Monday, December 30, 2013

Magande seeks govt explanation over exports of concentrates
By Chiwoyu Sinyangwe

Mon 04 Nov. 2013, 14:01 CAT

FINANCE minister Alexander Chikwanda should explain why mining companies stockpiling concentrates are shunning existing smelters, says Ng'andu Magande.

And Magande says Chikwanda should not push Zambia into another heavy debt trap like he did when he served as finance minister in the 1970s. On October 4, Chikwanda signed Statutory Instrument number 89 cancelling the 10 per cent export duty on copper concentrates.

However, after President Michale Sata ordered its removal, Chikwanda on October 28 signed SI 99 cancelling SI 89.

Chikwanda, however, insists that mining firms should be allowed to export concentrates which are only 30 per cent pure copper at zero levy to help raise waning government revenues.

But Magande said Chikwanda should explain why mining companies should be allowed to export copper concentrates when the country had sufficient smelting capacity.

"You wonder how one could come up with a Statutory Instrument which is financial in nature without telling the one who approves the appropriation bill because that is approved by the President," Magande said.

"Now Chikwanda is busy saying 'no, why we did this is we were trying to balance here and there'. All these things should have been explained before because everybody is seeing all these stockpiles of concentrates and they are asking; why are these people not taking this material to Chambishi Copper Smelter for processing? The only conclusion is that they don't want to process it because a bar of copper which is already in copper form is going to fetch more money than in fact a tonne of copper concentrate which includes sand from Lumwana."

And Magande said Chikwanda could not continue borrowing huge amounts of money when the country was foregoing revenues from the key mining sector.

He said Chikwanda was running the country's economic affairs like his private business.

"What they are now doing and what they meant is against public interest," he said.

"You can't be doing all these things and they are appearing like they are private things. We see a government which is being formed by a long-standing opposition not being faithful."

Magande, a former finance minister during late Levy Mwanawasa's tenure, said with increasing appetite for debt by the current regime, Zambia would plunge into another death trap.

"Some of us were having sleepless nights some seven years ago. These are all loans that were contracted in the late 70s and early 80s," he said.

"Those of us who have had that experience of going through such a difficult time, where civil servants couldn't even be paid salaries, where we couldn't even buy medicines, fertiliser, why don't we just say we are grown-ups, we don't want to go this way? The President knows what went wrong? The minister of finance knows what is wrong. So why are we being led on the same path again?"

Magande said Chikwanda should learn from the debt he helped drive the country into before the late Mwanawasa's economic team unshackled the country from the over US$7.2 billion debt.

"It's not fair to other people who have cleaned up your mess," Magande said.

"So, what are you saying…that again we will bring another Magande to clean up the mess you are creating now for the future?"

And Magande said Zambia's future debt position could be worse than the HIPC position because the loans contracted were all commercial loans.

"Should we at any time default, you will just see so many plane loads of people coming to Zambia claiming their money and they will be putting interest which we have no way of negotiating at all," said Magande.

"The private sector does not have clubs like the Paris Club, or the meetings we go to at IMF, AfDB where you can talk in a group. When the private sector find the loan is too difficult to collect, they sell it to somebody and so in about 10 to 15 years from now, Zambia will have to deal with vulture funds - people who are extortionists. That's the complication of where we are going. Before, the loans belonged to governments and we could talk to government to government."

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