By Dr. Joseph Mwelwa (PhD)
THE illuminating statement for my thoughts on the current Zambian government’s posture on Zambia’s mining companies, and indeed, the posture being exhibited by those that are aspiring to govern Zambia is by former President Michael Chilufya Sata: “God has stopped distributing land and he already gave this land to Zambia and Zambians” or words to that effect.
Beneath this powerful statement is the implicit view that Zambians, must guard jealously their country and most importantly everything inherent in it. It’s people, natural resources in the waters, air, above the ground and under the ground. The case in point here are resources under the ground for they seem to be the only resources that have been contributing greatly to Zambia’s GDP. These are our copper, cobalt, gold, uranium, manganese etc.
On the world stage and with the advent of the third and fourth industrial revolutions, these minerals will be game changers!! Even while the government and those aspiring to govern must diversify the economy, they must do so having created coherent and sustainable policies to govern the minerals upon which most of Zambia’s economic growth depends in the interim and in the transitional phase of diversifying our economy to more sectors. Why is this important? Because Zambia will never get real value from its minerals through current thinking frameworks for taxing the mining entities.
No matter how much we raise the VAT thresholds, or introduce the so called windfall tax or the sales tax, Zambia and Zambians will continue to bleed and lose millions if not billions of revenue through mineral extraction from our lands that leave gaping holes, little pay and benefits for our hard-working people, furthermore truckloads of our precious minerals continue to pound our roads while we collect pittances through road tolls. Meantime, mining entities will delay payments of VAT and will still claim rebates from the Zambian government. So what is the deal?
First. The Zambian government and opposition leaders need to realise that mining entities are not doing Zambia a favour by paying their tax obligations into the national revenue chest. Second, we should stop getting excited at luring investors into the mining sector before putting our priorities right in terms of mining and investment policy frameworks. By default, Zambia already owns the minerals. What this means is that every Zambian by right is a stakeholder in these minerals. If you have been given a plot and down the line, minerals are discovered there, the implication is that you must vacate that piece of land for it holds a national asset. Should you want to mine the assets, the government on behalf of Zambians must take either a 49 or 51 percent or what ever percent would be agreeable to safeguard Zambia’s national resources.
Remember no tax is into play yet. Once you start mining, you are obligated to pay tax to government on top of your obligation to release the government’s stake. This is where Zambia’s big chunk of money to invest in education, health and infrastructure etc would come from. Tax would be additional bonus for lack of a better term. So, any investor whether local or foreign that seeks to mine Zambia’s minerals must understand this. Vendetta for example, Mopani and other mining consortiums must be putting Zambia’s stake aside and, on top of that, pay tax that they are obligated to do.
It is baffling therefore to see Zambia tussle with the likes of Vendetta or Mopani over things that should be straight forward. That is why Zambia is playing cat and mouse with these mining companies. They have been taking Zambia for for a ride for far too long. That is why they have the audacity to hold the government to ransom each time Zambia demands that they pay more. It is because the framework in which Zambia engages with these companies is very weak.
A case study exists south of Zambia, in Botswana, where these policies work. Furthermore, Botswana’s gem resource, the diamond, is no longer sold in London. Sight holders for Diamonds have to come to Botswana and trade where the diamonds are produced. This potentially sets up value addition and job creation in the long term. To actualize President Michael Sata’s prophetic view on Zambia being in charge of its country and resources to benefit Zambians, the government of Zambia and those aspiring to govern Zambia must clearly articulate these positions and look to models that work, not far from Zambia, for Implementation strategies that have worked for people’s development.
Dr. Joseph Mwelwa is a founder and senior partner of Joint Minds Consult, a research, education and training institute based in Gaborone, Botswana.
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