Tradequitye A Newsletter of CUTS Africa Year 9, No. 4/2010 Zambian Miners Want Windfall Tax Back he Zambian government has The government has been further Zambia should learn from countries Tbeen urged to seriously consider advised to consider learning from like Malawi, which has done relatively the many concerns being raised, not Australia, which had introduced a 40- very well by committing more only by Zambians but also by a good percent on super profit by mines resources to the agriculture sector. The number of cooperating partners over effective 2012 stating that these were country is thriving at both the re-introduction of windfall taxes the kind of efforts that should be international and domestic levels or considering hiking the mining replicated in a country like Zambia because of its fiscal commitment to taxes being paid by the mines. both in short and medium term. the agriculture sector. By signing the Comprehensive Africa Agriculture CUTS International Lusaka Board It is noted that there was need for Development Programme (CAADP) Chairman, Ambassador Love Mtesa, the government to also consider compact, the Government of Malawi was quoted saying “by instituting the implementing key provisions of the committed itself to sustaining or reintroduction of windfall taxes or amended Mines and Minerals increasing the CAADP recommended raising mining taxes, Zambians would Development Act to enable 10 percent of the national budget to be able to get a fair share of proceeds communities benefit from mineral the agriculture sector, with a view to from natural resources mined in the royalties and to clearly define policy achieving at least six percent country”. He added that it was on the use of the resources in order agricultural growth. common knowledge that the country's national wealth must benefit to promote national development. Zambians more than anyone else. However, Malawi is well above the The question that ensues is should CAADP target with an eight-percent Ambassador Mtesa is further quoted Zambians commit to these initiatives growth and 14 percent of the national saying “The government must for the sake of image building to the budget going to agriculture. The sector appreciate that windfall and variable international community, which is at generates about 80 percent of foreign taxes introduced by late President the expense of ordinary people and exchange for Malawi and subsequently Levy Mwanawasa after so much development? The song of making the 39 percent of the gross domestic campaign were designed to enable agriculture sector, a viable sector, to product (GDP). Zambians benefit from the soaring meaningfully contribute to the much- copper prices and super profits earned needed revenue gains for this country I N T H I S I S S U E by mining companies”. seems to be shrouded in mystery. France Telecom Targets Africa ........... 2 New Dawn for Africa ........................ 3 He noted that, while the Zambian The only way the agriculture sector Remove African Trade Barriers ........... 4 government was dragging its feet over will flourish is through the allocation Boosting Power Supply ....................... 5 the re-introduction of the windfall tax, of more resources, even beyond the other countries such as Chile, Maputo commitment. These Climate Change Conference Vital ........ 6 Democratic Republic of Congo were resources can, to a greater extent, be making serious efforts to come up raised locally, especially from the with mechanisms to generate more extractive industries, through the re- resources for workers, communities introduction of windfall taxes or and their infrastructure development CUTS Africa raising mining taxes. Email: [email protected] (Lusaka) programmes. Email: [email protected] (Nairobi) Website: www.cuts-international.org Economics and Development 15 percent of the cost will be provided France Telecom Targets Africa by either the government or ZESCO. The project is expected to shorten the rance Telecom is aiming to become www.timescontent.com Fthe “champion of rural Africa” distance for the implementation of the with a range of low-cost products and Zambia-Tanzania-Kenya interconnection services aimed at doubling its sales in project. Mupwaya said measures have the area by 2015. been taken by ZESCO to extend the lines from 66 to 330 kV from Serenje to Kasama The French operator is counting and another line from Serenje to Chipata. on rapid expansion in fast-growing He said with this development, the gap African and Middle Eastern markets between ZESCO and Tanzania Electric to offset a gradual decline in its Supply. (ZDA, 16.12.10) traditional fixed-line business and lower profits from mobile operations UK Grant to Ease Trade in France. The British government has released It set out its strategy for doubling a total of US$110mn for starting the its revenues in the region from US$4.7bn in 2009 through building networks, process for the implementation of the East recruiting low-income rural customers and providing mobile internet African Community (EAC), the Common services under its Orange brand. (FT, 10.11.10) Market for Eastern and Southern Africa (COMESA) and Southern African KQ Workers Disown Pay Deal financed by the government and the Development Community (SADC) Workers in the aviation industry have private sector. Other ongoing projects North-South corridor infrastructure denied claims of reaching an agreement under the PPP include the construction programme. with Kenya Airways (KQ) on contentious of new hostels, shopping mall and mini- The project, when implemented, will wage review talks and warned that they stadium at the University of Zambia and enable faster border crossings and will call a strike, should the negotiations the itezhi-tezhi hydro-power project improved port facilities. Railways and break down. The Chairman of the (ZDM, 08.12.10) highways will enable producers and Aviation and Allied Workers Union traders, especially in landlocked countries, Zambia to Reveal Mine Tax (AAWU), Moses Ndiema, dismissed a to transport their goods quickly and access statement by the national carrier stating The Zambian government should more easily regional and international that a deal on the protracted negotiations disclose the terms under which it has markets, stimulating economic growth had been signed, saying the two parties agreed the new tax regime with the foreign and inward investment. had only selected a team to lead the talks. mining firms, says the Economics (TEABW, 06.12.10) Paul Kasimu, Human Resource Association of Zambia. EAZ President, Adopt India's Growth Model Director, Kenya Airways, said that the Noel Nkhoma, said the failure to disclose airline had reached a final agreement with the contents of the agreement raised COMESA has advised Africa to the union. There has been a new suspicion among key stakeholders. For the reproduce India's private sector as growth leadership at AAWU that has set new purpose of transparency, the government model for the continent to succeed demands on the CBA that had been should be able to come out publicly and economically. COMESA Secretary, reached in April 2010. A staggering wage say we engaged the mines. General Sindiso Ngwenya, praised the bill and increasing operational costs have He warned that lack of transparency role played by the private sector in eroded KQ's profitability in recent years, might lead to a repeat of the one-sided growing the economy of that country. He as the full implementation of the union's development agreement which suffocated said the COMESA business council demands are set to push staff costs the country's ability to raise mining tax already had an MoU with the India beyond US$12bn a year. revenues, even in face of high record high Chambers of Commerce and emphasised (BD, 15.11.10) metal prices. Given the current copper the need to build on the already existing prices, Zambians could benefit more if relationship. PPPs' Contribution to GDP the government raised more from mine He named technology transfer, with Actualisation of public-private taxes. (ZDM, 02.12.10) particular emphasis on leather and leather partnerships (PPPs) in Zambia will products, cotton textile and clothing, Zesco, TBA China Sign Deal contribute up to 10 percent to the gross agro-food processing and ICT, as area that domestic product (GDP) within five ZESCO Limited has signed an was of interest to the COMESA region. years, through increased inflow of agreement with TBA of China, valued at India's Minister of State for External investments in the economy. Zambia's US$334mn, to extend the 330 kilovolt Affairs stated that there was need to GDP is forecast to grow by about 6.4 (kV) power line from Pensulo in Serenje reinforce the India-Africa relationship and percent and reach US$19bn in 2010. to increase the capacity supplied to announced that her country would hold Zambia has earmarked many projects Northern and Eastern provinces. TBA a summit in 2011 that will address the in energy, transport and agriculture, which will finance 85 percent of the project cost issue. (ZDM, 15.11.10) will be developed through PPPs to be through a loan to the government, while 2 u Year 9, No. 4/2010 Tradequity News on Trade End to Agro-produce Import and it attracted over 40 million tourists, ZDA Director General Glyne The Zambian agricultural sector has while Zambia's was below 1 million in Michelo, said once the one-stop border made tremendous progress following the 2009. (MT, 28.12.10) post being constructed under the public diversification of the economy. The sector, private partnership (PPP) framework at among other crops, has seen an increase Zambia Kickstarts AGOA Forum Kasumbalesa becomes operational, trade in maize production, with a bumper Zambia is scheduled to host the will be enhanced. harvest of 2.8 million metric tonnes in African Growth and Opportunity Act Michelo said trade will be enhanced the 2009-2010 farming season.