Trymore Tagwirei

Zimbabwe’s booming extractive sector is generating billions for the economy but contributing very little to the fight against climate change, according to a new ActionAid Zimbabwe study titled Research Study of the Extractive Sector in Zimbabwe.

The 2025 report concludes that the country is failing to harness mining revenue for environmental protection, warning that current public finance systems do not adequately integrate climate priorities into revenue mobilisation and allocation.

Zimbabwe’s mining industry accounts for more than 80 percent of export earnings, 13 percent of GDP, and over 6 percent of national employment. Yet, the report notes, government spending on environmental protection and climate action remains negligible.

Between 2021 and 2023, mining royalties contributed about three percent of total government revenue, amounting to over ZWL$642 billion. However, the study highlights the lack of a mechanism ensuring that these royalties directly support climate adaptation or mitigation efforts.

Most royalties are channelled into the Consolidated Revenue Fund, while a portion goes to the Mutapa Investment Fund—an entity the report criticises for lacking transparency and environmental accountability.

“There is limited transparency on how mineral proceeds deposited into the Mutapa Investment Fund are utilised.

“There is no evidence suggesting prioritisation of climate-related investments,” reads the report.

The report also raises concern over a policy requiring mining firms to surrender half of their royalties in minerals instead of cash.

It warns that the “royalties in kind” system poses significant risks of undervaluation, corruption and financial leakages, particularly in the absence of a public inventory and audit system.

On carbon revenue, the study finds that Zimbabwe’s tax system provides minimal support for environmental initiatives.

“Although the country has had a carbon tax since 2001, it applies only to fuel, excluding industrial and mining emissions. Between 2019 and 2023, carbon tax revenue contributed just 1.02 percent of total revenue, while the environment sector received only 0.27 percent of the national budget,” reads the report.

In practice, the report states, nearly 74 percent of climate-related revenue is diverted to non-environmental expenditures, significantly weakening Zimbabwe’s climate response capacity.

“Despite having climate policies in place, implementation remains weak. The extractive sector is largely disconnected from national climate policy instruments, and mining laws are not aligned with the National Climate Policy, the National Adaptation Plan, or the country’s international climate commitments,” reads the report.

The report also flags a lack of transparency in carbon trading. Although government introduced carbon credit regulations in 2023, “there is no publicly available data on how much revenue has been earned from carbon credit trading since the introduction of SI 150 of 2023.”

Excessive tax incentives granted to major mining companies are also undermining potential revenue generation. The study points to special mining leases, loss carry-forward provisions, and exemptions under double taxation agreements as major contributors to tax losses.

Communities in mining areas are equally disadvantaged. With Community Share Ownership Trusts not being mandatory, affected communities rely on corporate goodwill rather than guaranteed benefit-sharing mechanisms.

ActionAid Zimbabwe is calling on government to overhaul the management of extractive revenues and channel more funds toward climate protection.

“Without deliberate policy reforms, Zimbabwe risks extracting its natural resources while destroying the environmental foundation necessary for sustainable development,” the report warns.

ActionAid Zimbabwe recommended ring-fencing mining revenue for environmental protection, introducing green taxes, making community ownership schemes mandatory, strengthening regulation of artisanal mining, enforcing transparency standards, and aligning mining laws with national climate policies.

“Mining must be redesigned as a contributor to climate resilience rather than a driver of environmental collapse,” reads the report.