Economist urges high revenue collection from mines
By Kombe Chimpinde
Mon 07 Mar. 2011, 05:00 CAT
A UNIVERSITY of Zambia lecturer of economics says the government is not maximising its revenue from copper. Professor Venkatesh Seshamani said Zambians still needed clarity on why the country decided to maintain a low tax rate compared to the average 47 per cent rate in the southern region.
Prof Seshamani said the issue of the windfall tax was now immaterial and the government should adopt a preferred system that would still maximise revenue collection from the country’s core natural resource.
Prof Seshamani made the remarks when he featured on ZNBC’s Frank Talk programme last week.
“I don’t care whether you have a windfall tax or some other tax. Call it whatever you want. What is important is that they should be able to maximise revenue from the investments, production and sale of copper,” he said. “That’s the most important thing now. If you look into the Ministry of Finance, the revenues accruing to the country were only 33 per cent and according to the finance minister, that now it is going to 47 per cent, which is quite respectable in the region. Now the question is whether with the introduction of the windfall tax we could really get more than 47 per cent.”
Prof Seshamani said much as the government was trying to create a conduce environment for investment through creation of incentives, which was vital, it needed to hike its rates because they were currently low compared to other states in the region.
“What is of concern again is what the Minister of Finance announced in Parliament that they are providing a long-term fiscal regime to the mining companies of 10 years. What this means is, quite alright, they will pay more, but it will still be low in terms of the rates. My concern is probably if you look at the tax rates, they seem to be eventually low compared to the SADC low average,” said Prof Seshamani.
“For example, you have raised royalty tax from 0.6 to three per cent but the SADC average is about six per cent. For instance, if you take the corporate tax it’s about 35 per cent. Angola, Namibia, Tanzania and others it’s 45 per cent or even more. Maybe I missed. You know these are issues that government must come out clear on and explain,” Prof Seshamani said.
Labels: VENKATESH SESHAMANI, WINDFALL TAX
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Zambia remains poor amid economic progress – Prof Seshamani
Wednesday, December 8, 2010, 9:11
A University of Zambia (UNZA) professor says there is need for the government to realize that despite Zambia making economic strides in the past decade, the country remains one of the poorest nations in the world.
Professor Vankentesh Seshamani who is a lecturer in the school of Economics says it is important not to lose sight of the country’s poor status when analyzing public policies especially at a time when the country wants to attain the midEdle income status.
Professor Seshamani says according to the United Nations, Zambia is classified among the least developed nations whose economies are vulnerable in the world.
He says it is not easy for the country to shrug off characteristics of vulnerability adding that this needs concerted efforts and political will from the leadership in graduating Zambia into more than a middle income status nation.
The professor has further said that in the past 15 years, Botswana and Kenya have graduated from least developed countries status adding that Zambia has to aim at achieving genuine development rather than the middle income status.
QFM
Labels: NEOLIBERALISM, VENKATESH SESHAMANI
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Seshamani urges govt to reconsider windfall taxes
By Fridah Zinyama
Tue 15 Dec. 2009, 04:00 CAT
AN Investment analyst has suggested that the government should
start taxing copper on the basis of prices per metric tonne for Zambia to accrue meaningful benefits from its natural resources.
And University of Zambia (UNZA) Economics lecturer Professor Venkatesh Seshamani has urged the government to reconsider its position on the recently scrapped 25 per cent windfall tax next year, considering that copper prices are likely to continue peaking on the international market.
Meanwhile, Civil Society Organisations (CSOs) have noted that the government needs to involve members of parliament when negotiating mining contracts with investors in order to encourage transparency and accountability in the whole process.
The government has in next year’s budget not included any projected revenue from the mining sector. And commerce minister Felix Mutati recently indicated that the government will not introduce any new taxes for the mines next year.
Copper prices have hit the US $7,000 per metric tonne level on the international market, and many stakeholders feel the government made a wrong move to scrap off windfall tax when prices bottomed at the peak of the global economic crisis.
In an interview, investment analyst Roman Kambone said the government should totally scrap off the corporate tax and implement the price per tonne taxation method, a system that he said could work.
“The people of Zambia need to benefit from their resources, and the best way this can be done is to find a taxation system that is going to work,” he said. “Let’s assume that government collects about 15 per cent of all sales per metric tonne that mining companies are making through out the year, the mining companies would remain with 85 per cent of their cash to meet their daily expenses.
And government would have more cash than they would have collected if they had implemented the corporate tax system. Moreover, it is difficult to say that government will tax profits from mining companies...profit is not always in cash.”
Kambone explained that this was the reason why most mining companies said that they had not yet started making profits which government could tax.
“Profits are not real, even when a company has profits, they may not have cash,” he urged.
Kambone further said the explanations given by the Chamber of Mines that some mining companies would need 15 years before being adequately taxed were incorrect.
“The reasons which the Chamber of Mines is putting forward on why some mining companies should not be taxed are not justifiable,” he said. “Different companies have different life spans and different mineral deposits. How much financial capital a company invests and how much cash flow a company generates to sustain the operations of a company all make a difference to whether a company can pay tax or not and not the years it has been operating.”
Kambone said copper prices on the international market were likely to remain high for the next few years, saying there was therefore no justification for the mining companies not to be taxed.
And Prof Seshamani said copper prices were likely to continue going up for the foreseeable future since economies of China and India were growing, stimulating demand for the red metal.
“Government should reconsider the decision they made on windfall tax, the same way they changed their minds concerning the mineral royalty,” said Prof Seshamani.
And the CSOs observed that there was a lot of secrecy surrounding development agreements and mining contracts signed by the Zambian government and the mines, hence the need for the involvement of members of parliament in the whole process.
“In the spirit of transparency and accountability, parliament through MPs should verify, rectify and ratify the agreements,” the CSOs recommended in a thematic position paper on the mining sector. “This will ensure that the process and outcomes of all negotiations pertaining to the developments agreements and mining licences are transparent and benefit the Zambians.”
And the CSOs further noted that a policy to guide the mining sector was needed so that it could contribute towards poverty reduction and benefit the poor.
“The basic objectives of mining in Zambia 2011-2015 should be to diversify mineral exploration from copper dependence, to develop mineral resources taking into account the national and strategic considerations and to ensure their adequate supply and best use keeping in view the present needs and future requirements,” they stated.
“To ensure that the conduct of mining operations has regard for safety and health concerns, to promote research and development in minerals and to ensure the establishment of appropriate educational and training facilities for human resources development to meet the manpower requirements of the mineral industry within the country.”
The CSOs further stated that government needed to come up with deliberate efforts to strengthen the Zambia Revenue Authority (ZRA) to scale up the monitoring and tax collection systems.
“This can be done through the establishment of a Mine Tax department under ZRA,” stated the CSOs.
Labels: MINING, TAXATION, VENKATESH SESHAMANI, WINDFALL TAX
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COMMENT -
Dr Musokotwane said the only way to lessen the tax burden on the few Zambians in formal employment would be through growing new industries. - That's not true. Zambia is barely getting anything form the mines and foreign corporations. What is not needed, is finance minister who shields the mines from taxation.
Formal employees to continue bearing bulk of tax burden
Written by Chiwoyu Sinyangwe
Sunday, October 18, 2009 2:54:38 AM
FORMAL employees in the country will continue to bear the bulk of the tax burden owing to limited number of serious industries to offer alternative sources for government revenue, finance minister Dr Situmbeko Musokotwane has said.
But former finance deputy minister Jonas Shakafuswa has charged that the government has sacrificed the Zambian people by abolishing higher taxes from the mining sector, a move he said was done to please multinational mining companies.
Meanwhile, University of Zambia (UNZA) economics don Professor Venkatash Seshamani has proposed that the increase in Pay As You Earn (PAYE) threshold be suspended until when it will make economic sense to raise it.
Speaking during Zambia Federation of Employers (ZFE) national budget discussion on Friday night, Dr Musokotwane said the only way to lessen the tax burden on the few Zambians in formal employment would be through growing new industries.
“Contrary to what I see that too many foreign companies…where are these companies? If there are too many companies in Zambia whether foreign or local, we will not have too many people out of jobs,” Dr Musokotwane. “The truth of the matter is that there are not many companies in Zambia whether foreign owned or owned by local people. The moment, you leave Lusaka, how many companies can you count that have serious employers which are serious tax payers? How many taxes are going to be paid from there? The truth of the matter is that you collect almost no taxes in these places because they are no serious companies in these areas.”
Currently, Zambia has less than 750, 000 in formal employment out of the population of 12 million.
Dr Musokotwane said the government was desirous to have each town in the country having some form of economic activity taking place so taxes were paid everywhere.
He also said the informal sector could not be relied upon as it was not key to solving limited revenue collection the country was facing.
“We cannot rely on the informal sector, even if these people were to be 100 per cent efficient, definitely, they will collect more but that will not sort out our major problem of revenue because you can only tax people who genuinely earn money,” said Dr Musokotwane. “People who are selling eggs on the street or this and that…yes we will be able to collect this and that but really the solution is to have many more companies”
But Shakafuswa opposed the government complaints about reduced revenue inflows, saying the move could be offset by increasing revenue collection from the mining sector, the country’s lifeblood.
Contributing to debate on the 2010 budget on Thursday evening, Shakafuswa said instead of completely mooning the windfall tax on the base metal mining sector, government should have adjusted the threshold instead.
The government in 2008 introduced a new mining fiscal regime which aimed to collect US $415 million from the mining sector but the fiscal regime was abolished this year following protracted dispute between the government and the mining multinational companies.
“Let us make money for our people from the important industries so that our people are proud of us,” said Shakafuswa. “We need the money for infrastructure not where when we are sleeping. Our government officials are being taken for dinners by the so-called investors. It baffles me that the government forgone that US $415 million…mind you these investors are ready to pay a US $20 million bribe so that they don’t pay US $400 million.”
Meanwhile, Prof Seshamani said the current adjustment in the Pay As You Earn threshold which was being adjusted by about K100, 000 did not make economic sense as was being eaten by the higher inflation rate.
“So the real benefit of this PAYE increase is being eaten by inflation,” said Professor Seshamani. “It is better you say we can’t do this (PAYE increase) this year.”
And ZFE president Dr George Chabwera bemoaned the reduced funding to critical sectors like the Ministry of Health.
“…We are concerned at the reduced allocations to social sectors such as health, education and labour. We think these areas should be adequately provided for to enable employers recruit from a labour pool that is educated and once ill, employers and employees will be treated in a functioning health service,” said Dr Chabwera.
Labels: BUDGET, JONAS SHAKAFUSWA, NEOLIBERALISM, TAXATION, VENKATESH SESHAMANI
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Prof Seshamani: an academician of note
Written by Bivan Saluseki
Friday, September 11, 2009 4:47:54 PM
I am a Zambian in spirit, says University of Zambia Professor of Economics Venkatesh Seshamani. In an interview, Professor Seshamani says Zambia today is his family's first home.
"India is only our second home, it's the land of our birth. India is the land of my birth, but Zambia has become the land of my action or karma. That is how God has ordained it should be for me and my wife and therefore, our loyalty will always to be Zambia in terms of work, in terms of whatever I try to contribute to the betterment of the country - training manpower and so on, that is really my mission," he says.
At the University of Zambia, Professor Seshamani has definitely assured himself of a place on the academic merit list.
With a CV reading like a wish-list, Professor Seshamani's work and humility is his best introduction.
Question: I would like to welcome you to this interview Professor. Just give us a brief background of yourself.
Answer: I was born and brought up in Bombay which is today called Mumbai but when I was born...obviously before India got her independence in 1947...it was called Bombay and I spent my childhood and did my school and my education until I secured my masters degree in economics over there. I also worked there for some time from 1968 to 1977 and towards the end of 1977, I got an offer of a job in the University of Dar eßs Salaam, Tanzania. So I went there. I worked in the university for four years and then I came to Zambia in 1982 and somehow although it was planned not to be so at that time, I just remained here until today. I have been working at the University of Zambia as a professor of economics.
Q: Could you tell us more about your family? If you have a wife and children?
A: Yes, I got married in 1976 to my wife Lalitha who too worked in Bombay when we were there but subsequently when we went to the University of Dar es Salaam, she worked as a researcher in the area of nutrition in the Economics Research Bureau. And then when we came here, she started working in school and today she is the deputy headmistress of the Italian School of Lusaka. We have two children. The first-born is Sharmishtaa and she will soon be finishing her doctorate in Johns Hopkins University in Baltimore, USA in the field of medical imaging. And we also have a son Shreyas who will be finishing his masters degree in robotic engineering from the University of Pennsylvania next year. So we have only two children. We are a small family. But the children have been in the US for many years now and here we are just the two of us.
Q: In terms of brothers and sisters, do you have any?
A: Unfortunately, I don't have brothers and sisters because my father died. I was the first-born and my father died when I was about a year old because of TB. As you know in those years, there was no known cure for TB and therefore, he passed away and my mother never got married again. So she became a widow at the age of 19. Since then, she has remained single and when my father died, she moved to her parents’ house and so I was brought up in the house of my maternal grandparents. My maternal grandfather was a very well known educationist of his time. In fact, he was one of the first persons in India to get a university degree way back in 1915 and he worked in various institutions in Bombay with a lot of British colleagues then and he also worked in the University of Bombay in the registrar's office and then retired.
Q: What kind of a family do you come from? Did you come from a rich family?
A: No, I hailed from a fairly low-income family but it was not so low that we went out of food and clothing. I was always given good food, good clothing. I went to a good school, it was a missionary school called St Michaels High School. I finished my school there. I then had the opportunity to study in one of the premier colleges in Bombay, Elphinstone College, which was affiliated to the University of Bombay. My grandfather was very particular that I should go to that college even though it was some distance from where we were living because some former freedom fighters had also been educated there. He felt that I should also be educated there. Subsequently, I went to do my postgraduate studies at the University of Bombay and then I taught for some years. Then I applied for a Fullbright Fellowship to do further postgraduate studies in the United States and at that time, because I had specialised in mathematical economics and statistics, there was this new subject called operations research which dealt mainly with programming techniques and so on and a lot of people told me if I could also do operations research, then my training in the quantitative area would be complete. Unfortunately, there was no programme of operations research in the University of Bombay and I don't think there were other universities in India offering that. So when I found this advertisement for the Fullbright Fellowship, I said let me apply and see if I can get it. There was some minimum of requirements for one to apply for that fellowship that time. You had to have a first class scholastic record right up to a masters degree. You must have secured the first division in your school. The first degree must be a first class. The masters degree also must be a first class, something like a distinction in this part of the world. And then you had to be at least 22 years of age, you should have taught or been in employment for at least two years. Those were the requirements. And when I applied, I found that the whole process of selection took a whole year. I had to take a number of exams, tests and interviews. I came to know the reason for this only subsequently when the Director of the United States Educational `Foundation for India told me about it- that there were only six scholarships available for the whole of India, in all subjects excluding medicine and there were 40,000 applicants. And so I was one of those six lucky ones who were selected finally and I was very happy that I made it. There had been such a tremendous process of elimination to select the candidates.
Q: What happened when you moved to Dar es Salaam?
A: When I went to Dar es Salaam, I was very happy because everybody said ooh that Africa...you know is in the third world, you are leaving Bombay...but I found that the academic environment was very vibrant. You were expected to give a seminar once every term or so. If one did not present a paper, colleagues would say, 'what happened, we are waiting for the paper.' And there would be a lot of heated debates and discussions. So I finished one contract there. And they renewed my contract but by the time I was finishing my second contract, Tanzania went to war with Uganda to oust Idi Amin. It was what I would say a Phyrric victory in a sense that although Tanzania won the war, it lost a great amount of resources and the situation, especially the living conditions became extremely difficult. My daughter was born there. You could not find even get things like, baby food, milk and so on. Life became very difficult. So I decided that since my contract was coming to an end, I would go back. But at that time, there were two or three people from here. One was Dr Chilebwe Ng'andwe who was Head of the Economics Department then and subsequently became director for SIDO. He came there as a visiting lecturer. He came to know that I was a very good lecturer there. So he said since your contract is coming to an end, why don't you come to us for some two years. Another person was Dr Situmbeko Musokotwane. He came to do his masters degree there around 1979, because there was no masters in economics programme then at the University of Zambia. So I was his lecturer there and he knew me better and my competence and he too urged me to come to UNZA. And then also there was the late Dr Patrick Ncube who had taught with me for sometime at the University of Dar es Salaam and subsequently came to the University of Zambia and he also told me, 'come to Zambia.' And because all these people insisted, I asked my wife and she said 'ok let's go'. And that's how I came here.
Q: How would you describe your experience of lecturing at UNZA?
A: Ooh, it's been very, very gratifying. I think that you know, I always say to myself; if money is your main objective in life, you should not be in the academic profession anywhere in the world. Even in the United States, professors are paid very highly but they are paid much less than those who work in industries for example. If you are in the academic profession then you have to look for other sources of motivation. For me it's the opportunity to contribute to the development of the human resources of the country. I think in a larger sense I would call it psychic income, In terms of monetary income, as you know, for a very long time our salaries have been very low and if I had gone into some other profession, I would have had a much higher salary. But I felt that the value of my contribution here in Zambia through UNZA would be much greater. And over the years, I found that several of my family of students that had come under my tutelage had become people in high places. And whenever I meet them, they would greet me and say we work here because of you and so on. It used to give me a tremendous sense of satisfaction. And today, I can say I have no regrets whatsoever for the past 27 years, I lived my 27 years at the University of Zambia despite the low income and so on because I look around, I find that there are ministers, deputy ministers, permanent secretaries...
Q: Like? You can mention some.
A: I don't know if I should mention them, some people might like it, some people might not. But Edith Nawakwi [FDD president] was my student, Newton N'guni was my student, right now the deputy minister of agriculture is my student. There are permanent secretaries in so many places. But if you walk through the corridors of the ministry of finance, I think 90 per cent of them would have been my students.
Q: What about the standards and quality of students being churned out of UNZA, has there been any deterioration as a result poor infrastructure for instance, inadequate funding, brain drain?
A: You see UNZA has had a bad name only because it has not been able to run its programmes efficiently, on schedule because of lack of funds. Within those constraints, one thing they we have always made sure at the level of academic staff, is that the quality of our level of education does not suffer. So that when our students graduate from here and they go to do further studies let's say in top universities in US, UK or Europe they will prove equal to the demands of the programmes there. We try to maintain those high standards. But in terms of duration, it's because of strikes you find a four-year programme becomes six years and so on. That is what is eroding the credibility of UNZA, not the decline or deterioration of academic standards. Of course sometimes, there is a problem because somewhere in the high school the standards are not being maintained. So there are some of these students, who don't come with the level of knowledge as is expected from high school graduates.
Q: Coming to Zambian's economy. There is some prediction of five per cent growth. Although just the other day we were told by Felix Mutati that it just be about four per cent.
A: You see, Zambia is still a vulnerable economy because we are still dependant upon factors beyond our control. And so we may make these projections based on some assumptions but if these assumptions are not borne out and something catastrophic happens on the global field then everything can crumble you know. We have an opportunity to achieve five per cent growth and that will be remarkable because India for example which has been growing at nine per cent until last year is hoping that it will grow only at five per cent or five per cent plus this year because of the global crisis. And many countries are operating even at lower rates of growth. So if we achieve five per cent growth, it would be good. Of course, the requirements of growth are very high, because poverty levels are very, very high. Unless you have seven to eight per cent growth, you wont be able to make a significant dent in the rate of poverty. So that is the problem. And then there could be specific stumbling blocks, say high fuel because of the global crisis. For example last year the copper prices were around US$8,000, it crashed down to US$ 2,000 and regained to US$ 4,000 and now it around US$6,000. With such fluctuations, you will see that your economic calculations cannot always be accurate.
Q: On the global economic front, are things getting any better? Are the worst days over for the economic crisis? I know that Japan has come out of the recession. The US is making headways too. The economic crisis is seemingly over, do you think the world economic order is changing?
A: It is changing because the recent report of the IMF is saying the downturn is over and Japan, France and Germany are slightly over the pickup. And the US will also pick up except that things cannot happen pretty fast. So things will pick up but only slowly. We expect that for example jobs will be restored, new jobs will be created in a very significant way but it will still take time.
Q: Some analysts believe China is on the route to taking over from US as the global economic power? And what is your comment on the benefits and ills of increased Chinese investment in Zambia like the rest of Africa and how best can it be used to make the so-called 'win-win' situation?
A: Sure. China has the potential. There are two things about China. One is that it's a huge country with the world's largest population. So it has got unlimited manpower resource. China has the capability to produce anything on this earth. Even in the United States most things you buy are made in China. Even the American flags are made in China. So you know that way China is a model of an economic power. And secondly you see in China right now they have an advantage of not being very democratic. I was recently in China. I attended an international conference on health economics a month ago. You should go to Terminal 3 at the airport which was specifically constructed for the Olympic games. There is nothing equivalent to that in the world including the United States.
Q: Yes, I saw that too. I was there a few weeks before the Olympics.
A: Yes. Now I was told that that was an area which had slums for people. They were just told ' you have to move. We are giving you somewhere else to stay. We are going to construct the Olympic Stadium and so on.' And people had no choice. But you cannot do a similar thing in India. Let's say the government wants to construct something and wants to clear some slums, there will be 10 opposition parties trying to take advantage, march on the streets, they will gather people to incite them to do this. So you know it's not easy to implement these things. In China once the party and the government decides you have no choice.
Q: So a little bit of dictatorship and an ounce of democracy works?
A: Yes, you know a little bit of dictatorship works for a country like that and United States of America cannot do the things that China has done. That is why there is this debate about what is good for a developing country. Is it a benevolent dictatorship or is it democracy. That debate is still going on. In India we have democracy, so you can never take quick decisions.
Q: You need a dictator to whip a country out of slumber.
A: Yes. But the problem is what if he turns out to be Idi Amin or emperor Bokassa. That is where the problem is.
Q: What about the benefits and ills of Chinese investments? I asked about the win-win situation?
A: No, it's a win-win situation because, you know China wants access to the basic resources in Africa. Africa is very rich in natural resources such as minerals, which China wants. And Africa also wants Chinese investment. We can achieve higher rates of growth and development if we can get Chinese investment. But to make it truly a win-win situation, but we need to take action and enforce adequate regulatory measures to make sure that the negative consequences do not override the positive benefits. You have a couple of incidents which happened in the mines, such as the shooting incident, and no prompt action was taken. I wrote a paper which I presented at an international conference in Doha last November trying to show the difference in approach between Chinese and Indian investors. The thing is Indian investors are purely private. The Chinese investors are purely government and government-to-government relationships are very good. The relationship between the government of Zambia and the government of China, between the government of Zambia and the government of India are very good. So if a private investor comes to you and starts business, and he makes a mistake, government can immediately take action but in a similar situation if it is a government investment, then government hesitates because they don't want to spoil the good relations with other countries. It's a government-to-government relationship. And that is what is happening. So if government can somehow move and also take action or strong regulatory measures, I think it can be a win-win situation.
Q: Copper mining has continued to be the main driver of the Zambian economy despite repeated calls for diversification into other sectors, and these calls are as old as 40 years? Why do you think this process has been so slow compared with other countries like Chile which are thriving away from copper?
A: I think it is simply lack of commitment. You see, I believe that two things are required for any country's development. Right knowledge and commitment. You must be committed to the development of your country especially at community and grassroots level. Secondly you should have the knowledge to know what is the right thing to do, right policies and so on. Now if you look at the regimes Zambia has gone through, the Second Republic and the First Republic under Dr Kaunda, I think the commitment was there. Under Kaunda, I would say the right knowledge was not there, it was not sufficient knowledge. Commitment was there. I think Dr Kaunda was genuinely committed to alleviating the living conditions of the poor and making Zambia a decent country to stay in. Commitment was there but apparently the problem was with ideologies - humanism, socialism and so on and so forth, then circumstances changed- certain strategies could not be carried on and you could not sustain the benefits. When you come to the Third Republic and the Chiluba regime, I think the knowledge improved. The government realised it had to rid itself of the responsibility of producing toothpaste and sugar. There is need to allow the market forces and the private sector to largely direct the economy. But I think the role of the government is not reduced because of that. The favourite phrase of yesterday was that 'government has no business in business'. It has no business in business only in the limited sense of 'business' but it must have a prominent role in terms of regulating the economy. In fact government's role increases especially because you are confronted with major developmental challenges where a large majority of citizens are poor. And there was need for responsibility of addressing the issue of poverty. I think that commitment began to wane, that's how we lost. I think it's only the time that President Levy Mwanawasa came in that we saw that both commitment and knowledge improve. That is why even today, a lot of people respect the late President because he showed genuine commitment.
Q: So are we still seeing the commitment from President Rupiah Banda's government too?
A: I think it's a bit early to comment on the present regime. We can only hope that the high commitment and knowledge which existed during Dr Mwanawasa's time will continue.
Q: To what extent does culture influence economic progress of any country? I say so because it is believed that Tiger economies, apart from having good economic programmes, do have very hardworking culture which has catalysed their success?
A: Sure, if you are talking of culture and work culture specifically, I think it is very, very important. You see the difference between United States and Japan. Both have got good work culture but very different. There is a difference in that suppose you go to see the secretary in a company in the United States, you go there five minutes before eight, she is not there. You go there at 8 O'clock she is there. You go there at 5 O'clock in the evening, she is there. You go five minutes past five she is not there. So between eight and five, she will do her job very sincerely and that's it. In Japan, it will be 07:30 in the morning she is there up to 6 O'clock in the evening, or 8 O'clock in the evening. No over-time and nothing more. They say that this is our company. So even though the regulations state that you should work from eight to five, they are prepared to work from seven to eight. But the American would work from eight to five. You know how it is here.[Zambia] (laughs). You know I went to a function I won't mention the name. Honourable Dipak Patel was the minister of commerce. I went there about five minutes to nine. Then I found honourable Patel there, the only one waiting as a guest of honour and he asked :Professor, am I in the right place? And I said yes. But the organisers were not there. Can you imagine? Even the organisers had not come. He said I will only wait up to 09:30 and after that I will have to leave because I have to pick someone at the airport. So if they don't come by that time, I am leaving. So this is the situation and this happens repeatedly. We are not of course an exception. But we need to realise that most valuable resource..
Q; In terms of fighting poverty, are we on the right track?
A: We have begun to be on the right track. You see as far as fighting poverty is concerned, you know many of people have said the problem with Zambia is not the shortage of resources but the lack of right priorities in the use of resources. And at one time, we had not been able to do anything for poverty because we had not allocated enough resources for poverty reduction activities. It's only recently that we are trying to show some seriousness. Poverty you fight it by improving access to basic education, health services, improving access to improved sanitation and access to water. These are the areas and the question is how much are you devoting. Now the point is that a country like Zambia goes to these international conferences. They bring up all these issues and it agrees to make health a priority, education a priority and says we must devote at least this minimum percentage of your budget to education and you sign but when you come back you don't do it. You agreed in Abuja that you must apportion 15 per cent of your budget to health but you are still not doing that. So we are moving in the right direction but I as somebody who is very much interested in making poverty history in Zambia, I can tell you honestly that today...I am an Indian national
Happy to be in Zambia on my passport but I am a Zambian in spirit. I have a lot of empathy for those living on the fringes of existence. And I am of the point of view that more and more resources should be devoted to poverty reduction activities. We are improving, moving in the right direction but the pace is slow but it is from that point of view that more and more resources should be devoted to poverty reduction activities. We are improving, only slowly. We are moving in the right direction but the pace is slow. I think it can be activated.
Q: I am literally cruising through my questions because of time. Coming to religion, you are Hindu or Christian?
A: You see, nominally I am a Hindu but I always give the answer which Mahatma Ghandi gave when he was asked what his religion was. He said ‘I am a Hindu, I am a Moslem, I am a Christian, I am a Jew. I am all of these or I am none of these.' I think that these are but the same different things. If you take the Sermon on the Mount, Hinduism also says the same thing, Islam also says the same thing. Nobody would contradict the Sermon on the Mount. I had a very unique opportunity in my childhood. I was born in a nominally Hindu family. I went to a school, which was a Christian school but the school was located in an area which had a predominantly Moslem population. So in my class, there were only a handful of Hindus and there were some Christians and there were Moslems. So I used to interact with all of them and I think I have imbibed a lot and I have got so much interest in the Bible and I have a fair amount of knowledge of the Bible.
Q: Last time you did a paper on the declaration of Zambia as a Christian nation.
A: Yes, I said I have no problems with that declaration because I think it's a declaration to say our actions should be in line with Christ's teachings and if the declaration is simply to remind people...this is the purpose of your life, to attain self-realisation or God realisation ultimately and for that they need to follow the path prescribed by Jesus. If it is just to remind people of that, then I have no problems. I myself remind myself of two statements from the Bible. First, ‘seek ye first the Kingdom of God and everything shall be added unto you’. And the second is 'what does it profit a man to gain the whole world but suffer the loss of his soul?' You know. You may become famous, you may become powerful, you may be very rich in the whole world but if it is compromising your soul, your integrity, your honesty and your sense of values, at the end of the day you leave this world, was it worth it? You are not going to carry even a dry blade of grass with you when you die. What you will carry with you are your good deeds. The good actions on this earth. When you remind yourself like that, then in the course of the day, even if I am faced with a lot of temptations, I would say: if the whole world is not worth losing my soul, is a few million kwacha worth it? It's not worth it. I can't sell my soul. So in that sense, I will say that I am very eclectic in my outlook. And I think it's for this reason that for example if you take the JCTR, it's a Jesuit organisation and they have kept me on their board of trustees for six or seven years. They think of me as Christian in my thinking. So I would say that I do not really like to talk about this. I sometimes respond very cynically when someone asks me about my religion, that I am a Shakespearean. Then they say, no, we are asking you about your religion. I say I am telling you my religion and I am Shakespearean. You see, Shakespeare made one of his characters say: And this above all, to thine own self be true and it shall follow as the night the day, thou cannot be fault to any man. Ultimately if you are true to your own conscience, your own inner voice, whatever you want to believe is inside you. If I am true to that I cannot be false to you. If I am trying to harm you, I am going against my own inner voice because it will say ‘look, what you are doing is not right.’
Q: Any final comments, I know you are very busy?
A: Well, my entire family and I are extremely happy that we came to Zambia. In fact, my children consider Zambia as their home. They don't consider the United States or India because they don't know those countries. My daughter when asked; ‘where is your home’ she says Zambia. For me and my wife also, I would say Zambia today is our first home. India is only our second home, it's the land of our birth. India is the land of my birth, but Zambia has become the land of my action or karma. That is how God has ordained, it should be for me and my wife and therefore our loyalty will always be to Zambia in terms of work, in terms of whatever I try to contribute to the betterment of the country - training manpower and so on, that is really my mission.
Q: Professor, thank you very much for your time.
A: Thank you.
Labels: PROFILE, UNZA, VENKATESH SESHAMANI
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Enact laws to place ceiling on political expenditures, says Seshamani
By Kabanda Chulu
Monday October 06, 2008 [04:00]
ZAMBIA should consider enacting laws to place a ceiling on the expenditures by every political party participating in national elections, University of Zambia (UNZA) Professor of Economics Venkatesh Seshamani has said.
Making observations on assertions that the October 30 Presidential elections will give rise to increased government and other political spending that will result in higher inflationary pressures, Prof Seshamani on Friday said that political parties cannot be prevented from spending on elections because the reality is that no election can be won without money power.
“…In order to reduce the impact of excessive expenditures which can have an inflationary impact, one can bring in legislation to place a ceiling on the expenditures by every political party participating in the election,” Prof Seshamani said. “In the United States, for instance, the ceiling is determined by the formula of two cents multiplied by the number of eligible voters in the election. Obviously, the eligible voting population will be different for a presidential election and a city council election but a similar formula can be developed here in Zambia as well in kwacha terms so that there is a ceiling to excessive spending.”
Prof Seshamani also said the returning to the treasury of large sums of unused funds at the end of a budget year was a common phenomenon.
“It happens almost every year. The reason is that there is no alignment between the budget year from 1st January to December 31 and the fiscal year 1st April to 31st March and on account of this, disbursements of approved allocations are not timely and adequate,” Prof Seshamani said. “And a huge amount of the approved allocations are then disbursed towards the end of the year and the ministries, provinces and spending agents are unable to utilise the funds which are then sent back to the treasury.”
Prof Seshamani suggested that the solution to this problem is to align the budget and fiscal years which would require constitutional amendment.
During his campaigns last week, Vice-President Rupiah Banda expressed surprise that K900 billion was last year taken back to the treasury and consequently advised that all budgetary allocations must be utilised.
Labels: UNZA, VENKATESH SESHAMANI
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Zambia should develop new oil refinery, says Chirwa
By Kabanda Chulu and Fridah Zinyama
Wednesday May 28, 2008 [04:00]
ZAMBIA’S solution to the increasing global fuel prices lies in developing a new refinery that can process crude oil from Angola, Bolton University Professor Clive Chirwa has said. And University of Zambia economics Professor Venkatesh Seshamani has said Zambia must explore alternative sources of energy because the high oil prices will continue having a negative impact on production costs and growth of the economy.
Commenting on the global crude oil price that reached US $ 135 per barrel (about 159 litres), Prof Chirwa said the increasing oil prices were threatening Zambia’s economic recovery programme that was mapped out in the last national budget.
He said the world oil market has become so turbulent such that even rich nations were finding it difficult to contain their petroleum costs.
“If we do no re-plan our strategy for survival, we will end up in enormous problems that will see oil prices crippling our entire economy and one of the solutions is to buy all the oil we need but this is not possible since our reserve accounts cannot afford such large expenditure on a single item.
Therefore, I foresee trouble in terms of petrol shortages,” Prof Chirwa said. “Another solution is that we need to move away from buying semi-processed oil and seriously make decisions once and for all of using oil from our neighbours, Angola and Namibia.”
He said that if the Indeni Refinery cannot technically refine Angolan crude oil, then the government should quickly invest in another refinery that could do so.
“What we need to do is to build a short pipeline from the oilfields in Angola to North Western province where the new refinery will be located and in doing so, we will kill two birds with one stone because we will reduce 50 per cent cost on middle east oil and another reason is that the refinery will initially use Angolan oil and later when our oil fields are explored will process Zambian oil but that is if the quantities we have are commercially viable,” said Prof Chirwa.
And Prof Seshamani said the high oil prices were here to stay and they would inevitably impact on production costs and growth of the Zambian economy.
"One of the main sources on which the desired growth rate of seven per cent or more is predicated is the growth of the copper mining sector but this sector itself requires huge quantities of diesel to run its operations and if the sector has to grow, its demand for oil will also go up commensurately," said Prof Seshamani.
"So the country is caught up from both sides, high oil prices impede high growth through cost-push inflation but high growth which alone can contain inflation requires high supplies of oil."
Recently, World Bank managing director Graeme Wheeler stated that rising energy and food prices will have devastating implications for global poverty and food security.
Wheeler stated that developing countries were confronted with tough challenges in the short and medium-term to maintain their growth momentum in a highly volatile environment.
He stated that a longer term solution is switching to alternative fuels, including renewable (ethanol and biodiesel) or synthetic fuels.
"One of the cruel ironies today is the connection between rising energy and food prices. This development can have devastating implications for global poverty and food security," Wheeler stated. "Volatile oil prices have put pressure on developing countries to look for ways to smooth out the bumps in the market and volatility has also hurt economic growth, investment and trade, and several developing countries have lost ground in the poverty fight as a result."
He stated that the price of oil, currently at US $135 per barrel, has escalated much more than expected and it has caught most by surprise.
"Unlike the previous oil shocks which were largely supply induced, price hikes this time reflect growing energy demand in emerging markets, especially China and India. International capital flows seeking investment opportunities in the face of a declining dollar have also played an important role," stated Wheeler.
And British Prime Minister Gordon Brown called for international pressure on oil producers’ group OPEC to bring oil prices down. In an interview with Sky News, Brown said it was not absolutely clear why the oil price had remained stubbornly high and was rising.
“Clearly oil prices are very high but also there needs to be some international efforts with OPEC to get the oil price down, especially that demand for oil is lower because of lower growth in Europe and the United States and lower growth in China than had been predicted at the start of the year,” Brown said. “So we've got to look very carefully at what is happening in OPEC and in oil prices and I think there is a strong case for putting pressure to see if we can get oil prices down.”
However, some analysts cited the supply disruptions in Nigeria, tensions in Iran and the weakness of the US dollar as some of the causes.
And international investment bank, Goldman Sachs has predicted that oil prices could rise towards US $150- US$200 a barrel because of a lack of adequate supply growth.
"The possibility of US $150-US$200 per barrel seems increasingly likely over the next 6-24 months, though predicting the ultimate peak in oil prices as well as the remaining duration of the up cycle remains a major uncertainty," the bank stated.
Labels: BIOFUELS, CLIVE CHIRWA, FUEL, GORDON BROWN, OIL, VENKATESH SESHAMANI
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Shakafuswa calls for patience
By Mutuna Chanda
Tuesday February 26, 2008 [03:00]
FINANCE deputy minister Jonas Shakafuswa has asked for patience in turning around the fortunes of the rural poor in Zambia. Commenting on University of Zambia Professor of economics Venkatesh Seshamani’s warning that Zambia could turn into a highly iniquitous nation unless concerted efforts were made to improve the plight of the people in rural areas, Shakafuswa said Zambia would change.
“There has been a lot of investment in minerals production and most of this is happening in rural areas,” Shakafuswa said. “In North Western Province there are mines that are coming up and not only there but in Mpongwe, so the concentration has gone in the rural areas.”
He said the development of mines in rural parts of the country would result in increased demand for goods and services.
“It used to be the case that rural areas were not paid so much attention to, but that now is changing. In Shang’ombo we are talking about diamonds that could be mined and in North Western Province where Lumwana is, there is a high percentage of uranium so Zambia will change,” he said.
On Professor Seshamani’s observation that the allocation to the agriculture sector had recorded 33.7 per cent real change in this year’s budget, Shakafuswa said the government had spent a lot of money on agriculture but there had been no corresponding return.
“Last year we gave the Food Reserve Agency about K250 billion to buy maize from peasant farmers but what happened in the Eastern Province some of the maize that we were buying was coming from Mozambique and Malawi,” said Shakafuswa.
Labels: RURAL AREAS, SHAKAFUSWA, VENKATESH SESHAMANI
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Prof Seshamani calls for rural development
By Mutuna Chanda
Monday February 25, 2008 [03:00]
UNIVERSITY of Zambia Professor of economics Venkatesh Seshamani has warned that Zambia could turn into a highly iniquitous nation unless concerted efforts are made to improve the plight of the people in rural areas. And former Zambia Business Forum (ZBF) vice chairperson Phillip Chilomo has warned that
the concentration of development in urban areas would undermine the growth that Zambia was trying to achieve. Speaking during a Friedrich Ebert Stiftung (FES) organised workshop for members of parliament and civil society representatives in Lusaka on Saturday, Prof Seshamani said Zambia already had a very high level of inequality.
Prof Seshamani made specific reference to finance minister Ng’andu Magande’s comments during his presentation of the national budget last month in that living conditions and monitoring survey of 2006 reflected that between 2004 and 2006 there was a fall in urban poverty from 53 per cent to 34 per cent and an increase in rural poverty from 78 per cent to 80 per cent.
“For the huge reduction in urban poverty and an increase in rural poverty should mean a huge increase in rural-urban inequality. It would be a clear suggestion that development efforts have been skewed in favour of urban areas,” Prof Seshamani said. “And this well correlates with the fact that agriculture, the mainstay of the rural population, has been persistently accorded a step-motherly treatment in the allocation of resources.”
He pointed out that areas that had been identified as being key to bringing about growth such as agriculture, mining, tourism and energy had suffered serious setbacks in this year’s budget compared with last year’s.
He highlighted that the allocation to agriculture had recorded –33.7 per cent, and mining, tourism, energy had recorded –30.9 per cent real change in allocations in this year’s budget.
“While the priorities of the social and physical infrastructural facilities are being sustained, those of the main economic sectors have received a serious setback,” Prof Seshamani noted.
“The drastic decline in the allocation for agriculture is not only for 2008. A recently completed study by Mudenda, Chileshe and myself on Zambia’s budgetary performance over the period 1991 to 2005 shows that there has been a persistent trend of low allocations to agriculture over a fairly long period. The government needs to explain why this is the case.”
And Chilomo said the imbalances in rural and urban areas’ development needed to be addressed.
“As long as we allow Lusaka and areas along the line of rail to grow at a faster pace than rural areas, we’ll undermine the growth that we’re trying to achieve,” Chilomo said. “People may abandon rural areas for urban areas. If you go to Namwala, the shops have deteriorated but if you come to Lusaka you have all the modern facilities and if the situation continues, we may not be able to stem the influx of people migrating from rural areas to urban areas.”
And Jesuit Centre for Theological Reflection (JCTR) director Father Pete Henriot said despite last year’s economic indicators showing monetary and fiscal stability as brought out by Magande, the social indicators reflected something different.
“The social indicators unfortunately not discussed by the minister but highlighted by the President (President Mwanawasa) and focused by election results show a picture of uneven progression; urban poverty down and rural poverty up… a tough life for the majority of the people,” said Fr Henriot.
And FES director Gerd Botterweck said people still did not feel the economic progress that was being spoken of.
“We know that Zambia has achieved in recent years a quite satisfactory stability of the major macroeconomic indicators. We also know that the poverty level is extraordinarily high and that people still don’t feel all this economic progress,” said Botterweck. “Beyond this we know that the distribution of wealth and income in market oriented economies cannot be left to market forces alone because they create a mere unjust society…we still need a state which cares for its citizens and especially the poor and which through its policies can help redistribute the resources accordingly to a more just and social society. The budget is a major vehicle to initiate this.”
And Itezhi-Tezhi member of parliament Godfrey Beene who is parliamentary estimates committee chairperson said parliamentarians needed timely and accurate information from all relevant stakeholders to enable them perform their functions.
Labels: POVERTY, RURAL AREAS, VENKATESH SESHAMANI
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Zambia needs other sources of power, says Seshemani
By Kabanda Chulu
Saturday January 26, 2008 [03:00]
ZAMBIA Chambers of Commerce and Industry (ZACCI) chairman Hanson Sindowe has said the country risks losing the economic gains recorded if new electricity generation plants are not developed to meet the current required demand. And University of Zambia Economics lecturer Professor Venkatesh Seshamani has said the country should look for alternative and cheaper sources of power such as nuclear energy. Sindowe said there was need to urgently attract investment in the sector in order to sustain the economic growth being recorded.
“Our immediate concern which requires much attention is that if Zambia does not move fast enough to have new power generation plants to meet required demand, the country risks to lose all the economic gains she has recorded during the past few years,” he said.
Sindowe, who is also Copperbelt Energy Corporation executive chairman, said the company’s long term plan was to enter into partnership with other entities in power generation operations.
“We are talking to various entities that we want to partner with for the purpose of developing power generation projects but it is too early to disclose any information since discussions are underway, but participating in electricity generation is part of our long-term plans,” he said.
And Prof Seshamani said uranium mining provided the prospects for a long-term solution in terms of an alternative and cheaper source of energy for Zambia.
“The Lumwana copper mines are known to have significant deposits of uranium that are mixed with the copper deposits. So along with the mining of copper, uranium can also be mined. Indeed, Zambia is planning to mine and export uranium which would bring high returns to the country especially since the international price of uranium has risen nearly ten-fold over the past decade,” said Prof Seshamani.
“But Zambia must not be content with mining and exporting uranium. She must see how the uranium can be used within the country itself to provide nuclear energy which would be cleaner, enduring and economical in the long-run.”
And Lusaka businessman Mark O’Donnell said the country should focus on attracting more investments in the power sector as a means of mitigating electricity problems.
“We need to see more investment in electrical power generation since dam sites have been known for many decades, yet the last time we built a dam was in the 1970’s. There should be no further delay in investing in more power generation.
There is an abundance of private capital in the world and to mobilise some of this to invest in electrical power generation is not a huge challenge, but why do we fear using this foreign capital?” O’Donnell asked.
Labels: ENERGY, HANSON SINDOWE, VENKATESH SESHAMANI, ZACCI
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