Constitutional watchdog Veritas- Zimbabwe says Section 36 of the Finance (No2) Act of 2020, which brought back indigenisation of the mining sector through what is being termed “the back door” can be challenged in the court of law.

According to Veritas, legally the amendment infringes property rights and delegates Parliament’s primary law-making power.

Veritas notes:

Is the Amendment Lawful?

The legality of the amendment may be open to challenge on two grounds:

1. That it infringes mine-owners’ right to property, guaranteed by section 71 of the Constitution.

If the Minister issues a notice prescribing minerals under the amended section 3(1), it will affect all miners currently mining those minerals, and will limit their ability to dispose of their mining assets.

The amendment will certainly diminish their property rights, therefore, but it is a moot point whether it will do so to such an extent that it amounts to compulsory acquisition of property so as to bring it within the ambit of section 71 of the Constitution.

2. That it delegates Parliament’s primary law-making power, in violation of section 134(a) of the Constitution

This is perhaps a stronger ground on which to challenge the amendment. The effect of section 134 (a) of the Constitution is that while Parliament can confer power to make statutory instruments on Ministers and other authorities, it must not delegate its “primary law-making power” to them.

The amendment surely gives the Minister of Industry and Commerce primary law-making power. The effect of prescribing minerals under section 3(1) of the Indigenisation and Economic Empowerment Act will largely be to fence off sectors of the mining industry from foreign investment. If that is to be done at all it should be done by Parliament itself through an Act of Parliament after careful debate, rather than by a single Minister after consulting two other Ministers.

Legislation by Stealth

The way the amendment was slipped through Parliament is deplorable.

Finance Acts are enacted each year to provide a legal framework for the Government to raise revenue through taxes, customs duties and other imposts.

This purpose is reflected in their long titles, which define their scope: here is the long title of the Finance (No. 2) Act, 2000, which is typical of them all:

“An Act to make further provision for the revenues and public funds of Zimbabwe and to provide for matters connected therewith or incidental thereto.”

Finance Acts are supposed to deal with taxation and the collection of revenue by the State, not with broad matters of economic policy such as indigenisation. Members of Parliament cannot be expected to scrutinise Finance Bills to check that there are no clauses that stray outside the Bills’ legitimate scope.

They are entitled to expect that Government lawyers will not insert such clauses in Finance Bills or, if they do, that the Minister who presents the Bills will inform Parliament of those clauses and will explain their effect.

That was not done in the case of clause 37 of the Finance (No. 2) Bill (now section 36 of the Finance (No. 2) Act). The clause had far-reaching implications for the economy and fell outside the legitimate scope of a Finance Act, yet it was not explained or even mentioned in the Bill’s explanatory memorandum, nor did the Minister of Finance and Economic Planning explain or even mention it when he piloted the Bill through Parliament. Indigenisation was not even mentioned in the Minister’s 2021 National Budget Statement which he presented to Parliament on the 26th November last year.

Zimbabwe is Open for Business?

In his inauguration speech in November 2017 the President announced that “Zimbabwe is open for business”. As explained in a Government website:

“Zimbabwe is open for business is a call by the President to Investors and Traders or Business Entities, both Local and International, to take up abundant opportunities in the country.”

Pursuant to that call, the Indigenisation and Economic Empowerment Act was amended in 2018 so that only diamond and platinum mining were reserved for indigenous Zimbabweans [though some other sectors of the economy were reserved for Zimbabwean citizens whether indigenous or non-indigenous].

Now the Indigenisation and Economic Empowerment Act has been amended again, apparently reversing the 2018 amendments. No explanation has been given and the amendment was slipped through Parliament almost furtively.

The Minister of Finance and Economic Development owes it to Parliament and the country to explain clearly:

What the Government’s new policy on indigenisation is and why the policy has been changed, and

Why the amendment was slipped through Parliament without full or indeed any explanation.