Thursday, March 27, 2014


Zambians should have access to mining agreements - Banda

By Gift Chanda
Fri 13 Dec. 2013, 14:00 CAT

ZAMBIANS should have access to all 'secret' mining agreements between the government and various mines to boost transparency in the extractive sector, says an industry official.

And ActionAid says the Zambian government cannot continue to ignore fresh calls for windfall tax and the need for Zambia to benefit from its mineral resources.

Zambia Extractive Industries Transparency Initiative Secretariat head, Siforiano Banda, said disclosure of existing and future mining agreements signed between the government and the mining firms was important as it would not only boost transparency, but also help beat tax evasion in the extractive sector.

Countries like Guinea have already made their agreements public by posting them online, but only after losing much of their national heritage through lopsided deals with cunning Western mining concerns.

On Monday last week, Ghana's President, John Dramani Mahama said his government would embark on a renegotiation exercise with companies, especially those in the extractive industry on new stability agreements.

In a move that could see Ghana follow Guinea's path, the head of head, said the current stability agreements which were signed for 20 years and beyond were not favourable to the government since the players would continue to receive the same amount of royalties, even if prices of such commodities are sky-rocketing on the world market.

"What Ghana is looking to do is the right thing. It is important that these agreements are reviewed and made public," Banda said, adding that the secrecy around the agreements promotes tax evasion by some mining firms in many African countries.

He explained that disclosure of the agreement was important as it would not leave Zambians guessing how the country was faring with regard to benefiting from its minerals.

According to Banda, the Zambian government in 2008 rescinded all development agreements it entered into with mining firms.
"...but there are some mining companies that have not adhered to the government directive," he said.

"It is in the interest of the public that the government discloses those companies. We also need a law to compel mining companies to disclose their tax contribution to the government because currently, it is voluntarily."

Pressure has been mounting lately on the government to ensure the country gets a fair share from its mineral resources following an overshoot in this year's national budget deficit.

Pamela Chisanga, ActionAid country representative, said with the fresh calls on windfall tax, it is apparent to many citizens that in spite of increased mineral production, Zambia was benefitting little from its mineral resources.

Zambia's 2013 copper production is forecast to exceed last year's output, which dropped to 824,976 tonnes from the previous year's 881,108 tonnes.

"Zambia currently does not have a robust mining tax structure to effectively tax the different mining operations and as such have failed to collect reasonable taxes from the mining sector," she said in an emailed response to a press query.

"The PF government promised to re-introduce the windfall tax once elected into office, but has since backpedalled on this without giving any reasonable justification why windfall tax is no longer an option. Mining companies have also failed to provide an explanation on why it is not good for Zambia to reintroduce the windfall tax as this is based on excessive profits and would not take effect below a given threshold."

She appealed to the government to re-open discussions with mining companies on the windfall tax and to allow for broader citizen engagement in the discourse.

"The government should further look at developing a robust mining structure to effectively tax the different mining operations in the country," Chisanga added.

In a new report "Walking The Talk", published on Tuesday, ActionAid observed that increased budget spending allocation to agriculture was being held back by a poor tax policy by governments.

The Zambian government spent just 6.4 per cent of its national budget on agriculture during 2009-2013, risking even greater food insecurity across the country, according to the report, which recommends that one option to combat this problem is to effectively tax and collect optimal revenue from mining companies.

"Empty words won't feed empty stomachs. The Zambian government must follow through on its promise and provide more money, ensuring it is better targeted to help the majority of Zambia's citizens, who earn their livelihood from agriculture," said Chisanga.

"To help them accomplish this, the government should revisit the current tax rates which apply to mining companies to see what opportunities exist to ensure that they make a fair contribution to the overall national budget through their tax contributions."

Although copper mining is the economic lifeblood of Zambia, some analysts argue that the country does not reap enough benefit because the mines are owned by foreign companies.

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