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Wednesday, 21 November 2007

BBC on Undermining Zambia's Development...

The BBC has a fantastic documentary on Zambia's mining industy. You can listen to it here. Maurice Walsh has been to Zambia to get answers to some key questions:

What is happening to the money that is being generated by Zambia's copper boom? How should Africa tax its natural resources? Are the forces of globalization forcing tax ever downward? How can a government survive in a country where most people don’t pay tax?
The documentary has this interesting statement by Paul Collier :
In Africa you have some, quite frankly, governments that are not fit to run a Post Office and are facing the Maradonas of business sophistication. These huge extraction companies, that have money to hire the brightest and best minds in the world....its a very unequal negotiation, not just in terms of power, but in terms of knowledge.
I know what Paul means but his statement is incomplete. The sad truth is that Zambia does also have the brightest and best minds just that the institutional framework does not allow these individuals to emerge. Until that is fixed, we will continue to rely on the media and external forces (e.g. NGOs) to push for a better deal for the average Zambian.

Update 1:

The Mine Watch blog has some interesting reactions to Magande's comments on the BBC documentary. Well worth the read. A short extract of Magande's shocking assessment:

"Everybody excluding those that know the facts. Out of the mining companies that are now saying they might be able to produce 1 million tonnes of copper by 2010, many of them are the ones that are investing their money, borrowed from outside, or made from other operations outside. When they are investing the money you don't expect that they are making the maximum profit. Maximum profit for most of these companies could be made 10 years from now. That is when we should be saying, look, these people have already recovered their investment, that is when they will be making full profits. That is when we can get worried about that."
Update 2:

Another blog discussing the BBC documentary.

7 comments:

  1. Maximum profit for most of these companies could be made 10 years from now. That is when we should be saying, look, these people have already recovered their investment, that is when they will be making full profits. That is when we can get worried about that."

    Bought and paid for.

    He should resign.

    ReplyDelete
  2. Is it clear to anyone beside myself that Magande is a crook, and that he is protecting his bosses - the mining companies - and neglecting any obligation he has to the people or economy of Zambia?

    He is just protecting his investment, his bribe, and the people who handed it to him.

    Otherwise, why would he say 'come back in 10 years'???

    Ten years?

    Magande should resign, and a commission should be convened by parliament to get to the bottom of this. Make public all mining agreements. If necessary, people should go to jail.

    This is corruption at the highest level of government.

    Donors should refuse to pay a single cent until Zambia gets all the money it is due from the mining companies.

    How about a taxpayers revolt? Refuse to pay taxes until the mines are bled to the maximum, and every single cent of the government's money is accounted for.

    ReplyDelete
  3. One hopes that it is incompetence rather than collusion with the mining companies deprive the poorest members of society their intrinsic right to windfalls from higher prices.

    But there's certainly no explanation, other than the obvious, of why EXISTING agreements and how they were reached have not been made public.

    There are only two reasons why governments never releases information. Its a matter of national security or it is politically damaging.

    ReplyDelete
  4. How about a third - it is evidence of a criminal conspiracy.

    Or they are in contravention of other legislation that the Zambian government is a signatory to.

    In any case, there is no excuse for not making all these agreements public, as well as inviting public scrutiny of the renegotiation process.

    And even if Magande meant 'come back in 2010' (although I doubt it), that is still 3 years in which Vedanta (for instance) is not taxed over it's $600 million per year profit - at 25%, that is 3 years of $150 million per year or $450 million the Zambian government is saying 'no thanks' to.

    That doesn't just smack of incompetence, that smacks of corruption.

    ReplyDelete
  5. I think the problem is that the media and the opposition have been very quiet on existing agreements. Its very strange.

    No one appears keen to ask how we got here and therefore what can we leverage to get ourselves out of this situation.

    Very strange indeed.

    ReplyDelete
  6. I think the problem is that the media and the opposition have been very quiet on existing agreements. Its very strange.

    Makes you wonder who has been paid off. Of course, with as much money as the mining companies have to begin with...

    No one appears keen to ask how we got here and therefore what can we leverage to get ourselves out of this situation.

    The Post is doing a good job of it.

    What do you make of the latest statements, that the whole negotiation process is corrupt.

    http://maravi.blogspot.com/2007/11/its-possible-to-increase-royalty-taxes.html

    ReplyDelete
  7. MrK,

    Yes the Post appear to have shifted up a gear. What has now impressed me is that Parliamentarians are now waking up.

    Mulipi in particular has been vocal. This is good news. We need transparence and our best route is Parliamentary scrutiny over the whole process.

    ReplyDelete

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