"They came to make profit, not to look after the lives of the people who were giving them profit"Those are the powerful words of Justina Mumba as reported by BBC News. Justina lost her beloved son Thomas two years ago, with 45 workmates in a blast at a subsidiary mine in Chambishi. Her words underscore the human side to the mining debate that has so often been ignored in the deliberations over the size of the mining royalties.
Its very easy in all this to forget that there's a human aspect to every debate, especially this one, and the dangers of ignoring it may lead to poor policy conclusions. As Alfred Marshall said "when an economist reasons rapidly and with a light heart, he is apt to make mistakes at every turn of his work". To avoid such mistakes its crucial that the mining debate considers those who it impacts on most. These are the mining workers and the local community.
Mining after all is done by real people - real Zambian men and women who are working daily to bring back the resurgence in mining activity that Zambia is now experiencing. A Marshallian heart like approach to the mining debate therefore requires first and foremost a recognition that any solution must seek to deliver a favourable outcome to the Zambian miner and the local community. And that community embody not just the people but the culture and wider environment.
The issue of the mining royalties or renegotiation of contracts cannot therefore be dealt with in isolation from other issues such as poor working conditions and lower wages of miners. That approach is heartless and crucially carries a number of dangers for Zambia:
- First, in the absence of stronger legislation in this area (as suggested in the BBC report), an arbitrary higher tax on mining activities for example could lead to the mining companies extracting revenues through other means. Most notably through lower wages or spend less on safety or cause more damage to the environment.
- Secondly, lack of effective protection of workers rights and poor wages may lead to greater discontent at the work place, which could eventually lead to the disruption in mining activities. This could in turn lead to lower productivity and damage in Zambia's international reputation as an ideal place to invest.
- Finally, the lack of better working conditions and poor wages for workers reduces the public acceptability of investment. People simply aren't able to believe that the mining activities serves any purpose other than to enrich the foreign companies.
Given these dangers its therefore imperative that the Government approach to the renegotiation of the the mining contracts takes a more holistic approach. I have termed this the "human approach" to the mining debate. It should not just focus on the revenue that country needs to get from the mining companies, but should be an overall package that would seek deliver a fair outcome for workers and the surrounding local community.
A human approach to the mining debate seeks to ensure that people who are most affected by mining operations are the focus of the renegotiations and relegates to second place, the pursuit of revenue for central Government. This is essentially a three staged approach :
Stage 1 : Identify all the key areas that Government is seeking a fair outcome on. I have identified three broad areas, although they could be others. These are : the welfare and pay conditions of the mining workers, the environment, and the local economy.
Stage 2 : Identify a range of solutions that the mining companies can implement to ensure that the areas identified in stage one are properly addressed. The ultimate aim here is to match the "failures" of the current system with appropriate and level headed solutions. For example, for the pay conditions of the workers the Government could suggested the "stock/share options" approach as suggested on this blog combined with a higher minimum wage. On the issue of the environment raised by WECSZ, the approach should be based on regulations and not financial as others have argued. Finally on the issue of local economy, the Government could reach an agreement with the mining companies where by a framework is agreed on how they could leverage private sector investment into local infrastructure. This would then be enshrined into law to apply to all new mines. These are just a few of the examples of how the three issues of the workers, the environment and local economy can be tackled. Other examples could also be explored.
Stage 3 : Having reached agreement on Stage 2 the Government can then renegotiate on extracting revenue from the mining companies if deemed necessary.
The current flaw in the Government approach is that it starts at Stage 3 and much of the discussion has focused on revenue, without sufficient attention paid to those that are immediately affected by the mines. The "human approach" outlined is an improvement on the Government approach because it ensures that those who are most affected by mining operations are put central to gaining the benefits from its expansion. These are mostly the workers and the rest of the local population. Delivering economic gains to them and in an efficient way should come before the struggle for revenue. Let us empower the workers in the mines through innovative solutions and let us ensure the local economy have the appropriate funding for much needed infrastructure such as local roads, housing and schools.
We need a much smarter and more human approach to the mining debate and not just a revenue hungry approach. More money to central Government alone will not improve local economies, and it won't certainly translate into better pay and working conditions for workers. A human approach could deliver these things.
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