Improving implementation: The law, policy and reality

Legislative and policy shortcomings are, however, not the most important constraint. All our studies found that by far the most serious problem is the gap between what the law or policy says should happen and what does happen. This is common to all the countries. 
In Angola, there is a lack of governmental control and of public information about the presence of China. Policies to attract investment into the extraction industry are in place, but have limited impact. The government’s national geological plan requires urgent and full implementation, and there is a need to carefully monitor and supervise Chinese construction activities. 
The Congolese government has been criticised for engaging in major contractual arrangements without the capacity to effectively manage them. This criticism affects all the contracts the DRC has signed with western or Asian governments and companies. 
Uncontrolled penetration of DRC by the Chinese was facilitated by lack of guidance from the Congolese government, which was not capable of controlling Chinese activities or ensuring that they were registered. As the provincial ministry of labour puts it: 
‘All foreign workers are requested to register with the ministry of labour. How.ever, it has not been easy to convince the Chinese to register and regularise their stay in the DRC. Many remained unregistered for many days and months after they have entered the country.’ 
Every time there was an inspection in Chinese companies, all the Chinese workers went into hiding until the inspectors had left. 
The ministry argued that 80 percent of Chinese investors do not respect the labour laws. In most situations inspectors had to force the Chinese to obey the Congolese law. The control of Chinese traders is made difficult by the protection the Chinese receive from politicians (at the national and provincial levels), many of them on the payroll of the Chinese traders. Consequently, many Chinese enterprises receive special treatment. Under these conditions, government departments with the responsibility to monitor Chinese activities cannot do their work because of persistent political interference. In the early days, many Chinese traders did not appear on official documents. They had good relations with individuals in government departments and thus ignored the re.quirements to complete official documentation. There were also many Chinese working in so-called Congolese companies. It was thus very difficult to evaluate the social actions of informal Chinese investors. The first group of Chinese came to the DRC as traders and not as investors or industrialists. In this phase, it is very difficult to give a correct as.sessment of Chinese investment, because their relationship with the Congo was not accurately documented. Documents at the provincial ministry of labour show the efforts by the provincial government to ensure that most Chinese traders were registered. For example, there are copies of letters sent to companies such as Dong Hui, Zhong Yuan, MKM and Shenand Mining reminding the owners of the companies to respect all the labour regulations from registration to the organisation of labour elections.
It is important to note that there were more Chinese companies in Katanga, but their names did not appear on any list of shareholders. At this stage, according to the ministry of mines, no Chinese company actually held a mining permit. Only one (with the government’s approval) owned a gravel and sand quarry. It had a business relationship with the roads construction company CREC. At Linda mine, the Chinese lady who the team met refused to be interviewed: she confused the team with government staff coming to ask for money. She shouted at the team ‘If it is money that you want, I will not give you any.’
The Chinese are seen as saviours through the construction of infrastructure – roads, bridges, clinics and railways. The Congolese government thus seems to have accepted bad working conditions, human rights abuses of its citizens, and environmental degradation linked to Chinese operations in exchange for infrastructure. The first and second phases of the Chinese presence in the extractive industries suggest that Chinese businesses had no real intention to invest in mining. Because they were in need of raw materials, they set up small companies and sent individuals to buy ores directly from artisanal miners, and then exported them to China. The Chinese carefully studied the conditions of investment, and concluded that buying ore would be more prudent than mining. Concerning the poor behaviour of these companies and individuals in their dealing with the Congolese, the blame should rest with the Congolese government.
It has numerous supervisory and control services, but they are poorly equipped and managed. Moreover, they use informal means to collect taxes from companies. Most Chinese companies appear to be outside the tax collection process. Instead, they paid politicians and public servants who provided them with security and protection for their businesses. 
Public representatives are not indifferent to mining in the DRC – they set up a lot of red tape in the face of any attempts to control protected Chinese companies. There is a problem of conflict between state interests and those of political leaders. China should not be permitted to undermine the fight against corruption and good governance, or to weaken social and environmental standards and perpetuate human rights abuses in the DRC. While the new legal and regulatory framework for mining is consistent with international best practices and offers some opportunities to improve the well-being of local populations in the spirit of sustainable management, there are major challenges with its implementation. The central government’s effective application of the mining law is wholly inadequate.
The state is very weak, in some places non-existent. The national and provincial ministries (mines, environment, labour and health) responsible for implementing and monitoring national laws lack the necessary institutional capacity, expertise and logistical support to enforce the law. The government has also been ineffective in monitoring the corporate social responsibilities of companies. The negative impacts of mining activities on residents are a key concern amongst the Congolese people, but the government is more interested in collecting royalties and taxes than paying attention to the impact of mines on communities. Government has not been able to enforce the mining code which provides mechanisms to minimise mining impact. 
In Mozambique, the trade links and investments of Chinese companies and individuals in the forestry sector are, our study finds, largely exploitative and neo-colonial. This is not entirely due to China’s approach, but also to weak governance structures in Mozambique, and corruption by national and local elites who approve the exploitation of timber without enforcing laws and regulations, especially the obligation to process it before exporting. Notwithstanding a set of laws and regulations with regards to nat.ural resources, the regulatory framework is not properly implemented: 
‘Forestry is the area which has proven the most challenging in the Sino-Mozam.bican relations. Illegal logging by a number of Chinese companies in Zambezia, Cabo Delgado, Nampula and Niassa provinces has become the most contro.versial issue in the Sino-Mozambican relation.’
In 2007, under increasing criticism, the Chinese Government produced a Sustainable Forestry Handbook for Chinese companies operating overseas.32 It called for a ban on illegal logging and clearing of natural forests for plantations. But not only has illegal logging continued, it is suggested that state-owned enterprises (which import 40-50 percent of Mozambican timber exports) are largely responsible for the illegal trade in logs, as they have an incentive to support national companies and favour timber processed in China rather than Mozambique.
Two comprehensive studies of the timber sector in Zambezia province were under.taken recently. In 2006, Catherine Mackenzie published Forest Governance in Zambézia, Mozambique: Chinese Takeaway! and in 2009 Mackenzie, with Daniel Ribeiro, updated her study, producing a report entitled Tristezas Tropicais: Mais Histórias Tristes das Florestas da Zambézia. Five problems were identified in these two studies. 
First, Mackenzie noted several shortcomings with the process of awarding sim.ple licenses in Zambézia at the time of her research.
She found no systematic control over the use of licenses, no records kept of the areas where simple li.cense holders were operating, and no checks to ensure that license holders were felling within their designated areas. As a result, simple licenses for the same areas were issued year after year, leading to over-harvesting and unsustainable management. Many operators felt that rural development was not their respon.sibility but that of the government, suggesting that there may be a problem with incentives in the current system design. Operators did, however, admit to having paid bribes to local officials to obtain their licences. One of the greatest prob.lems identified in this process was the lack of licensing staff compared with the number of applicants. In 2003, there were a mere 30 staff across the whole province. 
Second, forest concessions have been encouraged as opposed to simple licence holders, as it is believed that large industrial companies have an advantage when it comes to controlling an area of forest and have greater capacity to set up plants, creating employment and adding value to the timber industry. Despite official government policy to promote the concession regime and to phase out sim.ple licenses, the number of simple licenses went up every year between 2000 and 2004. Tristezas Tropicais noted that in 2003 there were 138 simple license and 12 industrial operators harvesting under simple licenses while awaiting approval of con.cessions. In 2008, there was a decrease in the number of simple licenses and an increase in the number of concessions.
The percentage of timber licensed to simple license holders fell from 92 percent to 61 percent. However, of the 32 concessions in operation in 2008, 11 had not yet established processing plants. Another impor.tant aspect of the concession model is that, to gain a concession, each firm must present a management plan to the local government. Of the 32 concessions ap.proved in 2008, the researchers of Tristezas Tropicais gained access to 20 plans for analysis. They found that, despite the 2005 management manual designed to assist companies in developing their management plans, no improvement from previous years was evident. Despite international recommendations to use cutting cycles of 30 years, all plans included cycles of 20 years, with the most valuable timber cut in the first 5 to 10 years. The life span of these plans is too short, reflecting the pri.ority of reaping profits over forest sustainability. 
Of greater concern, however, is that, in practice, concessions have turned into a way of informally sub-contracting to simple license holders, contributing to a further loss in transparency. This is particularly the case with Asian firms who do not oversee op.erations in concessions; instead, they provide or sell licenses to loggers and buy the timber off them to export, in much the same way as before concessions were encour.aged.
The researchers of Tristezas Tropicais found that only four concessions were op.erating legally (i.e. they log with their own workforce, process the timber in a sawmill, and export sawn timber or manufactured products). There is still no spatial manage.ment, even with legally operating concessions. As a result, it is believed that there is increasingly dispersed timber. According to the reports, although concessions have increased, forest management has not improved. Short rotations and over-cutting have been institutionalised. The concessions are actually being run by small operators, who are allowed to cut before establishing industries, and there is no replanting. 
Third, unprocessed wood is a problem. In 2004, unprocessed timber exports were justified as there was a lack of industrial capacity in Zambézia. In 2007, 28 percent of total exports were in the form of rough cut timber as opposed to fully squared. Op.erators argue that this is because sawn wood is costly and sells for less than logs. Since 2001 there have been no reports on industrial capacity. At that time, there were eight installations with the capacity to process 51 000 m3. Furthermore, in 2003 a Ministerial Diploma was issued which allowed the export of the five most important species, by reclassifying them as a precious class. The researchers argue that this regulation was pushed through the Council of Ministers due to an Asian lobby that put pressure on the government to change legislation to their benefit. 
Fourth, by law, those carrying timber are required to have a felling license and a trans.port license permit. Yet, in practice, Mackenzie found systematic under-reporting. There were few checkpoints, and policing was unfair (often privileging well-connected operators and Asian buyers to the detriment of villagers with small volumes of hand-sawn timber and established industrial operators). Once again serious understaffing was found to be a problem. The researchers found that the number of checkpoints had increased between 2004 and 2008 from three to five. But the most significant checkpoint at the Port of Quelimane had been downgraded, and less staff were em.ployed to carry out checks. New checkpoints therefore did not mean greater law en.forcement, but greater rent-seeking. 
Fifth, once at the port, two major irregularities were identified by Mackenzie in 2006: the large-scale export of undeclared timber and the illegal practice of transfer pricing. There were significant inconsistencies between the figures reported by the provincial forestry department and customs officials, and many of those interviewed during her research suggested that, given the number of ships that load up in the port, it was impossible for the low figures reported by customs to be correct. In October 2008, the customs office from Maputo launched an investigation in Zambézia and found that there were still widespread cases of illegal exports and under-reporting.34 Mackenzie in 2006 also found documents that revealed that some exporters invoice their overseas clients for logs at prices lower than the current market prices in Quelimane, suggesting that transfer pricing is being carried out to avoid tax payments in China. 
In theory, Mozambican local government authorities approve licences which should be issued according to annual quotas for designated areas to ensure that does not occur. Rural communities should receive 20 percent of licence fees. Sim.ple license holders are required to hold a consultation process with local communities and reach an agreement on compensation as requested by the communities. Concession holders must present management plans for their requested areas, which should also take local community compensation into account as well as harvesting plans that protect the ecosystem of the area to be explored. Once licences are awarded, quotas should not be surpassed, and all timber felled must be reported to local authorities.
Single license holders can sell their timber to local industries to be processed, and con.cession holders must provide industrial plans for processing. Exports must be of processed wood products, and not logs (although for certain species log exports are permitted, given a special regulation passed in 2003 which reclassified commercial timber). But despite the regulations, licenses are regularly awarded without meeting the necessary requirements, quotas are exceeded, harvesting under-reported, local communities are not compensated as agreed, and unprocessed logs are exported, undermining attempts to promote local industry. Bribes are common, and implementation of the law weak, leaving an open door for Chinese firms keen to buy logs to ship back to China. 
The case of Zambezia shows how, notwithstanding the existence of a reasonable set of laws and regulations, inefficient implementation has led to logging that is out of control. The Chinese have provided the drive for the boom through their demand for timber and the access to credit which allows operators to enter the industry. Lack of capacity, weak governance structures, and corruption by local elites who approve the exploitation of timber without enforcing laws and regulations, have undermined the implementation of a regulatory framework designed to protect the forest industry. Most importantly, they have undermined the potential to develop a sustainable indus.try and allow local communities to benefit. The development of a sustainable timber industry will depend on a clearer commitment from the government, whose strategic thinking and vision with regards to the forestry sector has been largely missing. 
In South Africa, the government’s attempt to change the racial composition of mine management has, by its own admission, not succeeded. Minerals Resources Minister Susan Shabangu has described the transformation of the mining industry as ‘not very encouraging’ given that black persons are 83 percent of the population, but 84 percent of mine management positions are still in the hands of whites (predominantly white males).. For the government, accelerating the empowerment of previously disadvantaged individuals is the priority for the mining industry. The National Union of Mineworkers (NUM) has also identified transformation as the industry’s greatest challenge, arguing that compromises in this context cannot be allowed to continue.35 Factors which could undermine South Africa’s attractiveness as an investment destination include rising labour costs and higher prices for electricity.
The implementation of safety laws has had mixed results. The most recent report of the MHSC indicates that the industry had 171 fatalities in 2008, down on the 220 in 2007. Accidents per person hours have improved, but mine managers are not being held liable for accidents as required by law (about 5000 people are injured on the mines every year). Industry representatives believe that achieving the goal of zero harm will take time and will involve broad education programmes generally, not only in the mining industry. Overall, South Africa’s workplace safety record is very poor. The National Union of Mineworkers (NUM) has called on the National Prosecuting Authority to arrest and charge mine managers when fatalities occur. NUM has also encouraged the DMR to speed up mine inspections and to make reports accessible for comment. 
In Zambia, while legislation governing extractive industries is adequate, there are limited capacities in most of the institutions expected to discharge the responsibilities of enforcing it. The concerned departments not only lack capacity, but are regulated by different laws. This proves a challenge when it comes to coordination of actions. The capacities in departments are not homogeneous and have to depend on interventions from other institutions. In the case that one institution does not do its work in time (or properly), there is a chain reaction of inertia and indecision.
Most of the enforcement wings of government remain weak despite the demand for them to be strengthened. For instance, the MSD is a critical department whose capacities should have been strengthened when it was projected that the mining industry was going to experience exponential growth.37 Virtually all institutions charged with the responsibility of enforcing the substantive areas of the legal frameworks are incapacitated. Most do not have the physical presence to consistently monitor and enforce standards and procedures. In addition, they do not have the human resources to enable them to discharge their responsibilities. In some instances, there is lack of clarity on the lead delegated authorising agencies (DAAs) in the enforcement of the various pieces of legislation pertaining to the industry. 
In Zimbabwe, small indigenous miners have fallen prey to Chinese investors who lease the claims for a fee based on tonnage produced. According to an audit report by the Ministry of Mines and Mineral Development, half the companies investigated were operating on such claims without government certificates and licenses. They were only registered with the local authorities. An official report concluded that there is ‘rampant, indiscriminate and flagrant disregard of the provisions of the mining statutes by foreign and local chrome miners’.38 These companies did not keep records on labour and production; the records were said to be kept in Harare, Gweru or China. They were not submitting production records to the relevant authorities, which would seem to suggest that smuggling is rife.  An audit report by the Ministry has shown that half the investigated mines could be involved in smuggling, which not only deprives government of taxes and royalties, but communities of development projects and investment.
Implementation of the Environmental Management Act is problematic: generally companies do not comply with it, and implementation is weak. The audit report also found that most investigated companies had no EIA. Investigations by Sunday Mail Business in 2010 showed that some Chinese miners in the Midlands Province were illegally mining chrome without the requisite EIA reports or the proper mining pa.perwork. The EMA’s inspectorate team went to the extent of shutting down the op.erations of some of these Chinese companies. But according to the Minister of En.vironment these operate as ‘large-scale makorokoza’39 that appear in another area if their operations are closed in one area. The audit report by the Ministry of Mines ob.served that on all the sites visited (Masvingo, Midlands, Mazowe and Mutoko) there were no legally-appointed skilled workers as required by the law, and nor were there records on safety and health. 
Experience teaches that policies that are not coordinated and are not consistent with each other generally lead to the opposite of what was intended. There is lack of co.ordination and consistency between policies at the local government and national lev.els. The audit into the activities of investors in the sector highlighted massive violation of rules. Some companies were operating without first registering or being approved by the ZIA. Although companies from different countries could be exploiting the loopholes presented by the lack of policy coordination at the local and national levels, Chinese companies were singled out in the report. Analysts believe that these compa.nies are capitalising on the excellent bilateral relations between Harare and Beijing to ease themselves into the mining sector. Chapter 5 has also reported on wide-ranging failure to implement labour law.