Community Share Ownership Trust money abused: Nhema | The Herald 18 October 2014
Most Community Share Ownership Trusts set up by Government in 2012 lacked business acumen to utilise seed money received from companies operating in their communities while some of the funds have been abused, an audit of the projects has revealed.
The audit on the operations of the CSOTs was commissioned by Government recently.
Most companies contributed US$10 million each towards the CSOTs as part of Government’s indigenisation and economic empowerment policy.
Youth, Indigenisation and Empowerment Minister Francis Nhema told a media briefing in Harare on Wednesday that the CSOTs needed to operate along strict business lines while balancing this with the social demands as opposed to leaning more towards the latter.
He said his permanent secretary, Mr George Magosvongwe, recently visited all the 16 CSOTs and made several observations that required a relook.
“We observed that in most cases we lacked the business skills that are required for them to run as a profit organisation as opposed to just a social organisation,” he said.
“We are putting emphasis that at least when they do identify projects, those projects must be income generating projects so that the Trusts are sustainable.
“We observed that in most cases they use the money to improve clinics, schools and roads which is fine, but we are now encouraging them to make sure that the seed money they received goes to economic projects . . after all is said and done, it must be a revolving fund.”
Minister Nhema said the projects by CSOTs should assume a national nature with benefits cascading to other communities where there are no natural resources.
He said mining companies in Chiadzwa that reneged on their pledges to pay the Marange-Zimunya Community Share Ownership Trust US$50 million had now agreed to honour their pledges once funds were available.
Minister Nhema said they engaged the Ministry of Mines and Mining Development to ensure that the companies honour their pledges.
Turning to the indigenisation of the banking sector, Minister Nhema said all foreign banks had complied with indigenisation laws except for one that was still having discussions with Government.
He said there was no resistance in the banking sector as most banks had submitted acceptable indigenisation plans.
Minister Nhema said Government was happy with the level of compliance in the financial sector after a flurry of negative reports suggesting that indigenising the sector might cripple the economy.
“As of now we have one which we are discussing with,” he said.
“The others have put down their plans and we are happy with it.
“The one which is outstanding is not because it is resisting but we are working on the plans that they have provided us.”
There are at least six foreign banks in Zimbabwe.