Ugandan Government Scraps Taxes on Oil, Gas, Mining Exploration

Ugandan Government Scraps Taxes on Oil, Gas, Mining Exploration

My comments

  • While on the face of it this move makes sense, I hope there is a balance to ensure that the scheme is not abused – leading to the loss of essential revenue, which Uganda needs.
  • In Malawi we had the Kayelekera Uranium mine, which was given many incentives (including a lax agreement that was too generous),  but which resulted in the loss of revenue by the government. African countries cannot afford to be conducting their affairs like this, because they are the ones who are most in need of resources – to help with economic development, poverty eradication and public investment(healthcare, education and national security). Further as I often say, when was the last time an African company was given a 70% stake in a mining interest in Europe or America?
  • It would be better and wiser, in my view, for the Ugandan government to get into the business of oil exploration. They would be able to keep more of the money derived from the natural resource – which they would then use in developing Uganda. In any case Uganda is a small landlocked country, and when you have few resources, you must utilise them wisely.
  • See my earlier article to understand my thinking on these issues.

Con Artists: Deception, deception and more deception

The typical con artist of the 21st Century is a puppet organisation whose employees have important sounding job titles, wear suits, have well manicured fingernails and sport pricey haircuts. None of that amateurish I have a gun give me your money or I’ll blow out your brains twaddle.

This morning, I found myself reading a hilarious article that suggested that the World Bank (of all the neoliberal outfits out there) was fronting some initiative designed to help Africa in preventing pricing irregularities of its minerals, in the process saving the continent billions of dollars?

Yeah, essentially that’s what it says…which is… how do I put it….dishonest, or at least not entirely truthful, if one is to be mild-mannered.

Yes, it will be good for people to know the actual price of their country’s minerals, but who exactly are we talking about here. Aren’t the prices of commodities evident and freely available to the public on international markets? Aren’t the people working in Natural resource departments of government agencies somewhat a bit more savvy (and knowledgeable) than the local man on the street? All you need is a computer (or even a mobile phone) and an internet connection. Don’t tell me government ministries of natural resources across Africa don’t have access to an internet connection to enable them to check the price of Platinum or Rare Earth Minerals on the international market…or are too incompetent to do so?

Which is why I think this initiative is merely a distraction. Having a map of your country’s natural resources and the cost thereof doesn’t immediately translate into physical or tangible gains. It doesn’t mean that you, the native, controls, owns or has the real benefit of those natural resources. Or does it?

At the most this is a PR stunt designed to mislead, a nefarious ploy to distract the people’s attention from the unfair, unethical and illegal state of play, where African resources are owned and exploited by foreign corporations who have no interest whatsoever in improving the lives of African people. It’s purpose in my view is simply to provide an illusion that something is being done, when the fact remains that nothing of any real substance is being done. It’s as hollow as announcing to the world that the UN is considering a resolution against Switzerland and other Tax Havens, to stop them receiving illicit funds from third world / developing countries, and then doing absolutely nothing else other than that annoucement….no action, zero! Meaningless.

So, you can mineral map the whole world if you like, but the locals in third world countries will still remain deeply afflicted by poverty, often going without, or with very little; there will continue to be poor or non-existent healthcare facilities, hunger and disease will continue to run amok, corruption will remain high, wars will tear the landscape and displace millions … as in the backdrop, an alliance of tycoons and wealthy billionaires multiply their wealth – their catalyst, a resource that should be owned by Africans, and yet isn’t.

How many African companies have contracts to mine minerals in North America? How many have contracts for oil extraction in the North Sea, or off the coast of Australia? What percentage of Canadians own Multimillion dollar companies registered in Canada? Similarly, what Percentage of Nigerian/ South Africans / Malawians own multimillion dollar companies in their own countries? Those are the questions the World bank or indeed any serious commentator should be asking, because addressing the disproportionate imbalances or anomalies in those questions is what has a far higher potential to reverse capital flight from Africa and third world countries. That’s what has a higher chance of improving the plight of the people of Africa. Not mineral mapping…or some silly PR stunt.

It can never be right, whether you have a mineral map or not, no amount of sugar-coating or window dressing will ever put that unfair state of play right. The truth is there has been a clearly indisputable economic unfair advantage gained by western countries (helped by wars, bad policies and stupid African leaders), and something serious must be done to reverse and rebalance the playing field. Half-hearted deceptive stunts fronted by agents of the neoliberal right will only harm the little sincere good that others are currently working on.

If you really want to know what this is all about, the ending of the article itself says it all:

BDs2

 

OECD Forum on Africa focuses on turning uneven economic growth into shared and sustainable economic transformation

 

…It was a day of many harsh truths: “Africa’s 5, 6, 7% growth is all very well, but China has managed an annual 10% for 30 years”, said Mallam Sanusi Lamido Sanusi, Governor of the Central Bank of Nigeria. “We have much further to go. And where does our money go? It goes on things like salaries, overheads, production subsidies – and not where it ought to go. In Nigeria, we are sitting on $25 billion of pension money, which we could be investing in meeting our own infrastructure needs, or in building our manufacturing and processing capacity. We grow tomatoes, and yet we import tomato paste.”

All agreed that the first challenge of natural resource management is to secure its full revenues and to use them wisely and fairly. Government tax revenues from natural resources for 2011 may have been up by 40%, but profits for international companies went up by 110%. This is a huge mismatch. Africa is said to be losing over $60 billion a year in illegal outflows and price manipulation in the extraction of minerals, with most of the proceeds going offshore. The easiest and the worst option for governments is merely to take the short-term rent paid by international companies for the right to discover and develop the continent’s natural resources, rather than do the hard work of creating jobs and ploughing back the proceeds into where they are needed most, in areas like health and education.

OECD Forum on Africa focuses on turning uneven economic growth into shared and sustainable economic transformation

Renewable Energy in Malawi? A Sustainable Future for the Warm Heart

A sustainable future is something we should aspire to. Expending natural resources in order to provide energy is a worldwide problem. In Malawi, the Warm Heart of Africa, only about 9% of the population has access to electricity. Electricity in Malawi is controlled entirely by The Electricity Supply Corporation of Malawi (ESCOM) , a company owned by the government. This government-owned entity controls all of the power centers in all of Malawi. ESCOM provides limited electricity that is out of the financial reach of the majority of Malawi’s 16.7 million people. A lack of electricity has created additional problems within Malawi, as satisfying the energy needs of so many people has inevitably led to the exhaustion of natural resources. [with minor edits]

More at Renewable Energy in Malawi? A Sustainable Future for the Warm Heart  via http://worldcampforkids.blogspot.co.uk

Global 100 Voices: No 5

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My next guest describes himself as the proprietor of a recently opened media company(AGM Media).The company offers photography, audio and video services, amongst other services. He’s also undertaking International studies with the Open University. Mr MKOTAMA KATENGA-KAUNDA, thank you for doing the 100 Voices Interview!

  1. As a Malawian, how important is Malawi’s Socio-Economic stability to you and your family?

It is important because as a human being, one always aspires to have a better life for one self and his/her family. Socio-economic stability gives a better chance for someone with a dream to have a better quality life in a developing country.

    2. After nearly 50 years since independence, what visible progress do you think Malawi has made since independence, and in your view, what pressing challenges remain? In view of those challenges, what do you think is the role of government and the people in tackling those challenges?

It is really difficult to pinpoint any visible progress Malawi has made since independence. It is the same scenario of ‘the rich getting richer and the poor getting poorer’. It is sad that Malawi has not developed as it should have because the majority of visible structures in our country were built by Kamuzu Banda about twenty-plus years ago. It has been 19 years since we became a democratic country and not much has really changed in Malawi. In my view, I fail to register any visible progress that Malawi has made since independence because we have destroyed the very foundation which our nation once built (electricity and water supply is erratic, refuse collection is non-existent, our postal services are inefficient, Malawian-owned industries have been sold off etc). The most pressing challenge is ‘corruption’ at all levels of society in Malawi. For things to change, the government, starting with the executive, need to be exemplary by being tough on corruption at all levels in society. If the government is serious about such issues, then it is inevitable that citizens will follow suit.

  3. As someone who lived(or has lived) outside Malawi for some time, and has been exposed to modern and progressive ideas, what symbols of development in the foreign country in which you lived have had the greatest impact on you, and why?

I lived in the UK for 12 years and there are a lot of symbols of development in the UK that have had the greatest impact on me. My view is that, anybody that works hard in the UK has the chance to live life above the poverty line. Their social welfare is admirable in that it manages to help those citizens who are unemployed, homeless, sick and disabled etc. The roads, universities, transnational corporations, manufacturing industries and many more are all symbols of development that are prevalent in the UK. These symbols of development have had the greatest impact on me simply because my country of origin, Malawi, is lagging behind as one of the poorest countries in the world.

   4. What lessons do you think Malawians and the Malawian leadership can learn from those ideas?

As this is a globalised world, a lot of Malawians have travelled and are still travelling. When we travel, it broadens our horizons and whatever we see in developed countries, always inspires us that we can also develop to the level of western countries. The lesson to be learnt is that as a nation, we should be resilient and ambitious with our developmental plans, because it is possible for third world nations to become developed nations. We should study and analyse those countries that have developed and try to figure out where we have gone wrong to strengthen our weaknesses on our path to development.

   5. When you last returned to Malawi, what struck you the most as the greatest sign of improvement or development since the last time you left?

I think the most clear sign of improvement that struck me was the number of better cars in Malawi.

   6. What struck you the most as the biggest sign of stagnation or regression?

The biggest sign of stagnation was corruption because everywhere i went, people preferred to do things through the back door.

frgl7. Malawians will be going to the polls in 2014, to elect a new president. In your view what kind of leader does Malawi NEED, considering the country’s current challenges? And specifically, how should that leader approach the top job in terms of creating sustainable development and foreign reducing aid dependency?

The biggest challenge Malawi has, is that we are dependent on foreign exchange for economic stability. As we approach the elections, Malawi needs an innovative leader that’s ready to initiate an ambitious blueprint to try to become self-sufficient. Malawi needs a frugal, transparent and incorruptible leader who is willing to make sacrifices for the future of our nation. This means that we need to utilise all our natural resources in a meaningful way where we get full returns that in turn spark developmental pathways for our nation.

   8. As you know, Tobacco is Malawi’s biggest source of export revenue. Looking at the problems that have plagued the tobacco industry in recent times, what alternatives do you think Malawi has besides Tobacco, and why are they viable alternatives?

Malawi’s alternatives to acquiring foreign revenue apart from Tobacco, is through natural resources. We have uranium in the northern region which is a sought after mineral in nuclear energy physics. Lake Malawi is rumoured to have gas and oil deposits underneath its seabed, which is believed to have caused tension between Malawi and Tanzania. However if the prospect is true, the returns from natural resources are always rewarding to countries with natural resources.

   9. Considering our troubled history with donors and funders such as the IMF and World Bank, most recently when  Bingu Wa Mutharika was president, how do you see Malawi progressing from this relationship in view of the criticisms these organisations have received in the media across the world?

The only way to progress from such a relationship is by becoming self-sufficient. Countries like Malawi are in a vicious cycle where they have become used to being dependants of the IMF and the World Bank. To come out of the reach of the IMF or the World Bank, Malawi needs to utilise its natural resources by channelling monetary gains into improving our social welfare.

   10. We know that Malawi has some precious minerals, including uranium, possibly oil and other natural resources. How do you think the present government is doing regarding managing Malawi’s natural resources?

The present government’s management of natural resources is poor. Rumours were rife in the previous administration that they signed a weak contract with Paladin an Australian company that was given concessions to mine uranium in Malawi. The current government has also kept the nation in the dark about the contract and no one really knows whether Malawi is gaining from it or not.

   11. In your view, can the government do better to manage natural resources? If so, how can it do better?

Yes, the government can do better by becoming transparent in its dealings with foreign companies that are given concessions to extract minerals from Malawi. Contracts should be negotiated for the benefit of the nation and not for just a select elite few. There is need for our government to realise that natural resources are for the benefit of all the people of the country, and not just for the leaders in the executive.

12. What is your answer to increasing transparency and eradicating corruption which is plaguing most governments across Africa?

The answer is to have a strong constitution without any loopholes, a constitution that punishes anyone in contempt of the law. There is also a need to separate the police from the state so they can work independently without government interferences.

   13. Any famous words?

Running a government is very serious business – Bakili Muluzi

 100 Voices is a collection of reflections, views, opinions, ideas and thoughts by Malawians across the world, regarding the past, present and future of Malawi.