SI 89 cannot be justified - Mtesa
By Gift Chanda
Wed 06 Nov. 2013, 14:00 CAT
THERE is absolutely no justification in allowing mining firms to export copper concentrates tax-free 49 years after Zambia's independence, says Ambassador Love Mtesa.
Commenting on the revoked Statutory Instrument (SI) 89 which finance minister Alexander Chikwanda signed on October 4, Mutesa said the instrument was detrimental to the economic development of Zambia.
On Monday last week, President Michael Sata reversed SI 89, which was to be in force up to September 30, 2014.
The SI was to reverse the November 2011 decision of the PF government to impose a 10 per cent export levy on copper concentrates and ores to encourage value addition to copper exports and improve accountability in the vast mining sector.
"The cancellation of SI 89 by President Sata is something that is very commendable to many of us in the country," Mtesa, a former Consumer Trust Unit Trust (CUTS) international Zambia chairperson, said.
"The mines need to be pointed in the direction of utilising refineries in the country so that they add value to what they produce."
After revocation, the SI 89 has since been replaced with SI 99, which has reinstated the 10 per cent export duty on copper concentrates and ores, which Chikwanda briefly abolished after being lobbied by First Quantum Minerals and Lubambe Copper Mines.
"Allowing the mines to export copper ore or as the President put it, exporting soil, is unacceptable 49 after independence," Mtesa said.
"There is absolutely no justification at all why this SI should have passed. We have the refinery, why shouldn't we be adding value locally?" He said the SI 89, if anything, would have meant the country exporting jobs.
"This SI would have entailed throwing away revenue from those minerals such as gold, found in the copper ore or concentrates, and that is not justifiable," he said.
Mtesa said the government needed to create jobs and value addition is just one of the other many avenues to do so.
"When you look at where we are as an economy, we need to do everything possible to add value to whatever we produce so that we can make enough money not only for the companies exporting but for the government as well in terms of taxation and the employees' Pay as you earn tax," he said.
Chikwanda recently told the Parliamentary expanded committee on estimates that President Sata's reversal of SI 89 would see mining firms stockpiling ores and concentrates fail to export the unfinished resources and therefore raise no revenues to pay tax to treasury.
Labels: ALEXANDER CHIKWANDA, CUTS, LOVE MTESA, STATUTORY INSTRUMENT 89
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It's true Zambeef's beef has aldehyde
By Mwala Kalaluka, Fridah Nkonde and Agnes Changala
Thu 20 June 2013, 14:00 CAT
AN analysis of eight beef products imported into the country by Zambeef seen by The Post has confirmed the presence of aromatic aldehyde.
But Zambeef has expressed surprise and disappointment that attempts were being made to portray its imported beef products as unwholesome and not fit for human consumption.
Health experts say the aromatic aldehydes discovered in the Zambeef beef is used to embalm dead bodies and can cause organ cancer in humans.
And the Competition and Consumer Protection Commission says it is aware about Zambeef's imported products being under scrutiny.
According to the analysis by the Ministry of Health's Food and Drugs Control Laboratory conducted in Lusaka last week, aromatic aldehyde was detected in all the samples.
The analysed samples included packed ox-tail marked CNN/001/F/2013, packed ox-tail marked CNN/002/F/2013, packed ox-tail marked CNN/003/F/2013, packed ox-tail marked CNN/004/F/2013, packed ox-liver marked CNN/005/F/2013, packed ox-liver marked CNN/006/F/2013, packed ox-hooves marked CNN/007/F/2013 and packed ox-hooves marked CNN/008/F/2013.
Health experts told The Post yesterday that aromatic aldehydes, which they compared to Benzene or jet fuel, are powerful preservative chemicals that are dangerous for human beings as they cause diseases such as Leukaemia.
"For example, if someone dies here in Zambia and they come from the UK, in order for the body to reach the UK fresh, we inject the aromatic aldehydes in the veins. So it is clear that they use it to keep their beef fresh for a very long time," the health experts who opted to remain anonymous said. "Aromatic aldehydes are very dangerous chemicals and it is unfortunate that Zambeef is actually using that chemical to keep their beef fresh. It is common knowledge that the only reason Zambeef is using that chemical is because they want to keep their products fresh."
They said the presence of large quantities of aromatic aldehyde in the beef Zambeef Plc imports would be a clear indication that the substance was deliberately put there to keep their beef fresh.
CCPC director consumer and education Brian Lingela yesterday said the commission had received correspondence regarding the discovery of aromatic aldehyde in imported beef by Zambeef.
"We received correspondence from the provincial medical office in the Copperbelt in which they are talking about this matter. One of the inspectors took the samples to Food and Drug Control laboratory and they informed us about the meeting yesterday Tuesday," Lingela said.
Lingela said the provincial office in the Copperbelt also requested the commission to attend a meeting that took place in Ndola yesterday.
He said his office had since sent a representative to attend the meeting in Ndola.
Lingela said the commission was hoping to hear the matter and also find a solution.
"What Zambeef has done is unacceptable and what health inspectors have done is a commendable job which needs support from consumer organizations," said Lingela.
Lusaka City Council director of Public Health Greenford Sikazwe said his department has not picked any samples from Zambeef for analysis.
"It is not true that Lusaka City Council inspectors are the ones who were investigating this issue, so your story is not true," Sikazwe said.
However, sources within Lusaka City Council confirmed that it is true the samples in question were not sourced by the local authority but by a council from the Copperbelt and that all at Lusaka City Council were aware of the results from the samples.
Asked if his department has ever received complaints relating to Zambeef products, Sikazwe answered in the affirmative.
"We received complaints (in May 2013) but the issues were being dealt with at Ministry of Health," he said.
Asked why they could not carry out an independent investigation on the products as a department, Sikazwe said his department works on delegated legislation from the Ministry of Health.
"That's why we couldn't act there and then because it was being addressed by the Ministry of Health," said Sikazwe.
But Zambeef public relations manager Justo Kopulande stated in an advert yesterday that the firm was surprised and disappointed that there were attempts to portray these imported beef products as unwholesome and not fit for human consumption.
"Zambeef only imports beef products that are in short supply locally. We import these products mainly from Ireland, United Kingdom and the United States of America. These are major exporting countries and have the highest food safety standards in the world," Kopulande stated.
"In importing these products, Zambeef obtains due authority from the relevant government authorities in Zambia. The relevant government authorities in the exporting countries inspect, test and certify all consignments as wholesome and fit for human consumption."
He stated that the importation and exportation of meat products was governed by the World Trade Organisation under the Sanitary and Phyto-sanitary Agreement in line with the Organisation for Animal Health guidelines.
"The Zambian government issues us with a permit for importation of livestock and livestock products under the Department of Veterinary Services and the Import Permit under the The Control of Goods Act. The exporting countries issue Health Certificates and Certificates of Origin for each and every consignment," Kopulande stated further.
"The Health Certificates declare that the food is wholesome and fit for human consumption. These certificates are issued by the Department of Agriculture, Food and the Marine in Ireland, the Department of Environment, Food and Rural Affairs in the UK, and the Department of Agriculture, Food Safety and Inspection Service in the USA."
He explained that Zambeef only imports a small fraction of what these countries export to the rest of the world, mostly to first world countries and that these were the same products that are supplied and consumed by the public in the originating countries.
"In our 20 years of existence as an indigenous Agribusiness Zambian company, dual-listed on The Lusaka Stock Exchange and the Alternative Investment Market of the London Stock Exchange, we maintain only the very highest food safety practices," Kopulated stated.
Recently, traces of horse DNA were discovered in beef products in the United Kingdom.
And Consumer Unit Trust Society International has demanded that Zambeef be banned from operating in Zambia because their action amounted to killing the consumers.
CUTS international communications manager Simon Ng'ona called for punitive measures against Zambeef because its action fell short of meeting the tenets of competition and consumer welfare and consumers' rights to be availed with products of high quality.
Labels: CUTS, SIMON NG'ONA, ZAMBEEF
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Coming late to work is dismissible - Sata
By Moses Kuwema
Fri 28 Dec. 2012, 14:00 CAT
PRESIDENT Michael Sata yesterday said that reporting late for work at State House was a dismissible offence. And President Sata says millers selling a 25-kilogramme bag of mealie-meal above K50,000 risk having their licences revoked.
Meanwhile, Consumer Unity Trust Society (CUTS) says there is need for stiffer market regulation so that prices of commodities such as mealie-meal do not sky-rocket.
Speaking when he swore in Kabompo East MMD member of parliament Danny Chingimbu at State House as lands, natural resources and environmental protection deputy minister, President Sata told Chingimbu that he was allergic to reporting late for work.
"If there is one thing which I am allergic to, it is coming late to work. Here at State House, coming late is a dismissible offence because when you are coming to work late, you are stealing money for the poor people. All of us who are here we are getting taxpayers money, what are we doing for the taxpayers?" he said.
President Sata urged Chingimbu to emulate finance minister Alexander Chikwanda, whom he said reported for work at 07:00 hours.
"Show a good example at home to your children, madam and at work. Because some people they think because you are a minister, you go to work at 16:00 hours. Behave like Minister of Finance. If you go to Ministry of Finance at 07:00 hours, you find Mr Chikwanda is in the office.
You must be an example. The biggest problem we have in this country….when I was a young man and when there was Northern Rhodesia government, we were far much richer than all the countries in the region. We were even richer than South Africa, that's why the Europeans forced us to go into the federation because they wanted to steal our riches. But today, we don't work. We are too lazy. Our currency is very weak, even if it has recovered by two cents but it is not what it used to be," President Sata said.
He warned Chingimbu against using his position to organise the MMD.
"We welcome you. You are MMD and a member of parliament. We have picked on a member of parliament because the Constitution says ministers will come from members of parliament. When you find that people from PF are keeping a distance from you, the choice is yours.
The only thing I want from you is to be a leader. Don't use your ministry position, cars, office and telephone to organise MMD. If you want to organise MMD go and ask jail master Nevers Mumba to give you the money to organise MMD. We will always relieve you," he said.
Meanwhile, President Sata said Kabompo could only become the provincial capital of North Western Province once the people in the district were united.
"The capital of North Western Province is supposed to be in Kabompo but you the people in Kabompo must be united. Once you are united then the sky is a limit. I know North Western Province very well because from Kabompo it is very easy to get to Yambezhi Zambezi, Chavuma, Mwinilunga, Mufumbwe and Solwezi.
But you people yourselves you have to work hard, " he said. "You know that Kabompo and Mwinilunga, we need to do that road, I have driven on that road, some of you don't even know where it is. Even Mrs Inonge Wina does not know where Kabompo is and we need to put a bridge to go to Manyinga district. There is a new Manyinga district, we need the roads."
On the mealie-meal prices, President Sata said the price of the commodity had continued to go up uncontrollably and warned the millers that the government would not hesitate to re-introduce price controls if the trend continues.
"I would like to warn the millers, we as the government, we can re-introduce price controls if they want to exploit the people in the villages and townships who don't work. And then you say mealie meal can cost K80,000. Any retailer…miller who is selling mealie meal for more than K50,000, they have their licence hanging," he said.
But CUTS-International Zambia executive director Simon Ng'ona said much as the President has the right to impose such market controls, the forces of demand and supply should be the order of the day.
"The problem which is there in this sector is lack of regulation. What the President should be doing is challenging the ministers or the regulators in the market to ensure that there is effective regulation so that prices don't sky rocket," Ng'ona said.
He said the other problem that could be there was the holding of maize by millers, saying the government had not done a thorough forensic audit of the maize stocks.
"These are some of the issues which should be looked at not the issue of taking us to the price control. The government should allow more private sector participation in the value chain of maize production, maize buying and I think it will bring about efficiency and effectiveness," said Ng'ona.
And President Sata said MMD president Nevers Mumba would be the next person he was going to swear in.
He said the only problem was that he did not know which job to give Mumba.
While walking outside for the photo shoot, President Sata mockingly told justice minister Wynter Kabimba that it was nice to be in government as he could afford to bring people from other political parties and make them ministers.
He said all MMD members of parliament would soon join PF.
"Mr Wynter have you seen how nice it is, we can even go to other parties and bring people and make them ministers," said President Sata as Kabimba responded: "I wish I was MMD, I would have been sworn in."
President Sata then said: "the MMD are coming, all of them. Tomorrow today it's 'Nerves' MMD president Nevers Mumba who is going to come but the biggest problem, is what job to give him."
Labels: CUTS, MEALIE-MEAL, MICHAEL SATA, WORK ETHIC
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CSO rues Zambia’s ‘missed chance’ on windfall tax
November 7, 2012 | Filed underBusiness | Posted by chandamm
By Kennedy Mupeseni
THE Consumer Unity Trust Society (CUTS) says it is saddened by Government’s failure to include the windfall tax on minerals in the 2013 national Budget.
CUTS programmes officer Tommy Singongi said Zambia could have benefitted greatly had windfall tax been re-introduced.
He said the country had lost another opportunity to get benefits from minerals because of Government’s failure to re-introduce windfall tax.
Mr Singongi said the civil society in Zambia expected the windfall tax to be included in the 2013 Budget.
“The country has lost another opportunity to get benefits from the country’s endowments.
“Introducing windfall tax is the only way the Government can get revenue instead of ordinary citizens subsidising the mines,” Mr Singongi said.
The Government scrapped off the 25 per cent windfall tax in 2009 following complaints from mine owners in the country that it raised production costs and discouraged investment.
But Mr Singongi said copper and other minerals were wasting assets, hence the reason for demanding for more revenue from it which the Government could plough into the economy.
The civil society organisations (CSO) in the country had earlier this year proposed to the Government the re-introduction of windfall tax for mining companies in the 2013 Budget.
The CSOs argued that there was need for equitable benefits from “super normal” profits enjoyed by the mining companies during periods of high copper and cobalt prices.
This was contained in joint submissions on tax and non-tax proposals for the 2013 national Budget to the Ministry of Finance.
Mr Singongi, however, said all hope was not lost because the Government could still re-negotiate with the mine owners in the country the windfall tax.
Labels: 2013 BUDGET (ZM), CUTS, TOMMY SINGONGI, WINDFALL TAX
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Mtesa cautions over World Bank proposal on grain marketing
By Gift Chanda in Kabwe
Fri 15 June 2012, 13:25 CAT
ENDING the government's participation in grain marketing abruptly could disrupt maize production, warns Ambassador Love Mtesa. The World Bank last week urged the government to stop setting prices at which it buys maize from local farmers and allow the prices to be determined by the market to promote sustainable growth in the agriculture industry.
But Ambassador Mtesa, who is also board chairperson for the Zambian chapter of the Consumer Unity Trust (CUTS) International, said caution needed to be exercised when implementing the proposal by the World Bank.
He said "the process of shifting away government's involvement in the country's maize marketing needs to be smooth and gradual".
The government announced that it would buy maize from small-scale farmers at K65,000 per 50 kilogramme bag in the 2012/2013 marketing season, a move that was criticised by the World Bank saying the pricing of maize should be left to market forces.
"We cannot afford to have an abrupt end of government's participation in maize marketing because we risk a disruption in production," Ambassador Mtesa said in an interview. "We need to be careful in managing this process. That is not to say we shouldn't implement the proposal by the World Bank. Yes we should implement this proposal in future."
Ambassador Mtesa advised that a well-functioning agricultural commodities exchange should be in place to avoid opportunistic pricing.
"Storage should also be sorted out. The government through the Food Reserve Agency (FRA) should also continue buying maize from farmers for food strategic purposes but it should play its initial role of buyer of the last resort," he said.
Ambassador Mutesa further advised that farmers should be allowed to export maize to regional markets.
"By doing so, we will be allowing farmers to earn more on their produce and production obviously will go up. We will also cut on loses that the country has been making," added Ambassador Mtesa.
The government normally buys the maize at higher prices than those offered by private buyers to ensure higher returns for the farmers, especially those that receive subsidised inputs.
It then sells the maize locally and within the region at reduced prices.
But the World Bank advised that this policy was costly and not sustainable in the long term and urged the government to review it.
"This old policy has not resulted in significant reduction in rural poverty and job creation. This policy direction has also limited private sector investments in the agriculture sector," it said in a statement.
Analysts have also raised concerns about the high expenditure on maize, saying the government was effectively using "treasury funds to subsidise the region".
Maize output declined by about six per cent to 2.8 million tonnes in the 2011/2012 season.
Labels: CUTS, LOVE MTESA, World Bank
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Fingers must burn over Zamtel sale, says Mtesa
By Gift Chanda
Mon 28 Nov. 2011, 13:25 CAT
FINGERS must burn over the fraudulent sale of Zamtel, says Ambassador Love Mtesa. In an interview, Ambassador Mtesa, who is Consumer Unit and Trust Society (CUTS) International Zambia board chairperson called for the repossession of Zamtel and prosecution of all those involved in the fraudulent sale of the country's largest telecommunication company.
He said
no stone should be left unturned over the fraudulent sale of Zamtel and people that were involved should be made to pay.
"The scam which is being unearthed with regard to Zamtel cannot be protected under the issue of international law," Ambassador Mtesa said.
"It is very clear that people concerned should be charged with three offences. The first one is economic sabotage, secondly corruption and thirdly theft. And all those concerns should happen, no one should be spared…they should not say international community will think otherwise, no! This is a clear case of corruption."
He said there should be no excuses against repossessing Zamtel because the deal "stinks of corruption in the first place".
"My view is that Zamtel should be repossessed by the state and re-advertised for sale in a transparent manner," he said.
"Investors are not crooks. Investors can see where there is a scam. We should not assume that investors are like crooks. Investors are reasonable people who are able to tell where there is a scam, where there is corruption. The sale of Zamtel is not transparent at all. It cannot scare away investors."
Ambassador Mtesa further said people that were involved in the sale of Zamtel should be made to pay legal fees that may arise from its repossession.
"People who are involved in this must pay legal costs. The assets that they have should be sold to foot the legal expenses. Zambians should not be made to suffer. They knew in the first place that what they were doing was illegal but they went through with it, why then should Zambians be made to pay? They should be the ones to pay," said Ambassador Mtesa.
"It's like the issue of paying legal cost for Chanda Chimba, why should the government pay for that? That should be paid by the MMD and individuals concerned, not the government. If people involved were to pay the cost, this would ensure that leaders in future are careful and do not involve themselves in such activities because they would know that the consequences would be too ghastly to contemplate."
Labels: AMBASSADOR, CORRUPTION, CUTS, LOVE MTESA, ZAMTEL
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‘Finance Bank sale lacked competition’
Written by Situmbeko Sitwala on Monday, 03 October 2011 18:10
By NANCY MWAPE
THE Consumer Unity and Trust Society (CUTS) says the handling of Finance Bank sale by the Bank of Zambia (BoZ) was not in the interest of competition. CUTS chairman Love Mtesa said the sale of Finance Bank to First National Bank (FNB) raises a number of questions and uncertainty.
By NANCY MWAPE
THE Consumer Unity and Trust Society (CUTS) says the handling of Finance Bank sale by the Bank of Zambia (BoZ) was not in the interest of competition.
CUTS chairman Love Mtesa said the sale of Finance Bank to First National Bank (FNB) raises a number of questions and uncertainty.
“If the several reports in the media on the issue are anything to go by, the general view is that the sale of the bank to FNB was not done in an appropriate manner. And this view is justified as events preceding this sale raise eye-brows,” he said.
Mr Mtesa said this in a statement issued in Lusaka recently.
He also called on Government to strengthen the interface between the Competition and Consumer Protection Commission (CCPC) and BoZ at operational level to curb actions that might affect competition in future.
He said for a vibrant, dynamic and competitive market system to be effective it requires a sound regulatory framework across the board that ensures that the tenets of competition benefit the competitive environment and the consumer welfare vis-à-vis promoting economic growth.
Mr Mtesa said the issue is not about the actual sale of Finance Bank or the amount tendered for the bid, but how the whole process was managed by BoZ.
“As an adage says, it is better to understand the disease than the symptom. The embryonic of this whole saga springs from how BoZ handpicked First Rand to manage the affairs of Finance Bank when it was declared unfit after the allegedly breaching of the Banking and Financial Services Act,” he said.
He said of interest in this development is that FNB in Zambia is a subsidiary and a product of First Rand’s greenfields strategy which is part of the group’s expansion into Africa.
Mr Mtesa said this implied that a competitor’s parent company was granted permission to preside over Finance Bank’s affairs, on the understanding that the parent company, First Rand, would not divulge any classified information to its subsidiary.
“As long as other banks knew that FNB was privy to the affairs of Finance Bank, they would not be willing to buy the bank. It is not clear whether this became the case and BoZ faced difficulties in selling the bank to another bank besides FNB. Whether this was the case or not, the BoZ created this mess by allowing interested parties to manage the affairs of a failing bank,” he said.
He said Finance Bank was already compromised after a competitor had the privilege of gaining access to its classified information.
Mr Mtesa said the proliferation of banks in Zambia, now totalling more than 17 since the economic reforms in the 90s, is expected to guarantee a highly-contestable bidding process, with local firm participation.
He said the K27 billion floated by FNB to acquire some of the shares could have favoured a local bidder as this could have retained and guaranteed a fair participation of local entrepreneurs in the seemingly competitive sector.
“But alas, there was not much interest from local firms as other foreign banks such as the First Alliance Bank, Eximbank of Tanzania, I and M Bank Limited from Kenya, JM Capital and Quantile Capital, both from South Africa who also expressed interest in acquiring Finance Bank,” he said.
Labels: CORRUPTION, CUTS, FINANCE BANK, LOVE MTESA
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COMMENT - I want to see the banks present a percentage by percentage breakdown of what the 24% lending rates constitute of. I also want to know why lending rates in Zambia, Malawi, Zimbabwe, etc. are nearly identical. Which to me smacks of collusion, possibly going up to the IMF/World Bank. This is extremely important, because if our economies are being manipulated for someone's agenda (think: globalisation), then there is very little actual sovereignty rested in the elected government. Which means democracy is meaningless. So we need to know why, with their 24% lending rates, the banks are pricing loans out of the reach of entrepreneurs.
Banks have sabotaged local economy - CUTS
By Kabanda Chulu in Kitwe
Tue 12 July 2011, 11:50 CAT
ZAMBIA’s economy has been sabotaged by the banking sector due to the bank’s failure to inject enough liquidity in circulation as a result of higher interest rates, observes the Consumer Unity Trust Society (CUTS) International.
Commenting on BoZ Governor Caleb Fundanga’s concern over low competition in the banking sector, CUTS International Zambia acting coordinator Simon Ng’ona said commercial banks are the only variable that appears not to be responding to the much talked about improved and sustained macroeconomic environment in Zambia.
“For instance, inflation has remained in the single digit rates and this should influence a reduction in some of the charges in the sector beyond what is pertaining, irrespective of the alleged high commercial bank operational costs,” Ng’ona said.
“Real and nominal Gross Domestic Product (GDP) has been growing on the back of a relatively constant velocity of circulation meaning that money supply is supposed to increase proportionally.
However, one is tempted to say banks have to some extent sabotaged the economy due to their failure to inject enough liquidity in circulation due to high interest rates making the whole phenomena a paradox.”
He challenged the Bank of Zambia (BoZ) and the Competition Commission to diagnose the bottlenecks that halt the progressive realisation of the fruits associated with a healthy banking sector.
“Once bottlenecks are identified, remedial measures must be undertaken to redress the situation and there is need to crack down exploitative and possible looming exploitative or abusive behaviour which retard effective competition,” Ng’ona said.
He said when analysing the status of competition using the number of players, now 18 banks, as a variable to measure, one is tempted to conclude and rationally assume that there is competition in the banking sector in Zambia.
“However, to get a clear understanding on whether effective competition has ensued or not, it will also be good to analyse the sector by looking at two variables namely, price and non-price competition.
Analysing the latter, it is evident from recent data and seminal reports released that there have been a proliferation of banks and banking products and services such as ATMs, mobile banking, among other products, which on one hand steers non price-competition,” said Ng’ona.
“However, the source of worry has remained with the pricing structure of these services which hinge on the price competition variable.”
Labels: CALEB FUNDANGA, CUTS, IMF, LENDING RATES, World Bank
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CUTS advises review of mining tax system
By Gift Chanda
Fri 24 June 2011, 17:30 CAT
KEY measures should be instituted to prevent revenue leakages from the mining sector, says CUTS International Zambia.
Commenting on the recent decision by the Tanzanian Parliament to approve a US$27.4 billion five-year development plan that backs the introduction of a super-profit tax on mining companies, CUTS acting Centre Coordinator Simon Ngona said Zambia needed to review the whole mining tax system to achieve optimum benefits from the country’s mineral wealth.
He said it was important that the country instituted key measures that would ensure revenue leakages were minimised or completely sealed.
He explained that re-introducing windfall tax without addressing key challenges of taxation in the extractive industry would not be an ultimate solution to ensuring Zambians benefitted from the country’s mineral wealth.
“It is not a single line of tax that ensures a country benefits from its industries but the whole tax system and framework for that particular industry,” he said.
“The Zambia Revenue Authority (ZRA) is on record admitting that it does not have the capacity to properly tax the mines nor monitor their activities and recent mine audits have reviewed glaring tax evasion and avoidance efforts by the mining companies…”
Last week mines minister Maxwell Mwale told Reuters that the government would audit more mining companies after previous audits turned up as much as US $200 million in unpaid taxes from the key economic sector.
Mwale said the government was still owed by Mopani Copper Mines in unpaid tax.
A recent audit on Mopani early this year revealed glaring irregularities and inconsistency in production and revenue figures that the mining company submits to ZRA for tax administration, most of which hinge on its links to Glencore AG.
Revelations of the audit sanctioned by the government with the aid of some cooperating partners also revealed the country’s lack of capacity to verify records submitted by mining firms to ZRA for tax administration.
It stated that the taxes being paid by mining firms in the country were not consistent with production volumes and the revenues from copper sales. Mopani has refuted the claims describing the report a flawed. The government has however asked the miner to pay back the money.
Labels: CUTS, MINING, SIMON NGOMA, TAXATION, WINDFALL TAX
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Mopani’s tax issues provoke debate
By Kabanda Chulu in Kitwe and Gift Chanda in Lusaka
Sun 13 Feb. 2011, 03:59 CAT
TAX payment irregularities revealed by the audit report at Mopani mines has silenced all arguments against the reintroduction of a simplified mining revenue collection system such as the windfall tax, says Dr Fred Mutesa.And Consumer Unity and Trust Society (CUTS) International has called for an industry-wide audit to be conducted in the mining sector to ascertain the true extent to which companies are evading taxes and how much Zambia has lost so far.
Meanwhile, Nkana PF parliamentarian Mwenya Musenge has challenged finance and mines ministers, Situmbeko Musokotwane and Maxwell Mwale, respectively, to stop acting as if they ‘know it all’ because their mining policies had failed resulting in Zambia losing millions of dollars.
Commenting on revelations of tax payment irregularities and inconsistent production figures that are submitted to the ZRA, Dr Mutesa, who is Zambian Empowerment for Development (ZED) president, said the right thinking Zambians had been vindicated for calling for fair and equitable taxes from the mines.
“If not properly checked, multinational companies such as Mopani and many other mines will continue to under invoice and under price for purpose of tax avoidance and evasion. So it is time to come up with a tax regime that is easier to enforce and collect revenue and also to compel the mines to do more on corporate social responsibility since copper is a waste asset and soon we shall very negative environmental liabilities,” Dr Mutesa said.
And CUTS stated that the irregularities reveled at Mopani mines were just a tip of an iceberg of how much more dirty business was going on in the mining industry. It stated that the government should own up on the basis of the revelations and carry out an industry-wide audit to ascertain the true extent of the tendencies to evade taxes as the only way to ascertain how much the country had so far lost in taxes.
CUTS further stated that the government should treat the revelations as a wake-up call to institute measures that would not only address the glaring revelations but end the abuse of the country's resources especially in the mining sector.
It urged the government to stiffen regulations under the Extractive Industry Transparency Initiative which will compel the mining firms to release timely and accurately financial figures.
“There is no doubt that the weaknesses of Zambia Revenue Authority have been exploited and a lot of money siphoned out of the country through methods such as deliberate failure to appreciate the tenets of transfer pricing and through accounting manipulation. This is a clear sign of tax avoidance and evasion and this should be a wake-up call for the government,” CUTS stated in a press release.
CUTS also called for the reintroduction of the windfall tax.
“It is common knowledge that profit based tax system are a problem given the capacity of the Zambia Revenue Authority hence the urgent need to revert to volume and sales based taxes,” CUTS advised.
It stated that mining firms had continued to make profits even at the expense of the consumers’ health.
“Not long ago, Konkola Copper mine polluted the Kafue River for the second time putting the health of workers and consumers at risk. It is important that we take a courageous step on our natural resources and we must realize that Zambia will only develop from its natural resources, copper being the main product,” stated CUTS.
Mopani operates mining units in Kitwe and Mufulira is 73.1 per cent owned by the Swiss commodity trader, Glencore AG.
And Musenge said the MMD government and its ministers should listen and realise that Zambians had been given a raw deal by the so-called mining investors.
“The unpleasant thing is that we have lost money because of the adamancy by Situmbeko and Mwale who insist that the mines are not making profit,” said Musenge.
“In 2008 during debates to amend the mines and minerals Bill, I proposed the establishment of a Minerals Accountability Directorate which should monitor from extraction to finished products and come up with independent figures and then advise ZRA on how much to collect as revenue since ZRA lacks capacity to genuinely tax the mines.”
Southern Africa Resource Watch (SARW) Zambia Representative Edward Lange said irregularities revealed in the audit report were a clear indication that Zambia should quickly be part of the Extractive Industries Transparency Initiative (EITI) where the mines would be compelled to publish how much they paid in taxes.
“If The Post did not publish this report, we wouldn’t have known about it and it shows the arrogance and hostilities which these mines have towards Zambia because they have government backing. And time to build the capacity of ZRA is now so that we avoid losing out,” said Lange.
Government with support from co-operating partners commissioned a pilot audit conducted by Grant Thornton and Econ Poyry of Norway, that revealed inconsistencies in production and revenue figures Mopani submits to ZRA for tax administration.
Dr Musokotwane has not acted on the findings of the report despite receiving it in August last year before the budget announcement.
Labels: CUTS, EITI, FRED MUTESA, MOPANI, MWENYA MUSENGE, SARW, TAX EVASION, WINDFALL TAX
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COMMENT - At some level, you can't blame anyone in Western Province for wanting to break off from Zambia, expecially when oil or diamonds are found there. The illegal scam that pertains today is that central government politicians take illegal bribes so foreign investors won't have to pay taxes and are 'protected' from the law. That is a direct attack on the integrity of the country itself. These resources belong to the people of the country, and are not subject to illegal scams by ruling (or opposition) party politicians. And yet arrogantly and narcissistically, we have the Finance Minister coming out and saying that there will be no significant reduction in poverty for 30 years. It would be morally superior for the people to steal these resources and sell them themselves. It is a disgrace that the part of the country that supplies most of 'GDP', has people living in abject poverty, on top of living in the most polluted part of the country. Does anyone in the MMD have the moral highground to accuse the people of the Niger Delta for taking up arms - no they do not, and it is their own thieving behavior that is to blame. You steal from the people, you lose any claim to morality or legitimate authority.
Chilipamushi bemoans state of C/belt towns
By Darious Kapembwa in Kitwe
Fri 28 Jan. 2011, 04:01 CAT
FORMER commerce permanent secretary Davidson Chilipamushi says
Copperbelt towns have remained depressed although they account for a large share of the country’s GDP and generate over two-thirds of the country’s foreign exchange.
And Consumer Unity and Trust Society (CUTS) international chairman Love Mtesa says the organisation has expanded its scope and interventions on subjects such as good governance, social accountability, trade and development, economic and business regulations.
During a CUTS organised workshop to launch the Better Exploration of Trade as a Means for Poverty Reduction BETAMPOR project in Kitwe, Chilipamushi said economic infrastructure still remained very poor despite huge economic gains as a result of high copper production.
“The fact of the matter is that Zambia is among the 50 poorest countries on earth but we’re saying there is economic boom but the towns look the same as they were 20 years back, even worse,” Chilipamushi said.
“Although statistically the Copperbelt accounts for a large share of the country’s GDP and generates over two-thirds of the country’s foreign exchange, it is clearly visible that there is nothing to show for it; the towns remain depressed as no real infrastructure has been developed.”
Chilipamushi, who is now a senior lecturer in the School of Business at Copperbelt University, said the towns’ ability to maintain even the existing structures seem to be diminishing as no new revenue was being collected from the flourishing mines.
He suggested that the revenue coming from the mines be given to the local authorities for development projects.
“…Maybe under councils the revenue could go a long way to improve on the outlook of the depressed towns,” Chilipamushi said.
He said diversification efforts away from the dependency on copper to the promotion of non-traditional exports must be supported.
Chilipamushi added that the diversification initiative would help in keeping the money within the province and also assist in reducing unemployment and high poverty levels.
Meanwhile, Ambassador Mtesa said the mission of the organisation was to function as a resource co-ordination centre as well as networking centre in order to promote South-South co-operation on trade and development by involving state and non-state actors.
“At international level, because of its abundant expertise, CUTS is working very closely with developing countries in helping them with research on trade and economic related issues which they need in their trade negotiations in Geneva at the World Trade Organisation (WTO) in Brussels and the EU negotiations on EPAs,” said Ambassador Mtesa.
Labels: COPPERBELT PROVINCE, CUTS, DAVIDSON CHILIPAMUSHI
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CUTS sees high lending rates as drawback
By Kabanda Chulu
Mon 08 Nov. 2010, 03:59 CAT
CONSUMER Unity and Trust Society (CUTS) International has said the business environment being created by government will not significantly contribute to the growth of the economy because of high lending rates.
Commenting on Zambia’s ranking to be among global leaders in improving business regulation that has seen the country move up eight places in the global doing business rankings from 84 to 76 out of 183 economies, CUTS Zambia board chairman Love Mtesa said there was no doubt that the government had made great efforts in improving the business and investment environment in the country.
“However, for these efforts to be sustained there is need to pay closer attention to the very high lending rates which commercial banks are charging and we appeal to the financial sector including micro-finance institutions to review their charges and lending rates downwards,” Mtesa stated.
“Unless the credit facilities are provided for at manageable rates, the business or investment environment being created by the government will not significantly contribute to the growth of the economy. The Small and Medium Entrepreneurs (SMEs), in particular, will not thrive.”
He challenged commercial banks to heed the calls and advice that both the Minister of Finance and the Bank of Zambia (BoZ) had consistently made regarding the need to lower lending rates.
“We are aware that the requirements for setting up such institutions in the sector have deliberately been made less stringent in order to encourage competition in the market, which is expected to ultimately translate into reduced charges,” stated Mtesa.
“CUTS acknowledge the importance of competition and how it benefits the consumer welfare. The financial sector has embraced competition and there are a number of players in the sector. Therefore, where a number of players exist, we expect the theories of competition to apply. If the commercial banks continue to resist the calls by both the government and BoZ, we shall assume that they have formed a cartel.”
Labels: CUTS, LENDING RATES, LOVE MTESA
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CUTS Int. observes weaknesses in news consumer bill
By Kabanda Chulu and Fridah Zinyama
Tue 21 Sep. 2010, 15:30 CAT
CUTS International has observed that the new competition and consumer protection bill has some weaknesses that should be addressed immediately in order to ensure full consumer protection.
Parliament has passed the new bill, which is awaiting Presidential assent. The bill has new features that will strengthen the business competition regime and enforcement of consumer protection mechanism. But Consumer Unity Trust Society (CUTS) Zambia programme officer Simon Ngona said the proposed legislation has revealed some inadequacies.
“The bill recognises consumer protection only within the context of unfair trading practices but the scope should be beyond this because a consumer protection law generally not only outlines the eight basic consumer rights, but also have provisions explaining how the law helps to ensure that such rights will be met and given that by its name, the bill purports to be a consumer law but it is not and it has to be comprehensive for it to be in the interest of consumers,” Ngona said.
“For instance, the definition of a consumer in the bill is limited but should be wide enough to include not only direct consumers but also other beneficiaries such as any other user other than the buyer, purchaser or partly promised person of a good or service is also considered as a consumer, secondly, the composition of the commission itself needs to be clear.
It provides that five members with relevant experience will be appointed by the Minister of Commerce and Trade but if there is no clear mention of criterion of selection, such posts are filled up on political basis and it will be good if space is created for representation of Civil Society Organisations and other non-state actors.”
He noted that part VII on consumer protection of the bill mentions penalties for violation of provisions related to consumer protection but lacked any mechanism for grievance redress.
“It should clearly outline how any consumer can file complaint, where this could be done (jurisdiction), the manner or procedure to file the complaint as well as procedure of disposal of complaints and the role of other stakeholder such as consumer organisation should also be highlighted in the whole redress process,” said Ngona.
“It is therefore imperative that these issues are taken into account if consumer protection is to be enhanced in Zambia and once such issues are addressed, the commission will have the muscle to protect consumers and legitimate businesses will have somewhere to turn to when they fall victim to these fraudulent practices and it is also important for consumers to be proactive and also to take time to understand some of the statutes that are being constituted and those that are being enforced.”
Labels: CONSUMERS, CUTS, SIMON NGOMA
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CUTS International recommends more investment in mineral refineries
By Fridah Zinyama
Thu 02 Sep. 2010, 14:40 CAT
CONSUMER Unity and Trust Society (CUTS) International has said Zambia needs more investment in refineries to improve copper and cobalt into finished products if real benefits of trading these extractive products is to be realized.
In a press statement, CUTS - International acting centre coordinator Patrick Chengo stated that trade in some countries like China had led to poverty reduction, which was why there was increasing concern that trade is yet to benefit poor countries like Zambia.
“Zambia heavily relies on the extractive industries, copper and cobalt, for its trade, but the impact on poverty reduction has been minimal,” he stated.
“The underlying factors have mainly been that the country has not fully diversified from its traditional exports which are mostly in form of raw and not finished products.”
Chengo stated that this was why investment in agriculture was also important if Zambia was to manage her diversification agenda.
“The Maputo Declaration of 10 per budget allocation to the agriculture sector is a starting point for Zambia’s strengthening of the diversification process,” he noted.
Chengo, however, stated that despite the fact that the country had recorded some steady growth steered by improved performance of the extractive industries, this growth had not translated into poverty reduction.
Poverty levels in Zambia still stand at over 65 per cent.
“This now brings closer the issues raised by United Nations Conference on Trade and Development (UNCTAD) where African countries, Zambia inclusive, have been challenged to consider engaging and replicating developing countries’ experiences that have translated into growth of their economies,” he stated.
Chengo noted that it was important that trade with countries like China, India and Brazil resulted in economic diversification rather than simply the sale of African commodities and raw materials, as indicated in the UNCTAD 2010 Africa trade report.
The report stated that growing trade, finance and investment with other developing countries was an opportunity for Africa to diversify production, acquire technology and develop regional markets.
Labels: CUTS, ECONOMIC DIVERSIFICATION, PATRICK CHENGO
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ZCC requests powers to fine businesses contravening competition, trading Act
By Kabanda Chulu
Wed 02 Dec. 2009, 04:00 CAT
ZAMBIA Competition Commission (ZCC) has stated that it has no powers to impose fines or ask traders to remove the ‘no return, no refund’ notices from their business premises.
Reacting to Consumer Unit Trust Society (CUTS) Zambia coordinator Angela Mulenga who urged the Commission to impose stiffer penalties on traders found wanting, ZCC public relations officer Vaida Bunda yesterday stated that it was not wrong for such notices to be placed in business premises unless they led to misrepresentation of a product quality, quantity or price function.
She stated that in a case where a trader with such notice had been found wanting, the Commission intervened to have the consumer refunded or given a replacement.
“If the trader fails to comply with ZCC, the case is then taken to the small claims court since currently, ZCC has no administrative powers to ask the traders to remove such notices from their business premises nor does it have powers to impose fines on traders found wanting,” Bunda said.
“In the draft bill currently under review and to be tabled before Cabinet and Parliament next year, the Commission has requested for administrative powers to fine businesses contravening the competition and fair trading Act.”
She explained that a ‘no return, no refund’ notice could only raise genuine concern if it was misleading consumers into thinking that even when a product was defective, they could not in any circumstance return it to the trader and claim for a refund or replacement.
“A trader in most cases puts up such notices to discourage consumers from returning the product after finding a similar one at a much cheaper price in a different shop. This then shows that a consumer should shop around before making a purchasing decision,î stated Bunda.
On Monday, Mulenga urged the ZCC and other relevant authorities mandated to safeguard the plight of consumers to mete out stiff punishment on any business house flouting trading practices and violating consumer rights through the ‘no return, no refund’ notices.
Labels: ANGELA MULENGA, COMPETITION, CUTS, ZCC
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Sichinga urges govt to develop knowledgeable trade negotiators
Written by Kabanda Chulu
Tuesday, November 11, 2008 7:12:22 AM
GOVERNMENT should develop a cadre of knowledgeable and efficient negotiators for the country to get meaningful benefits from trade agreements, Innovative Consulting and Financial Services director Bob Sichinga has said.
Presenting a paper during the capacity building workshop for the media on trade and development hosted by CUTS and Caritas Zambia in Lusaka, Sichinga also urged the government to put in place a trade policy to guide the country when signing trade agreements.
He said there was need for a dedicated team to be assembled and positioned within government.
“Zambia needs to develop a cadre of knowledgeable and well-networked negotiators. In fact, there is need for a dedicated team to be assembled and positioned in appropriate positions within government so that the country can get meaningful benefits from trade agreements,” Sichinga said. “We lack knowledge and this results in our inability to get what is good for the country because we normally negotiate from an ignorant point of view. For instance, when going for trade or any missions abroad, ruling party cadres always accompany the Head of State or minister at the expense of qualified and efficient negotiators.”
He also bemoaned the poor consultation that normally occurs whenever Zambia signs a trade agreement.
“The need for regular and comprehensive consultation with Civil Society and with Private Sector stakeholders is critical to adequately capture industries and Private Sector as well as citizen concerns and challenges but this is not happening and we just hear that this agreement has been signed,” Sichinga said.
He said globalisation of the world economy was a reality at the moment.
“Accordingly, Economic Partnership Agreements (EPAs) are increasingly becoming a simultaneous fact of any trade or economic relationship and Zambia therefore, needs to develop a comprehensive and sound trade policy framework, not drafts, to form basis of its agreements,” said Sichinga. “Hence, Zambia needs to ensure self interest as well as regional interest for neighbouring countries who form part of the regional block and this calls for the need to put a development agenda to deliberately recognise land-linked/land locked situation of Zambia.”
Labels: CUTS, ROBERT SICHINGA
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CUTS launches FEATS project
By Kabanda Chulu
Wednesday October 22, 2008 [04:00]
CUTS Zambia coordinator Angela Mulenga has said there is need to address the gap between economic development and trade policies in order to reduce poverty in the country. And the Consumer Unity Trust Society (CUTS) has launched the Fostering Equity and Accountability in Trading System (FEATS) project that aims at pursuing economic and social justice within and across borders.
Speaking yesterday, Mulenga said Zambia should start addressing core issues of raising awareness for better coherence between economic development and trade policies that would contribute to poverty reduction.
“In order to address the missing link between economic development and trade policies, there is need to better understand the complex issues at the interface of trade and development through sound analytical work that is objective and is based on real needs and capacities,” she said.
Mulenga said the FEATS project would be implemented in conjunction with CUTS Geneva. FEATS is a three-year project to be undertaken in two phases aimed at enhancing positive linkages between trade and development in project countries.
She said the project also aims at developing the capacity of governments to proactively respond to trade issues, including through their involvement in policy research.
“It is believed that the organically linked activities related to research, advocacy and networking will further build the capacity of stakeholders within the project and in particular, the capacity of governments in participating countries to better understand and participate in and derive benefits from international trading system hence improving equality and accountability of the system,” said Mulenga. “The project will also generate a more coherent and pro-trade development voice in the formulation and implementation of trade and development policy issues both at national and international level.”
Labels: ANGELA MULENGA, CUTS, FEATS
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EPAs worry small-scale farmers
By Joan Chirwa
Tuesday June 10, 2008 [04:00]
SMALL scale farmers will completely lose out on markets once governments in the region decide to hurriedly sign Economic Partnership Agreements (EPAs) this December, East and Southern Africa Small Scale Farmers Forum (ESAFF) has observed. And Consumer Unity and Trust Society (CUTS) Zambia coordinator Angela Mulenga has called for the discontinuation of EPA negotiations to safeguard interests of small scale farmers in Eastern and Southern (ESA) region.
ESA and the African, Caribbean, Pacific (ACP) countries have between now and December this year to concretise discussions with the European Union (EU) as they move towards the full implementation of the EPAs.
Several countries have signed interim EPAs, but stakeholders have questioned the idea behind the move since ESA and ACP still have a lot of issues to iron out before the trade arrangement takes effect.
“Farmers in the region look at the EPAs like a relationship between two unequal partners. The EU is hurrying us to sign the EPAs by December this year but when we look at advantages European farmers, it will be difficult for us to compete because our colleagues are heavily subsidised,” said Mubanga Kasakula, ESAFF’s regional vice-chairperson. “Small scale farmers in the region will lose even the little market that exists if we allow the EPAs to be signed.
For example, here in Zambia, we are already complaining about the number of goods flooding our markets from within the region. So if we fail to trade within the region, how possible will it be for us to compete at international markets such as those in the EU?”
In September 2002, the European Union and the ACP countries officially opened negotiations on EPAs in Brussels, which would have taken place over a five year period, were aimed at redefining the trade regime between the two groups of countries. Some considered that EPAs have the potential to offer the ACP countries good opportunities while others foresaw much soul-searching when it came to ensuring an improvement over the former system in terms of development prospects for the ACP countries.
From January 1, 2008, the waiver obtained from the WTO at the Doha ministerial conference would have come to an end to be replaced by a new framework that must be compatible with World Trade Organisation (WTO) rules, but this target was missed owing to unresolved differences in the trade negotiations between the EU and ACP countries.
The European Commission (EC) market access offered to the ACP countries under EPAs consists of duty-free, quota-free treatment for all imports. This treatment would apply from entry into force of the agreements for all products except for sugar and rice, whose duty-free, quota-free treatment would be phased over a transition period.
ACP countries have insisted that the EU should build capacity of African countries before the EPAs are concluded to ensure fair reciprocity in trade. In practical terms, ACP countries cannot adequately compete with the EU in trade due to the formers’ poor infrastructure and diverse socio-economic problems being faced by several countries.
In terms of trade in agriculture, there is a very big production gap between EU and ACP countries as the former heavily subsidises its farmers while the scenario is totally different for the latter. Agriculture, predominantly composed of small-scale farmers in most ACP countries, has not yet reached its peak and developing nations say allowing competition with already developed industries would hurt the local producers.
During negotiations, the ACP countries have raised concerns regarding the impact and benefits of small-scale farmers from the proposed EPAs and regional trade arrangements. Activists for pro-poor trade arrangements argue that the market liberalization of agricultural trade and the speedy process of regional integration under EPAs would worsen poverty levels in rural areas where most of the people depend on agriculture for their livelihood, as is the case in Zambia.
In Zambia, the small-scale farmers continue to account for the largest amount of total maize production of around 1.2 million metric tones, with 82 per cent while the remaining portion is produced by commercial farmers. This means small-scale farmers also need to be at the centre of trade negotiations on agriculture under EPAs.
It is also argued that the EU is pushing for an agreement on agricultural issues that have not been resolved in the Doha Round of trade negotiations being spearheaded by the WTO, and ACP countries are opposing this.
“Governments in the region should re-plan and reconsider the decision they are about to take in terms of signing the full EPAs this December,” Kasakula said. “People involved in production at a small-scale level but these have not been consulted in any way.”
As a result of the foregoing, ESAFF organised a two-day regional workshop in Lusaka where Kenya, Zambia and Zimbabwe were represented. The meeting aimed at increasing awareness on EPAs and regional integration among small-scale farmers as well as provides a forum for farmers to raise and share concerns on constraints to regional and local market access and analyse implications of EPAs on small-scale producers.
Recent assessment indicate that Zambia is expected to lose US $15.8 million (approximately K62.4 billion) resulting from the elimination of tariffs through the EPAs.
Countries in ESA are set to lose US$ 212 million worth of trade with one another, while the EU would increase its exports to the region by US $1.1 billion as a result of the EPAs. With limited sources of domestic revenue and tax bases, tariffs are one key sources of revenue for African countries. According to the World Bank, tariff revenues in sub-Saharan Africa average 7-10 per cent of government revenue, thus relying on import taxes to contribute to revenue to finance public services.
And Mulenga said there is need to lobby for EPAs to be coherent with national poverty reduction strategies and national development plans.
“The Ministry of Finance becomes key at this stage,” Mulenga said. “There is need to stop EPAs before December 2008 to safeguard the interest of the small farmers and save livelihoods of small farmers in ESA region.”
Mulenga said development in EPAs could only be achieved if there is increased international financial and technical assistance to assist small farmers to improve production and enhance trade capacities.
“Therefore, the EU needs to live up to its commitment to provide additional funds and not to ask member states. It would be ideal for each member country to develop strategies of accessing the funds being proposed in the current negotiations. These then would feed into the regional resource mobilization strategy,” Mulenga said. “Small farmers are usually left out hence need to find space so that their concerns are included in the various Funds being proposed.”
ESA countries have been asked to establish an ESA fund through the COMESA fund, but Mulenga says mobilization of funds might be difficult as most member states have bilateral agreements with individual ESA countries.
As of April 2008, the EC proposed that additional funds be mobilisd from the member states, hence the need to finalise a detailed costed development matrix.
Labels: CUTS, EPAs, FARMERS
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Study explains poverty reduction challenges
By Joan Chirwa
Friday February 29, 2008 [03:00]
POVERTY reduction becomes a much more challenging task when the poor fail to participate in the growth process, a study released by Consumer Unity and Trust Society (CUTS) has stated. And CUTS International deputy executive director Bipul Chatterjee has stated that pro-poor and pro-development policies must be considered as integral parts of a just and anti-poverty trade policy regime.
CUTS, through its Trade, Development and Poverty (TDP) project, manifests the policy relevance of international trade on poverty reduction.
The TDP project, with a three year implementation period ending this December and supported by the Department for International Development (DFID), the United Kingdom and the Netherlands, is also meant to assist in articulating policy coherence between the international trading system and national development strategies for trade to facilitate human development and poverty reduction.
“The next important aspect is the relationship between growth and poverty. There has been some concern amongst the policymakers that the benefits of growth are often not equitably distributed,” stated a study on trade, development and poverty linkages for sub-Saharan and Asian countries recently released by CUTS International. “When the poor cannot participate in the growth process, poverty reduction becomes a much more challenging task.
The term ‘pro-poor growth’ is therefore coined to emphasise the inclusive nature of the expanded economic activities. As trade adjustment is more likely to create a group of ‘winners’ along with ‘losers’, distributional consequences need to be understood carefully for assessing the implications for poverty reduction efforts.”
The study further noted that while Zambia, Tanzania and Sri Lanka had low export growth and poverty reduction rates, the deterioration in the poverty situation for Kenya and Pakistan made them rather unusual in the landscape of TDP project countries.
“On the whole, therefore, the project countries seem to suggest that despite the general relationship, the relationship between overall output growth, export expansion and poverty reduction is much more complex,” stated the TDP study.
And Chatterje stated that the linkages between international trade, development and poverty reduction had gradually begun to receive increased attention in many developing countries.
“Since trade policies affect poverty through their effects on economic growth and equitable income distribution, a pro-poor growth policy has a significant impact on poverty reduction rather than growth per se,” Chatterjee stated. “The benefits of economic growth resulting from international trade can positively impact on the poor through increased spending on health, education and social welfare, an increase in employment opportunities and the acquisition of new skills and technologies.”
Labels: CUTS, POVERTY
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