Maravi

ActionAid asks government to end profit externalization

COMMENT - I don't care where foreign mines invest their profits after they make them. I just want them to make a lot less profit, and the state to get much more revenues. Of course, if the state builds or buys it's own mines, it can have it's own income from mining.

ActionAid asks government to end profit externalization
By Gift Chanda
Thu 21 June 2012, 13:24 CAT

ACTIONAID Zambia has urged the government to clearly define its objectives in allowing foreign firms to externalise profits.

In interview, ActionAid Zambia economic justice project officer, Nsindano Kryticous, observed that Zambia was being robbed of the much needed funds to drive economic growth and development by allowing foreign firms to externalise profits.

He said there was need for the government to clearly define what it wanted to achieve by letting this trend to continue.

"You realise that most of Zambia's earnings, up to about 80 per cent, come from the mining sector, for example. However, what we get in terms of treasury contribution is only about four per cent. So you realise that externalisation robs the country," he said.

Kryticous intimated that the government should clearly state whether it wanted to increase investment inflows by making Zambia an attractive investment destination by allowing externalisation of profits or ensuring that the investment actually benefited Zambians.

He said if the latter was the case then the government should ensure that it finds a strategic way to make foreign companies help develop the financial sector.

"The ideal situation should be to at least allow these funds to be able to pass through the local banks so that that money should be utilised by the banking system to lend to small and medium enterprises," he said.

"As a country first of all we should come up with a strategy of what we really want to do. Which direction do we head to? Yes, financial liberalisation is good on one hand but very harmful on the other hand. It may attract more FDI Foreign Direct Investment but we must weigh the benefits and of course the costs."

He said a balance needs to be struck.

"We should have a situation where as much as it is easily for investors to externalise the funds it should also be easily for them to bring in the funds in the country but that is not the case. We have an imbalance there and you can't grow an economy in that way," said Kryticous.

Labels: ACTIONAID, FDI

posted by MrK @ 4:28 PM