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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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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Postpone kwacha rebasing - CUTS
By Gift Chanda
Mon 02 Apr. 2012, 12:59 CAT
THE rebasing of the kwacha should be postponed to allow for more sensitisation, urges Consumer Unity and Trust Society. CUTS international Zambia board chairperson Ambassador Love Mtesa yesterday observed that the time frame allocated for the rebasing of the kwacha or knocking out of three zero from the local currency was not enough.
"We are cognizant of the fact that the Bank of Zambia is in a hurry to finish this work, however, the time frame which is six months allocated for this mammoth task vis a vis sensitisation is too little," Ambassador Mtesa said.
"A massive sensitisation is paramount hence the need to postpone the launch."
Ambassador Mtesa said postponing the rebasing of the kwacha would give the government a sufficient window period for effective country wide sensitisation.
He said enough sensitisation before the new currency comes into effect mid this year was fundamental in avoiding rampant fraud and swindling activities during the transition period when consumers are not yet sure of fair pricing.
"The time frame that has been allocated for this process is not enough. We say this because when the members of parliament have been sensitised about it, it needs a bit of time for them to assimilate and understand the whole concept of rebasing," Ambassador Mtesa said.
"This is the first time Zambia is going to rebase her currency, as such there is great need for the Bank of Zambia to sensitise the members of the public and other stakeholders on the process before implementing it. This would help both BoZ and the stakeholders to reflect and understand the benefit that would come along rebasing and thereby spell over the doubts in many minds. As a consumer organisation, we realise that this process will adversely affect consumers on a number of fronts."
He proposed that the rebasing of the kwacha be delayed until the country ensures that all macro-economic variables are stable, including exchange rates.
"At the moment, the exchange rates in the financial markets are far from stable as the kwacha is currently in a downward spiral and so before government rebases the kwacha, there is great need that this and other macro-economic variables are in a more predictable and stable state which is not the case at the moment. The local currency has since depreciated by over 10 per cent against major convertible currencies the lowest in more than two years trading at K5, 400 to one US dollar," said Ambassador Mtesa.
"The government is also yet to explain to the public its plan on how to handle the short term inflationary pressure that is likely to arise from the rebasing process through speculation and rounding off effects. It is most likely that prices for certain goods that are slightly less than a rounded kwacha figure will be rounded off cumulatively causing short term inflation. For instance, a retailer selling a good currently priced at K850 will have to adjust it to K0.85. This retailer is likely to round off this figure to K1 for accounting simplicity's sake but on an aggregate scale this will cause the general price level to rise. Hence, the need for government to set measures to cater for this inflationary bump and mitigate negative consumer effects."
Labels: ECONOMY, KWACHA, LOVE MTESA
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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 - Not necessarily a bad idea, but the effect is only going to be marginal. Banks will make a little money from interest. The point should really be that it is foreign investors who are making all this profit instead of Zambians.
Investors should bank their money locally, says Mtesa
By Ndinawe Simpelwe
Fri 18 Feb. 2011, 04:00 CAT
IT is ideal for foreign investors to keep their money in local banks, says Ambassador Love Mtesa. In an interview, Ambassador Mtesa who is also Consumer Unit and Trust Society Zambia chapter board chairperson, said government should renegotiate with foreign investors to ensure that they bank their money locally.
Ambassador Mtesa said foreign investment in the country was good for the economy but that it would help to negotiate with the investors to bank with local banks.
“We need to look at the agreement because if foreign investors were banking with our local banks it would make the economy grow faster because some of the money will be used in the country,” Ambassador Mtesa said.
He said it was sad that all the money that foreign investors were making was going abroad, with the country benefiting nothing.
He said such kind of a situation was making it difficult for the government to plan for economic growth as it did not know what to expect from investors.
“It is necessary for both investors and government to sit down and look at possible ways of banking with local banks,” he said.
Ambassador Mtesa added that some foreign investors were making huge profits that would benefit the local economy through bank loans.
“They can agree on a percentage of how much money should be banked locally and how much be taken to their countries. Government should ensure that the economy grows from foreign investment,” he said.
Ambassador Mtesa said it was up to the government to ensure that the Zambian people started benefiting from foreign investment.
He recommended that government and foreign investors find a lasting solution in ensuring that some of the profits made should remain in Zambia.
Ambassador Mtesa said it was not necessary for investors to keep all their money abroad when the country had enough banks.
Labels: BANKING, LOVE MTESA
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COMMENT - The money needed to diversify the economy is to be collected now. The MMD is acting like a vampire squid (to use
Matt Taibbi's metaphore for GS bank), allowing foreign mining conglomerates to suck the lifeblood out of the country. This money is needed to build agriculture, manufacturing and infrastructure, as well as provide basic services to the population. Instead, the MMD values it's 'relationship' with the miners more than it does national development. They may even see non-foreign owned national development as a threat to their hold on power, as it would provide the opposition with alternative sources of funding (see what happened to Finance Bank for that reason).
Zambia not benefitting from copper - Mtesa
By Chiwoyu Sinyangwe
Thu 13 Jan. 2011, 04:00 CAT
THE current regime should replace “windfall tax” if they don’t like the term but the concept of allowing Zambia benefit from current high copper prices should not be dismissed, says Ambassador Love Mtesa.
International copper prices on the London Metal Exchange (LME) have continued to rally despite intermittent losses with three-month copper delivery on the London Metals Exchange trading around US $9,557 a tonne.
The surge in copper prices has prompted strong calls on the government to re-introduce the windfall tax to enable the country tap into current “abnormal profits” being enjoyed by the mines.
The government has, however, remained defiant, arguing that the variable profit tax which is measured in accordance with the profit and cost margins presented by mining was enough to help the country tap into the gains being made by mining firms.
In an interview, Ambassador Mtesa, who is also the executive chairman of the Zambian chapter of CUTS International, said there was urgent need to revisit the current mine taxation.
Ambassador Mtesa regretted the government’s continued resistance to calls for increased revenue collections.
“…By the time copper prices would start cooling down, the foreign mining ‘firms would be laughing all the way to the bank’ while the country would have nothing to show for the copper extracted,” Ambassador Mtesa said.
He observed that although the current surge would boost investor confidence into the country’s main economic stay, it was poor judgement for the government not to tax them properly to make “hay while the sun shines”.
“I know it is important to safeguard investments but the large corporations should also not be allowed to milk the country instead of helping it to grow,” Ambassador Mtesa said.
“If they the government don’t like the word windfall tax, let them replace it. It doesn’t matter if they change the name, but whatever they will come up with should translate in increasing revenue collections to improve the lives and welfare of the people.”
Ambassador Mtesa said the country was not benefiting from the vast copper mining sector despite its position as Africa’s top copper producer.
“The over 70 per cent of the population are poor and lack basic essentials such as shelter,” said Ambassador Mtesa.
“The issue of revenue collection from the mining companies is an issue of human rights for Zambia, and mind you copper will one day finish.”
Labels: FDI, LOVE MTESA, NEOLIBERALISM, WINDFALL TAX
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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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