Mortgaging the Future in Return for Power – Zimbabwe’s Natural Resources and the 2018 Election

The latest research report by the Centre for Natural Resource Governance explores the nexus between natural resources and the financing of electoral activities in Zimbabwe. The report explores the financial pressures of electoral processes on candidates and their resorting to illicit funds. Read on to understand the extent to which political players in the Zimbabwean electoral processes have relied on “dirty money”.

Introduction

In terms of its 2013 Constitution, Zimbabwe holds local government, parliamentary and presidential elections every five years. These elections are held at the same time hence they are referred to as “harmonised elections,” a term used to describe their simultaneous nature. The holding of these elections demands a lot of funds from central government for the coordination of electoral activities which is done by the electoral management body, the Zimbabwe Electoral Commission (ZEC). The harmonised elections budget for ZEC is often estimated in the region of US$200m-300m. The financial pressure of elections is not only on ZEC but is also felt by the participating political parties as institutions, and individual candidates because of the First-Past-the- Post (FPTP) electoral system that is used in the country.

While ZEC gets most of its funding from the central government and technical partners like the United Nations Development Programme (UNDP), political parties have to source their own funding. An important source of funding exists for those political parties that qualify for treasury funding through the Political Parties (Finance) Act (Chapter 2:11). The relevant provisions of the Act provide as follows: “Subject to this Act, every political party shall be entitled in each parliamentary year to receive from the State sums of money that are payable to it in terms of this Act.” Parties must however meet the criterion set out in the Act. An important criterion is that;

“Each political party whose candidates received at least five per centum of the total number of votes cast in the most recent general election shall be entitled to the same proportion of the total moneys appropriated as the total number of votes cast for its candidates in the election bears to the total number of votes cast for all its candidates in that election.”

In light of this provision, only Zanu-PF and MDC qualified for funding after the 2013 general election. While the US$1.8 million released to the MDC by June 2018, before the elections in July, for instance, might appear big for other purposes, it is not sufficient to pay administrative costs for running a political party, let alone fund a proper election campaign in an election year.

In general, a Zimbabwean party needs not less than US$30 million to fund an effective campaign for its presidential, parliamentary and local government candidates and US$5 million of this amount is what a party needs for election day expenses like training and deployment of election party agents. In a country where money plays a pivotal role in politics, the budget for election campaigns for political parties has become more demanding, even for parties that get some form of support from treasury. More often than not, business interests and cartels pour in money into political parties’ campaigns in return for business contracts if a political party wins election and forms the next government. As a result, dirty funds have found ways into political parties’ finances, posing many challenges and threatening both democracy and the allegiance that elected officials should ideally have towards the electorate.

In an attempt to address challenges of ‘illegal’ money influencing electoral outcomes, most countries, Zimbabwe included, have now established regulations and statutes that govern financing of political parties. The Zimbabwe Political Parties (Finance) Act gives guidelines on political parties funding. Section 6 of this Act gives parameters on the “prohibition of foreign funding” for political parties. A similar law exists in South Africa, the Political Party Funding Act 2019, which among other things, provides for the “establishment and management of a Multi-Party Democracy Fund to fund represented political parties sufficiently”. The South African Political Party Funding Act, like the Political Parties (Finance Act) of Zimbabwe, also seeks to prohibit certain donations made directly to political parties while also providing a legislative framework to compel political parties to disclose donations that parties would have accepted. In many cases, however, effective enforcement of these regulations has proven to be a major challenge. Many challenges — “ranging from the penetration of illicit funds and criminal networks into politics to the high costs of electoral politics and the undue influence of business interests — are exacerbated by badly designed regulations and poor enforcement” (Falguera, E etal, 2014:24).

Consequently, while it is not ideal that illicit funds supplement political parties funding, the reality on the grounds is that such money changes hands during elections. This research, therefore, seeks to unravel the extent to which political parties in Zimbabwe receive illicit funds during elections with particular reference to how parties were funded in the July 30, 2018 elections. References and comparative analyses are, however, made to political parties funding in the 2008 and 2013 elections. This was done to create comparative signposts in order to understand the extent of this practice and to establish whether the phenomenon is a flash in a fry pan or an entrenched practice requiring serious attention in our electoral politics. There are serious threats posed to democracy when illicit money is used to fund political parties’ election campaigns. It is worse when a country’s mineral resources are mortgaged and used as surety for the illicit ‘loans’ that politicians and political parties receive from corporate entities and individuals to fund their election campaigns.

Conclusion

The research found out that elections in Zimbabwe have become very expensive for both political parties and individuals to run, thus campaigns are more and more funded by money from external donors. The situation is worsened by the current economic environment where very few Zimbabweans have disposable income from which they can set aside a fraction to finance political parties of their choice. The collapsed private sector has also made it very difficult for political parties other than ZANU PF to get funding from local business sector.

As noted earlier, annual member subscriptions are also insignificant even for the biggest political parties like Zanu-PF which cannot raise US$800 000 annually. The current economic challenges also affect business investments even in cases where political parties have ventured into business to raise funds, hence most parties end up relying on illegal external funding. Using the country’s vast minerals resources as bait, the incumbent Zanu-PF lures potential funders with mining concessions while their serious challengers, the MDC, in its various formations, use the same modus operandi though with little success. They both promise to avail economic opportunities to friendly funding partners to secure funding for their campaigns in some quid pro quo arrangements with potential funders. It can be concluded that prior to these arrangements, no proper evaluations (geological surveys) of the mining concessions were done to establish their actual value before they are sold out to potential election funders hence most of the concessions are sold for a song.

A case in point is that of Bokai mine, which Zanu-PF, through the ZMDC, sold for $100 000 000-00 to Rautenbach who immediately passed the same mine to CAMEC for a total $175 000 000-00. CAMEC, in turn, after just a month of its purchase of the mine, valued the same for US$1 billion, an increase of US$825 000 000-00 in a space of 30 days. The same can be said of the deal between Zanu-PF and Moti’s African Chrome Fields where the South African businessman is reported to have bought 150 double cab vehicles for Zanu-PF’s 2018 election campaign in return for 300 hectares of chrome fields whose actual value was never disclosed to the public. In 2010, a US$100 000 000-00 donation to Zanu-PF and its proxy, Robert Mhlanga, unlocked 7540 hectares of diamond mining fields in the Marange communal area without proper evaluation of how much the concession was worth in terms of the diamond mineral resources and how much the Zimbabwe public stood to lose from the transaction. Immediately after the US$100 million was released for the purposes of the Zanu-PF election campaign (at the time of the deal, elections were said to be due in 2011 according to the Global Political Agreement between Zanu-PF and the MDC formations) the Mbada concession area, which was initially 1100 hectares of land, was extended by 6440 hectares to a total of 7540 hectares without any plausible explanation for the expansion except for the US$100 million availed to Zanu-PF for its election campaign (Funnekotter letter to IMF 05 December 2013).

The research shows that resources are being plundered by politicians who mortgage them in lieu of financial support for their next election campaigns. Massive advocacy work, therefore, could be done around the depoliticization of the minerals sector to arrest the phenomenon. This will ensure Zimbabweans, both current and future generations, benefit from their vast mineral endowment.

Read the full report here (2MB PDF)

Source: Centre for Natural Resource Governance