Magande advises PF to consult on governance
By Chiwoyu Sinyangwe
Wed 08 Jan. 2014, 14:01 CAT
ZAMBIA should start preparing incoming governments thoroughly in view of the experience the country has had with PF's first two years in office, says Ng'andu Magande.
Magande, Zambia's longest-serving finance minister, said most of the mistakes the PF had made in its first two years in office were as a result of not understanding how the government systems operate. Magande said it was very clear the PF made key decisions without understanding how the country operates.
"This is a party which has never been in power and if they said 'we are going to take one or two years to study the situation', people would still have understood that 'these people have never been in government, so, let them understand what goes on in government'," Magande said in an interview.
"But what happens is that here we don't have an American system where you find the incoming government starts learning by going to the offices. Here you just end up in place and you don't even know where you stand."
Magande urged the PF to work closely with civil servants to ensure they fully understand the civil service and general government operations before they plunge the country into serious governance issues.
Magande observed that the first two years of the PF had been characterised by ad hoc and not well-thought through arrangements.
He said key economic decisions such as the removal of consumer subsidies on maize and fuel had not benefitted the intended sections of the Zambian society.
"Today, who is buying maize at K80 per 25 kilogramme? It is the ordinary people in Chilubi and Kalingalinga…the same poor people they said they wanted to protect," said Magande.
Labels: NG'ANDU MAGANDE, PF
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Magande urges PF to improve governance
By By Allan Mulenga
Sun 05 Jan. 2014, 14:00 CAT
NG'ANDU Magande has asked the government to put its house in order to achieve economic development.
Giving his expectations from the government in 2014, Magande, who is leader of National Movement for Progress and former finance minister in the MMD government, said the government performed badly last year in terms of governance.
"They need to bring back the democratic governance, so that all Zambians can feel proud that this is their country and participate in economic management of the country. 2013 was very poor in terms of governance and I just hope they realise that," he said.
"Stopping other people talking and interchanging ideas does not help the national development."
Magande said the government needed to provide the governance system that gave freedom to every citizen to exploit their ideas.
"Technology is there on the Internet to be downloaded and the role of government is to have a proper governance system that gives freedom to every citizen to exploit their ideas. That is not what has been provided so far because they were always talking about the opposition not meeting. The opposition is made up of Zambians," he said.
Magande called for co-existence between the government and leaders of opposition political parties.
"It is not a special qualification, no. It is actually somebody who doesn't agree with you and wants a conversation. So if you deny him the opportunity to talk to him, you may be missing a better way of doing your own idea," he said.
Magande said economic development could only be realised when there was good governance.
"Governance really has to improve in order for the economic aspects of development to be done. And we saw that when Levy Mwanawasa was around. People started being proud of driving small cars from Japan. They started being proud of just owning few chickens from Kalingalinga. They started being proud of owing two-roomed house in Chipulukusu," he said.
"That is what we need. A governance system can be an environment that can be used by the citizens to exploit their ideas to build things and own things in their own country."
And Magande said the proposed re-introduction of the industrial development corporation (indeco) would take the country backwards in terms of economic development.
In his New Year message, President Michael Sata said the government would establish the industrial development corporation which would focus on developing labour-intensive industries and enterprises in key areas of agriculture, construction, manufacturing, tourism, science and technology.
"I am also very surprised by this announcement about the industrial development corporation. Because we seem to be going the same route we went before and you saw the disaster that came around. This time with the technological advancements, where people can even go to the moon, I would expect the government to help people to get there instead of them thinking of doing things for the people. That is what is completely surprising," Magande said.
He expressed doubt over the efficacy of the indeco, saying that it brought about its own challenges in terms of economic development.
"He President Sata is just re-introducing indeco, it is not his initiative. He is just repeating what happened before. Even if today somebody would come to us and say there will be a flood like in Noah's days, get ready now, the ark that would be constructed now would not be like Noah's ark because of technology," said Magande.
"So, re-introducing things in the same old way, we are not moving forward. Some of the initiatives are not really for 2014, they are for 1969. The environment is different; in 1969 we had very few technologically educated people. This time we have millions of people with brilliant ideas."
Labels: NG'ANDU MAGANDE, PF
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PF wants to slide Zambia into another debt trap - Magande
By Abel Mboozi
Sun 01 Dec. 2013, 14:01 CAT
COMMENT - "And Dr Situmkeko Musokotwane last week said the rate at which Zambia's external debt is climbing is worrying." Wow, really. This is the same Finance Minister who shielded the mines from taxation, and justified that by saying "We can always borrow". Short memories, perhaps, or just blatant hypocrisy and corruption?
Zambia now has more sources to borrow from - Musokotwane
By Bright Mukwasa
Fri 04 Mar. 2011, 04:01 CAT
‘Zambia can’t stop borrowing’
Written by Kabanda Chulu
Thursday, June 11, 2009 12:28:12 PM
" ZAMBIA can’t stop borrowing because available local resources are not adequate to sustain the financing of many projects around the country, finance minister Situmbeko Musokotwane has said. "
"“And the US $7 billion debt we had, in absolute terms it was a small amount by any standards but through our inability to service it, that was too huge because economic activities that needed to be sprouted out of that did not happen.” " - MrK
IT is sad that the PF wants to slide Zambia into another debt trap that would be difficult to dismantle, Ng'andu Magande has charged.
Magande, who is National Movement for Progress president, said it is surprising that the PF government is against the re-introduction of windfall tax on mines when it is the only sure way of raising reasonable revenue for the country.
He wondered why the PF government which campaigned on the premise of re-introducing the windfall tax was backpeddling over the matter and was now resorting to huge external borrowing.
"Even if the government does not want to re-introduce this tax on mines, what other tax sources are they intending to get money from in the mining sector? Money lies in windfall tax and the PF should tell the nation whether it is its policy not to implement the windfall tax," Magande said.
Levy Mwanawasa's government in 2008 introduced a windfall tax on copper at 25 per cent owing to the sector's low contribution to government revenue which still stands at less than two per cent.
Magande, as finance minister then, said the government envisaged to earn at laest U$415 million annually from the windfall tax as mining companies accounted for over 80 per cent of the country's export earnings.
However, Rupiah Banda's government in 2010 scrapped the tax amidst calls from civil society and opposition political parties to have it maintained.
The PF during its campaigns in the run-up to the 2011 elections promised to reintroduce the tax but finance minister Alexander Chikwanda last year, categorically indicated that the windfall tax would not be brought back and called those calling for its re-introduction 'lunatics.'
Commenting on Parliament's decision to allow Chikwanda to increase Zambia's external borrowing ceiling from K20 billion to K35 billion, Magande said in Lusaka yesterday that Zambians had now seen for themselves that the PF does not mean well.
He said the expansion of the mining industry in Zambia was fast and that was where economic growth was coming from.
"The expansion of the mining industry is very fast, that's where all this growth is coming from and then we have growth of six to seven per cent but poverty is still high because there is no equitable distribution of wealth which is supposed to be done by the government," he said.
He said taking the route of external borrowing would only take Zambia back into a debt trap situation.
"Why can't we really learn? It was going to be a different scenario if we had people in government now that have never served in similar capacities. The minister of finance has been in government before, so are President Sata and Vice-President Scott, so why can't we learn from those mistakes?" Magande asked.
"There is no doubt that the decision to raise the external debt ceiling would plunge Zambia into the Third Republic times, where her external debts would swell to unimaginable levels, which is sad."
Magande said former president Frederick Chiluba could not buy medicine in hospitals and that he built no single school then because he was servicing the external debt.
"Even medicines were in short supply because the government could not buy them. It is therefore, sad that the PF want to slide Zambia into another debt trap that would be difficult to dismantle," Magande said.
And Dr Situmkeko Musokotwane last week said the rate at which Zambia's external debt is climbing is worrying.
Dr Musokotwane, who is the immediate past finance minister, said it was saddening that Zambia's external debt which stands at U$3.2 billion was getting pushed up because of quick borrowing.
He was debating a motion in Parliament moved by Chikwanda, asking the House to permit him to increase Zambia's external debt borrowing ceiling from K20 billion to K35 billion re-denominated currency.
"The rate at which Zambia's indebtedness is climbing is too fast. Two years ago the debt was U$1.5 billion, today it's U$3.5 billion, in two years, you are talking of an increment of U$2 billion, this is too fast," Dr Musokotwane said.
"UNIP increased the debt from zero to U$7 billion in 27 years now we are increasing the debt by U$2 billion in two years, this is worrying people," he said.
Dr Musokotwane said in the Yellow Book, external debt indicated that a U$2 billion bond would be issued in 2014, meaning that the debt would shoot to over U$5 billion by next year.
"In three years, from U$1.5billion to U$5.7 billion, this of course is now getting close to where we were when we got debt relief, which is definitely worrying," Dr Musokotwane noted.
He said external borrowing of 75 per cent was substantial and raised questions.
Dr Musokotwane said the external debt could even be more than U$3.2 billion because he was not too sure the control called 'contingency liabilities' was included in the amount.
"These are amounts of money that can potentially become real debts. Of hand is the ZAMTEL liability; there is no question of the fact that the Libyan company(Lap-Green) transmitted something like close to U$400 million to acquire ZAMTEL," he said.
"Obviously they will not accept that such money goes into the drain, it is a contingent liability subject to judgment or agreement to the government and of course with time, we don't expect the US$400 million to be less than $500 million then."
He said the same applied to the Railways Systems of Zambia which has reverted to Zambia Railways.
"So, if you add all these plus other smaller amounts, I suspect we could already be owing U$3.7 billion which means that in actual fact, we could have already reached the existing limit perhaps even exceeded it. So, the debt issue is obviously a serious one," Dr Musokotwane said.
Bweengwa UPND member of parliament Highvie Hamududu in his debate said it was wrong for the government to premise the 2014 national budget on the decision to increase external borrowing.
Labels: DEBT, NEOLIBERALISM, NG'ANDU MAGANDE, SITUMBEKO MUSOKOTWANE
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KCM seek to meet Sata
By Staff Reporters
Wed 06 Nov. 2013, 14:01 CAT
KONKOLA Copper Mines (KCM) is seeking to meet President Michael Sata to explain it's plans to cut over 1,500 jobs at Nchanga underground. And Ngandu Magande says President Sata's warning to KCM to revoke the mining licence is a wake up call to other mining companies. Meanwhile, MMD president Nevers Mumba says there is no leader that will want to see people get on the streets without jobs.
In an interview, Joy Sata, KCM corporate affairs manager, said the firm had fully read President Sata's statement and was currently seeking an appointment to explain its position on the matter.
"Our position is that we have read the Presidents' statement and we shall endeavour to engage him over this matter," Sata said in an interview.
"For now, I am not sure we can say anything more than that and that remains our position for now."
And commenting on President Sata's statement that KCM was blackmailing the government, Magande said President Sata's statement might have been as a result of lack of cohesion and consultation in the Ministry of Mines.
"It's only KCM who have said this and other mines could be doing the same way. Let the mines minister listen to KCM if there is indeed need to lay off people or employing them elsewhere. That's where the government comes in and asks other mines to take them on. That's the role of government," Magande said.
Magande said the government should continue to dialogue with KCM.
He said the director of mines and the minister should have adequately informed President Sata on what was obtaining on the ground.
Magande said there was no way mining companies would avoid new technologies in their operations.
"On purely technical level, all industries' technology will always be there whether we like it or not. It's there to help us to do business easier and cheaper," Magande said.
And Mumba urged KCM to reduce their rhetoric in the media and seek for talks with the government.
"There is no leader that is going to want to see people disinfranchised and get on the streets without jobs. When KCM finds itself in this position, I think they should reduce their rhetoric in the media and seek urgently for an opportunity to talk with government and be able to put on the table their challenge and reach an agreement of some sort. They should meet with the unions in the spirit of explaining to them where they are. And out of that type of consensus, I think the result is going to be favourable to all parties involved," Mumba said.
"...I think they should be level headed, this is what is involved in investment, there are ups and downs. Sometimes you have to give a little in order to gain later."
Mumba, however, said the position that the government had taken was wrong saying confrontational methods were not the best way of resolving industrial matters.
Mumba said the government must understand that Zambia was a private sector driven economy and as such the government should engage the mining owners into dialogue and find a win-win solution.
"This is also for them to continue paying taxes to our government. We do not agree with this confrontational shouting from an anthill, either from State House or from the Ministry of Finance demanding that we will revoke your licence unless you keep the people on the jobs. It is not as simple as that, I think it is government's responsibility to push for dialogue. This is not the first time this is happening in Zambia. Under the MMD we had a situation where the mines wanted to lay off workers because the copper prices went down, but I do not remember it being done through arrogance or using political power to shout at the investors," he said.
Mumba said what worked for the MMD was dialogue and engagement with the private sector.
He said the statements from President Sata that KCM should 'go to hell', should never be made public.
"If he wants to make those statements, he can make them under the cover of the boardroom where the government engages private sector. Unless the talks break down, there is a dispute then may be out of responsibility to inform the nation, then they can make such statements," he said.
Alliance for Better Zambia president Frank Bwalya said President Sata should adopt a better approach in dealing with KCM.
Bwalya said the threat to revoke the licence could create instability in the mining industry.
"We do as a party condemn the attempt by KCM to lay off people because it is not justified. This is a very serious issue concerning an investor that employs a lot of people in our country and I think that the President could've avoided making such a statement to revoke their licence. What he should've done is assign people who are already working in government such as the responsible minister Mines, Minister of Labour and a few other government officials to engage KCM and find a better solution than just threatening to revoke," said Bwalya .
He appealed to the mining firm to respond favourably to the threat made by the President.
"The mining companies operating in the country and all investors have to understand that the President is carrying the lives of people on his shoulders and that he has citizens to protect. They should not be scared; they should respond favourably to the threat and do the right thing. We need a win-win situation," said Bwalya.
And Mineworkers Union of Zambia (MUZ) president Nkole Chishimba said in an interview that the threat was 100 per cent justified and was a 'welcome move' by the President.
"The company is not cooperating with any other stakeholders. When they wanted to retrench 2,000 people, we intervened as a union, the government also came in, and though they appeared to have stopped, they started scheming other things like tampering with conditions of service. All those things put together, KCM is not appearing to have any meaningful dialogue with anyone. He the President is 100 per cent justified, because that is what we were also asking him to do. There must be a rationale behind the President having said that threat to revoke. If we say what are the implications, then it is like we are very hesitant and we are allowing KCM to continue the impunities in which they are doing things'' said Chishimba.
Meanwhile, KCM has sued the Zambia Revenue Authority following its June 19 tax audit-triggered decision to charge and levy Valued Added Tax against the mining giant's export sales for the period January 2011 to March 2013 amounting to over K3.2 billion.
And Konkola Copper Mines Plc has further sued the Zambia Revenue Authority over its October 7 decision purporting to unilaterally standard-rate the mining firm's sales contained in its Valued Added Tax return for the months of July, August 2013 and subsequent months.
In its originating notice of motion filed in the Lusaka High Court principal registry on October 31, Konkola Copper Mines Plc KCM's application is for an order of certiorari, mandamus, prohibition and declarations challenging the ZRA's decisions to arbitrarily apply Value Added Tax (VAT) at the standard rate of 16 per cent on its export sales of copper cathodes instead of applying the zero per cent rate for export sales as provided for by the Laws of Zambia.
KCM also wants the High Court to quash both decisions which it has attributed to the ZRA Commissioner General Berlin Msiska and that the court should also compel ZRA to accept the evidence of proof of export documents availed to it by KCM and further restrain it from enforcing the provisions of Rule 18 of the Value Added Tax General Rules, Gazette Notice Number 191 of 1995.
KCM's desired order of prohibition seeks another restraint on the ZRA against enforcing an amended Value Added Tax General Rules as published in the Gazette Notice number 26 of 2013 of January 11, insofar as it purports to provide that it is a requirement that a certificate of importation into the country of destination is a condition precedent to prove export of goods for zero-rating purpose.
In KCM's affidavit in support of an ex-parte summons for leave to apply for judicial review and signed by its Chingola-based business controller Joel Chitambala, the Vedanta Resources-owned mining company described itself as a tax-compliant mining concern carrying on major mining operations at Nchanga, Konkola, Nampundwe and Nkana.
"On the 9th day of April, 2013, the applicant received a letter from the respondent dated the 15th day of March, 2013 informing them that they intended to undertake a specialised Valued Added Tax audit with respect to export sales," Chitambala stated. "On the 7th day of June, 2013, the respondent authored a letter addressed to the applicant informing them that their audit had revealed that the applicant had not complied with the provisions of Rule 18 of the Value Added Tax General Regulations Amendment Rules, 2013."
Chitambala outlined that according to the ZRA's findings, KCM failed to provide import documents bearing certificate of importation into the country of destination and receiving payments for exports through a foreign bank account based in the United Kingdom and not in a bank account based in Zambia.
"On the 10th day of June, 2013, the applicant responded to the respondent's purported audit findings," Chitambala submitted. "To the applicant's surprise, the respondent on the 7th day of October, 2013, proceeded to issue a global letter stating that the applicant's Valued Added Tax returns for the month of July, August 2013 and subsequent months would be adjusted to standard rate the export sales unless proof of export was availed to the respondent."
Chitambala described the decision by ZRA as an illegality, impossibility and unreasonable in the sense that KCM had evidence of proof of export beyond shadow of doubt.
"The applicant produces and sells various copper products. That approximately 95 per cent of the total copper produced by the applicant is exported to international markets, while the remaining five per cent is sold locally to Zambia Metal Fabricators Limited," the affidavit read.
Chitambala argued that these international metal traders were actually international middlemen that purchase these products from KCM for the purpose of reselling to the final consumer and in accordance with international norms and trade practices.
"In the circumstances, it is impossible to expect the applicant to be aware of the final destination of the copper products and as such the applicant cannot be expected to be in a position to render a certificate of importation into the country of destination," Chitambala stated.
"Once the international metal traders have sold the copper products on high seas to third parties, who remain undisclosed to the applicant the ultimate final destination of the copper products changes."
KCM has further described the ZRA's decision against it as baffling in the midst of the evidence availed to it and if the assessment amounting to K3,243,393,362.94 was sustained and the decision to standard-rate future export sales was also sustained, it would seriously affect the operations of the mining firm and result in irreparable damage.
"The applicant's financial situation is already strained by the fallen copper prices," Chitambala stated. "The Value Added Tax being demanded by the Applicant forms a significant portion of the applicant's working capital used to pay critical suppliers, service providers and employees."
KCM are being represented by Eric Silwamba, Jalasi and Linyama Legal Practitioners of Lusaka.
Labels: JOY SATA, KCM, MICHAEL SATA, NG'ANDU MAGANDE, TAX EVASION
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Magande seeks govt explanation over exports of concentrates
By Chiwoyu Sinyangwe
Mon 04 Nov. 2013, 14:01 CAT
FINANCE minister Alexander Chikwanda should explain why mining companies stockpiling concentrates are shunning existing smelters, says Ng'andu Magande.
And Magande says Chikwanda should not push Zambia into another heavy debt trap like he did when he served as finance minister in the 1970s. On October 4, Chikwanda signed Statutory Instrument number 89 cancelling the 10 per cent export duty on copper concentrates.
However, after President Michale Sata ordered its removal, Chikwanda on October 28 signed SI 99 cancelling SI 89.
Chikwanda, however, insists that mining firms should be allowed to export concentrates which are only 30 per cent pure copper at zero levy to help raise waning government revenues.
But Magande said Chikwanda should explain why mining companies should be allowed to export copper concentrates when the country had sufficient smelting capacity.
"You wonder how one could come up with a Statutory Instrument which is financial in nature without telling the one who approves the appropriation bill because that is approved by the President," Magande said.
"Now Chikwanda is busy saying 'no, why we did this is we were trying to balance here and there'. All these things should have been explained before because everybody is seeing all these stockpiles of concentrates and they are asking; why are these people not taking this material to Chambishi Copper Smelter for processing? The only conclusion is that they don't want to process it because a bar of copper which is already in copper form is going to fetch more money than in fact a tonne of copper concentrate which includes sand from Lumwana."
And Magande said Chikwanda could not continue borrowing huge amounts of money when the country was foregoing revenues from the key mining sector.
He said Chikwanda was running the country's economic affairs like his private business.
"What they are now doing and what they meant is against public interest," he said.
"You can't be doing all these things and they are appearing like they are private things. We see a government which is being formed by a long-standing opposition not being faithful."
Magande, a former finance minister during late Levy Mwanawasa's tenure, said with increasing appetite for debt by the current regime, Zambia would plunge into another death trap.
"Some of us were having sleepless nights some seven years ago. These are all loans that were contracted in the late 70s and early 80s," he said.
"Those of us who have had that experience of going through such a difficult time, where civil servants couldn't even be paid salaries, where we couldn't even buy medicines, fertiliser, why don't we just say we are grown-ups, we don't want to go this way? The President knows what went wrong? The minister of finance knows what is wrong. So why are we being led on the same path again?"
Magande said Chikwanda should learn from the debt he helped drive the country into before the late Mwanawasa's economic team unshackled the country from the over US$7.2 billion debt.
"It's not fair to other people who have cleaned up your mess," Magande said.
"So, what are you saying…that again we will bring another Magande to clean up the mess you are creating now for the future?"
And Magande said Zambia's future debt position could be worse than the HIPC position because the loans contracted were all commercial loans.
"Should we at any time default, you will just see so many plane loads of people coming to Zambia claiming their money and they will be putting interest which we have no way of negotiating at all," said Magande.
"The private sector does not have clubs like the Paris Club, or the meetings we go to at IMF, AfDB where you can talk in a group. When the private sector find the loan is too difficult to collect, they sell it to somebody and so in about 10 to 15 years from now, Zambia will have to deal with vulture funds - people who are extortionists. That's the complication of where we are going. Before, the loans belonged to governments and we could talk to government to government."
Labels: ALEXANDER CHIKWANDA, NG'ANDU MAGANDE, STATUTORY INSTRUMENT 89
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Quashing of SI 89 pleases Kaingu, Magande
By Gift Chanda and Abel Mboozi
Thu 31 Oct. 2013, 14:01 CAT
MICHAEL Kaingu says the MMD is very happy with President Michael Sata's strong stance against Statutory Instrument 89 that permitted exports of copper ores and concentrates tax-free.
And Kaingu has questioned finance minister Alexander Chikwanda's logic on his statement that government will lose out revenue from revoking Statutory Instrument 89.
Meanwhile, Ng'andu Magande who on Monday raised concern over the scrapping of the 10 per cent duty on mineral ores and concentrates has commended President Sata for revoking SI 89.
And Speaker of the National Assembly Dr Patrick Matibini has directed Chikwanda to explain the financial implications of the revocation of SI 89.
President Sata on Monday directed that SI 89, which was signed by Chikwanda on October 4, suspending 10 per cent export duty on copper ore and concentrates for one year, be reversed.
The government introduced the export tax on raw metals in November 2011 in a bid to encourage the development of local industry and to add value to the economic chain.
The tax made exporting copper concentrates less profitable, encouraging mines to use local smelters.
But Chikwanda, during an appearance before the expanded parliamentary committee on estimates on Tuesday, said the government would lose income from Kansanshi following the revocation of the Statutory Instrument 89 permitting mining firms to export concentrates tax-free.
Chikwanda said the Ministry of Finance had realigned SI 89 in line with President Sata's directive that it be revoked although the move would result in revenue losses due to low smelter capacity locally.
But Kaingu supported the decision by President Sata to have the 10 per cent tax on copper ore and concentrates brought back as Chikwanda could not have the luxury to continue giving tax incentives to the mines given the country's deteriorating fiscal position.
"When you export copper ore, you are actually not only exporting copper but other minerals. I tend to agree with President Sata and I am glad that he has come out strongly; it is not only me but many of us in MMD. We have been wondering why the mines were being allowed to ship out copper ore when we have many smelters in the country," he said.
"It has been proven that copper ore has many other minerals integrated, you find gold for example, and there is no way we should be allowing this to go untaxed."
Kaingu said Chikwanda's defence of SI 89 does not hold any water because the without the 10 per cent duty in place, mining firms would have continued to rob poor Zambians of the necessary revenues for development.
"I don't understand what the minister is saying because how can you lose revenue by allowing exports of ore tax free when the same ore contains so many other minerals?" he questioned in an interview.
"So much revenue that could have been collected on the other minerals that are contained in the ore was going to be exported tax free. So I do not understand what the minister means when he says the country will lose out."
Kaingu said many poor Zambians needed services but resources were scarce.
He said it was ironic for Chikwanda to borrow huge amounts of money from international sources to finance government expenditure when there was an opportunity to raise revenue from the mines through the 10 per cent export duty on copper ore and concentrates.
"...there is no way you can ever think that by exporting copper ore tax free you are helping the country," Kaingu said.
"When you look at our budget you cannot allow tax free exports. Look at the deficit of 8.5 per cent instead of 4 per cent. Look at our indebtedness, the local debt is 13 per cent, the national debt is 12 per cent, where are we getting the luxury to give away taxes? I don't think there should be any tax freedom for anybody. We have lost luxury particularly in our mining sector because it is one of the sectors that is doing well."
He said Zambia was lucky that despite the drop in copper prices, the fall had not been excessive.
"Besides, copper production has been very good. So what should be the reason for tax rebates? I don't see it myself," Kaingu said.
And Kaingu said he did not believe Chikwanda could have be misled by officers at the Zambia Revenue Authority.
Revoking SI 89 on Monday, President Sata admonished Zambia Revenue Authority commissioner general Berlin Msiska and commissioner of customs Dingani Banda for allegedly advising the finance minister wrongly.
"The truth of the matter is that Chikwanda is a highly qualified person in that job. He is doing it for the second time, I don't think he can be misled by his officials," said Kaingu. "I tend to disagree with that allegation that he was misled."
And Magande said Chikwanda needed to tell the nation how much the county was going to lose following the revocation of SI 89.
"If the minister is saying the country will lose money, let him get the details because that is what his officials are paid to do," he said.
"When they were putting this SI, they were supposed to work out the details of how much we are we going to lose. So if he says we will lose revenue, let us see the numbers in which case perhaps some of us who are not so close to what is happening will not miss out," said Magande.
And responding to Kaingu's point of order raised on Tuesday on whether the revenue from the mines through the imposition of export duty on ores and concentrates would be factored into the budget, Speaker Matibini said he had adequately studied the point of order to warrant a ruling.
In his ruling, Speaker Matibini explained that the point of order emanated from the customs and exercise (ores and concentrates), export duty (suspension) regulation 2013 as Statutory Instrument no 89 of 2013 which was issued on October 4, 2013, by the finance minister.
He said the SI in question suspended the levy of export duty on ores and concentrates from October 4, 2013 to September 30, 2014, and that the operation of the SI thus meant revenue loss to the government during the period that the law would be in effect.
"However, I wish to inform the House that on Monday October 28, 2013, Chikwanda issued a customs and exercise ores and concentrates export duty suspension amendment regulations 2013 being SI no 99 of 2013 which amended SI no 89 of 2013," Speaker Matibini said.
He explained that SI no 99 of 2013 therefore reduced the period of suspension of export duty on ores and concentrates to October 25, 2013.
"Effectively, SI 99 of 2013 has revoked the SI 89 of 2013. Honourable members, I therefore direct the Minister of Finance to explain the financial implications of this measure," said Speaker Matibini.
Labels: ALEXANDER CHIKWANDA, MICHAEL KAINGU, MICHAEL SATA, MMD, NG'ANDU MAGANDE, STATUTORY INSTRUMENT 89
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First Quantum dealings
By Editor
Mon 28 Oct. 2013, 14:00 CAT
COMMENT - Also see: Magande questions removal of duty on copper concentrates, By Chiwoyu Sinyangwe, Mon 28 Oct. 2013, 14:01 CAT
It is solliciting corruption, when it is legally possible for a minister is able to grant individual corporations tax exemption. The law must apply to all companies and all individuals at all time. It must not be possible fora company to approach a minister, and walk away with a tax exemption. Also, the Development Agreements were secretive and should all be scrapped for that rason alone. I say - nationalize the criminal enterprise. - MrK
The way our government is handling issues pertaining to First Quantum Minerals raises a number of issues and concerns. It is either those government officials responsible for the government's dealings and decisions concerning First Quantum Minerals are very corrupt and are receiving kick-backs or they are very incompetent.
First Quantum Mining has sued the Zambian government in the United Kingdom courts for allegedly abrogating the Bwana Mkubwa Development Agreement. The matter is now under arbitration and the Zambian government has filed in a plea to the claim by First Quantum Mining, who consequently submitted a counter claim based on the government's defence on September 25, 2013.
This same company, this same First Quantum Minerals that has sued the Zambian government, continues to receive benefits from our government and to be defended in all sorts of ways by some of the leading elements of our government. How is this possible?
On October 4, 2013, our government issued Statutory Instrument number 89 to waive export duty and allow First Quantum Minerals to export concentrates. This is difficult to understand for a government that wants to go and borrow hundreds of millions or billions of dollars on the international money markets. What is the purpose of us borrowing such huge amounts of money when we are allowing legitimate export duties not to be collected from First Quantum Minerals?
And why should First Quantum Minerals be exporting concentrates at a time when we have adequate refining capacity? Who can say they really know the other minerals other than copper that those concentrates contain? Again, there is something seriously amiss here; there is something stinking here. Is this a product of oversight, incompetence or outright corruption?
Whatever some may say or claim, it will not be wrong for anyone to conclude that Statutory Instrument number 89 was exclusively procured for First Quantum Minerals, which has stockpiled concentrates and does not want to export them because they will have to pay 10 per cent export duty on them.
First Quantum Minerals claims that there is no capacity in Zambia to treat concentrates. But this is contrary to what the smelter owners are saying. This is simply a strategy for avoiding to pay the correct tax to the Zambian government. And the Zambian government has allowed this to happen. Instead of collecting this duty, the government is opting to allow First Quantum Minerals to keep this money and burden the Zambian taxpayer with further national debt by going to borrow.
We have been advised by the international community, including the World Bank and International Monetary Fund, to collect more revenue from our mining activities. But what do we hear from our leaders responsible for these things? They are always defending the mining investors; they speak like they are directors of these mining companies. They seem to be more concerned about the profits of the mining companies than the benefits accruing to the Zambian people. Why? Again we ask: is it because of incompetence or it's simply a matter of corruption?
It is clear that the government is making the Zambian taxpayers subsidise the operations of First Quantum Minerals in this country.
When one critically analyses all that is happening, it is clear that the Zambian government is actually paying for the investment that First Quantum Minerals is putting in Kalumbila and other projects at Kansanshi. For what? Is it because someone in government is incompetent or is getting kick-backs from First Quantum Minerals?
And these people have no shame. They even went as far as trying to mobilise that clean man, that honest man, that apostle of our liberation struggle, Dr Kenneth Kaunda, to defend these clearly unjust and unfair dealings of First Quantum Minerals. Of course, Dr Kaunda, if he was told the truth, would never have agreed in any way to defend the interests of a company that is engaging in such unfair and unjust dealings against the Zambian people. There has been a strong lobby for First Quantum Minerals to have its permits, title deeds, Zambia Environmental Management Agency clearance to be processed quickly.
Regardless of the lawsuits that First Quantum Minerals has initiated against the Zambian government, whatever this company needs, it is still getting from our government. How is this possible?
First Quantum Minerals is claiming US$30 million from the Zambian government. The company has also stated that in the coming few months, it will be suing the government for US$2 billion for allegedly abrogating the Kansanshi Development Agreement. Surely, is this a company whose interests our apostle, our government should be made to defend and promote? There is definitely something wrong with those in government who are handling these issues. As we have already stated, it's either they have been bribed by First Quantum Minerals or they are extremely incompetent and not fit to hold the positions they hold in our government.
It is important for the Zambian people and their leaders to know what type of company First Quantum Minerals truly is. First Quantum Minerals is trying to portray itself as a very good investor when it is not. These dealings we are commenting on cannot be said to be acts of a very good investor. They actually project the very opposite.
The question is: should we continue as a nation to grant benefits to such a company? Should our government continue to allow such a company to operate in Zambia? Why should our government continue to be so nice, so kind, so generous to a company that is suing the Zambian state for over US$2 billion?
This behaviour is not new or strange to First Quantum Minerals. We shouldn't forget that this is the same company, the same First Quantum Minerals, that was kicked out of Congo because of similar behaviour or conduct.
We urge the Zambian government to be very transparent over matters pertaining to First Quantum Minerals. Given what is going on, it may be necessary for the Attorney General of the Republic to make known to the Zambian people these legal suits that their government is having with First Quantum Minerals. It is important for the Zambian people to have a direct say on these issues because those who are handling these matters on their behalf seem to be compromised; they continue to give incentives to First Quantum Minerals, ignoring its lawsuits against the Zambian people.
There should be no incentives or other benefits extended to First Quantum Minerals by the Zambian government until it withdraws its lawsuits against the Zambian people.
Why should the Zambian government give First Quantum Minerals title deeds to 600 square kilometres of land in North Western Province when the same company is demanding over US$2 billion from the Zambian people?
It is clear that there is some arm-twisting here, some blackmail here. But why should the Zambian government accept to be arm-twisted, to be blackmailed by First Quantum Minerals in this way? If there are Zambian government officials who have eaten First Quantum Minerals' money, promising to deliver all these things to them come what may, then let them give to First Quantum Minerals that which belongs to them and let the Zambian people hold on to what is theirs because they were not a party to those deals.
It's clear that right now, First Quantum Minerals thinks it is calling the shots. Yes, First Quantum Minerals may be calling the shots now. But for how long? This type of behaviour, conduct or deals cannot be sustained over the long term. It is such things that lead to nationalisations. They can be told to park their equipment and go. And in saying this, we are not in any way advocating anarchy. We believe in the rule of law. But what is happening borders on corruption and not legitimate business dealings. And the law punishes such conduct and practices.
Labels: ALEXANDER CHIKWANDA, CORRUPTION, DEVELOPMENT AGREEMENTS, FQM, NG'ANDU MAGANDE, TAX EVASION, TAXATION
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Magande questions removal of duty on copper concentrates
By Chiwoyu Sinyangwe
Mon 28 Oct. 2013, 14:01 CAT
NG'ANDU Magande has questioned the rationale behind finance minister Alexander Chikwanda's decision to remove 10 per cent excise duty on export of raw minerals.
On October 4, 2013, the government announced that it was suspending the 10 per cent duty slapped on the export of unprocessed copper and several other minerals in raw form for a year.
The government introduced the export tax on raw metals in November 2011 in a bid to encourage the development of local industry and to add value to the economic chain in the country's economic mainstay.
The tax made exporting copper concentrates less profitable, encouraging mines to use local smelters.
But according to Statutory Instrument No 89, which was signed by Chikwanda, the 10 per cent duty slapped on the export of unprocessed copper and several other minerals had been shelved until the end of September 2014.
"The export duty on ores and concentrates is suspended for free," the SI read in part.
"The regulation shall cease to have effect on 30th September 2014."
SI 89 comes on the back of the 2014 national budget, which proposes that effective next year, a 10 per cent export duty on semi-processed metals and base metals be widened to include copper blisters.
Commenting on the development, Magande, who is Zambia's longest-serving finance minister, said the government needed to tell the world what they wanted to do with the mining sector.
"It is a question of political will," Magande said in an interview.
"Our friends in the PF are not that determined to impose things that are going to help the country create wealth from our copper and get our people to do some jobs that are not complicated."
He said by allowing the export of copper concentrates and ores, the government would be undoing what Zambia had achieved under the MMD government to boost local smelting capacity as a way of adding value to raw copper exports.
"What is the philosophy of the PF government on mining?" asked Magande.
"Are they looking to value addition and processing in our country of the ores and raw materials. If we can't process all the copper into wires like at ZAMEFA, atleast, we should be getting some semi-processed copper as a way of industrialisation and creating jobs for our people."
According to SI 89, concentrates and ores the government has allowed to be exported include copper, cobalt, aluminum, nickel, lead, zinc, tin, chromium, tungsten, uranium or thorium, molybdenum, titanium, niobium, tantalum and vanadium.
SI 89 also covers concentrates and ores for precious stones such as silver and platinum.
On October 21, African Rainbow Minerals spokeswoman Jongisa Klaas was quoted by Bloomberg as saying: "We approached the Zambian government, asking for the 10 per cent export tax to be waived and we are appreciative of the government granting it to us."
African Rainbow Minerals jointly owns Lubambe Copper Mines with Brazil's mining giant, Vale, while ZCCM-Investment Holdings holds a 20 per cent stake on behalf of the government.
Lubambe, which was previously called Konkola North Copper Project, is a US$450 million copper mining venture that targets to produce 2.5 million tonnes of ore per annum with an initial production of 45,000 tonnes of copper per annum.
Chikwanda, before being appointed finance minister in September 2011, was instrumental in the setting up of Lubambe, which commenced producing copper concentrates on October 4, 2012.
African Rainbow Minerals was founded by Patrice Motsepe as South Africa's first black-owned mining company, although he is thought to have benefited from political connections when the ANC took over power and enacted laws on black ownership of industries.
Motsepe is currently the executive chairman of African Rainbow Minerals.
Separately, First Quantum Minerals, last month, said it was being "choked by stockpiles of unprocessed concentrates" due to inadequate treatment facilities in the country.
FQM, which operates Kansanshi Copper and Gold Mine in Solwezi, claimed it had stockpiled about 75,000 tonnes of unprocessed copper concentrate worth around US$133 million, which it could not export due to the 10 per cent levy on unprocessed mineral exports.
Previously, FQM used to send its concentrates for treatment to Konkola Copper Mines (KCM)'s Nchanga Smelter and the Chinese-owned Chambishi Copper Smelter.
Last July, authorities in the Democratic Republic of Congo raised taxes on copper and cobalt concentrate exports by two-thirds as it planned to ban the practice next year.
Much of the concentrates were processed by Zambian smelters.
On October 23, KCM strategy and business development director Brad Gnanasivam said the company's state-of-the-art smelter, which is the biggest in the country with a capacity of 300,000 metric tonnes copper cathodes, was operating at 50 per cent surplus capacity due to lack of feedstock.
Gnanasivam said the Outokumpu direct-to-blister smelter was very specific with the concentrates that it needed to be fed with and that it was important that local concentrates be blended with those sourced from Democratic Republic of Congo, which were richer in mineralisation.
Chikwanda proposed in the 2014 national budget to introduce a 15 per cent customs duty on copper blisters, copper powders and flakes, and lamellar structures and flakes.
According to the Zambia Revenue Authority, the customs due was intended to harmonise the tariff treatment of similar products and curb miscalculation and consequence avoidance of paying customs duty.
But Gnanasivam said export duty was inconsistent with SI 89, which repealed levy on copper concentrates.
"But we have an unusual situation," Gnanasivam said last week when he, Lubambe chief executive officer David Armstrong and Chibuluma Mines general manager Jackson Sikamo appeared before the expanded Parliamentary Committee on estimates representing the Chamber of Mines of Zambia. "We have a smelter that is smelting blisters that are 98 per cent copper, now suddenly has to pay 10 per cent tax but a producer of concentrates pays no tax. So, we are in an ironic situation where we are exporting a 30 per cent copper product at zero tax and you cannot export 98 per cent product because there is a tax."
Labels: ALEXANDER CHIKWANDA, CORRUPTION, NG'ANDU MAGANDE, TAX EVASION, TAXATION
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Magande warns govt against unplanned expenditure
By Chiwoyu Sinyangwe and Gift Chanda
Wed 09 Oct. 2013, 14:01 CAT
NG'ANDU Magande says it is surprising that the government wants to shift from expansionary budget to constrained expenditure when a lot of infrastructure projects are still ongoing.
And ActionAid Zambia says revenue mobilisation next year should not only centre on raising taxes but sealing tax leakages in all economic sectors.
Last month, Secretary to the Cabinet Fredson Yamba revealed that next year's budget will focus on reducing government expenditure as a way of containing rising fiscal deficit, which has accelerated from targeted five per cent this year to 8.5 per cent of the gross domestic product.
Finance minister Alexander Chikwanda is this Friday expected to deliver the budget speech to the National Assembly.
Commenting on the upcoming presentation of the 2014 national budget, Magande, who is National Movement for Progress (NMP) president, said it was inevitable for the government to watch its many unplanned expenditures to contain the widening fiscal deficit.
"Just after being in power for two years, you are already constraining your budget," said Magande, one of the longest-serving finance ministers in Zambia.
"The first budget the PF presented, they said it was for Rupiah Banda; the second one was theirs. Now the third budget, they are talking about regressing… it is like we are going backwards."
Magande, who supported treasury plans to contain the widening public expenditure, said there was need to spell out how the constrained budget would not hurt key infrastructure programmes.
"This year's deficit can only be dealt with by reducing your borrowings next year," Magande said.
"If next year, they are restraining the budget, how are they going to finish all the road projects they have started? I accept what Mr Yamba said that we have to constrain the budget next year. But what is going to happen to these roads they have started? It means the projects have to be abandoned."
Magande said proper budget execution could not be achieved in the absence of proper planning.
"Don't be excited that because you can start a road, then that is an achievement," said Magande. "It's how and when we could complete a road."
And ActionAid said sealing all tax leakages should not just be in the mining sector, but in all the other growth sectors of the economy.
The charity organisation said that sealing tax loopholes had potential to improve the overall performance of all tax types and increase efficiency and equity in the tax system.
"Tax mobilisation is not just about copper rentals," Patrick Nshindano, an Economic Justice Project officer at ActionAid Zambia said.
"It is about ensuring effective tax collection," he said.
Nshindano said there were a number of pitfalls hampering the government's ability to mobilise revenue which needed to be addressed in next year's budget.
Citing tax avoidance and evasion by some multinational corporations, Nshindano said the government needed to tackle the vice to increase domestic revenue mobilisation.
He also said the government needed to harmonise company taxation.
Currently, corporate tax rates are sector-based and differ across sectors.
In its proposal to the budget, ActionAid has proposed that the government unify corporate rates towards 30 per cent to arrest revenue leakage through tax planning.
"An example is Zambia Sugar Company which, despite being both an agriculture and manufacturing company, has most of its expenditure deductions accounted for under manufacturing to avoid paying tax at 35 per cent," ActionAid stated.
The charity also advised the government to re-negotiate or cancel double taxation agreements with particular countries, especially those with the Swiss Confederation and the Republic of Ireland.
ActionAid said double taxation agreements allowed foreign-owned companies to choose countries where withholding tax is zero-rated.
Labels: ACTIONAID, DEBT, FREDSON YAMBA, NG'ANDU MAGANDE
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(STICKY) First Quantum dealings
By Editor
Mon 28 Oct. 2013, 14:00 CAT
COMMENT - Also see: Magande questions removal of duty on copper concentrates, By Chiwoyu Sinyangwe, Mon 28 Oct. 2013, 14:01 CAT
It is solliciting corruption, when it is legally possible for a minister is able to grant individual corporations tax exemption. The law must apply to all companies and all individuals at all time. It must not be possible fora company to approach a minister, and walk away with a tax exemption. Also, the Development Agreements were secretive and should all be scrapped for that rason alone. I say - nationalize the criminal enterprise. - MrK
The way our government is handling issues pertaining to First Quantum Minerals raises a number of issues and concerns. It is either those government officials responsible for the government's dealings and decisions concerning First Quantum Minerals are very corrupt and are receiving kick-backs or they are very incompetent.
First Quantum Mining has sued the Zambian government in the United Kingdom courts for allegedly abrogating the Bwana Mkubwa Development Agreement. The matter is now under arbitration and the Zambian government has filed in a plea to the claim by First Quantum Mining, who consequently submitted a counter claim based on the government's defence on September 25, 2013.
This same company, this same First Quantum Minerals that has sued the Zambian government, continues to receive benefits from our government and to be defended in all sorts of ways by some of the leading elements of our government. How is this possible?
On October 4, 2013, our government issued Statutory Instrument number 89 to waive export duty and allow First Quantum Minerals to export concentrates. This is difficult to understand for a government that wants to go and borrow hundreds of millions or billions of dollars on the international money markets. What is the purpose of us borrowing such huge amounts of money when we are allowing legitimate export duties not to be collected from First Quantum Minerals?
And why should First Quantum Minerals be exporting concentrates at a time when we have adequate refining capacity? Who can say they really know the other minerals other than copper that those concentrates contain? Again, there is something seriously amiss here; there is something stinking here. Is this a product of oversight, incompetence or outright corruption?
Whatever some may say or claim, it will not be wrong for anyone to conclude that Statutory Instrument number 89 was exclusively procured for First Quantum Minerals, which has stockpiled concentrates and does not want to export them because they will have to pay 10 per cent export duty on them.
First Quantum Minerals claims that there is no capacity in Zambia to treat concentrates. But this is contrary to what the smelter owners are saying. This is simply a strategy for avoiding to pay the correct tax to the Zambian government. And the Zambian government has allowed this to happen. Instead of collecting this duty, the government is opting to allow First Quantum Minerals to keep this money and burden the Zambian taxpayer with further national debt by going to borrow.
We have been advised by the international community, including the World Bank and International Monetary Fund, to collect more revenue from our mining activities. But what do we hear from our leaders responsible for these things? They are always defending the mining investors; they speak like they are directors of these mining companies. They seem to be more concerned about the profits of the mining companies than the benefits accruing to the Zambian people. Why? Again we ask: is it because of incompetence or it's simply a matter of corruption?
It is clear that the government is making the Zambian taxpayers subsidise the operations of First Quantum Minerals in this country.
When one critically analyses all that is happening, it is clear that the Zambian government is actually paying for the investment that First Quantum Minerals is putting in Kalumbila and other projects at Kansanshi. For what? Is it because someone in government is incompetent or is getting kick-backs from First Quantum Minerals?
And these people have no shame. They even went as far as trying to mobilise that clean man, that honest man, that apostle of our liberation struggle, Dr Kenneth Kaunda, to defend these clearly unjust and unfair dealings of First Quantum Minerals. Of course, Dr Kaunda, if he was told the truth, would never have agreed in any way to defend the interests of a company that is engaging in such unfair and unjust dealings against the Zambian people. There has been a strong lobby for First Quantum Minerals to have its permits, title deeds, Zambia Environmental Management Agency clearance to be processed quickly.
Regardless of the lawsuits that First Quantum Minerals has initiated against the Zambian government, whatever this company needs, it is still getting from our government. How is this possible?
First Quantum Minerals is claiming US$30 million from the Zambian government. The company has also stated that in the coming few months, it will be suing the government for US$2 billion for allegedly abrogating the Kansanshi Development Agreement. Surely, is this a company whose interests our apostle, our government should be made to defend and promote? There is definitely something wrong with those in government who are handling these issues. As we have already stated, it's either they have been bribed by First Quantum Minerals or they are extremely incompetent and not fit to hold the positions they hold in our government.
It is important for the Zambian people and their leaders to know what type of company First Quantum Minerals truly is. First Quantum Minerals is trying to portray itself as a very good investor when it is not. These dealings we are commenting on cannot be said to be acts of a very good investor. They actually project the very opposite.
The question is: should we continue as a nation to grant benefits to such a company? Should our government continue to allow such a company to operate in Zambia? Why should our government continue to be so nice, so kind, so generous to a company that is suing the Zambian state for over US$2 billion?
This behaviour is not new or strange to First Quantum Minerals. We shouldn't forget that this is the same company, the same First Quantum Minerals, that was kicked out of Congo because of similar behaviour or conduct.
We urge the Zambian government to be very transparent over matters pertaining to First Quantum Minerals. Given what is going on, it may be necessary for the Attorney General of the Republic to make known to the Zambian people these legal suits that their government is having with First Quantum Minerals. It is important for the Zambian people to have a direct say on these issues because those who are handling these matters on their behalf seem to be compromised; they continue to give incentives to First Quantum Minerals, ignoring its lawsuits against the Zambian people.
There should be no incentives or other benefits extended to First Quantum Minerals by the Zambian government until it withdraws its lawsuits against the Zambian people.
Why should the Zambian government give First Quantum Minerals title deeds to 600 square kilometres of land in North Western Province when the same company is demanding over US$2 billion from the Zambian people?
It is clear that there is some arm-twisting here, some blackmail here. But why should the Zambian government accept to be arm-twisted, to be blackmailed by First Quantum Minerals in this way? If there are Zambian government officials who have eaten First Quantum Minerals' money, promising to deliver all these things to them come what may, then let them give to First Quantum Minerals that which belongs to them and let the Zambian people hold on to what is theirs because they were not a party to those deals.
It's clear that right now, First Quantum Minerals thinks it is calling the shots. Yes, First Quantum Minerals may be calling the shots now. But for how long? This type of behaviour, conduct or deals cannot be sustained over the long term. It is such things that lead to nationalisations.
They can be told to park their equipment and go. And in saying this, we are not in any way advocating anarchy. We believe in the rule of law. But what is happening borders on corruption and not legitimate business dealings. And the law punishes such conduct and practices.
Labels: ALEXANDER CHIKWANDA, CORRUPTION, DEVELOPMENT AGREEMENTS, FQM, NG'ANDU MAGANDE, TAX EVASION, TAXATION
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Magande warns of price hikes
By Henry Sinyangwe
Thu 03 Oct. 2013, 14:01 CAT
ZAMBIANS should brace themselves for major hikes in prices of goods following wage increments in the public sector, says National Movement for Progress president Ng'andu Magande.
And Magande, who is also former finance minister, says he hopes President Michael Sata sorts out the PF wrangles as they are 'consuming' Zambia.
He said there would be major inflationary pressures, as observed by the Bank of Zambia, because most Zambians were also not employed.
"We expect some inflationary pressures because a lot of Zambians are not employed and those who are employed are in the civil service, so they are getting more money and they will be spending it in the same shops that the other people go to. So when that happens, it means the businessmen will increase the prices of goods. To them, they are seeing these people who are spending money, but they don't realise that these are very few people and it's not everybody," Magande said.
He said the move was suicidal on the part of the government.
"Advising when someone has already jumped 10 floors and has committed suicide is not very useful because when the government was negotiating, they did not widely consult. There is nothing that the consumer will do because the government negotiated with the civil servants, and they agreed. They didn't at any time ask to say 'what do you think?'. If they had asked, we would have said 'no, you request the civil servants that instead of getting this increment at one go perhaps let them stagger them over some months or so'," Magande said.
He said it would be difficult to bring the prices down once they shoot up.
"And once prices go up, it's very difficult to bring them down, so you find that the citizens will start feeling the high cost of living, and that is what governments are there to do, to control the cost of living for all the citizens," Magande said.
He said the unemployed and the lowly paid would be most affected by the wage increase for civil servants.
"The unemployed and those who are lowly paid. I don't know why they are saying the public service is not well paid. Against whom are they comparing? If you take the private sector and there is some small bank which just came into Zambia with 10 workers and they pay those 10 workers K10,000 each, you can't say 'because these people are getting K10,000, therefore they are better paid than the civil servants and I will increase for civil servant'; the civil servants are nearly 260,000. So if you increase for civil servants in competition with 10 people, you know what that will...," Magande said.
He said addressing issues affecting the PF and the nation would be a nice way of President Michael Sata celebrating his anniversary as he swore in his Cabinet in October.
"I am waiting for the President to arrive so that he can quench this fire going on because apart from consuming the PF, it is consuming Zambia…Even as I go to some of these functions, you see people singing the national anthem and the voices are low, but when it is PF they are able to go on a public road and close it shouting 'PF'," said Magande.
"No, this country is for all Zambians and once you are in government, you look after all citizens."
Labels: INFLATION, NG'ANDU MAGANDE
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Govt may have room for spending on civil servants' salaries - Magande
By Gift Chanda
Wed 18 Sep. 2013, 14:01 CAT
THE government may still have spending room to implement new civil servants' salaries despite a widening budget deficit, says former finance minister Ng'andu Magande.
Salaries for civil servants are this month expected to be increased by the government amid fears of a widening national budget deficit.
Magande, who is also National Movement for Progress president, said it is only prudent that the government keeps its promise to implement the new salaries.
"One has to be magnanimous to keep one's promise. They the government negotiated these salaries way back in March and for the civil servants to be able to give them space of six months, it is just fair that they keep their promise," he said in an interview.
On fears that the government may not have funds to go ahead with the plan, Magande said it was unclear the government may not have capacity to implement the new salaries.
Ministry of Finance data shows that the country's budget deficit currently stands at five per cent of GDP, beyond a 4.3 per cent target.
"Perhaps the government might have looked at the figures and they know that most of the recurrent expenditures which resulted into the budget deficit in the first and second quarter of the year will not be repeated in the coming quarters," said Magande. "If that is the case, they may have room for spending on salaries the money that is coming in as revenue."
Chief government spokesperson Mwansa Kapeya over the weekend reaffirmed the government's resolve to implement the new salaries.
The government has increased salaries for civil servants with some getting as high as 200 per cent hikes effective this month.
The windfall follows the successful conclusion of negotiations between the government and the Civil Servants and Allied Workers Union of Zambia (CSAWUZ).
Other benefits in the 2013 collective bargaining include the introduction of the health personnel shift allowance at 15 per cent of basic salaries for nurses and other paramedics.
The commuted night-duty allowance has been pegged at seven per cent while the transport and housing allowances have been maintained at the existing rates of 10 and 20 per cent of basic salaries respectively.
Labels: CIVIL SERVANTS, DEBT, NG'ANDU MAGANDE
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Deferring mineral royalties
By Editor
Fri 13 Sep. 2013, 14:00 CAT
Deferring mineral royalties will certainly leave government in a tight cash situation. It is therefore a decision that has to be taken carefully.
The mining companies are asking for this, arguing that the drop in copper prices has greatly diminished their capacity to pay such royalties. But there are others like former finance minister Ng'andu Magande, who feel that the mines "can't just be crying foul every time the price goes down by a dollar.
And it's only that we started taxing the mining companies on a wrong note. We were too kind to them and so, if we want to change the situation, they will go on and say you are not fair. For me, the current copper prices are reasonable and the mining industry must also be adjusting to accommodate the movement in market prices."
It cannot be denied that this government has bent over backward to listen to the cries of the mining companies. And most of their requests have been responded to favourably. For instance, the mining companies were very opposed to windfall taxes and the government gave in to their wish. And today, when there are windfall profits, the mining companies take everything. But they are not ready to take all the losses when prices are not favourable and they want to pass the burden to the government.
No one wants to see any mine closed as a result of cash problems because the government is over-milking them. If there are legitimate problems the mines are facing, the government has a duty to listen to them and seek some accommodation. But the government should not be the only burden-bearer. There is need for both the government and the mining companies to share the rewards and the risks equitably. This was the essence of the windfall taxes they rejected. They didn't want the government to share in the windfall profits but they want it to take a share of their 'windfall losses'. This is not fair. And if all taxpayers were treated in this way, the government would be collecting very little money from taxes. This is so because every sector or industry has its own problems. Prices of products and inputs change continually across many industries but this does not result in changes in the way they are taxed.
What's good for the mining companies is good for other sectors as well. Important as the mining sector may be to our economy, it only accounts for 11 per cent of our gross domestic product and contributes just eight per cent of our total revenue.
Concessions being extended to the mining industry need to be examined carefully if the government is to increase its revenues and meet its development targets. The negotiating capacities don't seem to be equal.The mining companies seem to be represented by the best experts available in this country and others from outside. Most of the people the government is supposed to rely on are advisors of mining companies.
There is need for government to strengthen its negotiating capacity when it comes to dealing with mining companies. This is the only way we will maximise revenue from our mining sector.
In saying all this, we are not in any way suggesting that the government should not entertain the cries of mining companies. We are simply saying that the government should be in a position to discern what is legitimate and what is not from the complaints of the mining companies. We need to favourably address legitimate complaints of these companies because if we don't, they will close. The government needs to dialogue with the mining companies in a more efficient, effective and orderly manner.
If we play around with income from the mines, soon the government will have difficulties servicing its loans, and we will run back into serious debt problems. Government is borrowing money, and rightly so, for infrastructure development on the basis of the expected revenues from the mines. If money from the mines is not flowing in the quantities expected, there will be problems. It is therefore important for the government to be very clear on what mining taxes can be negotiated away and on what can't.
If the government is not getting enough revenues from the mining sector, desperation will soon set it and the government will have no choice but to start borrowing heavily from the local market. This, of course, has serious disadvantages to the growth of the economy because it inhibits the private sector from accessing finance. The government crowds out the private sector in the local market. And when this happens, other taxes also will start to drop. Here discipline, and a lot of it, is required. So how we manage the mining taxes is of crucial importance to the economic progress of our country. And government needs to be given time to negotiate with the mining companies and come up with a win-win tax system.
Labels: DEVELOPMENT AGREEMENTS, MINING, NG'ANDU MAGANDE, TAX EVASION
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Magande opposes deferment of mineral royalties
By Chiwoyu Sinyangwe and Gift Chanda
Fri 13 Sep. 2013, 14:00 CAT
THE government cannot afford to defer mineral royalties in the current expansionary expenditure, says National Movement for Progress president Ng'andu Magande. And Magande says foreign mining companies are exaggerating the impact of the recent drop in copper prices on their operations.
Meanwhile, University of Zambia development studies lecturer Simon Manda said Zambia has room to raise more revenue from the mining sector without toiling with taxes.
Copper prices closed yesterday trading at US $7,170 a metric tonne as concerns over Syria eased and investors avoided making any bold bets ahead of a key meeting by US policy-makers next week.
Mines minister Christopher Yaluma on Monday said the government might defer mineral royalties to help mining companies hurt by dwindling international copper prices handle their loss of profitability.
But Magande, a former finance minister, said the government needed to maximise revenue collection to fund many huge unplanned expenditures announced in the last two years.
"I don't think this is the time we should be foregoing any revenues from anybody," he said.
"If we don't have enough of it revenue, we should tailor our budget to what exactly we have. They have gone ahead with these huge projects but did they forecast the revenue? Clearly after HIPC, one would want to caution the government that they don't take us on that route of heavy indebtedness again."
Magande warned that some of the infrastructure projects on the cards might not be completed as government coffers run dry.
He said increased government borrowing from commercial banks would push food prices high owing to the PF's failure to plan, distorting the macroeconomic position of the country.
"I hear the government is going to borrow US $350 million from the commercial banks to fund the salary increment of 200 per cent," he said.
"All the money the banks have, they will surrender it for the government to borrow, so there will be no money for farmers to borrow. If it will be there, it will be very expensive. So, what's going to happen to food prices next year? So you are saying we are going to keep macroeconomic policies correct but your actions are doing something else."
And Magande accused mining companies of exaggerating the impact of the recent drop in copper prices on their operations.
"For me, the current copper prices are reasonable and the mining industry must also be adjusting to accommodate for the movement in market prices," said Magande.
"They can't just be crying foul every time the price goes down by US$1. And it's only that we started taxing the mining companies on a wrong note. We were too kind to them and so, if you want to change the situation, they will go on and say you are not fair."
And Manda said while some stakeholders have observed that the mining sector can help finance the government's rising expenditure in the face of dwindling donor support, toiling with the mining tax regime all the time could have drastic consequences.
"We need to be careful not to have a situation where we maximise revenue collection at the expense of the very mining companies that are funding our budget," he said in an interview.
Manda said there was need to raise the Zambia Revenue Authority's capacity and ensure that various government institutions properly manage their spending.
The mining industry accounts for 11 per cent of the Gross Domestic Product and exports over US$3 billion worth of copper per annum, but contributes just eight per cent of total revenue.
"The PF government came into power under a populist agenda and they feel obliged to fulfil the promises they made to the people. But caution on mining taxes needs to be exercised not to kill the goose that lay the eggs," Manda said.
"People need to give the government time to dialogue with the mining companies to come up with a win-win tax system."
The government recently doubled royalties on mining to six per cent, arguing that the country does not benefit sufficiently from its mineral wealth.
Labels: DEVELOPMENT AGREEMENTS, MINING, NG'ANDU MAGANDE, TAX EVASION
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Give and take
By Editor
Tue 03 Sep. 2013, 14:00 CAT
"TODAY we have a situation in Zambia where not only politicians but successful business persons don't want to look back and ask how they got rich and think of helping those that are suffering. Those who are rich want to continue being rich, disregarding those that are poor." This is an observation of Ng'andu Magande, president of the National Movement for Progress.
What Magande is saying is an objective reality underlining the fact that we are all passengers of the same ubwato - this country of ours in which we all live.
A trifling minority is travelling in the comfort of luxurious cabins on this ubwato. They enjoy a nutritional, abundant and balanced diet as well as clean water supplies. They have access to sophisticated medical care here at home and abroad, where they are often evacuated.
The overwhelming and suffering majority on this ubwato of ours is travelling in conditions that resemble the terrible slave trade of previous centuries. That is, the majority of the passengers on this ubwato are crowded together in its dirty sections, suffering hunger, disease and helplessness.
Obviously, this ubwato is carrying too much injustice to remain afloat, pursuing an irrational and senseless route.
It is our collective duty to ensure that all passengers on this ubwato of ours can travel in conditions of solidarity, equity and justice.
And as we have repeatedly stated, we all know that this country of ours will not be a good place for any of us to live in unless it is a good place for all of us to live in.
We are reminded by the Bible: "When you have all you want, think what it is like to be hungry, what it is to be poor. Things can change in a single day; the Lord can act very quickly" (Sirach 18:25-26).
There is need to have concern for others. When we do not know someone or do not feel connected to an individual or group, we tend to overlook their needs. Yet the development of human society requires that people help each other.
We have mutual interests. The more we become interdependent, the more it is in our interest to ensure the wellbeing of others. And when we are motivated by wisdom and compassion, the results of our actions benefit everyone, not just our individual selves or some immediate convenience.
It is very difficult to achieve harmony in a nation without concern for others. So the practice of kindness is very, very important and very, very valuable in human society. Through kindness, we will get happiness and we will get genuine satisfaction.
Peaceful living is about trusting those on whom we depend and caring for those who depend on us. This is what brings harmony in a nation, in a community.
If we cherish others, then both others and ourselves, both deeply and superficially, will be happy. When we cherish ourselves more than others, we produce various types of suffering, both for ourselves and for those around us.
We need to start taking responsibility as individuals and as a collective for those in need. It is the nature of human beings to yearn for freedom, equality and dignity. If we accept that others have a right to peace and happiness equal to our own, do we not have a responsibility to help those in need? Of course, no one can afford to assume that someone else will solve their problems. Every individual has a responsibility to help guide our human family in the right direction. Good wishes are not sufficient.
We need to start working for the welfare of others. Our daily thoughts and actions should be directed towards the benefits of others. We should share the sufferings of our fellow human beings and practice compassion and tolerance, not only towards our beloved ones but towards those we detest.
It is a give-and-take situation. By showing concern for other people's welfare, sharing other people's suffering, and helping other people, ultimately one will benefit. If one thinks only of oneself and forgets about others, ultimately one will lose. Most of the good or beneficial effects that come about in the world are based on an attitude of cherishing others. The opposite is also true.
There is need to work for the welfare of all. With a pure heart, you can carry on any work and your profession becomes a real instrument to help your fellow citizens. Once you have pure and sincere motivation, all the rest follows. You can develop this right attitude towards others on the basis of kindness, love and respect, and on the clear realisation of the oneness of all human beings.
And true compassion is not just an emotional response but a firm commitment founded on reason. A truly compassionate attitude towards others does not change, even if they behave negatively. And to experience genuine compassion is to develop a feeling of closeness to others combined with a sense of responsibility for their welfare. Each of us in our own way can try to spread compassion into people's hearts.
And compassion compels us to reach out to all living beings, including our so-called enemies, those people who upset or hurt us. Irrespective of what they do to us, if we remember that all beings like us are only trying to be happy, we will find it much easier to develop compassion towards them.
Our doings and thinkings must be motivated by compassion for others. The way to acquire that kind of outlook is to accept the simple fact that whatever we desire is also desired by others.
And the development of a kind heart, or feeling of closeness to all human beings, does not involve any kind of religiosity we normally associate it with. It is for everyone irrespective of religion or political affiliation.
And here we are reminded of what Dr Ernesto Che Guevara once said: "At the risk of seeming ridiculous, let me say that a true revolutionary is guided by a great feeling of love. It is impossible to think of a genuine revolutionary lacking this quality."
Since at the beginning and end of our lives we are so dependent on others' kindness, how can it be that in the middle, we neglect kindness towards others?
As human beings, we are social creatures, and a concern for each other is the very basis of our life together.
For these reasons, we need to pay a lot of attention and act on what Magande has said.
Labels: NG'ANDU MAGANDE, POLITICS, POVERTY
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Govt is under pressure to manage budget - Magande
By Henry Sinyangwe
Thu 13 June 2013, 14:01 CAT
FORMER finance minister Ng'andu Magande says the government is under pressure to manage this year's budget following its unplanned expenditures. And Magande says the government is likely to U-turn on the increased wages for civil servants because the increment was not budgeted for this year.
Commenting on the Economics Association of Zambia's warning that Zambians should expect more stringent measures on the revenue and expenditure side of government as there is likely to be upward adjustments in the next budget, Magande said he anticipated tax increases.
"We anticipate increases in some taxes because there are so many capital projects being started and we do not know where the money is going to come from. Apart from the capital projects, there are also a number of recurrent expenditures, which are increasing because of all these appointments of new people in different positions. So I can imagine the Ministry of Finance might even be having problems on how to balance the recurrent budget already," he said.
Magande said the government would have no choice but to adjust some of its revenues upwards.
"Where will they get the money, unless they adjust some of their earnings by increasing taxes. So that definitely is going to happen," he said.
Magande said there was no consolation in talking about the maize and fuel subsidies because they were covered by loans which must be paid back to the lending institutions.
"There is no consolation in talking about the subsidies because already, the Minister of Agriculture Robert Sichinga explained that these subsidies have been covered by loans which have not been paid and are already over K2 trillion. So there is no savings to be made there. What will happen now is any savings that will be made will go towards settling the loans which are owed by FRA and the government to the various financial institutions," he said.
"Even when we are told the savings from the subsidies are going to capital projects, I don't think that will be possible for the next two, three years because the banks have to be paid their money."
And Magande said there was lack of planning on the part of the Ministry of Finance because the planning department had been dissolved.
"The first thing the PF government did at Ministry of Finance was to dissolve the planning department, so who is the Minister of Finance going to consult on how things have to be? The people who are there now are just Treasury people who look at the bank statement from Bank of Zambia to see what money is there and that is not the best way you can run a development agenda…," Magande said.
Asked on the wage agreement for civil servants which is supposed to be effected this September, Magande said the situation was turning negative for the government and might not materialise.
Labels: EAZ, NG'ANDU MAGANDE
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Rupiah can't repent if his sins are not exposed - Magande
By Kombe Chimpinde
Thu 07 Mar. 2013, 14:00 CAT
NG'ANDU Magande says Rupiah Banda cannot repent if his sins are not exposed. Magande, who is National Movement for Progress president, said it was unfortunate that Zambians had to spend time now to uncover the skeletons of Banda when this would have been avoided by taking up the issue when Banda was in office.
"We didn't take up issues (abuse of office) that time. During RB's time, people were talking, I was talking; you were quoting me. The parties were talking. Now surprisingly some parties are saying because this 'person is not in government, leave him alone'. How do you do things like that? Because people don't repent without knowing their sins," he said.
Magande said President Michael Sata should approach Banda and try to give him one last chance to answer to the charges levelled against him.
"Let him (President Sata) call him (to a meeting) where ACC is going to present what they have against him so that he lets him explain to the charges. He has refused to appear before ACC. What can poor (Roswin) Wandi do? Of course you know she cannot be forcing an elderly person to appear before her," Magande said.
"Going to Parliament where others in the opposition are already saying 'we won't vote', they may just face opposition. Even when they have the facts, the opposition may just oppose. So why can't the President say 'I will deal with the matter differently'."
He said the public must be made to understand the extent of mismanagement in the Banda-led regime in order for everyone to participate in calls to have him prosecuted.
"Levy Mwanawasa had to look for very senior statesmen to come and persuade (Fredrick) Chiluba to admit that he had gotten this much money... That is what Mwanawasa did when he brought (Olusagan) Obasanjo here. It was only after he failed that he started saying he could use the legal system," Magande said.
"During our time we had to publish information to say we have recovered this, and some people bought some that was auctioned. We were making these announcements. People were also free to listen to the legal proceeding."
And Magande said that the opposition must not oppose the lifting of Banda's immunity on the basis that they were not in government.
"When government is doing something which you have to get involved, you participate; don't jump to oppose everything. For me who has been in government for a long time, I find a problem in a way we politicians are running the country. There is no continuity," he said.
Labels: CORRUPTION, NG'ANDU MAGANDE, RUPIAH BANDA
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Magande explains how multinationals avoid taxes
By Gift Chanda
Wed 13 Feb. 2013, 15:30 CAT
MULTINATIONAL companies are avoiding taxes by inflating their operational costs through the involvement of many foreign firms in transactions, says Ng'andu Magande. Meanwhile, Zambia Sugar has denied engaging in illegal practices aimed at reducing the amount of taxes paid to the Zambian Treasury.
Commenting on revelations by the British charity ActionAid that accused Zambia Sugar Plc of avoiding paying taxes enough to put 48,000 children in school annually in Zambia,
Magande said the involvement of too many companies in the operational chains of multinational companies was inflating costs and eroding their tax obligation to Zambia.
Magande, who is Zambia's longest-serving finance minister, says tax avoidance by foreign multinational firms operating in the country was widespread.
According to the Zambian law, companies only become liable to pay company tax when they become profitable and have subtracted their operational costs from their total revenues.
ActionAid claimed that Zambia Sugar had paid "virtually no corporate tax in Zambia since 2007".
Its report released on Sunday revealed that Zambia Sugar Plc moved millions of kwacha out of Zambia and into tax havens like Mauritius and the Netherlands, reducing its taxable profits.
The company, which generated profits of KR550 million, was accused of "siphoning" over KR374 million out of Zambia and paying only 0.5 per cent of its pre-tax profits.
But Zambia Sugar, in a statement issued yesterday, insisted that there was no artificial reduction in profit in Zambia.
"Zambia Sugar payments made by Zambia Sugar for the services of third party contractors, expatriate personnel in Zambia and export services provided by Illovo, are made at cost," the company stated.
"We have responded in a transparent and detailed manner to ActionAid and despite this they have produced a report written in inflammatory language that is designed to mislead."
But ActionAid insisted during a public discussion forum in Lusaka yesterday that the report was factual and represented what was on the ground. ActionAid country director for Zambia said the organisation had since lobbied people to go on a one-week sugar-free campaign to compel Zambia Sugar to start paying its taxes in the country.
And Magande, who is also Movement for National Progress president, said local people needed to benefit from the incomes made from their resources.
"If you read this report, how many companies will you find involved in just selling your sugar to Burundi, which is just on the boundary of Zambia? Do you need all these companies in Mauritius, in Ireland to be involved? You see, by having all these intermediaries, they multinationals are just adding the costs and those costs go on the accounts of the Zambia Sugar company," he said in an interview.
"When that happens, Zambia Sugar is going to pay more money for just moving one tonne of sugar to an importer in Burundi and in that way, they are inflating their costs of production and, therefore, their taxable income goes down."
Magande said once the taxable income goes down, the company will pay less tax.
"We are not saying this is illegal, we are not saying it doesn't happen, but what we are questioning is that 'does it need to happen?'
No! You cannot have more cost on producing one tonne of sugar from Nakambala, with the factory in the fields and probably the furthest point to the sugar canes is only about 10km. The sugar is packed locally, why do they need somebody from Mauritius to say this is from Zambia? These are things that are happening but should we allow them to continue because they reducing the taxable income?" he asked.
Magande further said the management fees the firm pays for services sought out of Zambia could be avoided because there is capacity locally.
Meanwhile, University of Zambia lecturer Dr Mathias Mpande says any deliberate act inimical to the country's treasury should be stopped because it is not morally right.
He said multinational firms must declare correct and equitable taxes to the government.
Dr Mpande also advised the government to avoid creating different tax arrangements with various firms, saying this was breeding revenue leakages.
And NAREP president Elias Chipimo said the government should be ready to revoke incentives given to firms that set up their accounting systems in ways that make them pay less tax.
"There shouldn't be any secrecy around development agreements at all," said Chipimo in an interview. "They should be made public. In fact, the government should have made these agreements public in the first place."
Labels: ACTIONAID, ELIAS CHIPIMO, NAREP, NG'ANDU MAGANDE, TAX EVASION, TAXATION
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