Friday, October 23, 2009

CSOs urge govt to revise investment policies

CSOs urge govt to revise investment policies
By Kabanda Chulu
Fri 23 Oct. 2009, 04:00 CAT

CIVIL Society Organisations (CSO) yesterday urged the government to revise investment policies so as to prevent capital flight and compel foreign investors to leave a certain percentage of their profits in the country. The civil society also advised the government against borrowing above the projected macroeconomic targets.

Appearing before the expanded parliamentary committee chaired by Bweengwa member of parliament Highvie Hamududu, the Jesuit Centre for Theological Reflection (JCTR), Civil Society for Poverty Reduction (CSPR) and Caritas Zambia, all submitted that Zambia had continued to experience capital flight by foreign investors to countries that serve as tax havens.

JCTR aid policy analyst Chilufya Chileshe said foreign investors must be forced to maintain accounts with banks in Zambia for recapitalisation.

“Government should sharpen our investment policies to put emphasis on ‘resident’ investors so that we can retain and increase the investment capacities in the country as well as generating employment,” said Chileshe.

“Foreign companies should be guided by a non-externalisation of profits policy because Zambia has continued to experience capital flight and they should be compelled to leave some profits in the country.”

And CSPR advocacy programme officer William Chilufya said the government should also reduce the number of years in which companies enjoy tax holiday to a maximum of one year in an effort to reduce the massive revenue losses.

“While tax incentives to foreign investors have the huge potential to promote investment, these incentives deprive government of essential resources for delivering social services to the people as promised in the national development plans,” said Chilufya.

The cost of doing business should be reformed through addressing infrastructure challenges such as roads and telecommunication and not just giving incentives to investors.”

And Caritas Zambia economic justice programme officer Edmund Kangamungazi said the government must decrease its domestic borrowing because it results in higher interest rates and prevents the private sector and ordinary people from borrowing from banks.

But Chongwe member of parliament Sylvia Masebo argued that there was nothing wrong with borrowing especially that the government had few resources to carry out its operations.

“Most of us survive on borrowing and we borrowed to acquire most of the things that we have,” said Masebo.

However, JCTR programme officer for trade and debt Privilege Hang’andu responded that people were not against borrowing but that the government should not over-shoot the projected macroeconomic targets.

“For instance, in the 2009 budget, borrowing was projected at 1.8 per cent of GDP but recently the finance minister announced that government borrowing currently stands at three per cent and it might even get higher by year-end,” said Hang’andu.

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