Zambia Mining Investment and Governance Review THE MINING INVESTMENT AND GOVERNANCE REVIEW (MInGov) APRIL 2016 © 2016 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington, DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Rights and Permissions The material in this work is subject to copyright. 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Any queries on rights and licenses, including subsidiary rights, should be addressed to: World Bank Publications The World Bank Group 1818 H Street NW Washington, DC 20433 USA Fax: 202-522-2625 Email: pubrights@worldbank.org ii  Funded by: Implemented by: In association with: iii ZAMBIA MINING INVESTMENT AND GOVERNANCE REVIEW Abbreviations & Acronyms ASM Artisanal and Small-scale Mining CSR Corporate Social Responsibility EITI Extractive Industries Transparency Initiative ESIA Environmental and Social Impact Assessment ESMMP Environmental and Social Mitigation and Management Plan FDI Foreign direct investment GDP Gross Domestic Product ICSID International Center for Settlement of Investment Disputes IMF International Monetary Fund MInGov Mining Investment and Governance Review PEFA Public Expenditure and Financial Accountability SADC Southern Africa Development Community SOE State Owned Enterprise VPSHR Voluntary Principles on Security and Human Rights ZCCM Zambia Consolidated Copper Mines ZCCM-IH ZCCM Investments Holdings Plc ZEMA Zambia Environmental Management Authority ZRA Zambia Revenue Authority iv  TABLE OF CONTENTS Table of Contents EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 MINING IN ZAMBIA – COUNTRY CONTEXT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 OVERVIEW of MInGov FINDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 3.1 Introduction and Performance Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 3.2 Overview of “Value Chain” and “Theme” Performance . . . . . . . . . . . . . . . . . . . . . . . 9 3.3 Mining Sector Importance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 3.4 Performance from a Value Chain Perspective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 3.4.1 Contracts, Licenses and Exploration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 3.4.2 Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 3.4.3 Taxation and State Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 3.4.4 Revenue Distribution and Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 3.4.5 Local Impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 3.5 Performance of Cross-cutting Themes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 3.5.1 Economic Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 3.5.2 Political Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 3.5.3 Sustainable Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 3.6 Special Topic: Artisanal and Small-scale Mining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 STAKEHOLDER PRIORITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 CONCLUSIONS AND ACTION POINTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 5.1 Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 5.2 Action points . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 ANNEX 1 - THE ZAMBIA MInGov DATA COMPENDIUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 v ZAMBIA MINING INVESTMENT AND GOVERNANCE REVIEW Figures Figure 1: Mining in Zambia at a Glance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Figure 2: Zambia Country Dashboard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Figure 3: Performance by Value Chain Stage and Theme . . . . . . . . . . . . . . . . . . . . . . . . . 9 Figure 4: Minig Sector Importance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Figure 5: Performance of the Artisanal and Small-scale Mining Sector . . . . . . . . . . . . . . 19 Figure 6: Overlap between Stakeholder-selected Priorities . . . . . . . . . . . . . . . . . . . . . . 22 Figure 7: Stakeholder-selected Priorities (All Stakeholders) . . . . . . . . . . . . . . . . . . . . . 23 Figure 8: Recommended Follow-up Points . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Tables Table 1: Performance of the Contract, Licenses, and Exploration Stage . . . . . . . . . . . . 11 Table 2: Performance of the Operations Stage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Table 3: Performance of the Taxation and State Participation Stage . . . . . . . . . . . . . . . 13 Table 5: Performance of the Local Impact Stage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Table 6: Economic Environment Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Table 7: Political Environment Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Table 8: Sustainable Development Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Annex Tables Table 1: Themes, Value Chain Stage, Topics, Indicators and Information Source ������ 29 Table 2: Theme Scores . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Table 3: Value Chain Stage Scores . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Table 4: Topic Score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Table 5: Indicator Scores . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Table 6: Performance of the Artisanal and Small-scale Mining Sector . . . . . . . . . . . . 42 Table 7: Question Scores . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Annex Figures Figure 1: Topic Scores . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Figure 2: Indicator Scores . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Figure 3: Stakeholder prioritisation, Government . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 Figure 4: Stakeholder prioritisation, CSO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Figure 5: Stakeholder prioritisation, Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 vi  ACKNOWLEDGEMENTS AND REPORT EFFECTIVENESS Acknowledgements and Report Effectiveness Date This Zambia Country Report is a product of The Mining Investment and Governance Review for Zambia, which was undertaken in March-April and October 2015 by a team led by Michael Baxter and consisting of Lois Hooge, Wilfred Lombe, Anne-Claire Howard, Julia Baxter, Yann Lebrat, Isabella Gerber, David Mihalyi and Giorgia Cecchinato. A wide range of stakeholders was interviewed during the review and the team wishes to thank all participants for their time and valuable comments. This report presents data on mining investment and governance indicators for Zambia that are current as of October 1, 2015. Scores for any of the indicators in the review may have changed since that date. vii ZAMBIA MINING INVESTMENT AND GOVERNANCE REVIEW EXECUTIVE SUMMARY The Zambia Mining Investment and Governance Review • Sector development is constrained by a number (MInGov) collects and shares information on mining of bottlenecks. The bottlenecks include, among sector governance, its attractiveness to investors, and others, insufficient resources are allocated to how it contributes to national development. The review, attracting new investment (such as for the provision based on data from primary and secondary sources and of adequate geological information); the mineral in-country interviews, assesses sector performance from policy is not well integrated into the national the perspective of three stakeholder groups – government, development framework; fiscal policy has been investors in the mining value chain and civil society – and highly unstable in recent years; a lack of policy for identifies gaps between declared and actual government local content within the mining industry; and the policy and practice. Findings are categorized by topics, absence of spatial development planning that could, and topics are grouped under stages of the mining “value for example, link infrastructure development with chain” and “themes” relevant to mining investment and mineral areas or leverage private sector investment governance. in infrastructure. The mining sector is important in Zambia and is likely to • According to investors, a number of areas are continue to be so. Zambia has a long history of mining constraining mining investment and returns. and a large known resource base of copper, emeralds These areas include inadequate fiscal and tax and other deposits, as well as good potential for further stability, and consultation on proposed changes; discoveries given the high degree of prospectivity. The the management of licenses, including disconnects mining sector is a major contributor to foreign direct between the requirements of different ministries investment, and mining tax revenues contribute a signif- (e.g., those dealing with mining, environment, and icant portion of total government revenue. The sector land and water access); poor infrastructure access; is also a significant source of formal employment - both and, ineffective practices regarding public financial directly and indirectly - which is a result of it being a management and accountability, revenue sharing more mature mining economy. and public investment integrity. The review’s key findings are: • The three key stakeholder groups agree on a number of topics they believe are particularly • Performance across the value chain is strongest important to strengthen sector governance, invest- in topics most closely associated with mining and ment and development impact. These topics are: which are related to the content of laws and regula- Rules for License Allocation and Geological Data tions, though implementation of these is wanting in Collection, Openness, Transparency and Independ- some instances; ence of Licensing Process, Sector Management and Intragovernmental Coordination, Tax policy, 1  EXECUTIVE SUMMARY Instruments and State Owned Enterprise Rules, • Developing (and subsequently implementing) local and Mining Taxation and State Owned Enterprise content, local employment and local development Financial Management. policies for the mining sector; • Civil society believes there is a number of • Adequately resourcing sector regulatory and weaknesses sector governance, including the poor monitoring agencies, particularly ZEMA and handling of environment and social impacts of geodata services; mining; problems with human rights associated with the sector; ineffective development planning as it • Treating the mining sector as an integral and driving relates to mining; issues concerning land access, force in development planning and implementation; compensation and resettlement; and the absence of and revenue sharing between national and local govern- ment. These topics were identified by civil society • Establishing a small cell in government to centralize considers as priorities for mining sector governance action on artisanal and small-scale mining, which and growth. could have benefit for the mining sector at large, for ASM miners and for environmental and social Possible areas for action are identified in the review. A impacts of mining. survey of priorities for stakeholder groups identifies six “low hanging fruit” to improve governance. These are: Three more challenging options – which remain funda- mental to the good governance of the mining sector and • Committing to better policy stability for the mining its contribution to national development – are: sector, particularly in the tax regime, and integrating the mineral sector into national development plans; • Ensuring communication and coordination among ministries whose actions affect the mining sector; • Instituting mechanisms to ensure meaningful consultation among all stakeholders on all signifi- • Improving public financial management, including cant local, social and environmental issues, mining budget management and public investment procedures, fiscal issues and other policy affecting programs; and the mining sector; • Managing government discretion in mining licensing decisions, and making what discretion there is transparent and accountable. 2 ZAMBIA MINING INVESTMENT AND GOVERNANCE REVIEW 1 INTRODUCTION The Zambia Mining Investment and Governance Review The remaining four themes are either cross-cutting (D (MInGov) collects and shares information on mining to F) or assess the importance of mining (M) in Zambia. sector governance, its attractiveness to investors and how These themes are: its activities affect national development. It reviews sector performance from the perspective of three main stake- D. Economic Environment. This cross-cutting theme holder groups – government, investors in the mining reviews broader economic factors, including cost value chain and civil society – and identifies gaps between competiveness, economic stability, the general declared and actual government policy and practice. investment climate, and skills and human capital. MInGov identifies the status and challenges facing mining E. Political Environment. This cross-cutting theme governance and investment across seven themes and the measures political risks relevant to the mining extractive industry value chain. Three of these themes are sector and which include stability of mining and assessed across five stages of the value chain—Contracts, fiscal policy, political stability and security, and Licenses and Exploration; Operations; Taxation and State expropriation risk. Participation; Revenue Distribution and Management; and Local Impact. F. Sustainable Development. This cross-cutting theme covers development planning, local supplier devel- The three value chain themes are: opment, economic diversification and leveraging private sector investments in infrastructure. A. Policy, Legislation and Regulation. This theme measures de jure governance, or in other words the M. Mining Sector Importance. This theme measures scope and quality of mining sector rules compared the importance of the mining sector in Zambia in to good practice. terms of geological potential, the level of foreign direct investment, and its contribution to national B. Accountability and Inclusiveness. This theme revenue and employment. measures accountability, transparency practices and the extent to which the public and other relevant MInGov’s methodology focuses on the status of govern- stakeholders are involved in governance processes. ance and investment conditions in the mining sector from the perspective of stakeholders, and as reported C. Institutional Capacity and Effectiveness. This in primary and secondary sources. However, while theme measures the quality of government organ- analysis is based on data from 314 questions, some areas izations and their ability to effectively govern, important to the mining sector and government and including the extent to which the de jure intent of civil society in relation to mining are not covered. These the rules is applied in practice (de facto governance). less-well-covered areas include the quality of its infra- 3 1 INTRODUCTION structure services, the security of property from theft, the underlying strength of institutions, and ways to enhance mining’s contribution to local and national development. The Zambia MInGov report has one annex: The Zambia MInGov Data Compendium. It contains scores for each of the 314 individual questions, and their aggregation to theme and value chain stage level. In time, the MInGov website will provide access to MInGov country reports and their under-lying data, as well as other information on MInGov. Country review data is made available in this report (and in future on the website) to facilitate: (i) the user’s ability to drill down into the data; (ii) the identification of countries that are similar in terms of mining sector importance, governance and investment attractiveness; and (iii) the identification of stakeholder priorities. This information should help stakeholders develop options to strengthen sector governance, investment and impact. However, it should be kept in mind that MInGov is neither a ranking nor an index: it does not present rankings of countries on the strength of their mining sector governance or attrac- tiveness for investment in the sector. This report presents data on mining investment and governance indicators for Zambia that are current as of October 2015. 4 ZAMBIA MINING INVESTMENT AND GOVERNANCE REVIEW 2 MINING IN ZAMBIA – COUNTRY CONTEXT Mining is important in Zambia and is likely to continue countries, the overall economic environment is generally to be so in the future. Zambia has a long history of favorable and the overall political environment is satis- mining and a large known resource base of copper and factory—making Zambia an attractive mining location. other deposits, and good potential for further discov- eries. Although copper production in Zambia (its main Key features of the mining sector in Zambia are summa- mining product) is generally high cost compared to other rized in Figure 1. Figure 1: Mining in Zambia at a Glance Main minerals mined Employment in the mining sector • Copper – 730,000 tonnes, world’s eighth largest • Employment in mining: 90,000 (2012) producer (USGS); copper accounts for 85% of • Mining employment that is in formal sector: 82% national mining revenue (2014) (2012) • Cobalt – 3,100 tonnes, world’s eighth largest • Share of total employment: 2.3% (2013) producer (2014) • Share of total formal employment: 8.3% (2012) • Mining share of GDP 12% (2014) Foreign direct investment Mining exports (2014) • Mining accounts for 61.7 % of FDI (2014) • 70% of total export value is from the mining sector Local procurement • Up to 95% of goods and services locally procured Mining contribution to national revenue by the mining industry are imported • 28% of total revenue comes from mining taxes (2014) • Government revenue from mining sector is equiv- alent to 4.0 % of GDP (2014) 5 2 MINING IN ZAMBIA – COUNTRY CONTEXT Two aspects of the Zambian mining environment are key The absence of policy continuity has been particularly to understanding today’s context of the mining invest- apparent concerning mining taxation. Since 1995, there ment and governance environment. One is the recent have been eight amendments to the Mineral Royalty Tax historic context of the sector’s ownership and manage- system, as well as imposition and revocation of three ment. The other is the overall national economic and Statutory Instruments related to financial requirements social development status. affecting the mining sector. These changes included a proposed (but eventually not enacted) windfall tax on The Zambian mining sector has undergone fundamental “excess” profits created by a rise in copper prices, and ownership transformation in recent decades, from being a proposal in late 2014 to increase royalty rates and nationalized in 1969 and re-privatized in the late 1990s. introduce a one-tier tax regime where expenses did not The period of state ownership and management had an appear to be taken into account. After the change was enduring impact on national and popular perceptions of announced (with little consultation within or beyond the role and performance of the sector, such as a commu- government), and implemented for a short period, nity’s expectations of mine-provided social services. government returned to a two-tier royalty and profit tax system in mid-2015 as mining companies struggled The Mines and Minerals Development Act 2008 revoked to remain profitable under the all-royalty system as the Minerals Development Agreements on which privati- copper price dropped. zation had been based. It established a legal framework based on international good practice, and strove to create It is this environment of policy flux and recrimination a favorable environment for foreign investment. Since among the main stakeholder groups – as well as falling then, FDI has risen steadily, notwithstanding price fluctu- commodity prices and investment interest – in which ations for major minerals including copper and cobalt. MInGov was undertaken in 2015. The private sector companies that purchased the In terms of national development, and despite the de-nationalized mines raised concerns that the complexity country’s overall strong economic management perfor- of the mining business was not well understood by the mance over the past decade, Zambia remains a country public or government. As a result of this mutual lack with low levels of human development and employment, of understanding, the mining sector and government significant poverty and increasing inequity. Mining plays have had a somewhat volatile relationship over the a disproportionately large role in the national economy; past decade. This period has seen a fluctuating copper efforts over the years to diversify the economy have had price, inadequate consultation between government limited impact. The mining sector, like elsewhere, has and industry (and within government), and changing limited direct impact on employment and its impact political priorities. on development depends largely on government’s ability to manage the revenue generated by the sector – which in Zambia is considerable in both absolute and relative terms. 6 ZAMBIA MINING INVESTMENT AND GOVERNANCE REVIEW 3 OVERVIEW of MInGov FINDINGS This section presents an overview of the results of the respect to governance, attractiveness for investment and Zambia MInGov. broader impact of the sector on national development.1 The dashboard presents the results of the question- 3.1 Introduction and Performance naire-based review against 36 topics each , each one of Summary which is represented by a cell in the matrix or, in the case of Mining Sector Importance, a bar. Results of perfor- Findings of the Zambia MInGov are summarized in the mance per topic (cell) are color coded according a scoring “dashboard” of Figure 2. The dashboard gives an overview key of Very Low to Very High (see Scoring Key, Figure 2). of performance of the mining sector in Zambia with 1 Results of the analysis of data derived from the questionnaire are summarized in Annex 1. This annex includes the score given the answer to each question, and the score for value chain stages, themes, topics and indicators; the relationship between these different categories is shown in Annex 1, Table 1. 7 3 OVERVIEW of MInGov FINDINGS Figure 2: Zambia Country Dashboard Extractive Industries Value Chain Theme Revenue Contracts, Licences Taxation and State Operations Distribution and Local Impact and Exploration Participation Management Policy, Rules for License Public Financial Clarity and Tax policy, Instruments Policies to Mitigate Allocation and Management Legislation and Harmonization of and State Owned Environmental and Geological Data Regulation, Including Regulation Sector Rules Enterprise Rules Social Impact Collection Revenue Sharing Accountability of Accountability Openness, Mining Taxation Human Rights, Processes, Compensation, Budget Transparency Transparency and and State Owned Employment Equity and Resettlement and Artisanal and Accountability, and Independence of Enterprise Financial and Environmental Inclusiveness and Smallscale Mining Public Integrity Licensing Process Management Transparency Voice Budget Community Institutional Mining Tax Cadastre, Geodata, Sector Management Implementation Consultation and Administration Capacity and License and Tenure and Intragovernmental and Macrofiscal Environmental and State Owned Effectiveness Management Coordination Management and Social Impact Enterprise Governance Effectiveness Management Cross Cutting Themes Diversity Business and Macro- National Skills and Economic Mining and Stability Investment economic Growth and Human Capital Human Health Environment Infrastructure of National Environment Stability Savings Availability Revenues Political Predictable Mining and Tax Expropriation Risk Political Stability Control of Corruption Environment Policy Sustainable Investment Promotion Development Planning Local Supplier Development Leveraging Infrastructure Development (Diversification) Mining Sector Importance 1.0 - 1.75 >1.75 - 2.50 >2.50 - 3.25 >3.25 - 4.0 Prospectivityand Potential Geological  Foreign DirectInvestmentin Mining  articipationin Mining State P Significanceof MiningRevenue of Mining  Budget Share  Revenues Employmentand EconomicShare of Mining Grey bars indicate the range of scores of indicators that support each value chain stage or theme. The represents the average of the indicators. Very low Low High Very High Not applicable or information not available Scoring Key 1.0 - 1.75 >1.75 - 2.50 >2.50 - 3.25 >3.25 - 4.0 N/A 8 ZAMBIA MINING INVESTMENT AND GOVERNANCE REVIEW Figure 3: Performance by Value Chain Stage and Theme A range of performance exists across the value chain stage and across themes. Value Chain Stage 1.0 - 1.75 >1.75 - 2.50 >2.50 - 3.25 >3.25 - 4.0 Contracts, Licences and Exploration Operations Taxation and State Participation Revenue Distribution and Management Local Impact Theme 1.0 - 1.75 >1.75 - 2.50 >2.50 - 3.25 >3.25 - 4.0 Policy, Legislation and Regulation Accountability and Inclusiveness Institutional Capacity and Effectiveness Economic Environment Political Environment Sustainable Development Notes: 1. Grey bars indicate the range of scores of indicators that support each value chain stage or theme. The represents the average of the indicators. 2. The scale for performance is: n Very low (1.0-1.75); n Low (>1.75-2.50); n High (>2.50-3.25); n Very High (>3.25-4.0). A higher score corresponds to better governance and capacity. 3. A list of indicators comprising the value chain stage and themes can be found in Table 1, Annex 1 3.2 Overview of “Value Chain” • Although themes A to C all fall in the “high” and “Theme” Performance category, theme “A”, Policies, Legislation and Regulation scores better than theme “B”, Account- This section provides an overview of performance across ability and Inclusiveness, and the actual or de the five value chain stages and the six cross-cutting facto situation as shown in theme “C”, Institutional themes.2 Subsequent sections present detailed results for Capacity and Effectiveness; and each value chain stage and theme. • Revenue Distribution and Management (value chain The performance of each value chain stage and theme are stage 4) and Sustainable Development (theme F) discussed in subsequent sections. However, three general score lowest; these entail considerable public policy comments on value chain stage and theme performance involvement and relate to issues removed from the are: immediate business of mining. • Taxation and State Participation is the only stage in the value chain (stage 3) that scores “very high”; all remaining topics are clustered in the “low” to “high” performance range, with no topic scoring “very low”; 2 Scores of questions, indicators, topics, value chain stages and themes are in Annex 1, the Data Compendium. 9 3 OVERVIEW of MInGov FINDINGS Figure 4: Minig Sector Importance Mining Sector Importance 1.0 - 1.75 >1.75 - 2.50 >2.50 - 3.25 >3.25 - 4.0 Prospectivityand Potential Geological  Foreign DirectInvestmentin Mining  articipationin Mining State P Significanceof MiningRevenue of Mining R Budget Share   evenues Employmentand EconomicShare of Mining Grey bars indicate the range of scores of indicators that support each value chain stage or theme. The represents the average of the indicators. 3.3 Mining Sector Importance As can be seen from Figure 4, mining is important in Zambia and is likely to continue to be so in the future. Mining Sector Importance (Figure 4, also represented in Zambia has a long history of mining and a large known the dashboard, Figure 2), the seventh theme, is composed resource base of copper, emeralds and other deposits of six indicators: Geological Prospectivity and Potential, and good potential for further discoveries given the high Foreign Direct Investment in Mining, State Participation degree of prospectivity. The mining sector is a major in Mining, Significance of Mining Revenue, Budget Share contributor to foreign direct investment and mining tax of Mining Revenues and Employment and Economic revenues contribute a significant portion of total govern- Share of Mining. Scores for these indicators, which are ment revenue. The sector is also a significant source based on primary and secondary data, indicate the of formal employment – both directly and indirectly, importance of the mining sector in a given economy, which is generally consistent with more mature from its geological potential to its impact on the economy mining economies. and measure the potential for mining led growth.3, 4 3 With respect to the topic State Participation in Mining, government participation in the mining industry is through a 77.7 per cent shareholding in ZCCM In- vestments Holdings Plc (ZCCM-IH), which has a 10-20 per cent shareholding in most major mining companies. Given the size of this shareholding, ZCCM-IH is treated in this MInGov review as a state-owned enterprise (SOE). There is no other SOE in the mining sector in Zambia. 4 Intervals for scoring performance are as in the dashboard, that is: Very low (1.0-1.75); Low (>1.75-2.50); High (>2.50-3.25); and Very High (>3.25-4.0). A higher score corresponds to better governance and capacity. 10 ZAMBIA MINING INVESTMENT AND GOVERNANCE REVIEW Table 1: Performance of the Contract, Licenses, and Exploration Stage Value Chain Stage 1. Contracts, Licenses and Exploration (2.86) Theme Topic Underlying Indicators Clarity of Rules for License Allocation, Conversion and Transfer (3.83) Rules for License Allocation Geological Data Collection Rules (4) Policy, Legislation and and Geological Data Collection Regulation (2.77) (3.71) Modern Mining Cadastre (4) License Approval and Review Timeframes (3) Openness, Transparency and Openness and Transparency of Licensing Process (2.99) Accountability and Independence of Licensing Inclusiveness (2.65) Process (1.99) Independence of Licensing Authority (1) Collecting Geological Information (2.83) State of Mapping and Geological Exploration (2.6) Mining Cadastre Effectiveness (3.13) Institutional Capacity and Cadastre, Geodata, License and Effectiveness (2.62) Tenure Management (2.88) Allocating Licenses Effectively (2.56) Transferability of Licenses (3.63) Managing Licenses Effectively (2.56) Note: The score for each theme is the average of scores of the five value chain stages in that theme (see Figure 2). The score for the value chain stage is the average of the three topics within that stage (which are shown in this figure). The score against the topic is the average of the scores of the underlying indicator scores; the indicator scores are the average of the scores of their underlying questions. The color coding is the same as in the matrix (Figure 2). Intervals for scoring performance are as follows: n Very low (1.0-1.75); n Low (>1.75-2.50); n High (>2.50-3.25); and n Very high (>3.25-4.0), where a higher score corresponds to better governance and capacity. 3.4 Performance from a Value 3.4.1 Contracts, Licenses and Exploration Chain Perspective Contracts, Licenses and Exploration, the first of the five This section presents findings against the five stages value chain stages, is the second strongest performing of of the extractive industry value chain. Scores reflect the five stages. Within this stage of the value chain, Rules mining governance performance and the attrac- for License Allocation and Geological Data Collection – tiveness of the sector to investment. The five value that is, the de jure situation – is the highest scoring topic. chain stages are assessed against three themes: Policy, It is also the highest scoring of all 15 topics that apply to Legislation and Regulation; Accountability and Inclu- value chain stages. siveness; and Institutional Capacity and Effectiveness. The other three cross-cutting themes are discussed in In contrast to the strong de jure situation, the accounta- Section, 3.5. bility and inclusiveness of the licensing procedure is less strong. This is caused by issues with the openness, transpar- ency and independence of the licensing process, shortfalls 5 Government notes that an Act was subsequently passed that improves the independence of the licensing authority. 11 3 OVERVIEW of MInGov FINDINGS in mining contracts being made publically available and, being serviced by active mapping and limited especially, a lack of independence of the license awarding recent geologic mapping, and because the develop- authority from the mining ministry.5 ment of geological information, including geological mapping and databases, is not strong (perhaps The actual (de facto) performance of cadastre, geodata, contributed to by the reported low staffing and license and tenure management is also not as strong as the resources of the Geological Survey). de jure situation. This rating is dragged down in particular by weaknesses in three areas: 3.4.2 Operations • Interview responses on allocating and managing licenses raised concerns on the use of discretionary Operations is the second weakest performing of the power, whether procedures are followed in practice, five value chain stages. Its performance is particularly the application of procedural timeframes, the appli- weakened by issues affecting Sector Management and cation of sanctions on non-performing companies, Intragovernmental Coordination, though performance and poor resourcing of the unit managing of the topic Clarity and Harmonization of Sector Rules – license monitoring; measuring the de jure situation - is also rated “low.” • Keeping the mining cadastre up to date; and The inter-ministerial arrangements for managing overlaps in authority covering natural resource issues affected • State of mapping and geological exploration falls by mining rights, timeframes for extensions of mining short due to a low proportion of licensed ground operations, and laws and regulations for dispute settling Table 2: Performance of the Operations Stage Value Chain Stage 2. Operations (2.36) Theme Topic Underlying Indicators Clarity of Legislation, Rules and Timeframes (2.5) Policy, Legislation and Clarity and Harmonization of Regulation (2.77) Sector Rules (2.3) Harmonization of Legislation and Government Coordination (1.89) Provisions for Artisanal and Smallscale Mining (2.5) Accountability of Processes, Access to Land, Compensation and Resettlement (2.05) Accountability and Compensation, Resettlement Inclusiveness (2.65) and Artisanal and Smallscale Access and Accountability of Mining Legislation and Processes Mining Voice (2.81) (3.14) Artisanal and Smallscale Mining Voice Representation (3.25) Timeframes for Approvals (..) Sector Management Institutional Capacity and and Intragovernmental Intragovernmental Coordination (1.47) Effectiveness (2.62) Coordination (1.98) Support to Artisanal and Smallscale Mining (2.5) Note: The score for each theme is the average of scores of the five value chain stages in that theme (see Figure 2). The score for the value chain stage is the average of the three topics within that stage (which are shown in this figure). The score against the topic is the average of the scores of the underlying indicator scores; the indicator scores are the average of the scores of their underlying questions. The color coding is the same as in the matrix (Figure 2). Intervals for scoring performance are as follows: n Very low (1.0-1.75); n Low (>1.75-2.50); n High (>2.50-3.25); and n Very high (>3.25-4.0), where a higher score corresponds to better governance and capacity. 12 ZAMBIA MINING INVESTMENT AND GOVERNANCE REVIEW between ASM and other miners are not well developed in The Operations stage of the value chain includes more Zambia. Harmonization of Legislation and Government than half of the questions in the review that directly Coordination scores barely above a “very low” level. concern artisanal and small-scale mining. An overview of ASM findings is in Section 3.6. Given the low level of performance of de jure elements, it is not surprising that the corresponding de facto topic, Sector Management and Intragovernmental Coordina- 3.4.3 Taxation and State Participation tion, also performs poorly. Support to ASM performs relatively well but overall topic performance is negatively Taxation and State Participation scores in the “very high affected by a “very low” rating for Intragovernmental range”, and is the highest performing value chain stage. Coordination. Numerous challenges affect sector management and coordination within government. The scores of topics at this value chain stage benefit from There are virtually no effective devices for coordina- the high ratings given to the rules, financial management tion over issues that affect the mining sector, which by and governance of ZCCM-IH. As noted above (Section nature is multi-sectoral with activities and impacts that 3.3), ZCCM-IH Plc is treated as a state owned enterprise affect a range of government agencies. Inevitably, conflict (and the only one). “Very high” ratings for state owned between ministries about their roles in sector govern- enterprise (SOE) elements are in large part driven by that ance is not uncommon. For example, there was little fact that the publically listed ZCCM-IH operates within coordination between the mining and finance ministries a framework of international governance standards and in 2014-2015 concerning revisions in the tax code that accountability to its shareholders and the stock markets had deep ramifications for the mining sector. And while where it is registered. the Zambia Environmental Management Authority, ZEMA, is on an inter-ministerial committee that decides In addition to the impact of high scores from SOE-re- on mining licenses, it has limited say at the exploration lated indicators, though, this value chain stage rates stage, resulting in one case in mining exploration being well because tax policies and instruments (the de jure approved in a protected area. situation), accountability and inclusiveness, and institu- Table 3: Performance of the Taxation and State Participation Stage Value Chain Stage 3. Taxation and State Participation (3.39) Theme Topic Underlying Indicators Tax Policy and Instruments (3) Tax policy, Instruments and Policy, Legislation and State Owned Enterprise Rules Rules for Auditing, Base Erosion and Profit Shifting (3) Regulation (2.77) (3.33) State Owned Enterprise Governance Rules (4) Mining Taxation and State Accountability of Mining Taxation (2.81) Accountability and Owned Enterprise Financial Inclusiveness (2.65) Management (3.41) State-Owned Enterprise Financial Management (4) Mining Tax Administration Mining Tax Administration (3.18) Institutional Capacity and and State Owned Enterprise Effectiveness (2.62) Governance (3.44) State-Owned Enterprise Governance (3.7) Note: The score for each theme is the average of scores of the five value chain stages in that theme (see Figure 2). The score for the value chain stage is the average of the three topics within that stage (which are shown in this figure). The score against the topic is the average of the scores of the underlying indicator scores; the indicator scores are the average of the scores of their underlying questions. The color coding is the same as in the matrix (Figure 2). Intervals for scoring performance are as follows: n Very low (1.0-1.75); n Low (>1.75-2.50); n High (>2.50-3.25); and n Very high (>3.25-4.0), where a higher score corresponds to better governance and capacity. 13 3 OVERVIEW of MInGov FINDINGS tional capacity and effectiveness (de facto) all perform in is required to ensure that mining sector revenue contrib- the “high” range. Tax policies and instruments and rules utes to national growth, and to help ensure support of the for auditing, base erosion and profit shifting are generally sector by all stakeholders. strong. The tax code is clear and readily available. Tax, cost and physical audits are undertaken with the major The strongest performing topic falls under the Institu- mining companies. Transfer pricing, advanced pricing tional Capacity and Effectiveness theme, which suggests and thin capitalization are each increasingly subject to that the challenge is more in establishing effective policies developed by the Zambia Revenue Authority policies, laws, accountability and inclusiveness than in (ZRA). Tax policy affecting the mining sector continues to implementation. evolve. Efforts have been made to ensure that government has an adequate minimal revenue stream in all produc- While there is a multi-year perspective in fiscal planning tion periods but this has so far borne limited results and comprehensive budget documentation, which are in a relatively turbulent mining taxation and market both good practice, a key short-coming is the absence environment. Finally, it is noteworthy that Mining Tax of a legislated requirement for sharing resource revenue Administration scores higher at the de facto level than at between central and sub-national governments. In the de jure level: this may reflect the impact of the ZRA addition, experience is mixed with public investment once laws and regulations have been established. integrity concerning large-scale public investment. While there is an established process for screening projects for consistency with government priorities, there is 3.4.4 Revenue Distribution and little oversight external to the implementing ministry. Management Other concerns are that cost benefit analysis is unevenly followed, ministries do not have master procurement Revenue Distribution and Management is the poorest plans, cost overruns are common, and independent performing of any value chain stage or theme. This is audits are not done of completed public investments. significant given that sound public financial management Table 4: Performance of the Revenue Distribution and Management Stage Value Chain Stage 4. Revenue Distribution and Management (2.04) Theme Topic Underlying Indicators Public Financial Management Public Financial Management and Revenue Sharing (2.5) Policy, Legislation and Regulation, Including Revenue Regulation (2.77) Sharing (1.75) Macrofiscal Management Rules and Stabilization (1) Budget Transparency and Budget Transparency and Accountability (1) Accountability and Accountability, and Public Inclusiveness (2.65) Integrity (1.75) Public Investment Integrity (2.5) Budget Implementation (2.86) Budget Implementation and Institutional Capacity and Large Scale Public Investment (2.5) Macrofiscal Management Effectiveness (2.62) Effectiveness (2.62) Macrofiscal Management and Revenue Stabilization Effectiveness (2.5) Note: The score for each theme is the average of scores of the five value chain stages in that theme (see Figure 2). The score for the value chain stage is the average of the three topics within that stage (which are shown in this figure). The score against the topic is the average of the scores of the underlying indicator scores; the indicator scores are the average of the scores of their underlying questions. The color coding is the same as in the matrix (Figure 2). Intervals for scoring performance are as follows: n Very low (1.0-1.75); n Low (>1.75-2.50); n High (>2.50-3.25); and n Very high (>3.25-4.0), where a higher score corresponds to better governance and capacity. 14 ZAMBIA MINING INVESTMENT AND GOVERNANCE REVIEW Table 5: Performance of the Local Impact Stage Value Chain Stage 5. Local Impact (2.75) Theme Topic Underlying Indicators Community Impact, Consultation and Corporate Social Responsibility (1.83) Policies to Mitigate Policy, Legislation and Environmental and Social Regulation (2.77) Rules for Environmental and Social Impact Management (2.5) Impact (2.78) Rules for Financial Sureties for Decommissioning (4) Human Rights, Employment Human Rights and Employment Equity (2.56) Accountability and Equity and Environmental Inclusiveness (2.65) Transparency (3.28) Environmental and Social Impact Transparency (4) Impact and Community Consultation (2.4) Community Consultation and Institutional Capacity and Environmental and Social Environmental and Social Impact Management Effectiveness (1.64) Effectiveness (2.62) Impact Management (2.18) Effectiveness of Sureties for Decommissioning (2.5) Note: The score for each theme is the average of scores of the five value chain stages in that theme (see Figure 2). The score for the value chain stage is the average of the three topics within that stage (which are shown in this figure). The score against the topic is the average of the scores of the underlying indicator scores; the indicator scores are the average of the scores of their underlying questions. The color coding is the same as in the matrix (Figure 2). Intervals for scoring performance are as follows: n Very low (1.0-1.75); n Low (>1.75-2.50); n High (>2.50-3.25); and n Very high (>3.25-4.0), where a higher score corresponds to better governance and capacity. 3.4.5 Local Impact combination of 1997 regulations linked to the previous act, and guidelines approved by the ZEMA Board but The Local Impact value chain stage covers the environ- which do not have a statutory basis. Another challenge mental and social management of the impact of mining, to local impact is that the informed consultation as including consultation processes and human rights required under the current law is difficult to achieve in issues.6 It scores in the “high” range, with the strongest many situations, and particularly so in mining-affected performance from the topic, Human Rights, Employ- communities. ment Equity and Environmental Transparency. Procedures in effect allow an Environmental and Social A main challenge facing the Local Impact stage is the Impact Assessment (ESIA) to be prepared once an gulf between policies, legislation and regulation, the de exploration license has been issued but prior to the jure situation, and actual performance. award of a mining license. An ESIA system is in place. However, its effectiveness can be constrained by a This situation is most apparent in the challenge facing the range of factors. For example: (i) biodiversity issues are management of the environmental and social impacts included in the ESIA/ESMMP rather than being specif- of mining where that the 2011 environmental law is ically addressed in a separate document; (ii) ESIAs are not yet fully covered by regulation. A 2013 regulation primarily handled by ZEMA with limited input from covers general environmental issues (such as chemicals, other ministries; (iii) environmental and social issues hazardous waste, air and ozone) but the strategic associated with artisanal and small scale mining are environmental assessment aspects of the law – which are not fully addressed; and (iv) ZEMA has inadequate focused on community-level organization and impacts resources to monitor ESIA preparation and implemen- – have yet to be regulated: they are managed through tation. Resource constraints also mean that ZEMA is 15 3 OVERVIEW of MInGov FINDINGS Table 6: Economic Environment Performance Cross-Cutting Theme Topic (and indicator) Diversity Skills and Business and Macro- Economic Mining and Stability National Human Investment economic Human Health Environment Infrastructure of National Growth and Capital Environment Stability (1) (2.36) (2) Revenues Savings (4) Availability (2.78) (2.5) (1.75) (2.5) Note: The score for the cross-cutting theme is the average of the scores of the underlying topics (which are in effect indicators since the topics for cross-cutting themes do not have indicators). The topic score is the average of the scores of questions that comprise the topic. The color coding is the same as in the matrix (Figure 2). Intervals for scoring performance are as follows: n Very low (1.0-1.75); n Low (>1.75-2.50); n High (>2.50-3.25); and n Very high (>3.25-4.0), where a higher score corresponds to better governance and capacity. largely unable to conduct field and even incisive desk of this theme is at the upper end of the “low” range but reviews of mining license applications, implementa- performance by topic is highly variable. tion of license conditions or environmental and social regulations. The lowest scoring topic rating, Human Health, is due to Zambia scoring in the lowest 25 percent of comparator Human rights and employment equity has good countries for life expectancy, causes of death and HIV practices in the existence of an independent human prevalence. rights commission (though it faces staffing and budget constraints) and government rules that promote The rating for the diversity and stability of national employment equity. Main deficiencies include that revenues measures the variation of domestic revenues in government is not a signatory to Voluntary Princi- real terms over five years. The high rate of variability is ples on Security and Human Rights (VPSHR), and the likely to continue given the on-going slump in the mining fact that companies are not required to carry out due sector (which accounts for some 28 per cent of national diligence as part of the licencing procedure. revenue), and as such is likely to exacerbate the weak macroeconomic outlook for Zambia. 3.5 Performance of Cross-cutting National growth and savings scores well as the two data Themes points on which it is based – five-year cumulative GDP growth and the five-year adjusted net savings – both score Performance of the cross-cutting themes is summa- in the top 75 percent range for secondary data (i.e., above rized in the matrix (Figure 2).6 A more detailed review is 75 percent). As this topic reflects 5-year performance, presented below. changes in scoring are subject to a lag and the topic may not perform as well in coming years. 3.5.1 Economic Environment The general business and investment environment topic reflects a ranking similar to Zambia’s rating in the 2016 The cross-cutting theme of Economic Environment Doing Business survey (97th globally and 5th among 15 covers elements relevant to investment in the mining SADC countries); that is, a rating in the mid-range. This sector and the national economy. Overall performance is to be expected as half t he data sources for this question 6 Information on cross-cutting themes is collected from a similar range of primary, secondary and in-country interview sources as other themes. However, given the nature of information required and available, secondary sources are more significant to cross-cutting themes than to other themes (see Annex 2, Table 1). 16 ZAMBIA MINING INVESTMENT AND GOVERNANCE REVIEW Table 7: Political Environment Performance Cross-Cutting Theme Topic (and indicator) Political Environment Expropriation Risk Political Stability Predictable Mining Control of Corruption (2.67) (3.33) (3.33) and Tax Policy (1) (3) Note: The score for the cross-cutting theme is the average of the scores of the underlying topics (which are in effect indicators since the topics for cross-cutting themes do not have indicators). The topic score is the average of the scores of questions that comprise the topic. The color coding is the same as in the matrix (Figure 2). Intervals for scoring performance are as follows: n Very low (1.0-1.75); n Low (>1.75-2.50); n High (>2.50-3.25); and n Very high (>3.25-4.0), where a higher score corresponds to better governance and capacity. are from Doing Business. The secondary data on which topic) gives Zambia a “political stability” rating equiva- this topic score is based show poor performance against lent to a “very high” score (4). enforcing contracts, dealing with construction permits and the effectiveness of the civil law system. Improve- The “very low” score for Predictable Mining and Tax ment in these and other areas of the general business and Policy reflects frequent changes in the main features investment environment would benefit the mining sector. of the mining fiscal regime, including ad hoc changes. This was particularly topical in 2015 given government’s proposed adjustment to the royalty and tax regime. The 3.5.2 Political Environment out-cry amongst miners about these proposed taxation changes, aside from the changes themselves, focused Political Environment is the second highest scoring on the fact that there had been little consultation with theme, and is the theme identified by stakeholders the industry before the changes were proposed, and as having the most topics that are priority to a sound subsequent “consultation” was seen as having minimal mining investment and governance priority (see impact. Section 5 below). Zambia is a politically stable and safe country: the 3.5.3 Sustainable Development country has never been at war and elections are generally free and fair. The World Economic Forum Sustainable Development, the poorest performing of all Global Competitiveness Index (the data source for this themes, covers four topics that are crucial to maximize Table 8: Sustainable Development Performance Cross-Cutting Theme Topic (and indicator) Investment Sustainable Development Local Supplier Leveraging Promotion Development (2.16) Planning (2.33) Development (1.74) Infrastructure (2.06) (Diversification) (2.5) Note: The score for the cross-cutting theme is the average of the scores of the underlying topics (which are in effect indicators since the topics for cross-cutting themes do not have indicators). The topic score is the average of the scores of questions that comprise the topic. The color coding is the same as in the matrix (Figure 2). Intervals for scoring performance are as follows: n Very low (1.0-1.75); n Low (>1.75-2.50); n High (>2.50-3.25); and n Very high (>3.25-4.0), where a higher score corresponds to better governance and capacity. 17 3 OVERVIEW of MInGov FINDINGS the positive impact of mining for national economic 3.6 Special Topic: Artisanal and and social development. However, handling these Small-scale Mining topics effectively is challenging as doing so can entail fundamental changes in how government plans and Artisanal and Small-scale Mining (ASM) attracts implements development. attention due to its ability to create employment and to impact positively on the poor, the way in which it Development Planning prioritizes integrated planning affects the environment, how it interacts with formal across the national economy, spatial development mining activities, and its treatment in policy, law and approaches that focus on mining (and other growth regulation. The 15 questions on ASM and their scores industries and growth poles), and a high level of consul- are in Table 13. tation; none of these approaches is well established in Zambia. ASM performance is similar to other key features of the mining sector in Zambia in the sense that there is Local Supplier Development is the development, imple- a generally appropriate policy, legislative and regula- mentation and monitoring of local procurement policy tory framework is in place but implementation of this and regulation, plus a focus on local employment; for framework is wanting. a mining industry as old as that of Zambia, and given the publicity given by all stakeholders to the impor- An important achievement is that ASM is recognized tance of local content and local supplier development, in the mining law and such miners can operate legally it is surprising that a national policy does not exist.7 under defined regulations. There are also instances of The absence of such a policy or other relevant govern- formal miners and ASM operating in adjacent areas ment-led programs is the reason that this topic is one of without conflict. only three with a “very low” performance rating. Beyond these achievements, however, artisanal and Investment Promotion (Diversification) is a long-es- small-scale miners are largely left to operate without tablished national goal. However, the low score for this government monitoring or support. There is no govern- topic reflects more the priority given the issue in policy mental agency dedicated to ASM. A number of private is not reflected in actual progress in this area. associations claim to represent the interests of ASM but overall the miners have no effective support for skill Leveraging Infrastructure involves the use of private or development, for conflict resolution in dealing with publically funded infrastructure by the mining industry the formal mining sector, other stakeholders or among and others. Such infrastructure could be for transport, themselves, or for their economic and social develop- power or water supply. There is little development of ment needs. such opportunities, and indeed some participants in the review cited examples of such leveraging not being Areas seen in review results concerning ASM that encouraged by government and state owned utilities. require attention include skills development support, dispute resolution and environmental impact. The creation of a dedicated unit within government focused on ASM could help ensure improved economic and social returns from ASM, a less negative environmental impact, fewer disputes within the sector, and improved tax returns. 7 Another significant lacuna is the absence of a national policy and guideline for corporate social responsibility investment by the mining (or any other) sector. 18 19 Figure 5: Performance of the Artisanal and Small-scale Mining Sector 1.0 - 1.75 >1.75 - 2.50 >2.50 - 3.25 >3.25 - 4.0 To what extent is there a regulation in place that allows the formalization of artisanal and small-scale miners? (76) To what extent is artisanal and small-scale mining legally recognized in the mining law or Clarity and Harmonization of Sector regulations? (77) Rules To what extent do the laws and regulations allow for artisanal and small-scale and industrial mining activities to coexist? (78) To what extent are there detailed laws and regulations to settle disputes between ASM and other mining activities? (79) Is there a non-state association that represents artisanal and small-scale miners? (89) Accountability of Processes, Compensation, Resettlement and ASM Voice To what extent do artisanal and small-scale miner associations participate in the monitoring, advocacy and enforcement of their property rights? (90) ZAMBIA MINING INVESTMENT AND GOVERNANCE REVIEW Is there a dedicated unit within the Ministry dealing with artisanal and small scale mining? (97) To what extent is support provided by government to artisanal and small scale miners concerning technical or business skills? (98) To what extent is the government effectively using a dispute resolution system dedicated to ASM Sector Management and to tackle disputes between artisanal and small scale mining and other mining activities? (99) Intragovernment Coordination In practice, are there instances of coexistence of ASM and industrial mining activities? (100) To what extent are artisanal and small-scale miners legally allowed to operate? (101) To what extent is artisanal and small-scale mining taking place under formalized procedures? (102) Does the government have a simplified tax collection system for ASM? (111) Tax Policies and Instruments, and State In the law and regulations, is there a simplified environmental permit or impact assessment Owned Enterprise Rules for artisanal and small-scale mining? (189) To what extent is the government monitoring compliance with environmental requirements for artisanal and small-scale miners? (220) 4 STAKEHOLDER PRIORITIES 4 STAKEHOLDER PRIORITIES Stakeholders who participated in in-country inter- • Similarly, the de jure topic Rules for License Alloca- views were asked to indicate topics from among those tion and Geological Data Collection is a shared on the matrix that are priorities, in their view, for sound priority of all stakeholder groups. However, the governance of the mining sector in Zambia, including for de facto Cadastre, Geodata, License and Tenure attracting investment to the sector and to facilitate the Management topic is considered a top priority only sector’s development impact. Stakeholders were requested by government and industry, which suggests that to identify their top five priorities. CSOs are more focused on policy than implemen- tation in this area. Rules for License Allocation and The results of this prioritization are shown below, for all Geological Data Collection is the topic assigned stakeholder groups combined (Figure 7). Similar figures highest priority by stakeholders from among the15 for three stakeholder groups (government, mining topics that apply to value chain stages; industry and civil society) are in Annex 1, Figures 4-6. The figure shows the importance that stakeholders attach to • Openness, Transparency and Independence of review topics, the larger the size of a topic “cell”, the more Licensing Process is another high priority for all important it is regarded for sound sector governance and stakeholder groups, which highlights a perceived investment; the color key is used throughout this report lack of independence of the licensing authorities; and is explained in Figure 2.8 • Government and industry stakeholders also give Points that stand out from stakeholder priorities at a value priority to Clarity and Harmonization of Sector chain stage and theme level include: Rules, highlighting perceived inconsistencies on regulation monitoring mining operations and which • Taxation, especially Tax Policy, Instruments and may hamper policy implementation; State Owned Enterprise Rules, is a top priority for all stakeholder groups, so highlighting the interest • CSOs give priority to the legislation and accounta- in the revenue component of mining rather than its bility topics of the Local Impact value chain stage, so broader economic impact; reflecting a focus on environmental issues and labor rights; 8 Stakeholders indicate their priority topics from a list of the 30 topics in the matrix. Weighted scores (see, Methodology document) are grouped within their respective value chain stage or cross-cutting theme, the size of each topic representing its weighted value: the larger the topic and theme/value chain is portrayed, the greater the priority assigned to it by stakeholders. The color of individual topics is as it appears on the matrix which indicates the performance of topics (and not, for example, the performance of them from the stakeholder perspective). 20 ZAMBIA MINING INVESTMENT AND GOVERNANCE REVIEW • Industry and CSO stakeholders emphasize more • Despite being the lowest performing value chain strongly than government that Mining Taxation and stage, Revenue Distribution and Management is State Owned Enterprise Financial Management, not a major priority for any stakeholder group, with highlighting that despite the strong performance the exception of government concerns over perfor- (a “very high” rating) of the topic, companies mance on Budget Implementation and Macrofiscal continue to be concerned about is; and Management Effectiveness; this lack of stakeholder priority may explain why legislation and accounta- bility topics in this stage are rated as “very low”. 21 4 STAKEHOLDER PRIORITIES Figure 6: Overlap between Stakeholder-selected Priorities Intersection of No. of Shared Topics (Shared Priorities) Stakeholders Priorities n Rules for License Allocation and Geological Data Collection CSOs n Openness, Transparency and Independence of Licensing Process Government 5 n Tax policy, Instruments and State Owned Enterprise Rules Industry n Mining Taxation and State Owned Enterprise Financial Management n Sector Management and Intragovernmental Coordination n Political Stability CSOs 3 n Policies to Mitigate Environmental and Social Impact Government n Human Rights, Employment Equity and Environmental Transparency n Cadastre, Geodata, License and Tenure Management Government n Macroeconomic Stability 4 Industry n Skills and Human Capital Availability n Clarity and Harmonization of Sector Rules n Accountability of Processes, Compensation, Resettlement and Artisanal and CSOs 2 Smallscale Mining Voice Industry n Mining Tax Administration and State Owned Enterprise Governance n Local Supplier Development Government 3 n Predictable Mining and Tax Policy n Budget Implementation and Macrofiscal Management Effectiveness n National Growth and Savings CSOs 2 n Budget Transparency and Accountability, and Public Integrity n Development Planning Industry 2 n Business and Investment Environment Industry Government 4 2 3 5 2 3 2 CSOs 22 23 Figure 7: Stakeholder-selected Priorities (All Stakeholders) Taxation and State Participation Contracts, Licenses and Exploration Political Environment Mining Tax Administration and State Owned Enterprise Governance Openness, Transparency and Independence of Licensing Process Political Stability Cadastre, Geodata, ZAMBIA MINING INVESTMENT AND GOVERNANCE REVIEW Rules for License Allocation and Predictable License and Tenure Control of Expropriation Mining and Tax Geographical Data Collection Management Corruption Risk Policy Tax policy, Instruments and State Owned Mining Taxation and State Owned Enterprise Financial Management Enterprise Rules Diversity Revenue Distribution Economic Environment and Stability Macro- and Management of National Human economic Revenues Health Stability Budget Transparency and Local Impact Accountability, and Public Integrity Mining Infrastructure Budget Public Financial Skills and Implementation Management Human Capital and Macrofiscal Regulation, In- Availability Business and Investment Management cluding Revenue National Growth and Savings Environment Effectiveness Sharing Operations Sustainable Development Development Leveraging Accountability of Processes, Planning Infrastructure Compensation, Resettlement Human Rights, Employment Equity and and Artisanal and Small-scale Environmental Transparency Mining Voice Investment Policies to Mitigate Sector Management and Intragovernmental Promotion Local Supplier Community Consultation and Environmental Environmental and Social Impact Coordination Clarity and Harmonization of Sector Rules (Diversification) Development and Social Impact Management 5 CONCLUSIONS AND ACTION POINTS 5 CONCLUSIONS AND ACTION POINTS 5.1 Conclusions • National development plans not integrating the mining sector, and the absence of spatial The mining sector in Zambia has significant national development planning that could, for example, link importance and makes an important contribution to the infrastructure development with mineral areas; national economy and development resources. However, sector development and investment are constrained by • Parliament’s limited capacity for oversight of the a bottlenecks and areas of weak performance that need mining sector; attention to strengthen the mining governance and investment environment, as well as the impact of the • The absence of a “whole of government” approach sector’s reform and growth potential. These include: to mineral development, including in relation to environmental governance; • Insufficient resources are allocated to attracting new investment (such as for the provision of adequate • Weak and inconsistently applied public and geological information); inter-ministerial consultation mechanisms; • Mineral policy is not well integrated into the national • A tendency for government to rely on administra- development framework – which would help ensure tive orders rather than on legislative development mining’s contribution to sustainable development and parliamentary review processes; and broader support for the mining sector; • Clarification of the role and mandate of the • Mineral revenues are not shared with the local Ministerial Advisory Committee; and governments or communities where minerals are extracted, so undermining their social and physical • Development of the capacity of the mining development and indeed the social license of miners cadastre. and government; • The absence of a formal benefit sharing framework, 5.2 Action points as a result of which company contributions to social development are ad hoc and inconsistent, and their Areas for action by government and other stakeholders are relationship with national development efforts apparent from this review. Based on the views of the main unclear; stakeholder groups – government, industry and civil society – the review provides a shared view of the status mining • A lack of policy and realistic expectations for local governance. Discussion about the sector within Zambia content within the mining industry; sometimes appears to be based on entrenched views. 24 ZAMBIA MINING INVESTMENT AND GOVERNANCE REVIEW It is up to the stakeholders in the Zambian mining Regarding the mining sector as an integral and driving economy to decide how they might follow-up on this force in development planning and implementation; and Mining Governance Review. To help initiate this process, more than 20 recommended follow-up actions are identi- • The establishment of a small cell in government to fied below in Figure 8. Amongst these, some easy wins centralize action on artisanal and small-scale mining and more challenging options stand out. could have benefit for the mining sector at large, for ASM miners and for environmental and social Six “low hanging fruit” are: impacts of mining. • Committing to better policy stability for the Three more challenging options – which remain funda- mining sector, particularly in the tax regime, and mental to the good governance of the mining sector and integrating the mineral sector into national develop- its contribution to national development – are: ment plans; • Ensuring communication and coordination among • Instituting mechanisms to ensure meaningful ministries that can affect the mining sector; consultation among all stakeholders on all signifi- cant local, social and environmental issues, mining • Improving public financial management, including procedures, and fiscal issues and other policy budget management and public investment affecting the mining sector; programs; and • Developing (and subsequently implementing) local • Managing government discretion in mining licensing content, local employment and local development decisions, and make what discretion there is trans- policies for the mining sector; parent and accountable. • Adequately resourcing sector regulatory and monitoring agencies, particularly ZEMA and geodata services; Figure 8: Recommended Follow-up Points Contracts, Licenses and Exploration Value Chain Stage • Improved institutional performance. Quick wins include (a) keeping the mining cadastre up to date, (b) facil- itating public access to useful geological data, and (c) making mining contracts and license details readily accessible. • More efficient exploration rights. Address the reasons that exploration rights appear to be more open to dispute and uncertainty in comparison to mining licenses. • Acceptable levels of transparent government discretion. Minimize the application of discretion in license award and management, and apply it consistently and transparently. Operations Value Chain Stage • Improve intra-governmental coordination. Clarify inter-ministerial arrangements that affect mining, and identify and implement incentives to address that the multi-sectoral nature of mining sector development and investment. 25 5 CONCLUSIONS AND ACTION POINTS • Effective support for ASM. Establish a body (with participation of all relevant stakeholders) to develop and implement a strategy to address the economic, social and environmental concerns and impacts of ASM. • Timeframes and processes. Ensure that timeframes and processes for all required review and approval steps affecting mine operations are established, monitored and enforced. Taxation and State Participation Value Chain Stage • Refinement of some tax policies. Finalize modification of tax policies on transfer pricing and related party transactions. • Minimum revenue streams. Review fiscal policy to ensure government receives an adequate minimum revenue stream at all stages of mine production. Revenue Distribution and Management Value Chain Stage • Fiscal discipline and rules. Strengthen steps needed for fiscal discipline and fiscal rules for savings and expenditure of minerals revenues (supported by adequate cost-benefit analysis). • Reliable revenue sharing. Define and implement a system of sharing resource revenue between central and sub-national governments. • Public expenditure and financial accountability. Apply continued attention to improving performance against PEFA indicators. • Efficient public investment. Address the policy and practical constraints that appear to weaken the effec- tiveness and efficiency of the public investment program. Local Impact Value Chain Stage • An effective ZEMA. Ensure that ZEMA is provided with sufficient resources, support and accountability to enable it to perform its foreseen and required role with respect to the mining (and other sectors). • Effective addressing of environmental and social impacts. Review the effectiveness of procedures meant to address mining environmental and social impacts. • Attention to human rights and employment equity. Assess how to better implement human rights and employment equity relevant to the mining sector, and develop and implement an action plan to this end. • Timely, comprehensive and meaningful consultation. Continue efforts to ensure timely, comprehensive and meaningful consultations on the environmental and social impacts of all scales of mining. Cross-Cutting Themes • MInGov and Doing Business link with investment environment. Use MInGov and Doing Business findings to monitor the business and investment environment from the perspective of investors across the value chain. 26 ZAMBIA MINING INVESTMENT AND GOVERNANCE REVIEW • Mining key to development planning. Review the place of mining in the national development plan and identify steps to attract investment to the sector and to maximize its contribution to economic and social development. • Missing: national local supplier development policy. Develop and implement a national policy on local supplier development for the mining sector that covers employment, skills development, procurement, investment and social programs. • Spatial planning perspective. Introduce spatial planning concepts into the national development plan and sector plans, and use spatial planning to facilitate infrastructure support for the mining sector. • Private-public partnerships for infrastructure. Overcome constraints to public/private investment in the provision of infrastructure, especially that of value to the mining sector and communities around mining activities. 27 ANNEX 1 THE ZAMBIA MInGov DATA COMPENDIUM A ANNEX 1 THE ZAMBIA MInGov DATA COMPENDIUM Annex Tables Table 1: Themes, Value Chain Stage, Topics, Indicators and Information Source ������ 29 Table 2: Theme Scores . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Table 3: Value Chain Stage Scores . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Table 4: Topic Score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Table 5: Indicator Scores . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Table 6: Performance of the Artisanal and Small-scale Mining Sector . . . . . . . . . . . . 42 Table 7: Question Scores . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Annex Figures Figure 1: Topic Scores . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Figure 2: Indicator Scores . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Figure 3: Stakeholder prioritisation, Government . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 Figure 4: Stakeholder prioritisation, CSO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Figure 5: Stakeholder prioritisation, Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 28 29 Table 1: Themes, Value Chain Stage, Topics, Indicators and Information Source INFORMATION SOURCE : 314 Questions VALUE CHAIN STAGE THEME (7) TOPIC (36) INDICATOR (64) (5) Secondary In-country Primary (132) (61) Interview (121) A1.1 Clarity of rules for license allocation, conversion and transfer 10 0 0 A1, Rules for license al- A1.2 Geological data collection rules 1 0 0 A. Policy, Legislation location and geological and Regulation data collection A1.3 Modern mining cadastre 1 0 0 A1.4 License approval and review timeframes 4 0 0 B1, Openness, B1.1, Openness and transparency of licensing process 5 0 3 B. Accountability and transparency and Inclusiveness independence of 1. Contracts, Licenses licensing process B1.2 Independence of licensing authority 1 1 ZAMBIA MINING INVESTMENT AND GOVERNANCE REVIEW and Exploration C1.1, Collecting geological information 2 0 7 C1.2, State of mapping and geological exploration 4 1 1 C1, Cadastre, geodata, C1.3, Mining cadastre effectiveness 2 0 8 C. Institutional Capacity license and tenure and Effectiveness C1.4, Allocating licenses effectively 0 0 7 management C1.5, Transferability of licenses 0 0 2 C1.6, Managing licenses effectively 0 0 9 A2.1 Clarity of legislation, rules and timeframes 3 0 0 A. Policy, Legislation A2, Clarity and harmoni- A2.2 Harmonization of legislation and government coordination 3 0 0 and Regulation zation of sector rules A2.3 Provisions for artisanal and smallscale mining 4 0 0 2. Operations B2, Accountability of B2.1, Access to land, compensation and resettlement 3 0 2 processes, compensa- B. Accountability and tion resettlement and B2.2 Access and accountability of mining legislation and processes 2 0 2 Inclusiveness artisanal and small scale mining voice B2.3 Artisanal and small-scale mining voice representation 1 0 1 INFORMATION SOURCE : 314 Questions VALUE CHAIN STAGE THEME (7) TOPIC (36) INDICATOR (64) (5) Secondary In-country Primary (132) (61) Interview (121) C2.1, Timeframes for approvals 0 0 2 C2, Sector management C. Institutional Capacity 2. Operations and intra-governmental C2.2, Intra-governmental coordination 1 0 3 and Effectiveness coordination C2.3 Support to artisanal and small-scale mining 2 0 4 A3.1, Tax policy and instruments 9 0 0 A3, Tax policy, instru- A. Policy, Legislation ments and state owned A3.2 Rules for auditing, base erosion and profit shifting 6 0 0 and Regulation enterprise rules A3.3 State owned enterprise governance rules 2 0 0 3. Taxation and State B3, Mining taxation and B3.1, Accountability of mining taxation 2 0 2 B. Accountability and Participation state owned enterprise Inclusiveness financial management B3.2, State owned enterprise financial management 3 0 2 C3, Mining tax C3.1, Mining tax administration 2 1 13 C. Institutional Capacity administration and and Effectiveness state owned enterprise governance C3.2, State owned enterprise governance 1 0 4 A4, Public financial A4.1, Public financial management and revenue sharing 3 0 1 A. Policy, Legislation management regulation, and Regulation including revenue sharing A4.2, A4.2 Macrofiscal management rules and stabilization 1 0 0 B4, Budget transparency B4.1, Budget transparency and accountability 0 1 0 B. Accountability and and accountability, and 4. Revenue Distribution Inclusiveness public integrity B4.2, Public investment integrity 4 0 1 and Management C4.1, Budget implementation 0 7 2 C4, Budget implemen- C. Institutional Capacity tation and macrofiscal C4.2, Large-scale public investment 0 0 6 and Effectiveness management effective- ness C4.3 Macrofiscal management and revenue stabilization 0 0 2 effectiveness 30 ANNEX 1 THE ZAMBIA MInGov DATA COMPENDIUM 31 Table 1: Themes, Value Chain Stage, Topics, Indicators and Information Source (continued) INFORMATION SOURCE : 314 Questions VALUE CHAIN STAGE THEME (7) TOPIC (36) INDICATOR (64) (5) Secondary In-country Primary (132) (61) Interview (121) A5.1 Community impact, consultation and corporate social 3 0 0 responsibility A5, Policies to mitigate A. Policy, Legislation environmental and and Regulation A5.2 Rules for environmental and social impact management 12 0 0 social impact A5.3 Rules for financial sureties for decommissioning 1 0 0 B5, Human rights, B5.1, Human rights and employment equity 6 0 5 5. Local Impact B. Accountability and employment equity and Inclusiveness environmental ZAMBIA MINING INVESTMENT AND GOVERNANCE REVIEW transparency B5.2, Environmental and social impact transparency 1 0 1 C5, Community C5.1 Impact and community consultation 0 0 5 consultation and C. Institutional Capacity environmental and C5.2 Environmental and social impact management effectiveness 0 0 9 and Effectiveness social impact management C5.3 Effectiveness of sureties for decommissioning 0 0 1 D1, Business and D1, Business and investment environment 0 9 0 investment environment D2, Mining infrastructure D2.1, Mining infrastructure 0 5 0 D3. Diversity and stabili- D. Economic D3.1, Diversity and stability of national revenues 0 2 0 N.A. ty of national revenues Environment D4, Macroeconomic D4.1, Macroeconomic stability 0 3 0 stability D5, Economic growth D5.1, Economic growth and savings 0 3 0 and savings INFORMATION SOURCE : 314 Questions VALUE CHAIN STAGE THEME (7) TOPIC (36) INDICATOR (64) (5) Secondary In-country Primary (132) (61) Interview (121) D6, Skills and human D6.1, Skills and human capital 1 6 0 D. Economic capital N.A. Environment D7. Human health D7.1, Human health 0 3 0 E1, Expropriation risk E1.1, Expropriation risk 2 4 0 E2, Political stability E2.1, Political stability 0 3 0 N.A. E. Political Environment E3, Predictable mining E3.1. Predictable mining and tax policy 1 0 2 and tax policy E4, Control of corruption E4.1, Control of corruption 0 1 0 F1, Development planning F1.1, Development planning 5 0 5 F2, Local supplier F2.1, Local supplier development 4 2 4 development F. Sustainable N.A. Development F3, Investment promo- F3.1, Investment promotion (diversification) 3 0 2 tion (diversification) F4, Leveraging F4.1, Leveraging infrastructure 4 0 2 infrastructure M1, Geological M1.1, Geological prospectivity 0 3 0 prospectivity A. Policy, Legislation M2, Mining foreign direct N.A. M2.1, Mining foreign direct investment 0 1 0 and Regulation investment M3, Significance of state M3.1, Significance of state participation 4 0 0 participation 32 ANNEX 1 THE ZAMBIA MInGov DATA COMPENDIUM 33 Table 1: Themes, Value Chain Stage, Topics, Indicators and Information Source (continued) INFORMATION SOURCE : 314 Questions VALUE CHAIN STAGE THEME (7) TOPIC (36) INDICATOR (64) (5) Secondary In-country Primary (132) (61) Interview (121) M4, Significance of M4.1, Significance of mining revenue 0 2 0 mining revenue M5, Budget share of M5.1, Budget share of mining revenue 0 2 0 A. Policy, Legislation mining revenue N.A. and Regulation M6, Economic and employment share of M6.1, Economic and employment share of mining 3 2 0 mining ZAMBIA MINING INVESTMENT AND GOVERNANCE REVIEW Descriptive Topics No. Questions (Primary Source) X.1, Licenses and Exploration—descriptive information 3 X.2, Mining Policy, Law and Regulations—descriptive information 5 X.3, Mining Tax Policies and Tax Instruments—descriptive information 9 X.4, Public Financial Management and Revenue Sharing—descriptive information 5 X.5, Environmental and Social Impact Management—descriptive information 4 X.6, Sustainable Development—descriptive information 3 ANNEX 1 THE ZAMBIA MInGov DATA COMPENDIUM Table 2: Theme Scores Themes Max Min Average A Policy, Legislation and Regulation 4.00 1.00 2.77 B Accountability and Inclusiveness 4.00 1.00 2.65 C Institutional Capacity and Effectiveness 4.00 1.00 2.62 D Economic Environment 4.00 1.00 2.36 E Political Environment 4.00 1.00 2.67 F Sustainable Development 4.00 1.00 2.16 M Mining Sector Importance 4.00 2.50 3.36 Table 3: Value Chain Stage Scores Value Chain Max Min Average 1 Contracts, Licenses and Exploration 4.00 1.00 2.86 2 Operations 4.00 1.00 2.36 3 Taxation and State Participation 4.00 1.00 3.39 4 Revenue Distribution and Management 4.00 1.00 2.04 5 Local Impact 4.00 1.00 2.75 34 ZAMBIA MINING INVESTMENT AND GOVERNANCE REVIEW Table 4: Topic Score Value Chain Stage Topic Max Min Avg. Rules for License Allocation and Geological Data Collection 4.00 2.50 3.71 Contracts, Licenses and Openness, Transparency and Independence of Licensing Process 4.00 1.00 1.99 Exploration Cadastre, Geodata, License and Tenure Management 4.00 1.00 2.88 Clarity and Harmonization of Sector Rules 4.00 1.00 2.30 Operations Accountability of Processes, Compensation, Resettlement and Artisanal and Smallscale Mining Voice 4.00 1.00 2.81 Sector Management and Intragovernmental Coordination 4.00 1.00 1.98 Tax policy, Instruments and State Owned Enterprise Rules 4.00 1.00 3.33 Taxation and State Partici- Mining Taxation and State Owned Enterprise Financial Management 4.00 2.25 3.41 pation Mining Tax Administration and State Owned Enterprise Governance 4.00 1.75 3.44 Public Financial Management Regulation, Including Revenue Sharing 4.00 1.00 1.75 Revenue Distribution and Budget Transparency and Accountability, and Public Integrity 2.50 1.00 1.75 Management Budget Implementation and Macrofiscal Management Effectiveness 4.00 1.00 2.62 Policies to Mitigate Environmental and Social Impact 4.00 1.00 2.78 Local Impact Human Rights, Employment Equity and Environmental Transparency 4.00 1.00 3.28 Community Consultation and Environmental and Social Impact Management 4.00 1.00 2.18 Cross-cutting themes Business and Investment Environment 4.00 1.00 2.78 Mining Infrastructure 3.00 1.00 2.00 Diversity and Stability of National Revenues 2.50 1.00 1.75 Economic Environment Macroeconomic Stability 3.00 2.00 2.50 National Growth and Savings 4.00 4.00 4.00 Skills and Human Capital Availability 3.00 1.00 2.50 Human Health 1.00 1.00 1.00 Expropriation Risk 4.00 2.00 3.33 Political Stability 4.00 3.00 3.33 Political Environment Predictable Mining and Tax Policy 1.00 1.00 1.00 Control of Corruption 3.00 3.00 3.00 Development Planning 4.00 1.00 2.33 Local Supplier Development 4.00 1.00 1.74 Sustainable Development Investment Promotion (Diversification) 4.00 1.00 2.50 Leveraging Infrastructure 4.00 1.00 2.06 Geological Prospectivity and Potential 4.00 2.50 3.17 Foreign Direct Investment in Mining 3.00 3.00 3.00 State Participation in Mining 3.00 1.00 2.13 Mining Sector Importance Significance of Mining Revenues 4.00 4.00 4.00 Budget Share of Mining Revenues 4.00 4.00 4.00 Economic and Employment Share of Mining 3.00 2.00 2.67 35 ANNEX 1 THE ZAMBIA MInGov DATA COMPENDIUM Figure 1: Topic Scores Indicator 1.0 - 1.75 >1.75 - 2.50 >2.50 - 3.25 >3.25 - 4.0 Rules for License Allocation and Geological Data Collection Openness, Transparency and Independence of Licensing Process Cadastre, Geodata, License and Tenure Management Clarity and Harmonization of Sector Rules Accountability of Processes, Compensation, Resettlement and Artisanal and Smallscale Mining Voice Sector Management and Intragovernmental Coordination Tax policy, Instruments and State Owned Enterprise Rules Mining Taxation and State Owned Enterprise Financial Management Mining Tax Administration and State Owned Enterprise Governance Public Financial Management Regulation, Including Revenue Sharing Budget Transparency and Accountability, and Public Integrity Budget Implementation and Macrofiscal Management Effectiveness Policies to Mitigate Environmental and Social Impact Human Rights, Employment Equity and Environmental Transparency Community Consultation and Environmental and Social Impact Management Business and Investment Environment Mining Infrastructure Diversity and Stability of National Revenues Macroeconomic Stability National Growth and Savings Skills and Human Capital Availability Human Health Expropriation Risk Political Stability Predictable Mining and Tax Policy Control of Corruption Development Planning Local Supplier Development Investment Promotion (Diversification) Leveraging Infrastructure Geological Prospectivity and Potential Foreign Direct Investment in Mining State Participation in Mining Significance of Mining Revenues Budget Share of Mining Revenues Economic and Employment Share of Mining 36 37 Table 5: Indicator Scores Theme Value Chain Stage Topic L5 Indicator Max Min Avg. A1.1 Clarity of Rules for License Allocation, Conversion and Transfer 4.00 2.50 3.83 A1.2 Geological Data Collection Rules 4.00 4.00 4.00 Policy, Legislation and Rules for License Allocation and Regulation Geological Data Collection A1.3 Modern Mining Cadastre 4.00 4.00 4.00 A1.4 License Approval and Review Timeframes 4.00 2.50 3.00 Openness, Transparency and B1.1 Openness and Transparency of Licensing Process 4.00 1.00 2.99 Accountability and Independence of Licensing Inclusiveness Process B1.2 Independence of Licensing Authority 1.00 1.00 1.00 Contracts, Licenses and Exploration C1.1 Collecting Geological Information 4.00 1.00 2.83 C1.2 State of Mapping and Geological Exploration 4.00 1.00 2.60 ZAMBIA MINING INVESTMENT AND GOVERNANCE REVIEW C1.3 Mining Cadastre Effectiveness 4.00 1.00 3.13 Institutional Capacity and Cadastre, Geodata, License and Effectiveness Tenure Management C1.4 Allocating Licenses Effectively 4.00 1.86 2.56 C1.5 Transferability of Licenses 4.00 3.25 3.63 C1.6 Managing Licenses Effectively 4.00 1.00 2.56 A2.1 Clarity of Legislation, Rules and Timeframes 4.00 1.00 2.50 Policy, Legislation and Clarity and Harmonization of Regulation Sector Rules A2.2 Harmonization of Legislation and Government Coordination 2.50 1.00 1.89 A2.3 Provisions for Artisanal and Smallscale Mining 4.00 1.00 2.50 Accountability of Processes, B2.1 Access to Land, Compensation and Resettlement 2.50 1.00 2.05 Accountability and Compensation, Resettlement Inclusiveness and Artisanal and Smallscale Operations B2.2 Access and Accountability of Mining Legislation and Processes 4.00 2.07 3.14 Mining Voice B2.3 Artisanal and Smallscale Mining Voice Representation 4.00 2.50 3.25 C2.1 Timeframes for Approvals 0.00 0.00 .. Sector Management and Institutional Capacity and Intragovernmental C2.2 Intragovernmental Coordination 2.50 1.00 1.47 Effectiveness Coordination C2.3 Support to Artisanal and Smallscale Mining 4.00 1.00 2.50 Theme Value Chain Stage Topic L5 Indicator Max Min Avg. A3.1 Tax Policy and Instruments 4.00 1.00 3.00 Policy, Legislation and Tax policy, Instruments and A3.2 Rules for Auditing, Base Erosion and Profit Shifting 4.00 1.00 3.00 Regulation State Owned Enterprise Rules A3.3 State Owned Enterprise Governance Rules 4.00 4.00 4.00 Taxation and State Mining Taxation and State B3.1 Accountability of Mining Taxation 4.00 2.25 2.81 Accountability and Participation Owned Enterprise Financial Inclusiveness Management B3.2 State-Owned Enterprise Financial Management 4.00 4.00 4.00 Mining Tax Administration C3.1 Mining Tax Administration 4.00 1.75 3.18 Institutional Capacity and and State Owned Enterprise Effectiveness Governance C3.2 State-Owned Enterprise Governance 4.00 2.50 3.70 Public Financial Management A4.1 Public Financial Management and Revenue Sharing 4.00 1.00 2.50 Policy, Legislation and Regulation, Including Revenue Regulation Sharing A4.2 Macrofiscal Management Rules and Stabilization 1.00 1.00 1.00 Budget Transparency and B4.1 Budget Transparency and Accountability 1.00 1.00 1.00 Accountability and Accountability, and Public Inclusiveness Revenue Distribution Integrity B4.2 Public Investment Integrity 2.50 2.50 2.50 and Management C4.1 Budget Implementation 4.00 1.00 2.86 Budget Implementation and Institutional Capacity and Macrofiscal Management C4.2 Large Scale Public Investment 4.00 1.00 2.50 Effectiveness Effectiveness C4.3 Macrofiscal Management and Revenue Stabilization Effectiveness 4.00 1.00 2.50 A5.1 Community Impact, Consultation and Corporate Social Responsibility 2.50 1.00 1.83 Policies to Mitigate Policy, Legislation and Environmental and A5.2 Rules for Environmental and Social Impact Management 4.00 1.00 2.50 Regulation Social Impact A5.3 Rules for Financial Sureties for Decommissioning 4.00 4.00 4.00 Human Rights, Employment B5.1 Human Rights and Employment Equity 4.00 1.00 2.56 Accountability and Local Impact Equity and Environmental Inclusiveness Transparency B5.2 Environmental and Social Impact Transparency 4.00 4.00 4.00 C5.1 Impact and Community Consultation 4.00 1.00 2.40 Community Consultation and Institutional Capacity and Environmental and Social C5.2 Environmental and Social Impact Management Effectiveness 2.50 1.00 1.64 Effectiveness Impact Management C5.3 Effectiveness of Sureties for Decommissioning 2.50 2.50 2.50 38 ANNEX 1 THE ZAMBIA MInGov DATA COMPENDIUM 39 Table 5: Indicator Scores (continued) Value Chain Stage L5 Indicator Max Min Avg. D1.1 Business and Investment Environment 4.00 1.00 2.78 D2.1 Mining Infrastructure 3.00 1.00 2.00 D3.1 Diversity and Stability of National Revenues 2.50 1.00 1.75 Economic Environment D4.1 Macroeconomic Stability 3.00 2.00 2.50 D5.1 National Growth and Savings 4.00 4.00 4.00 D6.1 Skills and Human Capital Availability 3.00 1.00 2.50 D7.1 Human Health 1.00 1.00 1.00 E1.1 Expropriation Risk 4.00 2.00 3.33 ZAMBIA MINING INVESTMENT AND GOVERNANCE REVIEW E2.1 Political Stability 4.00 3.00 3.33 Political Environment E3.1 Predictable Mining and Tax Policy 1.00 1.00 1.00 E4.1 Control of Corruption 3.00 3.00 3.00 F1.1 Development Planning 4.00 1.00 2.33 F2.1 Local Supplier Development 4.00 1.00 1.74 Sustainable Development F3.1 Investment Promotion (Diversification) 4.00 1.00 2.50 F4.1 Leveraging Infrastructure 4.00 1.00 2.06 M1.1 Geological Prospectivity and Potential 4.00 2.50 3.17 M2.1 Foreign Direct Investment in Mining 3.00 3.00 3.00 M3.1 State Participation in Mining 3.00 1.00 2.13 Mining Sector Importance M4.1 Significance of Mining Revenues 4.00 4.00 4.00 M5.1 Budget Share of Mining Revenues 4.00 4.00 4.00 M6.1 Economic and Employment Share of Mining 3.00 2.00 2.67 ANNEX 1 THE ZAMBIA MInGov DATA COMPENDIUM Figure 2: Indicator Scores Underlying Indicators 1.0 - 1.75 >1.75 - 2.50 >2.50 - 3.25 >3.25 - 4.0 Clarity of Rules for License Allocation, Conversion and Transfer Geological Data Collection Rules Modern Mining Cadastre License Approval and Review Timeframes Openness and Transparency of Licensing Process Independence of Licensing Authority Collecting Geological Information State of Mapping and Geological Exploration Mining Cadastre Effectiveness Allocating Licenses Effectively Transferability of Licenses Managing Licenses Effectively Clarity of Legislation, Rules and Timeframes Harmonization of Legislation and Government Coordination Provisions for Artisanal and Smallscale Mining Access to Land, Compensation and Resettlement Access and Accountability of Mining Legislation and Processes Artisanal and Smallscale Mining Voice Representation Timeframes for Approvals Intragovernmental Coordination Support to Artisanal and Smallscale Mining Tax Policy and Instruments Rules for Auditing, Base Erosion and Profit Shifting State Owned Enterprise Governance Rules Accountability of Mining Taxation State-Owned Enterprise Financial Management Mining Tax Administration State-Owned Enterprise Governance Public Financial Management and Revenue Sharing Macrofiscal Management Rules and Stabilization Budget Transparency and Accountability Public Investment Integrity 40 ZAMBIA MINING INVESTMENT AND GOVERNANCE REVIEW Figure 2: Indicator Scores (continued) Underlying Indicators 1.0 - 1.75 >1.75 - 2.50 >2.50 - 3.25 >3.25 - 4.0 Budget Implementation Large Scale Public Investment Macrofiscal Management and Revenue Stabilization Effectiveness Community Impact, Consultation and Corporate Social Responsibility Rules for Environmental and Social Impact Management Rules for Financial Sureties for Decommissioning Human Rights and Employment Equity Environmental and Social Impact Transparency Impact and Community Consultation Environmental and Social Impact Management Effectiveness Effectiveness of Sureties for Decommissioning Business and Investment Environment Mining Infrastructure Diversity and Stability of National Revenues Macroeconomic Stability National Growth and Savings Skills and Human Capital Availability Human Health Expropriation Risk Political Stability Predictable Mining and Tax Policy Control of Corruption Development Planning Local Supplier Development Investment Promotion (Diversification) Leveraging Infrastructure Geological Prospectivity and Potential Foreign Direct Investment in Mining State Participation in Mining Significance of Mining Revenues Budget Share of Mining Revenues Economic and Employment Share of Mining 41 Table 6: Performance of the Artisanal and Small-scale Mining Sector Value Chain Answer Answer Topic Indicator Question Data Source Stage & Theme Score Interpretation To what extent is there a regulation in place that allows the formalization of Good practice 4 Primary artisanal and small-scale miners? (76) in place To what extent is artisanal and small-scale mining legally recognized in the mining Good practice 4 Primary Operations law or regulations? (77) in place Clarity and Harmonization of Provision for ASM Policy, Legislation Good practice Sector Rules To what extent do the laws and regulations allow for artisanal and small-scale and and Regulation 2.5 partially in Primary industrial mining activities to coexist? (78) place To what extent are there detailed laws and regulations to settle disputes between Good practice 1 Primary ASM and other mining activities? (79) not in place Accountability Is there a non-state association that represents artisanal and small-scale miners? Good practice Operations 4 Primary of Processes, (89) in place ASM Voice Compensation, Accountability and Representation Resettlement and To what extent do artisanal and small-scale miner associations participate in the Partly meeting In-country Inclusiveness 2.5 ASM Voice monitoring, advocacy and enforcement of their property rights? (90) own goal Interview Is there a dedicated unit within the ministry responsible for mining that deals with Good practice 1 Primary ASM? (97) not in place To what extent is support provided by government to artisanal and small scale Good practice 4 Primary miners concerning technical or business skills? (98) in place Operations To what extent is the government effectively using a dispute resolution system Sector Not meeting In-country dedicated to ASM to tackle disputes between artisanal and small scale mining and 1 Management and own goal Interview Institutional other mining activities? (99) Intragovernment Support to ASM Capacity and Coordination Partly meeting In-country Effectiveness To what extent is ASM permitted on areas of industrial mining activity? (100) 2.5 own goal Interview To what extent are artisanal and small-scale miners legally allowed to operate? Meeting own In-country 4 (101) goal Interview To what extent is artisanal and small-scale mining taking place under formalized Partly meeting In-country 2.5 procedures? (102) own goal Interview 42 ANNEX 1 THE ZAMBIA MInGov DATA COMPENDIUM 43 Table 6: Performance of the Artisanal and Small-scale Mining Sector (continued) Value Chain Answer Answer Topic Indicator Question Data Source Stage & Theme Score Interpretation Taxation and State Tax Policies and Participation Instruments, and Tax Policy and Good practice Does the government have a simplified tax collection system for ASM? (111) 1 Primary State Owned Instruments not in place Policy, Legislation Enterprise Rules and Regulation Local Impact Rules for Policies to Mitigate Good practice Environment and In the law and regulations, is there a simplified environmental permit or impact Policy, Legislation Environmental and 2.5 partially in Primary Social Impact assessment for artisanal and small-scale mining? (189) and Regulation Social Impact place Management ZAMBIA MINING INVESTMENT AND GOVERNANCE REVIEW Local Impact Community Consultation and Environmental To what extent is the government monitoring compliance with environmental Not meeting In-country Institutional Environmental and Social Impact 1 requirements for artisanal and small-scale miners? (220) own goal Interview Capacity and and Social Impact Effectiveness Effectiveness Effectiveness Figure 3: Stakeholder prioritisation, Government Taxation and State Participation Economic Environment Operations Accountability of Processes, Compensation, Resettlement and Artisanal and Small- Mining Tax Administration and State Owned Enterprise Governance scale Mining Voice Business and Investment Environment Macro-economic Stability Clarity and Harmonization of Mining Taxation Sector Rules and State Owned Revenues Diversity and Human Health Enterprise Stability of National Financial Tax policy, Instruments and State Owned Enterprise Rules Management Mining Infrastructure Contracts, Licenses and Exploration Sector Management Skills and Human National Growth and Intragovernmental Capital Availability and Savings Coordination Cadastre, Geodata, License and Tenure Sustainable Development Political Environment Revenue Distribution Management and Management Control of Corruption Leveraging Tax Policy Infrastructure Political Stability Predictable Mining and Expropriation Risk Effectiveness Macrofiscal Management Budget Implementation and Integrity Accountability, and Public Budget Transparency and Development Planning Local Impact Community Policies to Local Consultation and Human Rights, Mitigate Public Financial Openness, Transparency and Independence of Rules for License Allocation and Geographical Investment Promotion Supplier Environmental Employment Equity Environmental Management Regulation, Licensing Process Data Collection (Diversification) Development and Social Impact and Environmental and Social Including Revenue Management Transparency Impact Sharing 44 ANNEX 1 THE ZAMBIA MInGov DATA COMPENDIUM 45 Figure 4: Stakeholder prioritisation, CSO Contracts, Licenses and Exploration Taxation and State Participation Sustainable Development Mining Taxation and State Owned Enterprise Financial Management Mining Tax Tax policy, Instruments and State Owned Administration and Enterprise Rules State Owned Enterprise Governance Local Supplier Development Operations Investment Openness, Transparency and Development Promotion Leveraging Independence of Licensing Rules for License Allocation and Planning (Diversification) Infrastructure ZAMBIA MINING INVESTMENT AND GOVERNANCE REVIEW Process Geographical Data Collection Economic Revenue Distribution Coordination Environment and Management Sector Management Cadastre, Geodata, License and Tenure Management and Intragovernmental Accountability of Processes, Political Environment Compensation, Resettlement and Artisanal and Small- Clarity and Harmonization of Sector Rules scale Mining Voice Skills and Macro- Human economic Capital Local Impact Stability Availability Budget Predictable Mining and Tax Implementation Policy and Macrofiscal Human Health National Management Growth and Effectiveness Control of Business and Savings Corruption Investment Environment Budget Budget Human Rights, Employment Policies to Mitigate Diversity Social Impact Management Transparency Implemen- and Equity and Environmental Environmental and Social and tation and Stability of Accountability, Macrofiscal Political Stability Expropriation Risk Transparency Impact Mining Infrastructure National and Public Management Community Consultation and Environmental and Revenues Integrity Effectiveness Figure 5: Stakeholder prioritisation, Industry Taxation and State Participation Operations Local Impact Economic Environment Business and Macro- Investment economic Human Rights, Employment Mining Taxation and State Owned Enterprise Environment Stability Equity and Environmental Financial Management Transparency Owned Enterprise Governance Mining Tax Administration and State Skills and National Human of Sector Rules Clarity and Harmonization Intragovernmental Coordination Sector Management and Growth and Capital Policies to Mitigate Tax policy, Instruments and State Savings Availability Environmental and Owned Enterprise Rules Accountability of Processes, Social Impact Compensation, Resettlement and Diversity and Stability Artisanal and Small-scale Community Consultation and Environmental and of National Mining Infra- Contracts, Licenses and Exploration Mining Voice Social Impact Management Revenues Human Health structure Investment Political Environment Sustainable Promotion Development (Diversification) Openness, Transparency and Independence Leveraging Development Planning Local Supplier Development Infrastructure Control of Corruption of Licensing Process Political Stability Revenue Distribution and Management Rules for License Allocation and Budget Implementation and Budget Transparency and Sharing Geographical Data Macrofiscal Management Accountability, and Public Public Financial Expropriation Risk Including Revenue Cadastre, Geodata, License and Tenure Management Collection Predictable Mining and Tax Policy Effectiveness Integrity Management Regulation, 46 ANNEX 1 THE ZAMBIA MInGov DATA COMPENDIUM ZAMBIA MINING INVESTMENT AND GOVERNANCE REVIEW Table 7: Question Scores Question Data Question Interpretation Score Number Source 1. Contracts, Licenses and Exploration A. Policy, Legislation and Regulation A1 Rules for License Allocation and Geological Data Collection A1.1 Clarity of Rules for License Allocation, Conversion and Transfer To what extent are the procedures for the allocation of exploration Good practice 1 rights detailed, laid out in law and regulations, and compatible with Primary 4 in place relevant legislation? To what extent are the procedures for the allocation of mining Good practice 2 rights detailed, laid out in the law and/or regulations, and Primary 4 in place compatible with relevant legislation? To what extent does the legislation impose clear limits to the Good practice 3 discretionary powers of the authority in charge of awarding Primary 4 in place exploration licenses? To what extent are limits to the discretionary powers of the Good practice 4 Primary 4 authority in charge of awarding mining licenses laid out in the law? in place To what extent are exceptions to the First Come, First Served Good practice 5 Primary 4 principle allowed? in place In the law, to what extent does a company that holds an exploration Good practice 6 license (and is in compliance with license conditions) have an Primary 4 in place automatic prior right to apply for a mining lease in that area? Good practice According to the law, to what extent do license holders have the 7 Primary partially in 2.5 freedom to transfer their licenses to eligible companies place To what extent are sanctions for non-performance by companies Good practice 8 Primary 4 regarding licenses prescribed in the regulations? in place To what extent are mining contracts allowed to be used to Good practice 9 Primary 4 supersede the provisions of prevailing laws? in place Data not To what extent is it defined in law which government body 10 Primary available or not .. negotiates and approves mine development agreements? applicable A1.2 Geological Data Collection Rules In the law, to what extent are exploration companies required to Good practice 11 regularly report quantitative operational information, including Primary 4 in place geological information, to the GSD or mining authority? A1.3 Modern Mining Cadastre Is the establishment and operation of a mining cadastre provided Good practice 12 Primary 4 for in the law? in place 47 ANNEX 1 THE ZAMBIA MInGov DATA COMPENDIUM Question Data Question Interpretation Score Number Source A1.4 License Approval and Review Timeframes According to regulation, to what extent is there a clear timeframe Good practice 13 Primary 4 for the allocation of licenses? in place Data not In the law, to what extent is there discretion in the speed of 14 Primary available or not .. approval for license applications? applicable Good practice To what extent does the regulation ensure that applications not 15 Primary partially in 2.5 meeting criteria are rejected as opposed to remain pending? place Good practice To what extent is the timeframe for approval of exploration work 16 Primary partially in 2.5 programs set out in regulations? place B. Accountability and Inclusiveness B1 Openness, Transparency and Independence of Licensing Process B1.1 Openness and Transparency of Licensing Process To what extent is the information required for license applications Good practice 17 Primary 4 easily accessible? in place To what extent do the regulations require that the reasons for Good practice 18 Primary 4 license application denial be communicated to the applicant? in place Good practice To what extent does the legislation detail a transparent process for 19 Primary partially in 4 license cancellations? place In practice, when licenses are cancelled to what extent are the In-country Meeting its own 20 reasons communicated to the license holder in an accurate, 3.4 Interview goal complete and timely fashion? To what extent are mining contracts required to be made publicly Good practice 21 Primary 1 available in the law? not in place In-country Not meeting its 22 To what extent are mining contracts made publicly available? 1 Interview own goal To what extent does the legislation contain barriers to the Good practice 23 disclosure of license and contract information, such as state secrecy Primary 4 in place laws? Working To what extent does the government publish key details for each towards In-country 24 license such as the license holder, duration of license and license meeting its own 2.5 Interview type? goal, but less than half way 48 ZAMBIA MINING INVESTMENT AND GOVERNANCE REVIEW Table 7: Question Scores (continued) Question Data Question Interpretation Score Number Source B1.2 Independence of Licensing Authority In the law, to what extent is the authority in charge of awarding Good practice 25 licenses for exploration and mining independent from the mining Primary 1 not in place ministry? Data not To what extent is the authority in charge of awarding licenses for In-country 26 available or not .. exploration and mining independent from the mining ministry? Interview applicable C. Institutional Capacity and Effectiveness C1 Cadastre, Geodata, License and Tenure Management C1.1 Collecting Geological Information To what extent is there a government website that describes what Good practice 27 national geological information is available and at what cost (if not Primary partially in 2.5 free)? place To what extent is there a library with current national geological Good practice 28 information maintained by the Geological Survey Department Primary 4 in place (GSD) or a similar organization? More than half In practice, how reliably are exploration companies delivering the In-country way towards 29 required operational information, including geological information, 3.25 Interview meeting its own to the GSD or mining authority? goal To what extent does the Geological Survey Department (GSD) or In-country Not meeting its 30 similar organization collect geological information in an accessible 1.75 Interview own goal library? To what extent does the Geological Survey Department (GSD) or In-country Meeting its own 31 similar organization store geological information from companies in 4 Interview goal a confidential manner? To what extent does the Geological Survey Department (GSD) or a In-country Meeting its own 32 similar organization make use of the geological data collected from 4 Interview goal companies to improve understanding of geological prospectivity? To what extent does the Geological Survey Department (GSD) or a In-country Meeting its own 33 similar organization make use of the geological data collected from 4 Interview goal companies to monitor compliance with licenses? To what extent is the Geological Survey Department (GSD) or In-country Not meeting its 34 1 similar organization staffed with well-trained professionals? Interview own goal To what extent is the Geological Survey Department (GSD) or In-country Not meeting its 35 1 similar organization appropriately financially resourced? Interview own goal 49 ANNEX 1 THE ZAMBIA MInGov DATA COMPENDIUM Question Data Question Interpretation Score Number Source C1.2 State of Mapping and Geological Exploration Data not What proportion of the country’s land has been licensed for 36 Primary available or not .. exploration? applicable To what extent is the licensed ground being serviced by active In-country Not meeting its 37 1 exploration? Interview own goal Good practice Is there a country-wide geological map (usually at scale 38 Primary partially in 2.5 1:1,000,000, 1:2 000 000, 1: 1 500 000)? place Good practice What proportion of the country is covered at scale of 1:250,000 or 39 Primary partially in 2.5 similar (e.g. 1:200 000)? place What proportion of the country is covered at scale of 1:100,000 Good practice 40 by geological maps or similar (for example, 1:100,000, 1:62,500, Primary 4 in place 1:50,000)? Higher 50%- 41 Quality of geological database - Fraser Institute Secondary 3 75% C1.3 Mining Cadastre Effectiveness To what extent are the mining cadastre rules being correctly In-country Meeting its own 42 4 implemented and information is accessible to the public? Interview goal To what extent does the relevant legislation or guidelines provide Good practice 43 for a map component to record license boundaries in the Primary 4 in place cadastre? To what extent is the topographic map for the cadastre In-country Meeting its own 44 4 compatible with GPS systems? Interview goal In practice, are there boundary disputes between license holders In-country Not meeting its 45 1 due to the ambiguity of boundaries? Interview own goal In-country Not meeting its 46 To what degree is the mining cadastre up-to-date? 1.5 Interview own goal To what extent is the mining cadastre used to support the In-country Meeting its own 47 4 management of licenses? Interview goal To what extent does the cadastre system ensure that license In-country Meeting its own 48 4 information (including boundaries) cannot be tampered with? Interview goal 50 ZAMBIA MINING INVESTMENT AND GOVERNANCE REVIEW Table 7: Question Scores (continued) Question Data Question Interpretation Score Number Source Working towards To what extent is the computerized cadastre system operating In-country meeting its own 49 2.5 without major technical problems? Interview goal, but less than half way Data not If there is a decentralized cadastre system in place, to what extent 50 Primary available or not .. is there a clearance requirement from central office? applicable In practice, if there is a decentralized cadastre system in place, to Data not In-country 51 what extent is a clearance from the central office required before available or not .. Interview issuing a license? applicable C1.4 Allocating Licenses Effectively Working towards To what extent are the procedures for the allocation of exploration In-country meeting its own 52 2.17 rights laid out in the legal framework followed in practice? Interview goal, but less than half way To what extent are the procedures for the allocation of mining In-country Meeting its own 53 4 rights laid out in the legal framework followed in practice? Interview goal Working towards To what extent are limits to discretionary power in the award of In-country meeting its own 54 2.5 exploration licenses followed? Interview goal, but less than half way Working towards To what extent are limits to discretionary powers in the award of In-country meeting its own 55 1.86 mining licenses followed? Interview goal, but less than half way Working towards To what extent is there a preference for local companies or In-country meeting its own 56 producers in the allocation process of exploration or mining 2.5 Interview goal, but less than licenses? half way More than half way To what extent is it clear which government body (or bodies) In-country 57 towards meeting 2.88 negotiates and approves mining contracts? Interview its own goal Working To what extent do license cancellations or denied applications In-country towards meeting 58 2 result in appeals? Interview its own goal, but less than half way C1.5 Transferability of Licenses In practice, if a company holds an exploration license and is in More than half way compliance with license conditions, to what extent does that In-country 59 towards meeting 3.25 translate into an automatic priority in obtaining a mining lease in Interview its own goal that area? In practice, are license holders able to transfer their licenses to In-country Meeting its own 60 4 eligible companies? Interview goal 51 ANNEX 1 THE ZAMBIA MInGov DATA COMPENDIUM Question Data Question Interpretation Score Number Source C1.6 Managing Licenses Effectively To what extent are the legislated timeframes for license In-country Not meeting its 61 1.75 application and allocation followed? Interview own goal To what extent is the cadastre system mostly free of long-standing In-country Meeting its own 62 4 pending applications? Interview goal In the case of FCFS (First Come, First Served), to what extent are In-country Meeting its own 63 4 applications time-stamped as they are received? Interview goal Working towards To what extent are the sanctions regarding licenses for In-country meeting its own 64 2.13 non-performance by companies enforced? Interview goal, but less than half way Working towards To what extent are the timelines for deciding on exploration and/ In-country meeting its own 65 or mining rights applications compatible with the timelines of 2.13 Interview goal, but less than other required permits? half way To what extent is the timeframe for the approval of exploration In-country Not meeting its 66 1.5 work programs followed? Interview own goal To what extent is the unit managing the monitoring of licenses In-country Meeting its own 67 4 staffed appropriately to perform its duties? Interview goal To what extent is the unit managing the monitoring of licenses In-country Not meeting its 68 1 receiving an adequate operational budget to perform its duties? Interview own goal Data not In practice, how long does the approval for exploration license In-country 69 available or not .. applications take? Interview applicable 2. Operations A. Policy, Legislation and Regulation A2 Clarity and Harmonization of Sector Rules A2.1 Clarity of Legislation, Rules and Timeframes To what extent do regulations cover all relevant mining procedures Good practice 70 (exploration, license issuance, work programs, mines inspection, Primary 4 in place health and safety, explosives, emergency, mine closure, etc.)? To what extent is the timeframe for the approval of mine Good practice 71 Primary 1 development plans set out in the regulations? not in place To what extent is the timeframe for the approval of extensions of Good practice 72 Primary 1 mining operations set out in the regulations? not in place 52 ZAMBIA MINING INVESTMENT AND GOVERNANCE REVIEW Table 7: Question Scores (continued) Question Data Question Interpretation Score Number Source A2.2 Harmonization of Legislation and Government Coordination Working towards To what extent is mining sector legislation consistent with other meeting its own 73 Primary 2.17 relevant legislation? goal, but less than half way To what extent are legislation or inter-ministry arrangements covering natural resource issues that may be affected by Good practice 74 Primary 1 mineral rights (e.g., land use, water, forests and nature reserves) not in place well defined to minimize overlaps or gaps? How clearly does mining or other legislation assign roles and Good practice 75 responsibilities between government ministries/agencies in the Primary partially in 2.5 mining sector? place A2.3 Provisions for Artisanal and Smallscale Mining To what extent is there a regulation in place that allows the Good practice 76 Primary 4 formalization of artisanal and small-scale miners? in place To what extent is artisanal and small-scale mining legally Good practice 77 Primary 4 recognized in the mining law or regulations? in place Good practice To what extent do the laws and regulations allow for artisanal and 78 Primary partially in 2.5 small-scale and industrial mining activities to coexist? place To what extent are there detailed laws and regulations to settle Good practice 79 Primary 1 disputes between ASM and other mining activities? not in place B. Accountability and Inclusiveness B2 Accountability of Processes, Compensation, Resettlement and Artisanal and Smallscale Mining Voice B2.1 Access to Land, Compensation and Resettlement Does the holder of a mineral right have guaranteed access rights Good practice 80 to (surface) land, or does this need to be negotiated with Primary 1 not in place landowners (or users) separately? Good practice Is there an established procedure following Equator Principles for 81 Primary partially in 2.5 the resettlement of communities displaced by mining activities? place Working towards To what extent does the government enforce the legal In-country meeting its own 82 requirements to resettle communities affected by mining 2.5 Interview goal, but less than activities? half way 53 ANNEX 1 THE ZAMBIA MInGov DATA COMPENDIUM Question Data Question Interpretation Score Number Source Is there an established procedure for the payment of Good practice 83 compensation to landowners (and/or users) when exploration and Primary partially in 2.5 mining activities interfere with their activities? place To what extent does the government enforce the legal In-country Not meeting its 84 requirements of mining companies to compensate people affected 1.75 Interview own goal by mining activities? B2.3 Provisions for Artisanal and Smallscale Mining To what extent are the key laws and regulations governing mining Good practice 85 operations available from a single and up-to-date online Primary 4 in place government source? Working towards To what extent does the legislative branch carry out an oversight In-country meeting its own 86 role regarding the mining sector beyond the consideration and 2.07 Interview goal, but less than approval of legislation? half way In the law, is there a domestic process to appeal decisions by Good practice 87 mining authorities that is outside and independent of the mining Primary 4 in place ministry? Working towards To what extent is this independent domestic appeal process able In-country meeting its own 88 2.5 to challenge decisions by mining authorities? Interview goal, but less than half way B2.3 Provisions for Artisanal and Smallscale Mining Is there a non-state association that represents artisanal and Good practice 89 Primary 4 small-scale miners? in place Working towards To what extent do artisanal and small-scale miner associations In-country meeting its own 90 participate in the monitoring, advocacy and enforcement of their 2.5 Interview goal, but less than property rights? half way C. Institutional Capacity and Effectiveness C2 Sector Management and Intragovernmental Coordination C2.1 Timeframes for Approvals Data not To what extent is the timeframe for the approval of a mine In-country 91 available or not .. development plan followed? Interview applicable Data not To what extent is the timeframe for the approval of an extension of In-country 92 available or not .. a mining operations followed Interview applicable 54 ZAMBIA MINING INVESTMENT AND GOVERNANCE REVIEW Table 7: Question Scores (continued) Question Data Question Interpretation Score Number Source C2.2 Intragovernmental Coordination Working towards How common are conflicts between government In-country meeting its own 93 ministries/agencies over the roles and responsibilities assigned for 2.5 Interview goal, but less than the mining sector? half way To what extent are there formal mechanisms for sharing Good practice 94 information between government agencies closely working on Primary 1 not in place mining (MOUs, intra-governmental working groups)? To what extent is there regular sharing of information between In-country Not meeting its 95 government agencies that have regulatory responsibilities for the 1.38 Interview own goal mining sector? To what extent are there instances where mineral rights conflict In-country Not meeting its 96 with other legislation on natural resources (e.g., on land use, water, 1 Interview own goal forests or nature reserves)? C2.3 Support to Artisanal and Smallscale Mining Is there a dedicated unit within the Ministry dealing with artisanal Good practice 97 Primary 1 and small scale mining? not in place To what extent is support provided by government to artisanal Good practice 98 Primary 4 and small scale miners concerning technical or business skills? in place To what extent is the government effectively using a dispute In-country Not meeting its 99 resolution system dedicated to ASM to tackle disputes between 1 Interview own goal artisanal and small scale mining and other mining activities? Working towards In practice, are there instances of coexistence of ASM and In-country meeting its own 100 2.5 industrial mining activities? Interview goal, but less than half way To what extent are artisanal and small-scale miners legally allowed In-country Meeting its own 101 4 to operate? Interview goal Working towards To what extent is artisanal and small-scale mining taking place In-country meeting its own 102 2.5 under formalized procedures? Interview goal, but less than half way 55 ANNEX 1 THE ZAMBIA MInGov DATA COMPENDIUM Question Data Question Interpretation Score Number Source 3. Taxation and State Participation A. Policy, Legislation and Regulation A3 Tax policy, Instruments and State Owned Enterprise Rules A3.1 Tax Policy and Instruments Is it clear in the law which government agencies have the authority Good practice 103 Primary 4 to collect taxes and payments from resource companies? in place To what extent are taxes from mining required by law to be placed Good practice 104 Primary 4 in the national treasury? in place Does the legislation prescribe rates, formulas and bases for the Good practice 105 Primary 4 main elements of the fiscal regime? in place Good practice To what extent are there well-defined provisions for the 106 Primary partially in 2.5 renegotiation or review of fiscal terms? place To what extent does the mining or investment legislation provide Good practice 107 clear rules on the types of tax incentives that can be granted to Primary 4 in place large investors? To what extent does the fiscal regime ensure that the Good practice 108 government has an adequate minimum revenue stream in all Primary 1 not in place production periods? Good practice To what extent does the mining fiscal regime include progressive 109 Primary partially in 2.5 fiscal instruments? place To what extent are there clear rules in the tax code or regulations Good practice 110 Primary 4 for the following payment processes: in place Does the government have a simplified tax collection system for Good practice 111 Primary 1 ASM? not in place A3.2 Rules for Auditing, Base Erosion and Profit Shifting According to regulations, to what extent are regular tax, cost or Good practice 112 physical audits required to be conducted of small-scale operators Primary 4 in place and large mining companies? Is there a legal provision providing for an arm’s-length principle Good practice 113 Primary 4 for regulation of transfer-pricing practices? in place To what extent are there clear documentation requirements to Good practice 114 Primary 4 demonstrate compliance with transfer pricing rules? in place To what extent are there clear procedures for using advanced Good practice 115 Primary 1 pricing agreements to limit transfer pricing? not in place 56 ZAMBIA MINING INVESTMENT AND GOVERNANCE REVIEW Table 7: Question Scores (continued) Question Data Question Interpretation Score Number Source Is there an annual disclosure requirement for related party Good practice 116 Primary 1 transactions? not in place To what extent do the legal provisions limit the risk from thin Good practice 117 Primary 4 capitalization? in place A3.3 State Owned Enterprise Governance Rules To what extent does law or regulation require mining sector SOEs Good practice 118 to adhere to good corporate governance when examining the Primary 4 in place Board’s composition? Where the mining SOE engages in quasi-fiscal activities, to what extent are the roles and responsibilities of the SOE to provide Good practice 119 Primary 4 subsidies or social expenditures (quasi-fiscal activities) clearly set in place out? B. Accountability and Inclusiveness B3 Mining Taxation and State Owned Enterprise Financial Management B3.1 Accountability of Mining Taxation Working towards To what extent are changes to mining tax legislation done through In-country meeting its own 120 a consultative process that is timely, meaningful, comprehensive 2.25 Interview goal, but less than and transparent? half way Does the country disclose through EITI or another disclosure Good practice 121 Primary 4 process, details of mining revenues? in place Are government officials with a role in the oversight of the mining Good practice 122 sector required to disclose information about their financial Primary partially in 2.5 interests in any extractive activity or project? place Working towards To what extent do government officials with a role in the oversight In-country meeting its own 123 of the mining sector disclose information about their financial 2.5 Interview goal, but less than interests in any extractive activity or project? half way B3.2 State-Owned Enterprise Financial Management If there are State Owned Enterprises (SOEs) in the mining sector, Good practice 124 Primary 4 do such SOEs have a legal obligation to publish financial reports? in place To what extent do mining sector SOEs publish annual financial In-country Meeting its own 125 4 reports? Interview goal Are mining SOEs subject by law to annual audits by an Good practice 126 Primary 4 independent external auditor? in place In practice, are annual audits of mining SOEs undertaken by an In-country Meeting its own 127 4 independent external auditor? Interview goal Do mining SOEs have to follow internationally recognized Good practice 128 Primary 4 accounting standards? in place 57 ANNEX 1 THE ZAMBIA MInGov DATA COMPENDIUM Question Data Question Interpretation Score Number Source C. Institutional Capacity and Effectiveness C3 Mining Tax Administration and State Owned Enterprise Governance C3.1 Mining Tax Administration To what extent does the taxation authority issue guidance notes or Good practice 129 Primary 4 interpretations? in place To what extent are the bases on which taxes are levied subject to In-country Not meeting its 130 1.75 disputes between companies and government? Interview own goal More than half way To what extent, are tax, cost or physical audits of mining In-country 131 towards meeting 2.88 companies conducted systematically? Interview its own goal Working towards To what extent are the timing of physical audits and cost audits of In-country meeting its own 132 2.13 mining companies coordinated? Interview goal, but less than half way Working towards In-country meeting its own 133 To what extent are transfer pricing rules enforced in practice? 2.5 Interview goal, but less than half way Working towards To what extent are there regular audits for transfer pricing of In-country meeting its own 134 related party transactions and advanced pricing rules for regularly 2.5 Interview goal, but less than occurring transactions? half way To what extent are the advanced pricing rules followed for In-country Meeting its own 135 4 regularly occurring transactions? Interview goal Data not To what extent are there regular audits of companies following In-country 136 available or not .. thin capitalization rules? Interview applicable Does the tax administration have a large taxpayer unit/office or Good practice 137 Primary 4 one specialized in natural resources/mining? in place Working towards To what extent is the unit specialized in taxation of natural In-country meeting its own 138 2.5 resources/mining staffed appropriately to carry out its activities? Interview goal, but less than half way Working towards To what extent, is the unit specialized in natural resources/mining In-country meeting its own 139 2.5 receiving appropriate funding to carry out its mandate? Interview goal, but less than half way Effectiveness in the collection of tax payments—Public Higher 50%- 140 Secondary 3 Expenditure and Financial Accounting (PEFA) indicator 75% 58 ZAMBIA MINING INVESTMENT AND GOVERNANCE REVIEW Table 7: Question Scores (continued) Question Data Question Interpretation Score Number Source In practice, are taxes and payments only collected by the In-country Meeting its own 141 4 mandated agencies? Interview goal In practice, are taxes from mining only placed in the national In-country Meeting its own 142 4 treasury? Interview goal In-country Meeting its own 143 To what extent are the fiscal terms in the law followed? 4 Interview goal To what extent are the terms for investment incentives in the law In-country Meeting its own 144 4 followed? Interview goal C3.2 State-Owned Enterprise Governance To what extent do mining sector SOEs have a board with: independent expert members with private sector experience, In-country Meeting its own 145 4 separate positions of chair and chief executive officer, and a board Interview goal of a reasonable size? Good practice 146 Is there an internal audit department within mining SOEs? Primary 4 in place In practice, does the internal audit department of mining SOEs In-country Meeting its own 147 4 review the effectiveness of internal controls annually? Interview goal To what extent do mining SOEs follow the role (including any In-country Meeting its own 148 4 subsidies or social expenditures) set out for them? Interview goal Working towards To what extent, are mining SOEs or state equity partners honoring In-country meeting its own 149 2.5 their financial obligations? Interview goal, but less than half way 4. Revenue Distribution and Management A. Policy, Legislation and Regulation A4 Public Financial Management Regulation, Including Revenue Sharing A4.1 Public Financial Management and Revenue Sharing Are arrangements for resource revenue sharing between central Good practice 150 Primary 1 and sub-national governments defined by legislation? not in place Are ministries required to undertake procurement plans for Good practice 151 Primary 4 infrastructure projects according to the laws and regulation? in place In the regulation, to what extent is it clear when and how yearly Good practice 152 budget allocations to sub-national governments should be Primary partially in 2.5 disbursed? place 59 ANNEX 1 THE ZAMBIA MInGov DATA COMPENDIUM Question Data Question Interpretation Score Number Source A4.2 Macrofiscal Management Rules and Stabilization Data not Does the law provide for a fund to protect budget expenditures In-country 153 available or not .. from revenue volatility using savings or other funds? Interview applicable Good practice 154 Are there macrofiscal rules in place to stabilize the budget? Primary 1 not in place B. Accountability and Inclusiveness B4 Budget Transparency and Accountability, and Public Integrity B4.1 Budget Transparency and Accountability 155 Open Budget Index - Open Budget Survey Secondary Lowest 25% 1 B4.2 Public Investment Integrity Good practice To what extent is there well-publicized, detailed and up-to-date 156 Primary partially in 2.5 strategic guidance for public investment decisions? place Are public investment projects required to be evaluated after Good practice 157 completion by an independent auditor according to the laws and Primary partially in 2.5 regulation? place Working towards To what extent are completed public investment projects In-country meeting its own 158 2.5 evaluated by an independent auditor? Interview goal, but less than half way Good practice Are the assets and liabilities of mining sector SOEs included in the 159 Primary partially in 2.5 public sector balance as reported by the Ministry of Finance? place Are the assets and liabilities of the natural resource fund Data not 160 included in the public sector balance as reported by the Ministry of Primary available or not .. Finance? applicable C. Institutional Capacity and Effectiveness C4 Budget Implementation and Macrofiscal Management Effectiveness. C4.1 Budget Implementation Budget cycle (performance of key systems, processes, and institu- Higher 50%- 161 Secondary 3 tions)—PEFA indicator 75% 162 Control of expenditures—PEFA indicator Secondary Low 25%-50% 2 To what extent do subnational governments receive their budget In-country Not meeting its 163 1 allocations in a full and timely manner? Interview own goal Higher 50%- 164 Robust budget classification system—PEFA indicator Secondary 3 75% Comprehensiveness of information included in budget Higher 50%- 165 Secondary 3 documentation – PEFA indicator 75% 60 ZAMBIA MINING INVESTMENT AND GOVERNANCE REVIEW Table 7: Question Scores (continued) Question Data Question Interpretation Score Number Source Data not Extent of unreported extra-budgetary expenditure – PEFA 166 Secondary available or not .. indicator applicable 167 Multi-year perspective in fiscal planning – PEFA indicator Secondary Top 75%+ 4 Data not To what extent, does the government follow the rules established In-country 168 available or not .. by resource revenue sharing legislation? Interview applicable In this country, how efficiently does the government spend public 169 Secondary Top 75%+ 4 revenue? – WEF GCI C4.2 Large Scale Public Investment In practice, is there an established process for screening public investment project proposals for consistency with government In-country Meeting its own 170 4 policy and strategic guidance, and to what extent does the Interview goal government follow it? Working towards To what extent does the government use a formal cost benefit In-country meeting its own 171 2.5 appraisal process for public investment project proposals? Interview goal, but less than half way To what extent are the project appraisals of public investment In-country Not meeting its 172 1 projects undertaken by an external agency or expert? Interview own goal Working towards To what extent do ministries prepare procurement plans for major In-country meeting its own 173 2.5 public investment projects in key sectors? Interview goal, but less than half way Working towards To what extent are there regular cost over-runs on major public In-country meeting its own 174 2.5 investment projects in key sectors? Interview goal, but less than half way Data not Are there often delays in project completion relative to the initial In-country 175 available or not .. estimated time on major public investment projects in key sectors? Interview applicable C4.3 Macrofiscal Management and Revenue Stabilization Effectiveness To what extent is the fund to protect budget expenditures from In-country Not meeting its 176 1 revenue volatility working? Interview own goal In-country Meeting its own 177 To what extent does the government follow its macrofiscal rules? 4 Interview goal 61 ANNEX 1 THE ZAMBIA MInGov DATA COMPENDIUM Question Data Question Interpretation Score Number Source 5. Local Impact A. Policy, Legislation and Regulation A5 Policies to Mitigate Environmental and Social Impact A5.1 Community Impact, Consultation and Corporate Social Responsibility To what extent is there a requirement for extensive, timely, Good practice 178 well-informed community stakeholder consultation with affected Primary partially in 2.5 communities before the commencement of mining operations? place Good practice In the law, to what extent are community development 179 Primary partially in 2 agreements required for mining operations? place Is there a national policy on corporate social responsibility (CSR) Good practice 180 Primary 1 that applies to mining? not in place A5.2 Rules for Environmental and Social Impact Management Good practice In the law, is there a requirement for companies to submit plans on 181 Primary partially in 2.5 managing and mitigating the environmental impact of operations? place In the law, is there a requirement for companies to submit plans on Good practice 182 managing and mitigating the socio economic impacts of Primary partially in 2.5 operations? place In the law, are company plans to manage and mitigate the social Good practice 183 and environmental impacts of operations subject to review by an Primary 1 not in place inter-ministerial committee? In the law, are there clear rules on fees and timeframes for Good practice submitting, approving and updating environmental and social 184 Primary partially in 2.5 impact assessments (or other key environmental and social impact place related documents such as EMMPs)? In the law, is an environmental and social impact assessment (or Good practice 185 similar) required before a mining license/lease can be granted or Primary partially in 2.5 as a condition to begin operations? place Good practice In the law, are there requirements in place on managing the 186 Primary partially in 2.5 environmental and social impact of closure of mine sites? place Good practice Is there a policy or regulation that protects biodiversity on a mine 187 Primary partially in 2.5 site? place Good practice Is there a regulation that enables biodiversity off-setting for a 188 Primary partially in 2.5 mine site? place Good practice In the law and regulations, is there a simplified environmental 189 Primary partially in 2.5 permit or impact assessment for artisanal and small-scale mining? place 62 ZAMBIA MINING INVESTMENT AND GOVERNANCE REVIEW Table 7: Question Scores (continued) Question Data Question Interpretation Score Number Source In the law, does the agency or ministry responsible for Good practice 190 environmental protection have a say in the approval of exploration Primary partially in 2.5 rights? place Is an agency independent from the mining authorities responsible Good practice 191 Primary 4 for environmental protection and rehabilitation? in place Good practice In the law, is there a grievance and complaints mechanism defined 192 Primary partially in 2.5 in the environmental regulations? place A5.3 Rules for Financial Sureties for Decommissioning Does legislation require the posting of environmental bonds or Good practice 193 similar financial assurance methods to cover the cost of Primary 4 in place environmental rehabilitation post-mining? B. Accountability and Inclusiveness B5 Human Rights, Employment Equity and Environmental Transparency B5.1 Human Rights and Employment Equity Good practice Is government implementing the African Charter for Human 194 Primary partially in 2.5 Rights? place Is the state’s duty to protect human rights (Pillar I of the UN Good practice 195 Guiding Principles on Business and Human Rights, UNGP) Primary partially in 2.5 implemented through a National Action Plan? place Is the government a signatory to the Voluntary Principles on Good practice 196 Primary 1 Security and Human Rights (VPSHR)? not in place Data not In practice, if government is a signatory to the VPSHR, to what In-country 197 available or not .. extent is it monitoring VPSHR implementation? Interview applicable In practice, does the government require companies to carry out In-country Not meeting its 198 1 human rights due diligence as part of the licensing process? Interview own goal Good practice 199 Is there an independent Human Rights Commission? Primary 4 in place Working towards To what extent is the Human Rights Commission adequately In-country meeting its own 200 2.5 staffed to facilitate a grievance and complaint mechanism? Interview goal, but less than half way Working towards To what extent is the Human Rights Commission receiving an In-country meeting its own 201 adequate budget to facilitate a grievance and complaint 2.5 Interview goal, but less than mechanism? half way Are there adequate government rules to promote employment Good practice 202 Primary 4 equity? in place 63 ANNEX 1 THE ZAMBIA MInGov DATA COMPENDIUM Question Data Question Interpretation Score Number Source More than half To what extent is an institution mandated to ensure consistent In-country way towards 203 3 compliance with employment equity rules? Interview meeting its own goal Does the government recognize indigenous peoples on its Data not 204 territory and their rights in relation to mining (free, prior and Primary available or not .. informed consent)? applicable B5.2 Environmental and Social Impact Transparency Are environmental and social impact assessments (or other key Good practice 205 environmental and social impact related documents required such Primary 4 in place as EMMPs) required to be made public? To what extent are environmental and social impact assessments (or other key environmental and social impact related documents In-country Meeting its own 206 4 required such as EMMPs) made public in a way accessible to Interview goal affected communities? C. Institutional Capacity and Effectiveness C5 Community Consultation and Environmental and Social Impact Management C5.1 Impact and Community Consultation Working towards To what extent do mining companies consult with affected In-country meeting its own 207 communities in a timely, meaningful, informed, comprehensive and 2.13 Interview goal, but less than transparent manner? half way Working towards To what extent are comprehensive community development In-country meeting its own 208 2 agreements negotiated prior to mining operations? Interview goal, but less than half way To what extent does the agency or ministry responsible for In-country Meeting its own 209 environmental protection have a say in the approval of mining 4 Interview goal rights? More than half To what extent are operating mining companies setting aside In-country way towards 210 2.88 funds for mine closure? Interview meeting its own goal To what extent do government and mining companies collaborate In-country Not meeting its 211 1 in the planning and implementation of CSR activities? Interview own goal C5.2 Environmental and Social Impact Management Effectiveness To what extent is the institution tasked with monitoring and In-country Not meeting its 212 1 enforcing environmental regulations staffed appropriately? Interview own goal 64 ZAMBIA MINING INVESTMENT AND GOVERNANCE REVIEW Table 7: Question Scores (continued) Question Data Question Interpretation Score Number Source To what extent is the institution tasked with monitoring and In-country Not meeting its 213 enforcing environmental regulations receiving appropriate funding 1 Interview own goal to carry out its task? Working towards To what extent are environmental requirements enforced In-country meeting its own 214 systematically through inspections and penalties for 2.5 Interview goal, but less than non-compliance? half way To what extent is a grievance and complaints mechanism used Data not In-country 215 to challenge decisions by the agency monitoring environmental available or not .. Interview regulation? applicable To what extent are company plans to manage and mitigate the Data not In-country 216 social and environmental impacts of operations reviewed by available or not .. Interview government? applicable To what extent does the government approve environmental and Working towards social impact assessments (or other key environmental and social In-country meeting its own 217 2.5 impact related documents required such as EMMPs) according to Interview goal, but less than fees and timeframes in the regulation? half way To what extent are environmental and social impact assessments (or similar) carried out and approved before a mining license/ In-country Not meeting its 218 1 lease/operating permit is granted as a condition to begin Interview own goal operations? Working towards To what extent are mining companies submitting plans on In-country meeting its own 219 mitigating biodiversity impacts that are free standing annexes to 2.5 Interview goal, but less than environmental and social impact assessments? half way To what extent is the government monitoring compliance with In-country Not meeting its 220 1 environmental requirements for artisanal and small-scale miners? Interview own goal C5.3 Effectiveness of Sureties for Decommissioning Working towards To what extent are the funds for mine closure and environmental In-country meeting its own 221 2.5 rehabilitation kept in an escrow account or bond or similar entity? Interview goal, but less than half way D. Economic Environment D1 Business and Investment Environment D1.1 Impact and Community Consultation Higher 50%- 222 Starting a business – Doing Business indicators Secondary 3 75% 223 Dealing with construction permits – Doing Business indicators Secondary Low 25%-50% 2 65 ANNEX 1 THE ZAMBIA MInGov DATA COMPENDIUM Question Data Question Interpretation Score Number Source 224 Getting credit – Doing Business indicators Secondary Top 75%+ 4 225 Enforcing contracts – Doing Business indicators Secondary Low 25%-50% 2 How would you rate the level of efficiency of customs procedures 226 Secondary Top 75%+ 4 (related to the entry and exit of merchandise)? – WEF GCI How burdensome is it for businesses to comply with governmental 227 administrative requirements (e.g., permits, regulations, reporting)? Secondary Top 75%+ 4 – WEF GCI Perceptions index measuring effectiveness of civil law system – 228 Secondary Low 25%-50% 2 World Justice Project (WJP) Average number of procedures required to start a foreign Higher 50%- 229 Secondary 3 subsidiary – World Bank Investing Across Borders 75% Average number of days required to start a foreign subsidiary – 230 Secondary Lowest 25% 1 World Bank Investing Across Borders D2. Mining Infrastructure D2.1 Mining Infrastructure Data not 231 Quality of roads – WEF GCI Secondary available or not .. applicable 232 Logistics Performance Index – World Bank Secondary Low 25%-50% 2 Extent of infrastructure (for example transport, telephony, and Higher 50%- 233 Secondary 3 energy) – WEF GCI 75% 234 Quality of the railroad system – WEF GCI Secondary Low 25%-50% 2 Quality of port facilities, or port accessibility in case of landlocked 235 Secondary Lowest 25% 1 country – WEF GCI D3. Diversity and Stability of National Revenues D3.1 Diversity and Stability of National Revenues 236 Trend in level of non-extractive revenues over 5 years – IMF GFS Secondary Top 75%+ 4 237. Variation of domestic revenues in real terms over 5 years – 237 Secondary Lowest 25% 1 IMF WEO D4. Macroeconomic Stability D4.1 Macroeconomic Stability 238 Five-year cumulative inflation – IMF WEO Secondary Low 25%-50% 2 66 ZAMBIA MINING INVESTMENT AND GOVERNANCE REVIEW Table 7: Question Scores (continued) Question Data Question Interpretation Score Number Source Data not 239 Credit rating – Standard and Poor's Secondary available or not .. applicable Five-year average total debt service to gross national income Higher 50%- 240 Secondary 3 (GNI) – World Bank WDI 75% D5. National Growth and Savings D5.1 National Growth and Savings Five-year cumulative gross domestic product (GDP) growth – 241 Secondary Top 75%+ 4 IMF WEO Data not 242 Five-year total average debt to GDP – IMF WEO Secondary available or not .. applicable 243 Five-year average adjusted net savings – World Bank WDI Secondary Top 75%+ 4 D6. Skills and Human Capital Availability D6.1 Skills and Human Capital Availability Higher 50%- 244 Perception of the availability of labor/skills – Fraser Secondary 3 75% 245 Gross tertiary education enrolment rate – WEF GCI Secondary Lowest 25% 1 Higher 50%- 246 Quality of math and science education – WEF GCI Secondary 3 75% Higher 50%- 247 Attraction and retention of talented nationals – WEF GCI Secondary 3 75% Good practice Is there a post-secondary school, college or university providing 248 Primary partially in 2.5 curriculum for mining sector development? place 249 Mean years of schooling – Human Development Index Secondary Low 25%-50% 2 Higher 50%- 250 Expected years of schooling – Human Development Index Secondary 3 75% D7. Human Health D7.1 Human Health 251 Life expectancy at birth – Human Development Index Secondary Lowest 25% 1 Death caused by communicable diseases and maternal, prenatal, 252 Secondary Lowest 25% 1 and nutrition conditions (percentage of total) – WB WDI 253 Prevalence of Human Immunodeficiency Virus (HIV) - WB WDI Secondary Lowest 25% 1 67 ANNEX 1 THE ZAMBIA MInGov DATA COMPENDIUM Question Data Question Interpretation Score Number Source E. Political Environment E1 Expropriation Risk E1.1 Expropriation Risk Transfer and convertibility risk, force majeure - OECD country risk Higher 50%- 254 Secondary 3 classification 75% 255 Expropriation risk – Delcredere Ducroire Secondary Low 25%-50% 2 256 Protection of property rights, including financial assets – WEF GCI Secondary Top 75%+ 4 Is the country signatory to the International Center for the Good practice 257 Primary 4 Settlement of Investment Disputes (ICSID) Convention? in place Does the country provide in its domestic law for the international Good practice 258 Primary 4 arbitration of foreign investment disputes? in place Higher 50%- 259 Protecting investors – Doing Business indicators Secondary 3 75% E2. Political Stability E2.1 Political Stability 260 Political stability – WGI Secondary Top 75%+ 4 Order and security (control of crime, civil conflict, and Higher 50%- 261 Secondary 3 violence) – WJP 75% Security Situation (includes physical security due to the threat of Higher 50%- 262 attack by terrorists, criminals, guerrilla groups, etc.) – Secondary 3 75% Fraser Institute E3. Predictable Mining and Tax Policy E3.1 Predictable Mining and Tax Policy Data not How frequently and to what extent were the main features of the 263 Primary available or not .. fiscal regime changed in the past five years? applicable Data not To what extent are the fiscal terms for mining generally stable over In-country 264 available or not .. time or are there ad hoc changes? Interview applicable In-country Not meeting its 265 To what extent is the mining legislation generally stable over time? 1 Interview own goal 68 ZAMBIA MINING INVESTMENT AND GOVERNANCE REVIEW Table 7: Question Scores (continued) Question Data Question Interpretation Score Number Source E4. Control of Corruption E4.1 Control of Corruption Higher 50%- 266 Control of corruption – WGI Secondary 3 75% F. Sustainable Development F1 Development Planning F1.1 Development Planning To what extent is there a current multi-year national Good practice 267 Primary 4 development plan? in place Good practice Does the current multi-year national development plan have a 268 Primary partially in 2.5 section on the mining sector as a driver for development? place Is the multi-year national development plan on track to meet its In-country Not meeting its 269 1.5 targets? Interview own goal Working towards To what extent are plans to leverage the mining sector as a driver In-country meeting its own 270 of development within the national development plan being 2.5 Interview goal, but less than implemented? half way Does the country undertake spatial development plans that Good practice 271 Primary 1 leverage mining and investment locations? not in place Data not To what extent are the plans to develop mining regions within the In-country 272 available or not .. national development plan meeting the targets set? Interview applicable Good practice 273 Is the national development plan publicly available? Primary 4 in place Working towards To what extent, did an informed and meaningful national In-country meeting its own 274 consultation take place during the preparation of the national 2 Interview goal, but less than development plan? half way Good practice 275 Is the mining development policy publicly available? Primary partially in 2.5 place To what extent did an informed and meaningful national In-country Not meeting its 276 consultation take place during the preparation of the mining 1 Interview own goal development policy? 69 ANNEX 1 THE ZAMBIA MInGov DATA COMPENDIUM Question Data Question Interpretation Score Number Source F2. Local Supplier Development F2.1 Local Supplier Development Are local content requirements for goods and services within the Good practice 277 Primary 1 mining value chain accessible to the public? not in place Has the government sought the views of a wide range of In-country Not meeting its 278 stakeholders in preparing the local content policy for goods and 1.19 Interview own goal services within the mining value chain? To what extent do local content regulations for goods and services Good practice 279 Primary 1 within the mining value chain target specific value pools? not in place In practice, are the local content regulations for goods and Data not In-country 280 services in the mining sector targeting an adequate value pool available or not .. Interview based on country capacity? applicable Do local content regulations within the mining value chain have Good practice 281 Primary 1 clear timeframes? not in place Data not To what extent is there support for companies in attaining local In-country 282 available or not .. content targets? Interview applicable Is there within government an enforcement mechanism for local Good practice 283 Primary 1 content regulations? not in place Data not In practice, is there a designated institution monitoring the In-country 284 available or not .. progress of local content policy implementation? Interview applicable Higher 50%- 285 Quality of local suppliers for the mining sector – WEF GCI Secondary 3 75% 286 Number of local suppliers – WEF GCI Secondary Top 75%+ 4 F3. Investment Promotion (Diversification) F3.1 Investment Promotion (Diversification) Good practice 287 Are there no or low tariff on import of capital equipment? Primary 4 in place Are there no or low tariff (or non-tariff barriers) on raw material Good practice 288 Primary 1 exports? not in place 70 ZAMBIA MINING INVESTMENT AND GOVERNANCE REVIEW Table 7: Question Scores (continued) Question Data Question Interpretation Score Number Source Good practice 289 Is there an Investment Promotion Agency? Primary 4 in place Working towards To what extent is the investment promotion agency adequately In-country meeting its own 290 2.5 staffed to fulfill its mandate? Interview goal, but less than half way To what extent is the investment promotion agency receiving In-country Not meeting its 291 1 adequate funding to fulfill its mandate? Interview own goal F4. Leveraging Infrastructure F4.1 Leveraging Infrastructure To what extent do regulations allow for sharing of transport Good practice 292 Primary 1 infrastructure associated with resource extraction? not in place More than half Are there examples of shared infrastructure in the transport sector In-country way towards 293 2.88 related to resource extraction? Interview meeting its own goal To what extent do regulations allow for sharing of energy Good practice 294 Primary 1 infrastructure? not in place In-country Meeting its own 295 Are there examples of shared infrastructure in the energy sector? 4 Interview goal Is there a law that encourages the private financing of Good practice 296 Primary 1 infrastructure? not in place Good practice Is a governmental unit responsible for negotiating the private 297 Primary partially in 2.5 finance of infrastructure? place M. Mining Sector Importance M1 Geological Prospectivity and Potential M1.1 Geological Prospectivity and Potential Data not 298 Mineral resource wealth – World Bank Secondary available or not 2.5 applicable 299 Best Practices Mineral Potential Index – Fraser Institute Secondary Top 75%+ 4 Exploration spending relative to production value – ICMM / SNL Higher 50%- 300 Secondary 3 Metals & Mining 75% 71 ANNEX 1 THE ZAMBIA MInGov DATA COMPENDIUM Question Data Question Interpretation Score Number Source M2. Foreign Direct Investment in Mining M2.1 Foreign Direct Investment in Mining Higher 301 What is the share of mining FDI as % total FDI in the country? Secondary 3 50%-75% M3. State Participation in Mining M3.1 State Participation in Mining Good practice 302 What is the extent of state participation in the mining sector? Primary partially in 3 place Good practice 303 What are the main type of state participation in the mining sector? Primary partially in 2 place Good practice 304 What is the SOE or state equity share in mining projects? Primary partially in 2.5 place What is the total revenue (turnover) of mining sector SOEs and Good practice 305 income from state equity in mining companies as a percentage of Primary 1 not in place GDP? M4. Significance of Mining Revenues M4.1 Significance of Mining Revenues Government revenues from mining as a percentage of sector 306 Secondary Top 75%+ 4 revenues—IMF/National statistics Government revenues from mining as a percentage of total GDP— 307 Secondary Top 75%+ 4 IMF/National statistics M5. Budget Share of Mining Revenues M5.1 Budget Share of Mining Revenues Total mining revenues as a percentage of total government budget 308 Secondary Top 75%+ 4 expenditure—IMF GFS or EITI Data not Mining revenues for subnational governments as a percentage of 309 Secondary available or not .. subnational budgets—National statistics applicable M6. Economic and Employment Share of Mining M6.1 Economic and Employment Share of Mining Data not 310 What is the number of ASM miners? Primary available or not .. applicable 72 ZAMBIA MINING INVESTMENT AND GOVERNANCE REVIEW Table 7: Question Scores (continued) Question Data Question Interpretation Score Number Source Good practice 311 How many local mining supply companies exist? Primary partially in 2 place Mining employment as percentage of total labor force—National Higher 50%- 312 Secondary 3 statistics 75% Data not What is the total SOE employment as a percentage of the mining 313 Primary available or not .. labor force? applicable Higher 50%- 314 Mining sector as percentage of GDP—National statistics Secondary 3 75% 73 www.worldbank.org/mingov