Whose side is our government on? Mining companies or its people?

Thursday, July 7, 2011 - 16:33

Recently, Zambia held its first ever Zambia International Mining and Energy Conference (ZIMEC) which attracted the biggest mine companies and business´ from more than 40 countries.

The closing debate of the conference gave a platform to the Zambia Minister of Mines and Minerals Development, Mopani Copper Mines’ CEO, trade unions representatives, civil society organizations, and stakeholders to discuss mining companies’ practices, tax payment and transparency. One of the contentious issues on the table was the evasion of tax in Zambia by Mopani Copper Mines, which is a subsidiary of the world's largest commodities trading company Glencore.

A remark from Savior Mwambwa, Executive Director of The Centre for Trade and Development, captured the essence of the problems being discussed well: “If you closed your eyes and only listen to the arguments being made, you would actually think that the Government and the investors are on the same side.”

Mopani´s CEO Emmanuel Mutati refused to meet even half way on the issue of tax evasion. Mopani blamed the auditors analysing the company’s tax payment and accusing the company of tax evasion of “not understanding our system of taxing and our business model.”

If neither the auditors nor the public understand your tax systems or your business model, is there then not something wrong and unaccountable with your tax system and not with the public understanding?

somebody asked but waited in vain for a clear answer.

Civil society organizations demanded improvement of worker’s rights, environmental protection and requested profits made by mining companies in Zambia to be made public. According to the World Bank, copper is responsible for 70% to 75% of export earnings in Zambia but the mining industry as a whole only contributes about 10 percent of Zambia's tax revenue.

The Minister of Mines and Minerals Development made it very clear that civil society request for making tax records public available is wishful-thinking:

We can not go around exposing peoples or companies financial affairs. We are getting a good deal from Mopani.

He assured the audience. How good the deal is, is not the Zambian people’s business apparently.

It became clear from the Minister’s comments that the Zambian Government is not concerned with making Mopani Copper Mines answerable to paying fair taxes. He further questioned why Zambia is being targeted when countries such as Canada and Australia follow the very same practices and do not charge their investors windfall tax, but are left alone.

The minister’s responses were disappointing. As a representative of the Zambian people he should ensure that both sides have a fair play. On one side he has to ensure that the investors work in a good political environment and make profit and on the other ensure that the Zambian people are given what is due to them.

The debate around tax evasion has a tendency, rightly, to surround multinational companies’ bad practices and unaccountability. However the position taken by the Zambian Minister of Mines and Minerals Development showed very clearly that accountability and better practices from multinationals undoubtedly has to go hand in hand with strong political will in order for the Zambian people to enjoy from the good deal the government has made with Mopani and other mine companies.

ActionAid Zambia is taking on new programs around tax justice and in years to come Economic Accountability and Transparency will be one of our main themes of work. We will lobby for tax justice at local and national level and work to change government’s position, so even with eyes closed you can tell which side the Zambian government is on.