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Zambia has achieved a high overall score in implementing the 2019 EITI Standard

Outcome of the Validation of Zambia

Decision number
2021-73
Decision basis
EITI Articles of Association 2019-2021, Article 12.1. ix)
8 December 2021

Board decision

Zambia has achieved a high overall score in implementing the 2019 EITI Standard (90 points). The overall score reflects an average of the three component scores on Stakeholder engagement, Transparency and Outcomes and impact.

The EITI Board commends Zambia for achieving a very high score on Outcomes and impact (93 points), and recognises the progress in ensuring the effectiveness and sustainability of EITI implementation. Zambia EITI’s work in informing changes in the government’s extractive sector policies as well as both government and company practices in extractive governance. Validation has highlighted how industry and government stakeholders have come to rely on Zambia EITI for public awareness, public debate, and policy consultations related to the mining sector.

Zambia has achieved a very high score on Stakeholder engagements (93 points), with strong engagement by government, civil society and companies. The EITI Board recognises that the MSG, the Zambia EITI council (ZEC), has established itself as a robust and flexible platform to oversee all aspects of implementation, including in resolving disputes between various constituencies and stakeholders engaged in extractive industry governance. Consultations indicate that civil society is using EITI data for public debate. Government and industry representatives also actively use their engagements with civil society to inform local communities on extractive sector governance, and the ZEITI Secretariat appears to be actively coordinating capacity building and engagements between several different government entities. While the government has contributed funding for Zambia EITI activities, sustainability of EITI implementation in Zambia will require increased government support. Gender representation on the MSG is not yet balanced, although ZEITI is implementing a plan to address this.

Finally, the EITI Board finds that Zambia has a moderate score on the Transparency component (85 points). The ZEC have leveraged the multi-stakeholder approach to use a risk-based approach to reconciliation in their latest disclosures, addressing stakeholder information needs on the impact of the pandemic on the sector and on government revenues. The EITI Board recognises Zambia’s progress on corrective actions from previous Validations that have strengthened the use of EITI as a diagnostic tool of extractive governance. Further efforts to address requirements of the EITI Standard related to contracts (for Phase II of Validation), beneficial ownership, production and export data as well as disaggregated disclosures of government extractive revenues can facilitate more complex analyses of EITI data to inform reforms in fiscal terms, oversight of state-owned enterprises and other sector reforms. These disclosures can help ensure that governments and companies are effectively monitoring extractive operations and help build public trust in public disclosures. The Board recognises Zambia’s efforts to exceed basic requirements of the EITI Standard in its participation in an ongoing EITI review of government mechanisms for monitoring production and export data related to industrial and energy minerals, as well as gemstones.

The Board has determined that Zambia will have until a next Validation commencing on 1 October 2024 to carry out corrective actions regarding contracts (Requirement 2.4), beneficial ownership (Requirement 2.5), production data (Requirement 3.2), export data (Requirement 3.3) and on disaggregation (Requirement 4.7) of revenue data.

Failure to demonstrate progress on Transparency in the next Validation may result in temporary suspension in accordance with Article 6 of the EITI Standard. In accordance with the EITI Standard, the Zambia EITI Council may request an extension of this timeframe or request that Validation commences earlier than scheduled.

Background

In December 2019, the Board agreed that Zambia had made “meaningful progress with considerable improvements” in implementing the 2016 EITI Standard. The next Validation of Zambia was scheduled to commence on 2 December 2020. Due to the transition to the revised Validation model, the Board rescheduled the Validation to commence on 1 April 2021. On 10 May 2021, the EITI Board approved Zambia's request for an extension to its Validation deadline, to 1 July 2021.

Zambia EITI collated documentation for Validation using the Board-agreed data collection templates on Stakeholder engagement, Transparency and Outcomes and impact. The files are available on Zambia EITI website. The International Secretariat’s Validation team prepared an initial assessment following the Validation procedure and Validation Guide. In accordance with the Validation procedure, a public call for stakeholder views on EITI implementation was open from 1 June to 1 July. Stakeholder consultations were held virtually from 14 July to 19 August 2021. The prolonged consultation period was due to Covid-19-related issues and difficulties in consulting stakeholders.

The draft assessment was shared with the ZEC for feedback on 27 August, with a deadline of 24 September. The ZEC requested a four-week extension to the commenting deadline[1], to which the EITI International Secretariat awarded an extension to 25 October 2021, in accordance with the EITI Board’s Decision 2020-32Comments from the ZEC were received on 24 October, after which the assessment was finalised for the Validation Committee’s review.

The Validation Committee considered the case at its 9 November 2021 meeting and agreed an assessment of ‘fully met’ on Phase I of the Validation of Requirement 2.4 on license and contract disclosure, but with corrective actions related to Phase II of Requirement 2.4 applicable from January 2022.

In accordance with Article 4.c of Section 4 of the 2019 EITI Standard, the overall assessment consists of component scores on Stakeholder engagement, Transparency and Outcomes and impact, as well as an overall numerical score. The component score represents an average of the points awarded for each applicable requirement. The points awarded on the effectiveness and sustainability indicators are added to the component score on Outcomes and impact. The overall score is the average of the three component scores.

Corrective actions and strategic recommendations

The EITI Board agreed the following corrective actions to be undertaken by Zambia. Progress in addressing these corrective actions will be assessed in the next Validation commencing on 1 October 2024:

  1. In accordance with Requirement 2.4, by 1 January 2022, Zambia should ensure that any contracts and licenses in the extractive industries that are granted, entered into, or amended from 1 January 2021 are publicly disclosed in their entirety. In accordance with Phase II of the Validation of Requirement 2.4.b, the ZEC is expected to have addressed any barriers to comprehensive disclosure. If all licenses have standard stipulations as mandated by law and there are no deviations from such provisions in practice, the onus is on Zambia to substantiate such claims. In accordance with Requirement 2.4.c.ii, Zambia should clarify which license appendixes and attachments exist for licenses and contracts, publish a list of all active contracts and licenses, and indicate which are publicly available versus which are not. In accordance with Requirement 2.4.c.iii, Zambia should publish an explanation for any deviations between disclosure practices and legislative or government policy requirements concerning the disclosure of contracts and licenses.
     
  2. In accordance with Requirement 2.5 and to prepare for the second phase of Validation of Requirement 2.5 from January 2022 onwards, Zambia is required to ensure that the beneficial ownership of all companies holding or applying for a mining, oil and gas license is comprehensively and reliably disclosed as of January 2022. In the meantime, in accordance with Requirement 2.5.c, Zambia is required to ensure that the ZEC publishes an assessment of the comprehensiveness and reliability of beneficial ownership disclosures of all companies holding or applying for a mining or oil and gas license. Publicly listed companies, including wholly owned subsidiaries of companies listed on stock exchanges, are required to disclose the name of the stock exchange, and include a link to the stock exchange filings where they are listed, in accordance with Requirement 2.5.f.iii. Lastly, Zambia is also required to ensure that legal ownership data is available either through Zambia EITI reporting or through systematic disclosures, in accordance with Requirement 2.5.g.
     
  3. In accordance with Requirement 3.2, Zambia should ensure that production volumes and values are made publicly accessible for all commodities, including for each gemstone and industrial/energy mineral produced.
     
  4. In accordance with Requirement 3.3, Zambia should ensure that export volumes and values are made available for all commodities including coal and silver, highlighting where production does not translate into exports. Additionally, Zambia should ensure that export volumes and values are publicly accessible for various gemstones, and for different construction-related products such as cement versus limestone.
     
  5. In accordance with Requirement 4.7, the ZEC should continue to improve its coverage of government revenues by project (license). In order to further improve on Zambian government systems, and the ability to monitor payments on a per-license basis, Zambia EITI is encouraged to engage the MMMD and ZRA to ensure that payments are recorded as part of regular corporate filings to government, which occur on a per-license basis. Zambia EITI may wish to explore with these government agencies whether any changes are needed in laws or in statutory instruments and regulations, to ensure that data is regularly collected by government agencies on a per-license basis.

Strategic recommendations

Zambia is encouraged to consider the following recommendations to strengthen EITI implementation:

Outcomes and impact

  1. To improve public debate, ZEITI could consider developing summaries of EITI reports focusing on different constituent needs. This could include developing summaries on sub-national payments and environmental issues for local communities. Government could also benefit from receiving an overview of the economic contribution from industry and the areas were there may be wide differences in revenue or payment data. Other summarised data could include an overview of  and progress on beneficial ownership and contract transparency.

  2. To enhance the impact of EITI implementation in Zambia, the ZEC is encouraged to strengthen follow up on recommendations from EITI reporting particularly on contracts disclosure, beneficial ownership and providing a legal basis for EITI implementation. Putting a timeline to action plans around some of the areas could accelerate progress.

  3. To improve the impact of EITI implementation, ZEC is encouraged to continue doing complex analyses of EITI data and disclosures to inform national discussions on fiscal regime reforms, oversight of state-owned enterprises and debt.

  4. To strengthen EITI implementation, the ZEC may wish to further improve public access to open data. Additionally, ZEC is encouraged to ensure that any additional efforts to consider marginalised groups by accommodating different languages, ages, genders or others, is actively documented and published to ensure added accessibility by all interested stakeholders, including for Zambia EITI publications.

Stakeholder engagement

  1. To strengthen the accountability of the EITI process in Zambia, the ZEC is encouraged to make public and available online ZEC meeting minutes and a register of the ZEC decisions.

  2. To enhance the impact of EITI implementation in Zambia, the government is encouraged to strengthen follow up on recommendations from EITI reporting particularly on contracts disclosure, beneficial ownership and providing a legal basis for EITI implementation.

  3. ZEITI is encouraged to continue its demonstrated progress on improving gender representation on the ZEC, by setting clear goals of gender balance per constituency, and to ensure adherence starting from membership renewals scheduled for the second quarter of 2022 and onwards. Additionally, Zambia EITI and ZEC should engage with diverse stakeholders particularly at subnational level.

Transparency

  1. To further progress on systematic disclosures of exploration activities in Zambia, the ZEC is encouraged to collaborate with the Ministry of Mines and Minerals Development, to ensure that an overview of exploration activities is provided by the Zambian government on a regular basis, in accordance with Requirement 3.1.

  2. To fully capture the contribution of mining to the economy, ZEC should attempt to document government plans to formalise Artisanal and Small-scale Miners' subsector. This could include documentation of plans of ZCCM-IH to increase its participation in mineral trading markets, particularly in gold trade.

  3. To further progress on systematic disclosures of the legal and fiscal framework for the extractive sector in Zambia, the ZEC is encouraged to collaborate with the Ministry of Mines and Minerals Development, to ensure that all relevant legal acts and regulations are systematically disclosed, provide an overview of how the government oversees extractive activities, including which institutions are responsible for oversight over the sector. The regular publications could be reviewed annually by the ZEC, to assess whether the disclosures conform with Requirement 2.1, including highlights of relevant changes and/or reforms underway or recently completed.

  4. In order to strengthen systematic disclosures, Zambia EITI is strongly encouraged to work with the Mining Cadastre (MCO) Office to explore how license certificates and all their appendixes can be made publicly accessible through the existing cadastre system, and to ensure that information is further interlinked with the MOSES system and other government portals. Zambia EITI is recommended to complete its on-going study on contract transparency and use its findings and recommendations to overcome the barriers to disclosures. Zambia may also wish to ensure that the draft Extractive Transparency and Accountability Initiative Bill progresses and includes adequate provisions that enable contract and license transparency. Additional improvements could also be made in data accessibility, by incorporating opportunities for downloading the full lists of licenses and license holders in open data formats. This feature is currently held within the internal systems and it may be possible to provide it to external audiences as well. To this end, Zambia EITI and the MCO could work together to identify sources for funding to ensure that the necessary revisions and changes to the system are made.

  5. To strengthen EITI implementation, ZEITI is encouraged to collaborate with the Zambia Environmental Management Agency (ZEMA) to systematically disclose environmental licences granted each year, any environmental audits carried out including audits of the environmental management fund, and environmental reports produced by companies.

  6. To further strengthen citizens' understanding of environmental rights and obligations, Zambia EITI could consider summarising the precedence-setting court decisions driven by civil society's litigations related to the environmental impact of mining operations.

  7. To ensure continued adherence with Requirement 2.3.c, the ZEC should ensure that license registry information gaps, including for licenses held by non-material entities, are highlighted and remedied through the EITI reporting process, ahead of EITI Validation processes.

  8. To further enhance the impact of EITI implementation, the Zambia EITI Council is encouraged to engage with the Ministry of Mines and Minerals Development and the Zambian Revenue Authority to further expand the scope and added value of the MOSES system, in order to ensure regular monitoring and valuation of commodities beyond base and precious metals. The Government of Zambia through the Ministry of Minerals and Mining Development should consider options for obtaining the necessary funds to ensure expansion of the MOSES system to cover industrial and energy minerals and gemstones. This could include use of the national budget or engaging with development partners.

  9. To ensure continued adherence with Requirement 4.9.a, the ZEC should rectify the procedural errors which are highlighted as part of this Validation report. Zambia should ensure that there is a clear assessment, for each material company, whether they have conformed with applicable laws and regulations related to external audits. The assessment should indicate (i) which companies should be subject to credible and independent audits, and (ii) which companies undertook such audits and complied with filing obligations towards government entities.

The government and the ZEC are encouraged to consider these recommendations, and to document the ZEC’s responses to these recommendations in the next annual review of outcomes and impact of EITI implementation.

Scorecard for Zambia: 2021

Assessment of EITI requirements

  • Not met
  • Partly met
  • Mostly met
  • Fully met
  • Exceeded
Component View more
Score

The three components of Validation each receive a score out of 100, as follows:

Low 0-49
Fairly low 50-69
Moderate 70-84
High 85-92
Very high 93-100
View more

Outcomes and impact

93 Very high
Scorecard by requirement
Assessment
Assessment of EITI Requirements

Validation assesses the extent to which each EITI Requirement is met, using five categories. The component score is an average of the points awarded for each requirement that falls within the component.

Outcomes and impact

Effectiveness and sustainability indicators

3

1.5 Work plan

90

Zambia have fully met the objective that the annual planning for EITI implementation supports implementation of national priorities for the extractive industries while laying out realistic activities that are the outcome of consultations with the broader government, industry, and civil society constituencies. The 2021-2022 workplan is structured using a clear results chain showing how the activities are expected to contribute to identified outcomes and impact. The templates demonstrate clear links between the objectives and national priorities including the Companies Act implementation, the 7th National Development Plan, Zambia’s Economic Recovery Plan (2020-2023) and public interest as indicated through media coverage. The workplan covers the scope of the standard and there is focus on newer requirements of the Standard including beneficial ownership disclosures, gender mainstreaming and environmental disclosures. Operational and strategic objectives related to Validation, systematic disclosures, and the institutionalisation of EITI implementation through the ZEITI Bill are also covered in the workplan. The workplan is costed and identifies funding sources. The level of progress in addressing this requirement has been maintained since the previous Validation.

7.1 Public debate

90

Zambia have fully met the objective to enable evidence-based public debate on extractive industry governance through active communication of relevant data to key stakeholders in ways that are accessible and reflect stakeholders’ needs. As per the requirement, Zambia have ensured that disclosures are comprehensible by disclosing summaries of findings from audit reports relevant to the sector, as well as MMMD monitoring reports on production and export data. EITI data is actively used to inform Parliamentary debate and decision-making within government as evidenced by ZEITI being asked to provide evidence on licensing, legal reform, and discussions on the mining fiscal regime. Zambia has exceeded the requirements by undertaking more analytical work in the form of financial modelling reports, a quarterly production bulletin and reports that cover ASM and other issues, in addition to responding to regular media and governmental requests for data and analysis. Even though dissemination efforts have been affected by the COVID-19 pandemic, events have been led by civil society members of the ZEC, and ZEITI meetings have been live-streamed through social media channels. However, ZEITI is not exceeding all recommendations of this requirements as it does not yet provide sufficient evidence for catering to differences in age, gender, ethnicity, languages, or others. Written comments by ZEC argued that meetings with local communities are held in local languages and in English, with an explicit focus on gender balance in both engagement and in participation in outreach activities. While recognising these comments, the International Secretariat did not locate explicit documentation or data translated to local languages or specific actions that would cater to marginalised groups in the documentation provided, with the exception of a hashtag referring to gender equality.

7.2 Data accessibility and open data

90

Zambia have fully met the objective to enable the broader use and analysis of information on the extractive industries, through the publication of information in open data and interoperable formats. ZEITI has an policy that mandates open format publication and use, and publish EITI data on production, exports, and licences in Excel format on their ZEITI portal. ZEITI has finalised all summary data files for all fiscal years covered by EITI reporting. Data on production and exports is collated through the government system named MOSES and is shared monthly with Zambia EITI, Zamstats and ZRA. However, the government and companies themselves do not publish most information online using open formats. Zamstats publishes monthly data in the form of a pdf bulletin. This covers some export data. Zamstats also has an open data portal although this does not have the latest data. Zamstats and ZEITI have begun applying Harmonised System commodity codes in their regular reporting which ensures much better clarity and comparability in their disclosures.

7.3 Follow up on recommendations

90

Zambia have fully met the objective to ensure that EITI implementation is a continuous learning process that contributes to policymaking, based on the ZEC regularly considering findings and recommendations from the EITI process and acting on those recommendations it deems are priorities. The ZEC uses the EITI report to review progress in meeting recommendations from the EITI process. ZEITI also submitted evidence demonstrating that recommendations from EITI implementation are the focus of the current workplan and there is an annual process of reviewing progress in implementation. This implementation status reports highlights if a recommendation is at planning stage, partially implemented or fully implemented. The level of progress in addressing this requirement have been maintained since the previous Validation.

7.4 Review of outcomes and impact of implementation

90

Zambia have fully met the objective of ensuring regular public monitoring and evaluation of implementation, including evaluation of whether the EITI is delivering on its objectives, with a view to ensuring the EITI’s own public accountability. The level of progress in addressing this requirement have been maintained since the previous Validation.

Stakeholder engagement

92.5 High
Scorecard by requirement
Assessment
Assessment of EITI Requirements

Validation assesses the extent to which each EITI Requirement is met, using five categories. The component score is an average of the points awarded for each requirement that falls within the component.

Multi-stakeholder oversight

1.1 Government engagement

90

There is evidence of high government engagement in EITI implementation in Zambia. Both the Ministry of Mines and Mining Development and the Ministry of Finance actively participate in EITI. The Secretary to the Treasury chairs the ZEC. The Minister of Mines recently launched the 2019 EITI report. The national secretariat has high capacity and commitment. The government partly funds EITI implementation. There was a reduction in funding in 2020, in the wake of the Covid-19 pandemic. The Secretariat’s assessment is that the objective of the government’s engagement in EITI implementation is fully met and the level of progress in addressing this requirement have been maintained since the previous Validation.

1.2 Industry engagement

90

Zambia have fully met the objective of ensuring that extractive companies are fully, actively and effectively engaged in the EITI, both in terms of disclosures and participation in the work of the multi-stakeholder group, and that the government ensures an enabling environment for this. The representative body of small-scale miners also actively participate in EITI activities. The level of progress in addressing this requirement have been maintained since the previous Validation.

1.3 Civil society engagement

90

Zambia have fully met the objective of ensuring that civil society is fully, actively and effectively engaged in the EITI process, and that there is an enabling environment for this. The active participation of civil society in the EITI process is key to ensuring that the transparency created by the EITI can lead to greater accountability and improved governance of oil, gas, and mineral resources. The provisions related to civil society engagement seek to establish the conditions that permit this to occur over time. Documentation and stakeholder consultations imply there has been a legal dispute between a mining company and a CSO representatives. However, all stakeholders confirmed that the constituencies resolved representation issues and the matter separately without affecting EITI implementation. Obstacles do not influence CSOs’ freedom to express views, operate, and associate on issues related to the EITI. The level of progress in addressing this requirement have been maintained since the previous Validation.

1.4 MSG governance

100

The ZEC have exceeded the objective that there is an independent ZEC that can exercise active and meaningful oversight of all aspects of EITI implementation that balances the three main constituencies’ (government, industry and civil society) interests in a consensual manner. As a precondition for achieving this objective, the ZEC must include adequate representation of key stakeholders appointed on the basis of open, fair and transparent constituency procedures, make decisions in an inclusive manner and report to wider constituencies. The ZEC has technical working groups on gender and legislative advocacy, and has considered gender-balance in the election of new members. Many elections have been postponed due to the COVID-19 pandemic until Spring 2022, but newly elected representatives are conforming with this ambition within each constituency (4 out of 10 new representatives were female from 2020 onwards). ZEITI has been able to extend government participation beyond the ZEC members. Agencies such as PACRA and the OAG are actively engaged in EITI implementation. Government departments share information requested by EITI regularly and make use of EITI disclosures and analysis in their work. ZEITI has emerged as a platform to consult and influence policy discussions from an evidence basis. Government engagement is beyond regular participation in the ZEC and in the reporting process. The government consults ZEITI in various policy processes. This includes on legal reform such as on the ongoing review of the Mines and Minerals Act and the proposed development of the ZEITI Bill. PACRA has consulted with ZEITI on strengthening BO disclosures while the Ministry of Finance and the Ministry of Mines have consulted with ZEITI on the mining fiscal regime including on engagements with the IMF.

Transparency

83.5 Moderate
Scorecard by requirement
Assessment
Assessment of EITI Requirements

Validation assesses the extent to which each EITI Requirement is met, using five categories. The component score is an average of the points awarded for each requirement that falls within the component.

Overview of the extractive industries

3.1 Exploration data

90

Zambia have fully met the objective of ensuring public access to an overview of the extractive sector in the country and its potential, including recent, ongoing, and planned significant exploration activities. The level of progress in addressing this requirement have been maintained since the previous Validation.

6.3 Contribution of the extractive sector to the economy

90

Zambia have fully met the objective of ensuring a public understanding of the extractive industries contribution to the national economy and the level of natural resource dependency in the economy. The level of progress in addressing this requirement have been maintained since the previous Validation, providing data for the extractive sector’s contribution to GDP, government revenues, and exports. Additionally it provides employment data disaggregated by gender. ZEITI notes that there is no data to estimate informal sector activity, though it is not a significant contributor to macroeconomic indicators.

Legal and fiscal framework

2.1 Legal framework

90

Zambia have fully met the objective of ensuring public understanding of all aspects of the regulatory framework for the extractive industries, including the legal framework, fiscal regime, roles of government entities and reforms. The level of progress in addressing this requirement have been maintained since the previous Validation.

2.4 Contracts

90

Zambia have fully met the Phase I of this requirement, with the objective to ensure the public accessibility of all licenses and contracts underpinning extractive activities. Additional efforts will be needed for Zambia to fully meet Phase II of the requirement, to be assessed in its next Validation. Licenses awarded in 2021 are not publicly disclosed. In their comments to the draft Validation report, ZEC noted that government entities do not deviate from its (non-disclosure) policies on license and contract disclosures. Additionally, there is currently no legal framework or practice guaranteeing comprehensive disclosure of the contents of future or current licenses. However, Zambia EITI have made a first attempt to provide a partial list of which extractive licenses, concessions and development agreements are publicly available, through third-party sources, but only for a few licenses awarded ahead of the latest legislation. Zambia EITI also publishes the complete list of licenses that exist in Zambia, while noting that no license or contract is currently systematically disclosed apart from through third-party sources. However, Zambia EITI is also currently undertaking a study to further its ambitions for public disclosure of all licenses and contracts awarded or amended in 2021 onwards. ZEC noted that this study, combined with other activities such as adoption of a transparency bill, all represent a cogent plan for overcoming technical and legal challenges to contract disclosure. In its interpretation of what constitutes a “published plan with a clear time frame reflected in work plans addressing any barriers to comprehensive disclosure”, the International Secretariat considers that Phase I of EITI requirements on license and contract disclosure have been fully met. However, there are still concerns related to whether Zambia EITI will be able to fully meet the requirements of Phase II, when legal and practical barriers to contract disclosure must have overcome and that all new extractive contracts and licenses are fully disclosed from 1 January 2022 onwards.

6.4 Environmental impact

Not assessed

Requirement 6.4 is an encouraged aspect of the EITI Standard and is therefore not assessed in Validation unless there is evidence that the country has exceeded the requirement. Still, Zambia have met the objective of providing a basis for stakeholders to assess the adequacy of the regulatory framework and monitoring efforts to manage the environmental impact of extractive industries, and to assess extractive companies’ adherence to environmental obligations. The report clarifies the role of various government agencies, the nature of an Environmental Protection Fund which provides financial assurances of environmental rehabilitation after mine closure, as well as the lack of public access to Environmental Impact Assessments and similar documentation through centralised government portals.

Licenses

2.2 Contract and license allocations

100

Zambia have exceeded the objective of this requirement, to provide a public overview of awards and transfers of oil, gas and mining licenses, the statutory procedures for license awards and transfers and whether these procedures are followed in practice. While an audit report of 2017 caused concerns surrounding the award processes of several mining licenses, the report now summarises these findings, as well as the recommendations and follow up from government. The report goes beyond what is required by the EITI Standard in providing an overview of non-trivial deviations from statutory processes.

2.3 Register of licenses

90

Zambia have fully met the objective of this requirement to ensure the public accessibility of comprehensive information on property rights related to extractive deposits and projects. While some disclosure gaps were identified through documentation review, the gaps were remedied by the Mining Cadastre Office by the time of drafting this assessment, and the level of progress in addressing this requirement have been maintained since the previous Validation.

Ownership

2.5 Beneficial ownership

60

Zambia have mostly met the objective of this requirement to enable the public to know who ultimately owns and controls the companies operating in the country’s extractive industries, particularly those identified by the ZEC as high-risk, to help deter improper practices in the management of extractive resources. While most aspects of Phase I of beneficial ownership requirements have been addressed, there is no evidence that the ZEC has published an assessment of the comprehensiveness and reliability of beneficial ownership disclosures to date from all companies holding or applying for extractive licenses (i.e. not only of material companies included in the scope of EITI reporting in accordance with EITI Requirement 2.5.c). In its comments to the draft version of this assessment, ZEC indicated that most technical aspects of the requirement are addressed, though also confirmed that some gaps and challenges exist. In addition, the PACRA's company register and portal does not provide the name of the stock exchange where publicly-listed companies (or their wholly-owned subsidiaries) are listed. Lastly, legal ownership of extractive companies is only partially disclosed by Zambia EITI, and while the PACRA registry contains some information on legal owners, for most companies it is not possible to ascertain that all legal owners and their respective shares have been disclosed. BO data is not available through the PACRA register for the material companies.

State participation

2.6 State participation

90

Zambia have fully met the objective of ensuring an effective mechanism for transparency and accountability for well-governed SOEs and state participation more broadly through a public understanding of whether SOEs’ management is undertaken in accordance with the relevant regulatory framework. This information provides the basis for continuous improvements in the SOE’s contribution to the national economy, whether financially, economically or socially. The level of progress in addressing this requirement have been maintained since the previous Validation.

4.2 In-kind revenues

Not applicable

Requirement 4.2 remains 'Not Applicable' in Zambia in the period under review. The SOE operating in the mining sector, Zambia Consolidated Copper Mines – Investment Holding (ZCCM-IH), or other government agencies do not receive revenues paid in kind or directly from the sale of the state’s share of production.

4.5 SOE transactions

90

Zambia have fully met the objective of ensuring the traceability of payments and transfers involving SOEs and strengthen public understanding of whether revenues accruable to the state are effectively transferred to the state and of the level of state financial support for SOEs. The level of progress in addressing this requirement have been maintained since the previous Validation.

6.2 SOE quasi-fiscal expenditures

Not applicable

Requirement 6.2 remains 'Not Applicable' in Zambia in the period under review. The SOE operating in the mining sector, Zambia Consolidated Copper Mines – Investment Holding (ZCCM-IH), does not appear to make material quasi-fiscal payments. There is only evidence of smaller social contributions being made, which are disclosed in the company’s annual financial report.

Production and exports

3.2 Production data

60

Zambia have mostly met the objective of ensuring public understanding of extractive commodity(ies) production levels and the valuation of extractive commodity output, as a basis for addressing production-related issues in the extractive industries. Since the previous Validation production values of Amethysts, Dolomites and Quartz have not been provided for 2019. ZEITI has also not performed additional disclosures as in past years to cover additional commodities missing from EITI reports. Comments from ZEC provided reasoning behind why such data is difficult to collect and publish, but did not indicate why Zambia EITI’s former disclosures of production data were not extended to 2019. Lastly, as identified in previous Validations, constraints continue to exist in the MOSES system’s scope. Thus this leads to capacity constraints of the related government agencies (MMMD and ZRA), providing comprehensive and disaggregated production data due to a non-digital monitoring system for industrial and energy minerals, as well as gemstones.

3.3 Export data

60

Zambia have mostly met the objective of ensuring the public understands of extractive commodity(ies) export levels and the valuation of extractive commodity exports, as a basis for addressing export-related issues in the extractive industries. Since the previous Validation, Zambia has improved on data access and interoperability by publishing export numbers in open data formats applying international data standards. However, export volumes and values of different gemstones and industrial minerals have not been provided for individual commodities nor has it been for cement or limestone products specifically. Comments from ZEC referred to example data from ZRA, though none of the information appeared to cover the gaps of 2019 export volumes and values for all commodities.

Revenue collection

4.1 Comprehensiveness

90

Zambia have fully met the objective of ensuring comprehensive disclosures of company payments and government revenues from oil, gas, and mining as the basis for detailed public understanding of the contribution of the extractive industries to government revenues. The level of progress in addressing this requirement have been maintained since the previous Validation.

4.3 Infrastructure provisions and barter arrangements

Not applicable

Requirement 4.3 remains 'Not Applicable' in Zambia in the period under review. The level of progress in addressing this requirement have been maintained since the previous Validation.

4.4 Transportation revenues

Not applicable

Requirement 4.4 remains 'Not Applicable' in Zambia in the period under review. The level of progress in addressing this requirement have been maintained since the previous Validation.

4.7 Level of disaggregation

60

Zambia have mostly met the objective of this requirement to ensure disaggregation in public disclosures of company payments and government revenues from oil, gas and mining that enables the public to assess the extent to which the government can monitor its revenue receipts as defined by its legal and fiscal framework, and that the government receives what it ought to from each individual extractive project. Zambia has adequately identified what constitutes a project in the Zambian context, as well as which revenue streams are levied/imposed on project level. The approach taken to report revenues by Zambia EITI is also fully in line EITI's Requirement 4.7. However, there are weaknesses in companies' actual reporting of revenues by project, where only 70% of companies’ payments that were made by project were reported as such. The companies that failed to provide information with adequate detail include Kalumbila Minerals Limited, ZCCM Investments Holdings Plc, Kagem Mining Ltd, Sino-Metals Leach Zambia Ltd, Larfage Cement Zambia Plc, and CNMC Luanshya Copper Mines Plc. Even so Zambia EITI has greatly increased the coverage of data per project, increasing its coverage from 30% in 2018 to 70% in 2019. However, the barriers for the government to report mineral revenues by project is an issue for the sustainability for the availability of project-level data, and the report falls short of providing concrete recommendations for how to overcome this issue of government systems in the medium- to long-term.

4.8 Data timeliness

90

Zambia have fully met the objective of ensuring that public disclosures of company payments and government revenues from oil, gas and mining are sufficiently timely, as defined by the EITI Standard, to be relevant to inform public debate and policy-making. The level of progress in addressing this requirement have been maintained since the previous Validation.

4.9 Data quality and assurance

90

Zambia have fully met the objective of ensuring that appropriate measures have been taken to ensure the reliability of disclosures of company payments and government revenues from oil, gas and mining. The aim is for the EITI to contribute to strengthening routine government and company audit and assurance systems and practices and ensure that stakeholders can have confidence in the reliability of the financial data on payments and revenues. The EITI report falls short of providing an explicit/detailed overview of which precise companies or government entities have undergone audits. Still, stakeholder consultations confirmed that the additional assurance procedures are sufficient for stakeholders to maintain confidence in the reliability of the financial data in the EITI Report. Finally, the report improves from previous validations of Zambia by providing an assessment of the reliability of government and company data, and an independent review by the EITI Secretariat of companies’ filings did not reveal any significant deviation by companies from their annual returns obligations to PACRA, even if deviations were publicly accessible and confirmed by the IA.

Revenue management

5.1 Distribution of revenues

90

Zambia have fully met the objective of ensuring the traceability of extractive revenues to the national budget and ensure the same level of transparency and accountability for extractive revenues that are not recorded in the national budget. The level of progress in addressing this requirement have been maintained since the previous Validation.

5.3 Revenue management and expenditures

Not assessed

Progress in addressing Requirement 5.3 is not assessed in Validation unless there is evidence that the country has exceeded the requirement. The level of progress in addressing this requirement have been maintained since the previous Validation.

Subnational contributions

4.6 Subnational payments

90

Zambia have fully met the objective to enable stakeholders to gain an understanding of benefits that accrue to local governments through transparency in companies’ direct payments to subnational entities and to strengthen public oversight of subnational governments’ management of their internally-generated extractive revenues. Direct payments made by companies to subnational government entities are included in the EITI Report, consisting of property rates and annual business fees paid directly to local councils. The level of progress in addressing this requirement have been maintained since the previous Validation.

5.2 Subnational transfers

Not applicable

Requirement 5.2 remains 'Not Applicable' in Zambia in the period under review. No transfers between national and subnational government entities are explicitly related to only revenues generated by the extractive industries and mandated to be distributed using a revenue-sharing formula. The level of progress in addressing this requirement have been maintained since the previous Validation.

6.1 Social and environmental expenditures

Not applicable

Requirement 6.1 remains 'Not applicable' in Zambia in the period under review. Zambia does not have mandatory social expenditures. Voluntary expenditures (Annex 8) have been unliterally disclosed disaggregated by beneficiary, cash/in-kind and the nature of support (with the exception of Lubambe, Maamba, Kansanshi). Mandatory environmental payments that relate to the Environment Production Fund are partially disclosed though we do not find to be payments to government. Payments to the EPF only appear to be held in trust by the Government of Zambia, until mine project closure. If a company adequately rehabilitate their mine areas, a company would be reimbursed their original contribution to the EPF. On this basis, we conclude that payments to the EPF are not environmental payments from companies to governments, as the government only has a contingent claim to the EPF assets. This requirement would therefore only be applicable under Requirement 6.4. Therefore, the level of progress in addressing this requirement have been maintained since the previous Validation.

Countries
Zambia