COMMENT - On a small note of disagreement, I don't agree with prof. Haabazoka about economic targets if that means 5 year plans, and I don't think PAYE is a great idea, however those are just two prescriptions that I think there are more modern variations to. It is unacceptable that the mines, for instance through the illegal practice of transfer pricing, declare a loss year in and year out, or that dividends are not paid to ZCCM-IH, which today is a holding company with a very conflicted board of directors. They also neglect to collect dividends from the mines. I completely agree that the mines should be state owned. And there should be cheap credit for small businesses, farmers, consumers - official lending rates are prohibitive and have been for decades.
1. CopperCoin
How about a local crypto currency backed by copper?
https://www.themastonline.com/2018/02/23/iran-russia-consider-own-cryptocurrencies-after-venezuela-success/
2. Drought proofing farmland
Which can probably be promoted under the banner of combating the effects of climate change. The army probably has enough equipment to train recruits, a skill that can carry over into civilian life. And prevent the yearly flooding by storing water in the soil.
https://www.harvestingrainwater.com/2016/11/27/brad-lancaster-with-warren-brush-co-water-for-every-farm-earthworks-for-resiliency-in-an-era-of-drought-april-5-8-2017-hyder-az/
Brad Lancaster learned a lot from the Zimbabwean dry land water pioneer Mr. Zepheniah Phiri Maseko.
https://permaculturenews.org/2016/07/28/evolutions-mr-phiris-water-harvesting-plantation-1995-2016/
There are a lot of things that can be done in agriculture, manufacturing and education.
3. Manufacturing from locally grown agricultural products
How to make a HQ handmade Cigar
https://www.youtube.com/watch?v=ohVnoo2DC0g
Notice the prices
https://www.jrcigars.com/
Turning maize surpluses into storeable and exportable distillates, which would also help create a permanent market for maize surpluses for local farmers:
How to
http://www.whiskeyprof.com/basic-distilling/
Bourbon sells for $4,000 to $15,000 per barrel
https://www.forbes.com/sites/johnmccarthy12/2017/04/04/how-to-buy-a-barrel-of-bourbon/2/#7f985b681bfb
4. Horticulture
There are crops that can be grown besides maize and that have a very high return or are labour intensive.
https://modernfarmer.com/2017/07/5-valuable-crops-can-grow-us-grow/
If a market for small to medium sized farms is created, there has to be technology developed to meet their needs, rather than technology for giant corporations. The universities can be of help here. For example:
Quick Cut Greens Harvester (Official)
Farmer’s Friend
https://www.youtube.com/watch?v=OPIfw5_WoLU
5. Redistribute land
" The Northern Rhodesia (Native Trust Land) Orders-in-Council of 1947 created Trust Land as a result of pressure from the white settlers who demanded security on the land they occupied. Trust Land constituted about 58%. This was actually an extension of crown or state land to 64% while the reserve land for the local people was reduced to 36%. "
http://maravi.blogspot.com/2017/12/land-reform-in-zambia.html
6. Universal Basic Income
This is how you really stimulate the economy:
https://twitter.com/MrK00001/status/827872456035663872
There has to be a serious discussion about the end of 'jobs' which is universal, including in mining, a relentles tide caused by automation and innovation. People still need incomes, even without jobs. There has to be a concerted effort to eliminate poverty.
7. Democracy
The government has to do what the people want it to do. No more capture by the IMF, or corporations. Major decisions have to be put to a referendum - taking on debt, negotiating trade deals, going to war, etc. This is the only way to prevent rogue governments. It should be illegal for NGO's to take money from for instance Freedom House or the Open Society Foundations.
- MrK
Haabazoka calls for repossession of mines
By Chambwa Moonga on February 21, 2018
ECONOMIST Lubinda Haabazoka says Zambia’s mines ought to be under government ownership because the current model of private ownership is a failure.
And Dr Haabazoka, who is a University of Zambia (UNZA) lecturer, has noted that the current trend where Zambians are being over-taxed by authorities will not culminate into development for the country.
Speaking on The Assignment programme on Muvi TV on Sunday night, Dr Haabazoka inferred that mines under the current ownership model were not substantively contributing to Zambia’s economy.
“What we need to do [is that] the current model of mines being under private ownership is a failure. I don’t know how much taxes the mines are paying but when you look at ZCCM (Zambia Consolidated Copper Mines) in 1991, it made net profits of US$191 million. When you look at the mines from 1998 to today, all the taxes put together that they have paid are less than US$191 million! They (mine owners) are always saying ‘we are making losses’. So, they have failed. We need to get the mines under ZCCM again,”
Dr Haabazoka noted.
“Foreign investors can come and build malls, they can come and build factories – build motor vehicle manufacturing plants, we are not against that. But they should not run the mines! The mines should be under government. I’m a capitalist but also I’m for a mixed economy and I borrow from Russia… Look at our mines! Cobalt, I think, is selling over $40,000 per tonne. But where is that money going to? You cannot be running a shop for 15 years and continue making losses.”
He recalled that under ZCCM ownership, mines did more in terms of corporate social responsibility.
“When my father was a mine captain…my father just went up to equivalent of Grade seven. Our grandfathers and fathers took over the mines when the former president Kaunda was in charge. We didn’t have educated people but ZCCM built schools, roads, clinics and all the infrastructure that was on the Copperbelt,” Dr Haabazoka said.
“FDI (Foreign Direct Investment) for Zambia, for example, contributes huge amounts of foreign exchange inflows but unfortunately there are very few countries that have developed using FDIs. A foreigner cannot come and develop your country – they can bring in new technologies.”
And Dr Haabazoka pointed out that Zambia seemed not to know where it was going.
“You need to have targets which you need to reach and those targets are beyond single digit inflation, stable exchange rate. Those [targets] are basically that of revolutionalising the way you do things; major success stories of economic development, the South Korean example, the Japanese example, Singapore, even the Rwandan experience – those are things that basically you can see going on where everyone in the nation has put their hands together and are moving the country forward,” he said.
“At the moment, we don’t know what we want to achieve; do we want just to merely stabilise macro-economic indicators? Do we want to continue accumulating debt? Are we infrastructural wise? Where is our youth policy? Where are we going? What is happening to our manufacturing industry? What of our mineral wealth? How is economic development happening?”
Haabazoka added that from independence, Zambia’s government knew that it wanted massive investments and that it created its own manufacturing industry as well as enhancing infrastructural development.
“[But] from 1991 we lost it until 2001 when we stabilised the damage that was caused…by the huge debt that we had. Mwanawasa’s period was much more of a stabilising period, trying to get rid of the debt. In my opinion, now we should have that economic development that is aimed at trying to reduce…. We have gone back; from stabilising and reducing our debt to US$600 million, we started accumulating it after 2011 and now we are in massive debt. Now, we are supposed to start doing what we were doing from 2001 – stabilise issues so that in the future we start growing,” Dr Haabazoka said.
“As a country, we are hugely divided; the country basically is divided into red and green – tribal divisions! Everything that happens in the country people see it through political lenses, through surnames of individuals – there is a lot of disunity. People might disagree with me but basically that is what is obtaining.”
He also regretted that Zambians only spoke of economic diversification when copper prices were below $4,000 per tonne.
“When you look at economic diversification per se, you need both government and citizens to actively participate in it. First of all, you have to say what it is that we are dependent on. You are going to choose the mining industry. [But] can we use the mining industry to diversify our economy? Yes, we can!” Dr Haabazoka said.
He also observed that Zambians had fallen in love with money.
“I don’t know where that has come from. When you call a Zambian to come and do something, they are going to charge…. Some people even charge $500 per hour just to come and help solve the drainage…,” Dr Haabazoka observed.
Meanwhile, Dr Haabazoka noted that what was currently obtaining in the country’s economy could not propel Zambia to development.
“We cannot develop an economy on high taxes. There is no country in the world that has taxed its way into development. The current regime can change things, there is still time. They can actually do it within one or two years. But they have to do the following;
give a breather to citizens. There is no way you can be charging toll fees at K20 per motor vehicle. In a K20, a person on the street can buy pamela (rationed mealie-meal pack), eggs and make lunch for their family. Give a breather [because] there is no way you can tax your way into development,”
said Dr Haabazoka.
“The current Minister of Finance should bring back the Pay As You Earn to 35 per cent. Actually, 28 per cent is the best rate or most optimal tax for the current situation. You are going to see increased economy growth in the future. Those days if on a Saturday you went into a hardware shop, it will be packed. But nowadays you are just a few of you and it’s not because people don’t want to build; there is no disposable income [and] this is not politics. I’m just saying what is on the ground!”
Labels: DEBT, INFLATION, LUBINDA HAABAZOKA, NEOLIBERALISM
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COMMENT - There would be no debt at all if the government simply collected stiff Windfall Taxes from the mines. The debt is doubling, the currency is under pressure instead of increasing because of all the value flowing into the Zambian economy out of the mining sector.
Who is the lunatic now, Finance Minister Chikwanda?
Zambia’s future bleak due to incessant govt borrowing - Haabazoka By Misheck Wangwe and Stuart Lisulo | Updated: 26 Jul,2015 ,11:22:25
THE future of Zambia is bleak looking at the incessant borrowing being made by the PF government, says Copperbelt-based economist Dr Lubinda Haabazoka.
The Zambian government on Thursday issued a US$1.25 billion Eurobond, the highest ever, to be repaid in 10 years.
The facility, which was over-subscribed by US$500 million, is the third that Zambia has issued under the PF regime, at 9.37 per cent interest annually.
But Dr Haabazoka, who is also a senior lecturer of business studies at the Copperbelt University, said looking at the expenditure by allocation, much of the borrowed money might even go to consumption.
“No country in the history of economic development has ever developed on borrowed funds. One might argue that governments issue treasury bonds to develop their economies but the type of borrowing that we have seen is unprecedented. In 2011, Zambia only owed US$1.2 billion in foreign debt and now it owes more than US$7 billion. The rate at which we are acquiring debt is very high,” he said.
Dr Haabazoka said what was more worrying was that the sources of income were narrowing and the country’s economy was being run on borrowed funds.
He said the government could have cut down unnecessary expenditure such as scaling down the size of government and doing away with projects of low priority.
Dr Haabazoka said thinking that borrowed money was the only source of the national budget or running government was a misplaced ideology.
“This year is going to be the worst economically, after 15 years, because of the huge budget deficit due to lack of proper planning on the way government is supposed to be run. Look at the energy crisis! It will cost businesses because Zesco and government have recorded huge losses in terms of missed revenues and opportunities. Look at the fuel sector! There are huge losses; Indeni has shut and businesses that depend on generators to backup their energy sources have huge challenges to operate. Economically, our performance is dismal as a nation,” Dr Haazoka said.
He said the state of the economy was making it extremely difficult to operate smaller businesses.
“My advice to finance minister Alexander Chikwanda is that he must make this loan his final for the next two years. Those working in government must help in coming up with a strategy on how revenue collection could be improved without burdening the already overburdened labour force and formal sector,” Dr Haabazoka said.
He said the proceeds from the Eurobond were not likely to benefit Zambia’s economy owing to the massive externalisation of financial resources in the construction sector among foreign contractors.
“I see a lot of externalisation of resources because most contractors that are going to work on these infrastructure developments are Chinese and other foreign nationals so we are basically borrowing for foreign economic participants,” Dr Haabazoka added.
He also said the government’s intention to address the widening budget deficit, which is projected to soar to around K20 billion from K8.5 billion by accumulating new debt, will actually widen it even further next year.
“In trying to solve a budget deficit by borrowing, we are actually creating a wider deficit for the next year so basically, we are not solving anything! The easiest way to solve a budget deficit is to reduce unnecessary expenditure. You have to prioritise which sectors need money most and which ones can wait for the future,” said Dr Haabazoka.
- See more at: http://www.postzambia.com/news.php?id=9995#sthash.QdS8Zj5Q.dpuf
Labels: ALEXANDER CHIKWANDA, DEBT, EUROBOND, LUBINDA HAABAZOKA, NEOLIBERALISM, PF, WINDFALL TAX
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Haabazoka urges Chikwanda not to dismiss windfall tax
By Kabanda Chulu
Sun 22 Dec. 2013, 14:01 CAT
DR Lubinda Haabazoka has urged finance minsiter Alexander chikwanda not to dismiss windfall tax. Disagreeing with Chikwanda's stance on windfall tax, Haabazoka said the government should not reject ideas on mining taxation because all citizens have a common goal to see national economic development.
Speaking to journalists on Friday, Chikwanda said the government's programmes, including the reintroduction of the mining windfall taxes, could not be dictated by the feelings coming from the streets.
When asked what the government's position was on renewed calls to re-introduce the windfall taxes, Chikwanda said people were right to complain that the country was not getting its fair share from the mining sector, but that the government, however, had its own programme.
"We can't just have our programmes dictated by the feeling on the street, enlightened or unenlightened," he said.
Chikwanda said the government had its own plans to revise the mining taxation, taking into account the interests of the country as well as ensuring that the mines operate viably.
"The government in this situation is like a dairy farmer; if you want milk from a cow, you don't do things which will kill the cow because you will have no milk. You would want to invest in your cow or cows..., up the nutritional requirements, so that you can get more milk and possibly over an extended lactation period," he said.
"So the government has to do a serious balancing act. We can't just wake up and slap, say, 20 per cent or 30 per cent royalty tax on a little mine which in no time will go under; and if you are a mine like KCM - you employ 20,000 people, you put people on the street...The assurance, however, I can give the people of Zambia is that the government is alive to the issues relating to tax in the mining industry.
But Dr Haabazoka, the Copperbelt University academician, said everyone was entitled to their own opinions.
"I disagree with the minister on windfall tax because there is nothing wrong for people to call for windfall tax and government should not reject ideas because all of us have one common goal to see national economic development, whether one is for windfall tax or not," he said.
"Windfall tax is key in maximising revenue collection from the mines since it will tax super profits and if the mines make losses, then there will be nothing to tax but as we explore this route, we should also bring sanity to the mining sector by addressing the way profits are calculated, exports are declared and how production is monitored.
This way, we shall get meaningful results. Also government should understand the cost structures of the mines as they come up with taxation policies because operations at KCM can be different from that obtaining at Muliashi in Luanshya."
In 2008, under Levy Mwanawasa, the government introduced a windfall tax on base metals at a minimum rate of 25 per cent with a revenue projection of at least US$415 million per annum.
For copper, the windfall tax was pegged at 25 per cent at a price of US$2.50 per pound but below US$3.00 per pound, 50 per cent for the next 50 cents increase in price and 75 per cent above US$3.50 per pound.
But Rupiah Banda's government removed the windfall tax, claiming that it was 'hurting' the mining investments. And following the election of the PF into government, pressure from the civil society mounted for the re-introduction of the windfall tax. However, Chikwanda in 2011 said those calling for the re-introduction of the windfall tax were 'lunatics'.
And on the International Monetary Fund (IMF) which raised concern over rising fiscal imbalances and lower reserve coverage, Dr Haabazoka, who is head of account and finance department in the School of Business at Copperbelt University, said the statement was timely and the government should move towards increasing reserves.
"The call by the IMF is valid, we need to build reserves by broadening the resource mobilisation, and actually, the culture of savings should not just be encouraged at homes but also at national level, we shouldn't just build two or three months import cover that is used on consumption," Dr Habazoka said.
"We shall have problems if not addressed because debt servicing is done in foreign currency, hence we need to create a stabilisation fund that can cushion unfavourable swings in copper prices or negative impacts in the global economy."
He also commended Chikwanda for proposing the wage freeze.
"Government is over-stretched and cannot afford to offer huge increments, especially that most public service workers got more than 100 per cent and these increments were not tallied to production but to removing imbalances and harmonisation of salaries; so the wage freeze will also help government to plan," said Dr Habazoka.
"And despite the proposed recruitment freeze on those directly on government pay roll, it doesn't mean government will not create employment but this will be done through the various infrastructure projects being undertaken countrywide."
Labels: ALEXANDER CHIKWANDA, LUBINDA HAABAZOKA, WINDFALL TAX
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Chikwanda rejects 'street dictation'
By Gift Chanda, Chiwoyu Sinyangwe and Kabanda Chulu
Sat 21 Dec. 2013, 14:01 CAT
*** COMMENT - More lies from the mines. The mines would collapse because the Windfall Tax would make them 120% of profits? On the other hand, if FQM's cash costs are higher than $2,50 per lbs (below which the windfall tax is 0%), I would like to see them prove it, because the Cash Cost per lbs at KCM is $1,00 (which would leave the next $1,50 of profit completely untaxed). Cash Cost at Katanga Mining is $1,69 per pound. But FQM claims that their Cash Costs are over $2,50 per pound? Let them prove it. - MrK
And another thing - the last time the IMF 'advised' Edith Nawakwi that 'copper prices would not rise in her lifetime', they were dead wrong. When do they pay for being wrong? When will people stop listening to the IMF's 'advice'? - MrK ***
FINANCE minister Alexander Chikwanda says government programmes, including reintroduction of the mining windfall tax, cannot be dictated by the feelings coming from the streets.
When asked what the government's position was on renewed calls to re-introduce the windfall taxes, Chikwanda yesterday said people were right to complain that the country was not getting its fair share from the mining sector.
"However, the government has its own programme," Chikwanda told journalists.
"We can't just have our programmes dictated by the feeling on the street, enlightened or unenlightened."
He said the government had its own plans to revise the mining taxation, taking into account the interests of the country as well as ensuring that the mines operate viably.
"The government in this situation is like a dairy farmer; if you want milk from a cow, you don't do things which will kill the cow because you will have no milk. You would want to invest in your cow or cows..., up the nutritional requirements, so that you can get more milk and possibly over an extended lactation period," he said.
"So the government has to do a serious balancing act. We can't just wake up and slap, say, 20 per cent or 30 per cent royalty tax on a little mine which in no time will go under; and if you are a mine like KCM - you employ 20,000 people, you put people on the street."
He said the government had a responsibility to ensure that jobs in the mining sector are secured.
"The assurance, however, I can give the people of Zambia is that the government is alive to the issues relating to tax in the mining industry.
In 2008, under Levy Mwanawasa, the government introduced a windfall tax on base metals at a minimum rate of 25 per cent with a revenue projection of at least US$415 million per annum.
For copper, the windfall tax was pegged at 25 per cent at a price of US$2.50 per pound but below US$3.00 per pound, 50 per cent for the next 50 cents increase in price and 75 per cent above US$3.50 per pound.
But Rupiah Banda's government removed the windfall tax, claiming that it was 'hurting' the mining investments. And following the election of the PF into government, pressure from the civil society mounted for the re-introduction of the windfall tax. However, Chikwanda in 2011 said those calling for the re-introduction of the windfall tax were 'lunatics'.
And the International Monetary Fund (IMF) says there is need for better enforcement of existing taxing laws for the mining sector.
IMF resident representative for Zambia Tobias Rasmussen said there was also need to maintain policy consistence and stable investment environment in the mining sector.
"The tax regime for the mining sector is fairly standard for the industry," Rasmussen told journalists yesterday. "What is needed is better enforcement of the existing legislation. So, we would advise you go that route than changing legislation."
Rasmussen said the contribution of the mining sector to the overall local economy of Zambia was projected to rise as mining companies ramp up output and new mining projects come on stream.
"We are projecting that there will be an increase in mining revenues in the coming years," said Rasmussen.
"The two important reasons for this is that there will be increased production and some significant expansion underway which will increase production levels and that will also enhance the taxes to government. So, that is the way to approach the need for higher revenues is that area."
Meanwhile, mining industry experts have advised the government to devise an effective taxation policy that would ensure that a fair share of mineral wealth is distributed to local people.
And Chamber of Mines representative Kingsley Chinkuli says reintroduction of the windfall tax regime will be detrimental to the mining sector.
During a discussion on mining taxes hosted by the Economics Association of Zambia in Lusaka, economist Professor Oliver Saasa said the mines were a key component in the development of Zambia and people expected it to play a bigger role beyond the current scenario.
"But the mines are relatively lower players in the economy. While we may accuse the mines of failing to contribute sufficiently, we have also failed to establish effective structures, for instance, Ministry of Mines, Bank of Zambia, Central Statistics and ZRA have different figures and if our tax revenue collection is based on profits, then government should have accurate figures," said Prof Saasa.
"Our capacity is very weak and we have not done well to strengthen institutions that should monitor and get realistic revenue. Even with the windfall taxes, very few paid. Most of them resisted but since we lack capacity, even when we realise that we have been shortchanged, we still lack capacity to change things, so we need to put our house in order to get a fair share."
Financial expert Gilbert Chinyama said there was need to have research-based debates relating to economic governance of the country.
"Research organisations and other think-tanks should carry out studies and make their findings available for people to make informed comments on matters of the economy including the issues of windfall taxes," he said.
University of Zambia School of Mines lecturer Mathew Mpande said there were many forms of taxing the mines.
"There should be a balance between what the mines want and what the community wants but the current system which is being applied to the tax the mines is profit based and this is prone to abuse through tax avoidance, evasion and transfer pricing," said Dr Mpande.
"In India, they apply the expenditure based. I think it is very fair and Zambia should also tax the mines through this system. For example, when you look at the trucks that haul copper concentrates from Kansanshi to the smelters in Chingola, you realise that these are modern fleets of trucks, so tax the mines based on the expenditure they are making."
And Gen Chinkuli, who is also First Quantum Minerals country manager, said mines would collapse if the windfall tax was brought back.
"Mere attacks based on ignorance will not help the situation. The windfall tax is not the answer. If re-introduced, overall taxes for the mines will stand at 120 per cent, so meaningful consultation is needed to come up with a win-win situation," he said.
"FQM currently pays mineral royalty at six per cent on revenue, 30 per cent profit tax and 30 per cent variable tax also on profits. These are very high tax rates and if more taxes were to be added, then the mines will collapse."
Labels: ALEXANDER CHIKWANDA, GEN CHINKULI, LUBINDA HAABAZOKA, TOBIAS RASMUSSEN, WINDFALL TAX
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