The Zambian Economist has a good article
this week about the difficulties Zambia’s Mining Policy is facing especially in
regard to taxation. The Mines Minister has promised an enabling environment for
mining investors to sustain their operations by revisiting taxation. First Quantum
Mining has recently announced it was holding back from investing $1 billion in Zambia. Two weeks ago there had been a suggestion that mining taxes would
have to go up to cover a deficit in Government spending. For Zambia it is
a case of once bitten twice shy and keeping her distance from the World
Bank/IMF Structural Adjustment Programmes. This announcement led to the usual
barrage of self-interested, special pleading from the Chamber of Mines that a
variable profit tax is the same as the windfall tax………… Higher taxation will
put the mines out of business ………..etc, etc.
So it was a surprise to hear that the GRZ
will refund in stages US$600m in VAT to mining companies. This had been
withheld as the companies had failed to provide a transparent paper trail to
the end-user of zero-rated copper exports. The money to pay for this will come
from the recently acquired US$1 billion Eurobond, US$700m of which is apparently
still sitting at the Bank of Zambia.
Another paper called PV Zambia Report -
Copper Colonialism makes the point that politicians and newspapers here as
elsewhere in the world often portray multinational company investment in our countries,
as some sort of benevolent, altruistic, loss-making job creation-scheme. This
of course could not be further from the truth.
Extractive industries come to take
advantage of low taxes and neo-liberal policies which allow them to ruthlessly
exploit natural resources, leaving behind corruption and environmental and
social degradation which their minimal tax contributions and so-called social
responsibility programmes do not come close to covering. Sub-Saharan Africa is
a 'global net creditor', contributing billions of dollars to the world economy
each year. This comes from 'cash flight' in owed taxes, mispricing,
overestimating costs and under reporting production. Sub-Saharan Africa and
other places we know well, are not the burden on the rest of the world we are made
to believe. This misuse and exploitation of natural resources is plain and
simple extractivism. It is not investment, aid or charity.
Zambia's copper is a finite resource with
economists suggesting that it will be exhausted anywhere between 2020 and 2100.
This is highly unlikely, and merely shows how companies and financiers
manipulate figures to create investor confidence, enable speculation or to
spread fear, uncertainty and doubt.
What is true is that there is limited
window of opportunity to reverse the trend of losing rather than gaining from
this precious resource, making it last, or planning for an economy without it.
At present Zambia produces 1/16 of the
world’s copper. It is the eighth largest producer in the world. Copper provides
75% of our export revenue but only 2% of domestic revenue! The world price is
$7 300.00 per tonne and in 2012 Zambia produced just short of 1 million tones.
Is this resource benefitting the people of
Zambia under multi-national company management? If not, how can the Zambian
people and the Government gain the maximum benefit from this enormously
valuable national asset? There are no simple answers, but instead these are crucial
questions to address and consider. Missing information is needed to enable
informed debate to help Zambians decide what steps to take. Accurate information
could contribute to developing a 'critical consciousness' in Zambia, which examines
and creates new models of development, that will serve people's needs. Critical
consciousness is necessary to prevent Zambians from being short-changed by
neo-liberal rhetoric, which represent little or no change from the old extractivist
regime, backed by the same interests.
Finally, Zambia is not served well by its
NGO culture, this also should be critically re-examined. NGOs employ around 37 500
people in Zambia compared with 75 000 in mining. Many NGOs are out of touch,
living and working in gated compounds, driving 4x4s, but declaring anywhere
East or West of the line of rail as the bush! They are in receipt of foreign
donor aid funding and so are accountable to the donors and not the people they
are supposed to serve. They deliver top –down projects that were planned in
Head Office to communities and that bring no significant lasting change as they
are generally unconcerned with local priorities or needs. In fact ironically
they often use, suppress or co-opt existing grassroots movements instead of
nurturing them. They spent most of their
time doing surveys, holding workshops, gathering evidence with no follow-up. They
seem more concerned with ticking the right boxes so as to get the next tranche
of funding.
The notion of 'civil society' should be
expanded to include community groups, marginal trade unions and people's movements.
The growth of these bodies, which are at the heart of true democracy, should be
encouraged and valued. Mass movements are important to secure people’s rights,
as workers and as citizens, to change politics and policies and bring into
being a culture of questioning and activism. At community level Zambians can
learn from successful examples of social movements in India, North Africa, Latin
America, Europe and elsewhere, and begin a bottom-up process of redefining
'progress' and 'development' as concepts which will truly serve Zambia's
people.
