Maravi

‘Mining concessions are enough to keep investors’

‘Mining concessions are enough to keep investors’
Written by Kabanda Chulu and Fridah Zinyama

MINING concessions are enough to make investors stay in the country, National Union of Miners and Allied Workers (NUMAW) president Mundia Sikufele has said, further challenging finance minister Situmbeko Musokotwane to stop linking windfall taxes to the non-attraction of investments.

And Bank of Zambia deputy governor Denny Kalyalya has said the 2010 budget targets are realistic and aimed at bringing back the Zambian economy on the recovery path.

Meanwhile, Zambia Institute of Chartered Accountants (ZICA) president Chintu Mulendema has said the 2010 budget has tried to capture most of the issues which are affecting the Zambian economy.

In his 2010 budget presentation last Friday, Dr Musokotwane expressed concern over critics who he said did not seem to appreciate the importance of failing to secure mining jobs and were advocating laws that might scare-away investors.

But Sikufele said government had again failed the people of Zambia for not putting up measures that would have allowed a huge percentage of mining profits to remain in the country.

“Having listened to the budget, as miners we are left with no option since we feel being treated like Cinderella’s. Currently the mining sector is booming and we expect to get something and it is wrong to link the windfall tax to non-attraction of investments since this tax only comes into play when there is unprecedented boom whereby the mines make super profits,” Sikufele said.

“So to whose interest is Dr Musokotwane and his team discarding windfall taxes and do they think Zambia is for charity and why should Zambia perpetually beg when we can do something about the various challenges we face?”

He said Botswana had reached medium income status because the government had put in place measures to ensure that 65 per cent of mineral wealth was retained in the country.

“Re-introducing windfall tax will not scare away investors since they have concessions that can make then stay and operate comfortably,” said Sikufele.

“Dr Musokotwane should not pretend that things are alright especially that mines were given chance when copper prices dropped to below US $ 3,000 per metric tonne but now it is over US $ 6,000 per metric tonne and we still want to give the mines a chance so at what level are we going to benefit as Zambians.”

However, Dr Musokotwane argued that the beginning of 2009 was a difficult environment but government managed to perform well and that the revised 4.3 per cent growth rate was achievable.

“Had it not been for bold decisions by government, the mining industry and the whole economy would have been in ruins today and it is against this background that changes were made to the mining tax regime,” said Dr Musokotwane.

Last Friday, Dr Musokotwane unveiled a K16.71 trillion budget for next year but ignored the calls from many Zambians to bring back the mining windfall tax, claiming that the taxes would scare away investors.

And former finance minister Ng’andu Magande said the budget would only give hope to Zambians when there was a serious implementation of projects in the sectors that required attention in the short to medium term.

“Generally it is looking good and if money is spent and projects implemented then there can be hope to uplift Zambians out of poverty,” he said.

When asked if it was wrong for Dr Musokotwane to leave out the mining sector in his budget speech, Magande said the speech did not contain everything.

“Speech doesn’t include everything but we have to read through the yellow book to see what will be gotten from the mines and I hope they have not asked for incentives because they got everything they wanted in the 2009 budget,” said Magande.

And Dr Kalyalya said the targets set out in the 2010 budget were realistic and tenable.

“In view of the global crisis, the trajectory set out in the budget is very clear especially if agriculture continues to perform better, the targets are realistic and they look tenable because we can exceed five per cent growth rate and eight percent inflation rate,” said Dr Kalyalya.

“We are emerging from a crisis and this budget is an attempt to bring us back to where we have been previously and if all those projects in agriculture, manufacturing and tourism take off, then Zambia shall soon be on the recovery path.”

And during a post budget dinner discussion held on Friday night, Mulendema acknowledged the challenges Dr Musokotwane could have faced in coming up with a national budget to address most of the issues the economy was facing due to effects of the global financial crisis.

“...2009 was a very difficult year for government as Zambia was experiencing the effects of the Global financial crisis,” he said. “Most sectors of the economy like the mining sector suffered job losses, trade declined and the tourism sector witnessed a reduction in the number of tourists coming to Zambia,” he said.

Mulendema said it was therefore government’s objective to try and rectify some of the problems which had been created by the recession in the national budget. And Dr Musokotwane said although the economic environment had been challenging, the country was on course to record the targeted growth rate of 4.3 per cent.

“I am still optimistic that Zambia could still attain the five per cent growth rate if things continue going at the rate at which they are going,” he said.

Dr Musokotwane said 2009 had been a difficult year for government as they experienced a budget deficit of about three per cent.

“We had compressed revenue as some of the estimates that we had made failed to come through due to the economic crisis,” he said.

Dr Musokotwane said balance of payment (BoP) from exports had gone down and imports were also affected due to the depreciation of the kwacha.

“Imports had gone down by 34 per cent,” he said. “Because our budget is also dependent on tax revenues, we failed to capture most of it because of a reduction in customs duty and value added tax.”

He explained that in order for government to be able to function well in the face of reduced revenues, they had to increase domestic borrowing.

“The country’s indebtedness is going to go up but this cannot be helped if we are to find funds to implement most of our developmental programs,” said Dr Musokotwane.

“Other countries are equally experiencing indebtedness, so we cannot exactly avoid that particular route.”

And giving a socio-economic analysis of the budget, Economics Association of Zambia (EAZ) member Lloyd Sichilongo said Zambia’s growth rate was expected to weaken due to the effects of the global financial crisis.

“This is because there has been a reduction in revenue from the mining sector, the largest contributor to the country’s economy,” said Sichilongo.

Labels: BUDGET, DENNY KALYALYA, MINING, MUNDIA SIFUKELE, NUMAW, TAXATION, WINDFALL TAX

posted by MrK @ 7:14 AM