By Ntombi Mhlongo
Much against people’s beliefs and perhaps lack of knowledge, an opportunity for emaSwati to own shares in mining companies is available.
This is because the existing Minerals Act of 2011 provides for what is known as state participation in the mining sector. Section 133 of the Act has a provision which clearly stipulates that the share interest acquired by the government shall be distributed in such a way that 10 per cent shall be acquired by any person who is a citizen of Eswatini or registered in Eswatini at a fair market value to be determined by the Minister of Natural Resources and Energy.
The provision is in line with the recent directive issued by His Majesty King Mswati III that the government should ensure that citizens reap the full benefits of available mineral resources in the country.
Speech From The Throne
When delivering the Speech from The Throne to mark the Official Opening of the 5th Session of the 11th Parliament, His Majesty The King recounted that the country engaged a consultant to systematically investigate the kingdom’s potential mineral endowment in the Hhohho and Manzini regions.
His Majesty said numerous mineral targets were successfully identified, while another survey will be carried out to cover the Shiselweni and the Lubombo Regions.
“However, it is important that the biggest beneficiaries of these minerals are the people of Eswatini. this requires a review of the mining legislation, taking into account the practices of nations that are successful in this regard, such as the Gulf states. we must ensure that emaSwati reap the full benefits of our God-given resources,” The King said.
In an interview with an expert in the minerals and mining sector, he concurred that indeed there is an opportunity for emaSwati fully acquaint themselves with the existing legislation.
The expert is of the view that most emaSwati are seemingly not aware of the state participation component, yet it is the one that is key for them to reap the benefits as per the emphasis by His Majesty The King. The expert said the clause on state participation provides for EmaSwati to purchase shares from any existing mine.
“What I have discovered is that most emaSwati focus on the bigger picture which is that once one is granted a licence then it is the perfect road to riches. The truth is that a LiSwati can have multiple shares in different companies in the mining sector and that is provided for in the existing law,” he said.
The expert said emaSwati also need to have a clear understanding of the type of licences that can be granted as per the provisions contained in the legislation.
The Act provides that licences can be granted for both small-scale and large-scale business operations and the expert said most people do not bother to even understand how they can benefit from each one of them.
Another observation by the expert is that the country’s citizens also seem to be missing the point on the value addition aspect as far as available minerals are concerned.
He made an example of a mining investor who is always approached by businesspeople who want to offer trucking services which he said means all they want is to depend on someone else for their livelihoods when they can depend on themselves.
“Gold is a value-added product, one can make earrings, cellular components and even cosmetic products. Why don’t we have more EmaSwati exploring such opportunities instead of supplying trucks?” the expert asked.
Elaborating, he said there was a need to diffuse the notion that in the mining sector, people will only get rich only if they own a mine.
“The Act itself is not a problem, it is just that there are a few things that need to be done so that the citizens of the country can understand that they can be role players in this sector. It is not only the investors”.
The expert also advised that emaSwati need to consider being brokers, especially in the gold mining sector.
In terms of making it easier for those who want to venture into making products such as jewellery, he said the agreements that the country has with its SADC peers are there to make it possible. The only challenge, he said, is the laws that govern imports and exports. He made an example of a business that wants to make earrings that have gold stone decorations.
“The person imports the jewellery from Botswana for example, immediately it arrives at the local airport, the expectation is that value-added tax (VAT) has to be paid yet this is not a normal practice in other countries where precious stones trade is a big business”.
In those countries, he said, the VAT is not paid on the stone but on the earring by the consumer. In his view, the demand for VAT limits the business person from making the final product which is why they end up taking the earring to Botswana to have the stone decorations and in that way, the country misses out on the job opportunities that the government is trying to create.
In the Ministry of Natural Resources and Energy annual performance report, it is stated that a process is underway to review the Mines and Minerals Act, 2011 which will come with regulations for small-scale mining.
The ministry also mentioned that it is encouraging local participation in the exploration of minerals.
What the Mines and Minerals Act, 2011 stipulates;
Section 133. (1) The Ingwenyama in trust for the Eswatini Nation shall acquire 25 per cent shareholding without any monetary consideration in a large-scale mining project for which a mining licence is granted.
(2) The share interest arrangement specified in sub-section (1) is without prejudice to the obligation that the Government shall acquire 25 per cent shareholding without any monetary consideration in a large-scale mining project for which a mining licence is granted.
(3) The share interest acquired by the government under sub-section (2) shall be distributed as follows-(a) a 15 per cent of the share interest shall be maintained in an appropriate fund or other financial mechanism established by the government for the purpose of providing investment opportunities to citizens: and
(b) 10 per cent of the share interest shall be acquired by any person who is a citizen of Eswatini as defined in section 82 (3) or registered in Eswatini at a fair market value to be determined by the minister in a manner prescribed by regulations.