which employed an exploratory research design. This mixed methods research approach explored the impact of corruption on economic growth to identify effective corporate governance strategies for Zimbabwe. Data was collected through a survey questionnaire and interviews conducted with government officials, mining industry leaders, environmentalists, economists, and local community representatives. The qualitative data was analyzed using a thematic approach to identify recurring patterns, perceptions, and governance challenges related to corruption. A codebook framework was used to develop the themes. The questionnaire received a response rate of 70 out of 80 distributed questionnaires. Data was analyzed using NVivo statistical software.

Key Findings and Analysis

The study unearthed several critical patterns that demand action:

• Revenue loss due to illicit financial flows (IFFs) that drain resources meant to benefit citizens. The loss is through mainly tax evasion, money laundering, smuggling across porous borders and dirty contracts.
• Underreporting and bribery were the main forms of corruption from the survey.
• A complicated network of actors is involved in corruption in Zimbabwe's mining sector.
• Lack of transparency and accountability in beneficial ownership, institutionalization of stakeholder engagement, awarding contracts and licensing. This creates mistrust between the government and the citizens.
• Weak institutional oversight has resulted in no one holding power to account due to understaffing, lack of resources or compromised.
• Need to strengthen international cooperation to curb corruption.
• Minerals are exported in raw state.
• Immense potential for technology and value addition to boost industrial development.

The study also proffered solutions to address the patterns identified:

• Development of a new mining tax model that is based on economic resource rent as opposed to taxing profits.
• Introduction of drones to monitor porous borders, complemented by enforcement teams.
• Introduce an online open contracting, publishing all mining licences and contract awards to promote transparency. There should be beneficial ownership disclosure.
• Automation of licensing and contract awarding systems to minimize human discretion.
• Strengthen corporate governance through establishing strongly resourced and fully capacitated in terms of expertise, Independent regulatory and oversight institutions.
• Strengthen International cooperation in order to be effective in dealing with cross border crimes which at times may involve money laundering.
• Mineral beneficiation to be done locally.

Conclusion and Implications

Corruption is a cost and its impact on citizens is catastrophic. The government is starved of funding for essential services such as infrastructure, education and health due to revenue lost through tax evasion, smuggling, dirty contracts and other rent seeking systems, while a few corrupt elements benefit at the expense of many.  Corruption continues to harm economic growth despite the existence of several anti-corruption policies that are surrounded by weak regulatory frameworks that allow corruption to thrive, while a lack of openness and inclusive participation create chances for illegal activities. By embracing Transparency, accountability, leveraging technology and strengthening governance, Zimbabwe has the potential to benefit from its mineral wealth for the benefit of its citizens.