OBSESSION with international investors who pay low mineral royalties to Government has led to Zambia almost giving away its natural resources for free, says former Bank of Zambia Governor Caleb Fundanga.
He said most African countries’ tax on natural resources was low compared to developed countries where taxation was competitive. Dr Fundanga was speaking at the public discussion organised by the Economics Association of Zambia (EAZ) on taxation, institutions and participation and the best way to tax natural resources. “Sometimes we are so obsessed with international investors that we are almost giving away our resources for free, yet this is a chance to make some money for the country.
“If you look around, most of African countries’ tax on natural resources is quiet low yet if you compare with developed countries, taxation is quite high there,” he said.
Dr Fundanga expressed concern over how the process of giving mining contracts to investors was done in some African states.
He said most of the contracts involving foreign companies in African countries were concluded at State Houses and in secrecy and not in the interest of affected countries.
“The processes are done at State House and the deals that come out are not in the best interest of these countries.
“Is it not possible that these contracts can be done openly? The second aspect is that taxation. Once they have been given concessions, how much tax are they paying?” he asked.
Meanwhile, economist professor Oliver Saasa said 2015 would go down in the history of Zambia as a year when the mine sectors had contributed the least in the growth of the economy.
Professor Saasa attributed the low contribution to lack of clarity consistency and predictability in the policy regime which he said could not be blamed on investors.
“2015 will go down in the history of Zambia as a year when the mining sector has contributed the least with lack of clarity consistency and predictability in policy regime itself and you cannot blame investors at that level.
“In fact in a regime like ours, where it is not very clear, any investor who comes to Zambia and obeys the law must be a very bad investor. If I am an investor from America and I see these inconsistencies, I can get away with it,” he said.
Professor Saasa said 50 years down the line since independence; Zambia should have had a much clearer policy and tax regime where other countries could learn from.
“What I am saying is that let us put our house in order, 50 years down the line since independence, Zambia should have learnt experience from within the country. A much clearer policy and tax regime where other countries can learn from but at the moment, we are not there,” he said.