Monday, May 20, 2024

Poverty in the midst of plenty

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Children make their way along a road littered with garbage in Kalikiliki township
Children make their way along a road littered with garbage in Kalikiliki township

Zambia is ranked as Africa’s highest producer of copper and yet we have little or nothing to show for this in terms of poverty reduction because most of the proceeds from the commodity sales in London continue slipping through our fingers due to weak laws.

Today there is a report by the Zambia Extractive Industry Transparency Initiative (ZEITI) saying the mining sector is expected to grow to US$1.35 billion by 2015 from US$590 million in 2010.
The ZEITI 2010 summary reconciliation report presented at a press briefing in Lusaka last week by head of secretariat Soforiano Banda says the mining sector is expected to grow to about 50 per cent in 2015.
[pullquote]out of almost US$10 billion exported last year Zambia only earned a measly US$250 million in taxes[/pullquote] The good part of this report is that Zambia is ranked as the country with the ninth known largest copper reserves in the world and is seventh copper producer in the world.It is actually number one in Africa with regards to real copper production.

The sad part is that Zambia is among the 20 poorest countries in the world and out of almost US$10 billion exported last year Zambia only earned a measly US$250 million in taxes.

This is the sad reality the country finds itself in and maybe only God will help salvage the situation because taxing the mining firms appears like a serious challenge to not only Zambia but many countries as well.

As we reflect on revelations that Zambia was ranked the 7th largest producer of mined recovered copper in the world in 2010, it is vital to assess how much the country is earning from this sector.

It is becoming evident that that Zambia is not getting a fair share of the taxes it deserves from this crucial sector.It is said that if Zambia received the same price that Switzerland got for its copper exports, our country’s gross domestics product (GDP) would almost double. Yet it is our country that God blessed with copper and foreign investors continue ‘robbing’ the country of its resources with little benefit for the rest of the country.

We are aware that Zambia is expected to increase its copper output within the next two years but our main concern is how much of the exported revenue will accrue back to Zambia? Copper accounts for almost 80 percent of Zambia’s export earnings and yet it only contributed about 11 per cent to the GDP.

We are therefore urging authorities to ensure that more taxes are captured from copper exports so that the country can get enough resources to ensure that more tax is collected for development.With more taxes, this translates into more social investments which could go a long way in helping to alleviate poverty and help to improve the living standards of our people.

The protests about removal of fuel or maize subsidies could be history because the increased taxes of the largest industry in the country will reduce strain on Government.
Whilst Zambia is expecting a substantial increase in mine output, we are hoping to equally see a reasonable increase in terms of how much the mines contribute to revenue so that eventually the formal sector can also start paying lower taxes.

Source: Daily Mail

17 COMMENTS

  1. It actually pains me when i look at how these so called investors steal from us systematically by taking advantage of loopholes in our tax system.I just hope that in the future a better way of stopping this corporate theft will be found.

  2. Instead of focusing on removing subsidies to hurt the poor more why not focus on collecting more tax from these rich mining company’s Mr. President? Don’t you think that will make more sense?

    • Its those things you think you are in charge not knowing that someone else and calls the shots.
      You are already crying of subsidies, are you sure you can stand against the international world as we plunge into Zimbabwe when what you ask is done?
      I dont think so

  3. Increased revenue from exports will not automatically translate into social investments unless we hold those responsible for making such decisions accountable. If we DO manage to reap our rightful revenues for our resources we need to fix the leakage..otherwise this might end up in Swiss bank accounts.

  4. Have Zambians started doing tax returns by any chance? I remember before I left I was always told not to waste my time submitting tax returns because it is “not necessary in Zambia”… we need to start from a commitment to account for our earnings and how we account for the voice we express as pecuniary remit.

  5. What do you expect from the calibre of leadership that we voted into government, who definitely clueless about what the hell is going on out there ! What does Sata know about earning the country’s revenue from taxing of these mining companies? He would rather appoint more than 80+ cabinet ministers and escalate his & their salaries while demanding for the ordinary man on the street to tighten his belt !!

  6. This is bad. If this can’t hurt you then you are not a Zambian. We can fight this by speaking and make our voice head.

  7. WE DON’T HAVE A SENSE OF BEAUTY, OUR MINISTERS BEHAVE LIKE THEY NEVER TRAVEL, THEY LIKE CHEAP THINGS & STEAL ALL THE MONEY IN ANY PROJECT THEY TOUCH. AFTER ALMOST 50 YEAR OF INDEPENDENCE???? WE CAN NOT CLEAN THE STREET?? SOMETHING IS SERIOUSLY WRONG. I HATE THE DUST IN ZAMBIA, JUST KILLS ME AND PEOPLE THINK IT IS NORMAL TO LIVE WITH SUCH DIRT.

  8. This artical is misleading,, the guys is talking about revenue instead of Profit. The mines just like any big business pay tax on Profit not turnover like my Kantemba which is tax @ 3% of turnover.

    Ladies and Gentle men, Mining is serious business, everything about mining is very very expensive. the fuel, electric power, salaries, safety spare parts , machinary.

    with a salary of a teacher or a civil servant, you have to work 10 year just to buy a tire for dump truck, 1 tire “Six tires are required per truck at a cost in 2009 of approximately USD $42,500 per tire” (2009,wikipedia)

    Zambian failed these mines in the time of ZCCM and the rest is history

  9. Better our government need to be business minded instead of being very political, while we playing politics others are making money off us. The U.S gets a cut from everything

  10. That littered street, is it investors that littered it, are they the ones who used those plastics or you want them to come and remove the plastics while you litter with impunity. Wake up Zambians, do you want someone else to clean up you a ss after shi tting.

  11. BOB MARLEY: ”In the abundance of water, only a FOOL is THIRSTY..” And this is what our politicians have made us – Hungry in the abundance of so much natural resource with their DELIBERATELY leaky Tax and revenue collection laws, and porous borders. The revelations in the above article are actually no revelations at all– it is SO by DESIGN, for the benfit of those responsible for impoverishing our souls. Does ZRA know what every mine’s daily, weekly, monthly and annual TARGETS are? Do they know the ACTUAL production figures?This is very easy to monitor, just set a ZRA and a Shushushu office at each of the mines as a condition of their operating licences and permits!Do the same at every EXIT point from the country.This is so easy to implement,that’s why we are convinced govt is part of it…

  12. @Better, you’re the one who is misleading. Mines spend a maximum of US$3,500 per tonne to drill, crush, mill, process and transport the processed copper up to the pick up port of shipment(e.g. Durban) by the importer. That is their total cost-to-company per tonne. Copper prices now are fluctuating between US$8,000 and US$8,500. And that tells you that their profit margins PER TONNE range between US$4,500 and US$5,000 per tonne OR, PUT SIMPLY the profit margins are between US$135,000 and US$150,000 per ZALAWI TRUCK!!! Now, you & I know that every 2 days we see at least TEN of those ZALAWI TRUCKS shipping our copper to South Africa – which is at least US$1.35million per 2DAYS IN PROFIT MY BROTHER, AND THAT X(365/2) =minimum $245million PROFIT from ONLY ONE MINE where ZALAWI is contracted!

  13. Some countries have policies whereby the government owns 50% stake in all mining activities. Those investors should just adhere or go somewhere else, I fail to understand why investors try to control Africa’s resource and they don’t do it in the other parts of the world. They have the money yes, but they should be made to understand that countries owning these resources are entitled to the profit not just taxes. If Zambia does not capitalize on her mining sector which should be the major GDP contributor, then mother Zambia is digging her own grave.

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