CTPD says Zambia has continued lagging behind major mineral dependent African economies in aligning its national laws and regulations to the Africa Mining Vision (AMV) because of poor taxing policies.
In a statement, CTPD acting executive director Isaac Mwaipopo noted that amending the 2015 Mines and Minerals Development Act would facilitate for the reinstatement of a Mineral Revenue Sharing Mechanism (MRSM) in order to benefit communities that host Mining industries.
“CTPD calls for the amendment to the 2015 Mines and Minerals Development Act so as to facilitate for the reinstatement of a Mineral Revenue Sharing Mechanism-MRSM. This is critical if the country is to realize the aspirations of the recently launched 7th National Development Plan (7thNDP) that seeks not to leave any one behind. It is disheartening to note that at the mention of mining in Zambia, the focus and conversation among policy makers is predominantly on how to create an enabling environment for investors with less attention paid to discussions on how communities that host the mining investments can benefit from and equally live in a conducive environment,” Mwaipopo stated.
Mwaipopo observed that Zambia had continued failing to raise adequate domestic revenue from its vast mineral wealth to improve the quality of life of Zambians due to poor taxing policies.
“According to the recent study conducted by the Tax Justice Network Africa in partnership with the Centre for Trade Policy and Development-CTPD, focusing on progress made towards domesticating recommendation contained in the Continental Mining Vision, It was learned that Zambia is lagging behind other major mineral dependent African economies in aligning its national laws and regulations to the Africa Mining Vision (AMV). It was further observed that Zambia’s Bilateral Investment Treaties (BITs) and Double Tax Agreements (DTAs) are riddled with loopholes which contributes to the country’s inability to raise adequate domestic revenue from its vast mineral wealth to improve the quality of life of Zambians,” Mwaipopo stated.
“The absence of clear policies and systems to curb mining companies’ practice of declaring the bulk of their investments as debt (and not equity) is eroding the country’s tax base. These gaps contribute to the high levels of Illicit Financial Flows (IFFs) from Zambia, which is currently estimated at about US$2.8 billion per annum.”
Mwaipopo also noted that the Zambian government had for some reason repealed the clause that provided for rent distribution systems of allocating part of mineral royalties to communities near mining operations and local authorities as recommended by the AMV during the legislation review in 2015.
“The study further measured progress on Zambia, Ghana and Tanzania in domesticating the AMV’s Fiscal Regime and Revenue Management cluster and their respective sub-regions (namely SADC, ECOWAS and EAC), On revenue management, it was learned that Zambia had an explicit provision in the 2008 Mines and Minerals Act for the creation of a Mineral Revenue Sharing Mechanism-MRSM, this provision was to ensure that there are some rent distribution systems for allocating part of mineral royalties to communities near mining operations and local authorities as recommended by the Africa Mining Vision, but this clause was taken out during the legislation review in 2015, a retrogressive contrast to countries like Ghana and Tanzania which have put in place systems through a levy in Tanzania and a share of royalties in Ghana,” stated Mwaipopo.
“It is from this background that we demand for an amendment to the 2015 Mines and Minerals Act so as to facilitate for the inclusion of the Mineral Revenue Sharing Mechanism which will enhance opportunities for communities that host mining investments to benefit from the extraction, further to this call for re reinstatement of the Mineral Revenue Sharing Mechanism is the need to develop guidelines that would help ensure effective implementation of the mechanism.”