Zambia gov’t in talks with mining firms over sharing of mineral wealth – Xinhua | English.news.cn

http://news.xinhuanet.com/english/africa/2014-12/31/c_133890430.htm

Ok, so we’ll shut down the mine because of an 8% tax????!
Can you see how absurd that sounds? Are they saying that they make 8% in profit? The huge profits mining companies make (which BTW are wired out of the country) are not fairy distributed in the country that owns the resource,  yet they make it sound as if they are doing Zambians a favour??? The very definition of Greed… in other words,  we’ve got a contract,  our priority is to make as much profit,  we don’t care about the consequences of our tax evasion,  profit shifting or unfair contract terms on Zambia. If we can’t make the maximum possible profit, it’s not worth continuing the operation. 

Let the Canadian mining company leave. Let the Zambian government nationalise the mine, and take control of it. There are many educated people in Zambia,  they can manage. It will give them increased income and will help poor people in Zambia. Let them create a cooperative and provide employment to people who want to help African countries,  unlike wasting time with such leeches who only care for profit…
Also, I wonder whether they would have left if it were the government of Australia for example which increased the taxes. A part of me thinks it’s partly a bias towards African governments who are often bullied into accepting unfair contract terms, to the detriment of their people…

After suspension of oil and gas exploration licences in Malawi what happens now?

Anglo American Corporation was founded in Johannesburg in 1917 with £1 million (what today would have been £75 million, adjusting for inflation according to one inflation calculator).

AngloAmerican

It has since grown into a publicly traded behemoth with a market capitalisation of £31.2 billion and revenues of £29.3 billion (2013). It’s headquarters is now in London and the company is now known as Anglo American Plc, the fourth largest mining company in the world.

Although a net ‘loss’ of $961 million was declared in 2013, Anglo American is undoubtedly one of the big boys in the industry. To give you a scale of just how big they are, Anglo American Plc owns 85% of Luxembourg registered De Beers Investments, the holding company of De Beers, another prominent mining giant which is well-known in Southern Africa. But if that’s not convincing enough then how about this: Anglo American recently walked away from a gold interest worth $300 billion, after investing over $541 million it it. Apparently, the withdrawal is related to environmental risks, in particular the threat the Pebble Mine would pose to Alaskan Salmon (there’s even a campaign), although Anglo’s chief executive claimed the withdrawal was in fact a way of prioritizing “.. capital to projects with the highest value and lowest risks.”

Both Anglo American and De Beers have been criticised over their practices in Africa, including price-fixing, low wages (for Anglo American recently in Chile here) and lack of transparency. In particular, according to a Wikipedia entry:

In 1977, the company [Anglo American] demanded that the paper it owned, Rand Daily Mail, tone down its equal-rights support after exposing the murder of South African activist Steve Biko amid the subsequent government backlash. [words in parenthesis for clarity]

Further, a British charity, War on Want, published a report in August 2007 that accused Anglo American of profiting from the abuse of people in the developing countries in which the mining giant operates. According to War on Want:

“in the Philippines and South Africa, local communities threatened with Anglo American mines have faced severe repression in their fight to stay on their land, while in Ghana and Mali, local communities see little of the huge profits being made by AngloGold Ashanti but suffer from fear and intimidation and from the damaging impact of its mines on their environment, health and livelihoods”

In response, the company subsequently published a report defending itself and disclosing its finances.

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Malawi’s first president Dr Hastings Kamuzu Banda could have begun a state owned mining company in Malawi in the late 1960’s. He could have hired specialists from abroad, bought equipment from Britain or the US, begun prospecting for minerals, and by 1970 laid a foundation for a functional mining industry. The technology was available, and when Malawians had been travelling to South Africa in their thousands to work in the mines, labour would not have been a problem.

Banda didn’t begin a mining company. Instead he focussed on agriculture, which traditionally does not reap large profits as the sort which mining companies the likes of De Beers and Anglo American have been known to reap.

That decision could be a contributory factor further explaining Malawi’s economic woes today. While others were investing in assets and initiatives having huge long-term yields, Malawians were dabbling with agriculture and tobacco.

But to give him credit, while Dr Banda could have thought mining was not a priority to the newly independent country, he must have known that Malawi didn’t have enough capital resources to waste on ambitious projects whose very returns were unknown if not a gamble?

Further, having just broken away from the Federation of Rhodesia and Nyasaland, it’s understandable that while Britain could have been willing to extend Malawi a line of credit, as single-minded as Banda was known to have been, it’s inconceivable to think that he would have wanted to be constrained by such kind of favours from the very same people he so vehemently denounced. As he once declared: “We have no minerals. The soil is our gold mine”. In any case, what did a medical doctor who barely 10 years previously had been running a clinic in London know about the mining industry of the 1950’s and 60’s.

Having said this, would Dr Banda have started a state-owned mining company if he knew what treasures lay beneath the surface of Malawi’s geology? If he knew the value of such treasures on the international market?

Especially since there was information available as early as 1966 as to the Mineral deposits and mining potential of Malawi, according to a research paper titled MINERAL RESOURCES OF MALAWI AND MINING POTENTIAL by Rodney Mshali (The Society of Malawi Journal Vol. 62, No. 2 (2009), pp. 27-35 published by: Society of Malawi – Historical and Scientific ). Banda could have decided to take the risk if he wanted to.

Mineral Deposits

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Whichever way, it’s not my place to make a determination on Dr Banda’s judgement at this time.

But what does all this have to do with the current mining landscape in Malawi?

Well, as can be seen in the following links in Zambia, Chile, South Africa and Ethiopia , some mining companies have been known to be a menace to the countries they operate in. Issues of ownership, corruption, tax evasion in the form of profit shifting, low pay and poor working conditions, and of environmental degradation are often always lingering. In Malawi, recently, it has emerged that Paladin was considering to discharge ‘contaminated’ sludge kept in a dam near its Kayelekera mine into Malawi’s rivers systems for fear that if they did not do so, the rain season would cause their dam to overflow.

Thus, when news broke just under two weeks ago that the government of Malawi had suspended all oil and gas exploration licenses on Lake Malawi, so as to allow government to scrutinise and review each Licence that was issued or signed, I didn’t really know what to make of it. After all,  Malawi has had its fair share of sorry episodes of bad contracts married with irresponsible management, with the Paladin saga at Kayelekera. Although appearing diligent, uncovering any such lax agreements will just remind us all how deep in muck the country really is. It will not be a cause for celebration.

So then, what will the government do?

If they plan to review the oil exploration licenses in all good faith, and if necessary use legal mechanisms to resolve any indications of foul play -including unfair or prejudicial contract terms that do not benefit Malawians; if they plan to bring the miscreants to justice, then the suspension is a noble move.

In addition, the government of Malawi could work with charities [such as SHERPA (France), the Center for Trade Policy and Development (Zambia), the Berne Declaration (Switzerland), l’Entraide Missionnaire (Canada) and Mining Watch (Canada) ] which in 2011 filed complaints against mining companies Glencore International AG and First Quantum Minerals Ltd, to the Swiss and Canadian National Contact Points (NCP) for violating the OECD guidelines for multinational enterprises including for Tax avoidance in Zambia.

However, if the suspension of oil and gas exploration in Malawi is a veiled attempt at ‘rent-seeking’, as is rumoured to have taken place not only during Bingu Wa Mutharika’s regime, but also during the People’s Party administration, then it would be unfortunate because the government would have lost an opportunity to harness the resources that Malawi has. DPP would have lost a chance to show transparency.

One more thing; how can Peter Mutharika be sure that the value of assets or mineral resources declared by Oil companies interested in prospecting, or already prospecting is accurate, and not under-declared/under-valued ? For example, if the actual value (or near estimate) of viable crude oil deposits under the basin of Lake Malawi was US$400 billion, what is to stop the Oil companies holding the exploration licenses from misinforming the government that they had found only US$100 billion worth of confirmed deposits under the lake? Especially when the government was unable to verify those figures?

Wouldn’t an independent state-owned Mining company, that had its own equipment, and that owned a stake in each exploration site, and that was jointly involved in the exploration, so as to be able to verify the findings by its own independently undertaken mapping and surveying reduce such a risk?

Finally, it goes without saying that for them to be successful, any state-owned organisation (including parastatals) should be run and managed by people who by merit are fit to do so, and not by public appointees with little or no experience in the relevant technical field or area.

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Zambian President Suspended as party leader by Patriotic Front

Zambia’s Acting President, Guy scott, who took over from Michael Sata last month, after Sata’s sudden death, has been suspended as party leader by the ruling party for “unconstitutional conduct”.It comes after Scott fired a member of the Patriotic Front  without giving a reason.

The move by the party comes at a time when there has been a power struggle within the Patriotic Front, with news recently that the former first lady, Sata’s widow, and her son respectively, wanted to take charge as party leader and represent the Patriotic Front in next year’s elections. The infighting began soon after Sata’s death, with some people pointing to the Zambian constitution that would bar Scott from running as president because his parents were not born in Zambia (Scott’s Parents were British).

While Zambia has been hailed as one of the Southern African countries with much potential, the current situation reflects badly on the country’s political elites, not least because some people have used racial slurs and divisive colonial references to attack Scott, who was born in Zambia, and is Zambian in every respect. It also highlights regressive national laws which may be doing the African continent more harm than good. More details here [Via New York Times] and here [Via Reuters]

Malawi cancels $145 million arms deal with SA firm: report

Original article here (via Times Live)

Malawi cancels $145 million arms deal with SA firm: report

The agreement between the Malawi Government and Paramount Group has been abrogated. That is all I can confirm and say,” Gondwe told Saturday’s Nation newspaper.

The paper quoted a source within the finance ministry as saying the government of President Peter Mutharika told the firm the deal was “illegal and expensive”.

More on original article here

Comment

I think President Peter Mutharika must be hugely commended for doing this. The relationship between Paramount and Joyce Banda was unhealthily close. The whole fiasco regarding the arms deal, and the jet bartering and the comments from the UN had an air of dishonesty and special interests about it. I don’t believe the arms deal was to the benefit of the people of Malawi, and Joyce Banda was wrong to associate her government with these guys. As I wrote here, most of these deals benefit people other than Malawians.

Having said that, I wonder what it will cost the country to terminate the contract? Wait, was there a contract? Or was this another gentleman’s agreeement? We will need to know how much it costs the country, and why the president calls it ‘illegal…’. Presumably, the get-out clause is a better devil than paying $145 million? Although what you don’t want to happen is to spend additional millions of dollars you don’t have in court cases fighting a contract that is impenetrable.

I hope President Mutharika will make do on his promises to clean up government in Malawi, and not waste time with propaganda or fighting opponents. I hope he does away with all such useless and ‘illegal’ commitments Malawians never needed. I’d like to see Mutharika revisit Kayelekera, and ‘abrogate’ the unfair Paladin deal. I’d like to see him push for the completion of the Shire-Zambezi waterway, which his brother Bingu Wa Mutharika began – it will lower the cost of goods in Malawi. I’d like to see Malawians realise real benefit from the Vale railway line. I’d like to see Malawi University of Science and Technology open and begin training students in areas which the country is lagging behind. I’d like to see the restrictive and backward thinking regional quota system for university entrance abolished, and in its place an improved open merit based system established. It will be good to see more Universities built across Malawi, and there are many donors who will support this initiative. The proposed mini Chinese city could have huge benefits in terms of stimulating trade and entrepreneurship for both China and Malawi, the president must pursue the agreement, and see its completion. Why can’t we have our own oil refinery? As the Zambians have done (see another link here). There are many ideas the government can adopt to generate income and raise funds outside of taxes. Over a year ago, I helpfully listed some here.

But most of all, I’d like to see president Mutharika get to the bottom of the Cashgate scandal , prosecute all who were responsible for the theft, and close any remaining loopholes in IFMIS. Malawi can never move forward if people continue to steal from the government – and get away with it.

So far, so good. Well done Mr President Sir!

LSE Africa Summit: Potential, Promise and Prizes

LSEAfrica-1Say what you like about Africa: Starved, poor, disease ridden, war-torn, corruption infested, tragedy prone… whatever. But besides all the gloom and doom (which is real) is ample tangible evidence that Africa is working, and working very hard. Working to rectify the social and economic disparities across the continent, working for lasting peace, working for the rights of women, working to improve and advance healthcare, working to improve the business climate on the ground, working to make the continent better.

Two weeks ago, I had the pleasure to be invited to a summit on Africa at the London School of Economics (LSE) and Political Science, which was taking place from the 3rd to the 5th of April 2014 in their modern and state of the art facility, the £71 million Sheikh Zayed Theatre.

The initial news of the summit found me in a bad mood so the numerous pessimistic voices in my head kicked in, wondering whether this wouldn’t be another example of hot air devoid of real substance, one that would waste my time. Just another gathering of egoistic Africans talking great ideas which were largely impractical in a Western dominated world. The kind of people described in the cringeworthy description by Ken Follet in his 1979 novel Triple, when he wrote:

‘…thought he was fairly handsome, for a nigger, and haughty, the way they were when they made some money and got invited to white homes’

But after attending some of the sessions on Friday and Saturday, I couldn’t have been further away from the truth. I was wrong, my unqualified prejudgment rash.

What I found at the LSE Africa Summit were individuals who know the problems, know the questions that must be asked to solve those problems, know some of the answers to those problems, and are persistently searching for the answers they do not (yet) have.

LSE-1

Potential

I entered the auditorium the second day, halfway through the keynote address by Dr Obiagelli Ezekwesili, Co-founder of Transparency International and former Vice President of the World Bank Africa Division. She said that Government was a key ingredient to development across Africa and emphasized the importance of ‘eco-inclusivity’ in which the individual person was the creator of ‘eco-value’. For this to be possible, there was need for a focus on infrastructure development to create an atmosphere that would allow problem solvers to thrive, since solving the problems will lead to eco-value, and thereby ‘eco-exchange’. She said Africa needed an ‘agrarian revolution’, which to me meant using new or modern technologies to introduce efficiencies in agriculture. She stressed that governments must ask the question of what were the important obstacles which they (government) needed to remove. She made a reference to a ‘complete remodelling’ or overhaul of the educational systems in African countries, since this was key to developing an entrepreneurship mindset – one that was ‘far removed from the natural resources economy’. She said the role of government was to create the capacity for people to take advantage of opportunities.

The next session, a Panel session on Finance Investment, chaired by Dr Antonio Malfense-Fierro, was an exposition into a number of research theses undertaken by various researchers. LSE’s Adeline Pelletier kicked this off with her topic on ‘SME financing in East Africa: a supply-side story‘. She rightly identified Collateral as the main constraint on Financing, and among her conclusions was that credit scoring could be an oppourtunity so there was a need to ‘watch your credit score’. Dr Curtis Kidd Telemaque (‘The Implications of Secondary Markets on sub-saharan Development: a comparative study of Investors from the Nairobi and Johannesburg Stock Exchanges‘)  from the USA, and Dr Salimata Fall (‘Entrepreneurship Financing and Economic Development in 4 West African Economic and Monetary Union countries: Domestic credits versus foreign inflows‘)  from the International University of Grand Bassam (IUGB) in Abidjan, Cote d’Ivoire also made passionate and fact-filled presentations during this research session. By the time of the coffee break, I had already been challenged, and many questions swirled in my head (which thankfully I was able to discuss with various attendees at the summit) including:

  1. How can there be sustainable development and inclusivity across Africa when the ruling elite appeared to be inherently corrupt, and often in concert with other arms of government to plunder resources, at the expense of the people?
  2. The advantages for the West African Economic and Monetary Union sharing a single currency?
  3. Whether fluency in French was a limiting factor to doing business in West Africa?
  4. How there could be better economic policies across Africa, when:-
  • Moderates and progressives in most African countries appeared to be few in number, and often oppressed or sidelined?
  • When the majority of those moderates were ill funded, largely disconnected from one another and unable to orchestrate a major economic initiative of a significant proportion, similar to that seen across China?

The late morning and afternoon began with a panel session on Agriculture / Agribusiness chaired by Professor Waswa Balunywa in which the well-known fact that Africa has the lowest usage of technology and chemicals in agriculture which keeps it operating way below capacity was echoed. Among the contributors were Dr Chika A. Ezeanya from the University of Rwanda and Blessing Mabuto from the Organisation for Youth Advancement in South Africa. The themes included Indigenous Knowledge, a Case study at the University of Cape Coast on undergraduates entering agribusiness after graduation, and the increased Youth Participation in Agro-entrepreneurship as a Practical Solution to Youth Unemployment. [See Africa’s youth: a “ticking time bomb” or an opportunity?]

Promise

It was encouraging to see a Panel session on women, chaired by Dr Emilia Onyema , during which an engaging and thought-provoking discussion took place, after a presentation on ‘Entrepreneurship in Africa: Are female entrepreneurs shooting themselves in the foot‘ by Madvee Muthu from Global Integrity, Mauritius. There was a surprising revelation that in some instances, Women tended to start businesses when negative displacement occurred in their lives.

However, overall not enough women were represented on the panel sessions or roundtable discussions during the summit – a point which was picked on by Lanre Akinola, Editor of This is Africa, on the second day of the summit, during the panel session titled Creating Value Chains in Africa.

The final panel session of the second day was on New Frontiers and explored issues of entrepreneurship and industrialisation. It included a presentation on the economic miracle in China (China and late-comer industrialisation in sub-sahara Africa – situating the role of (industrial policy) – by Christina Woolf,a PhD candidate at SOAS, University of London), a presentation titled ‘Enabling a Conducive environment to Fostering Entrepreneurship Capacities among Ghanaian Graduates‘ by Ivonne Mejia (Sonoma State University) and a final presentation on Unlocking the Internet’s full Potential (by Joshua Goldstein of the Woodrow Wilson School for Public and International Affairs at Princeton University, USA). The session was chaired by Professor Alnoor Bhimani, a director of Entrepreneurship at the LSE.

Prizes

This session was followed by a roundtable discussion chaired by Richard Dowden on which Max Bankole Jarret (Deputy Executive Director of the Africa Progress Panel), David Campbell, Herman Kojo Chinery-Hesse (Founder of SOFTtribe) and Dentaa Amoateng (Founder of GUBA) were the contributors [See full program here] Among the discussions were modern technologies which would help propel Africa forward, and the participants explored topics such as the use of mobile money and mobile health technologies.

John_Drama“For Africa to be fully liberated, it must be self-sufficient…” – President John D. Mahama of Ghana

The highlight of the final day (5th April) was an address by His Excellency, President John D. Mahama of Ghana (see pics here) who started his address by stating that he was delighted to be at LSE to share ideas with other like-minded Africans, an exchange of ideas, he imagined, to be similar to that which had occurred during the pre-independence struggle that predated the independence of many African countries. After a brief historical background of the struggle for liberation in Ghana, including references to Nkrumah and various African leaders and organisations, he delved into the issue of private enterprise. He correctly noted that most African states had instituted state-owned enterprises soon after independence, but had quickly realised that the state enterprise model did not work properly in the climate at the time, so embarked on a privatisation and a diversification exercise. President Mahama outlined his vision of what government and the private sector must do together for entrepreneurship to thrive in Ghana and across Africa. He noted that as a social democratic government, his administration was mindful that as critical as entrepreneurship is to economic growth, it must also serve a higher and greater social purpose, which was to ultimately contribute to the well-being of his people. A bit of humour also featured in the Q & A session that followed, when President Mahama said “…thank God for the credit crunch in the west as now Ghana has a brain gain.” A recording of the address can be found here or below (Soundcloud).

After the address by President Mahama, there was a panel session titled Rethinking African Enterprise: Challenging Norms, chaired by Edward Paice, Director of Africa Research Institute, and at 12.05 a tribute to Komla Dumor.

lse2

After the lunch break, there was a panel session on Creating Value Chains in Africa chaired by Lanre Akinola, in which the participants included Mohit Arora (President of Capital pros Network, Inc), David Campbell, Founder of Farm Africa and CEO of African Fellowship Trust, Christoffel Wiese, the billionaire Chairman of Shoprite Holdings Limited and Jean-Marc Anga, Executive Director of International Cocoa organisation. Mohit informed the delegates that Value Chain integration was the biggest contributor to democracy, but posed the question of how Africa could integrate without moving people around? (a reference to the high cost and difficulty of transporting people across the continent from one country to another). He argued that productive capacity was too low (few tractors, productivity of the staff low) and that if cost of transportation and logistics remained high, ‘your people will remain in poverty’. Mohit, from his experience working with Asian countries, identified 4 important factors that needed to be independently available to farmers for progress to be made, namely:

  • Independent access to technology through ‘small means’
  • Access to transport
  • Access to ‘procurement programs’ and
  • Microfinance institutions (inclusive banking – small entities)

Jean-Marc Anga surprised the delegates by declaring that 71% of Cocoa world production comes from 4 countries (Nigeria, Côte d’Ivoire, Ghana and Cameroon) yet they only account for 4 % of consumption. And only 18% of cocoa is processed by these countries. He recommended that human productivity in Africa needed to be increased significantly, economies of scale needed to be realised by countries/ companies and organisations working together, and that the ‘small producer’ (which I thought meant the smallholder farmer) must benefit. Jean-Marc called out to governments to address food security across the continent, and wondered why transportation continued to be a bottleneck to trade, with flights to South America from Africa requiring  a connection in Europe. He posed what I thopught was quite the appropriate question that encapsulated the African Dream: Why can’t Ghana have a direct flight to Brazil? David Campbell talked about Zimbabwean farmers, and how what was reported in the media during the ‘land grab episode’ of the country’s history differed greatly from what was actually happening on the ground. Among other issues, Christoffel Wiese addressed questions regarding the intricacies of Shoprite’s employment and management training procedures, including reassuring one delegate that the majority of Shoprite managers in Zambia, were in fact Zambians, as opposed to white expatriates flown in from South Africa. He proposed that all borders should be opened as visa restrictions across Africa were hurting and costing businesses, receiving a round of applause from the audience.

The third panel session was on Disrupting the Global Technology Space (chaired by Jonathan Ledgard, Director of Future Africa Afrotech Initiative at the Swiss Federal Institute of Technology)  and the fourth titled Improving Access to Capital for SME’s (Chaired by Jubril Enakele, Director at Deutsche Bank AG, with contributions from Jenny Knott, Rob Hersov, Tutu Agyare and Zain Latif). The final panel session of the summit titled An Enterprise Map: Africa’s Prospects included contributions from Mthuli Ncube, Chief Economist and Vice President of the Africa Development Bank, Jacqueline Muna Musiitwa, Founder & Managing Partner Hoja Law Group, and Professor Thandike Mkandawire, professor of African Development at the LSE.

Throughout the summit, there was an ongoing theme that African countries needed to move away from resource dependency and inefficient agricultural methods whereby countries depended too much on natural resources and subsistence farming, to industrial, commercial agrarian and services sectors. There was a need to have more emphasis on labour, as opposed to the current situation where there was greater emphasis on capital. However shallow capital markets across the continent posed a real problem that needed to be overcome. There was consensus that African governments were the effector on which progress depended. There was a view that African countries needed to do more business with each other, and that trade barriers between African countries should be scrapped. Some speakers said they believed that better agricultural methods were essential to realising the full potential of agriculture across the continent, a goal that was crucial in ending food shortages on the continent. There was general consensus that systems needed to be put in place to create the environment that would spark and foster creativity. In regards women’s issues, there was a realisation that men needed to do more to enable women’s success, and that tradition should not be an impediment to progress. There was also general consensus that a change of perception or attitude was necessary in some sectors (for example in agriculture, ending the practice of using ‘weeding the school farm’ as punishment in primary schools) in that negative things needed to be turned around to reflect the positive. Similarly, there was a need to have a cultural awakening (e.g. more parental attention to risks when a child is developing) . Finally, there was a realisation that adding of value to raw materials was what would create wealth, instead of exporting raw materials.

It was disappointing to see that the summit leaned heavily on West Africa, especially Ghana and Nigeria, with not as many views and representation among the speakers from Southern and Central Africa. In addition, I disagreed with the assertion that state-owned enterprises are inherently inefficient. While the atmosphere after independence was such that it was difficult for most African countries to run state-owned enterprises (even though in Malawi Press Corporation had been a great success), as I stated here, knowing what we know now, there is a much higher chance that ‘hybrid‘ state run enterprises will perform much better today than those in the late 60’s, 70’s and 80’s.

But besides these minor issues, I believe the LSE Africa summit was a success. The range of speakers at the summit and diversity of topics ensured a more realistic picture of the happenings on the ground than say what one is likely to see on TV. Thus, in my view, the major implication of the summit is that there are thousands of Africans in the diaspora who have great plans for Africa, visionary individuals who are driven and have a sober view of Africa as a continent of potential on which they would like to establish business operations. Many of these individuals have great ideas that would satisfy real needs on the ground, and are under no illusions that setting up shop will be easy. The discussions I had with various delegates revealed that most have already started working their way towards a position to not only take advantage of the opportunities on the ground but also to contribute to Africa’s progress in various sectors including Health, Education, Business, Third Sector and Government.

Having said this, it was very much up to national governments in Africa to create the favourable environment by establishing policy frameworks and initiatives that would reach out to these entrepreneurs, some of whom find it difficult to invest and operate in the African climate due to bureaucracy, capital constraints, corruption, lack of institutions and lack of favourable infrastructure.

But some governments in some African countries were trying to create the right atmosphere, and it was important that this positive energy be replicated across the continent. In any case, the investments that would follow would be in Africa’s best interests, since theoretically, it means creation of jobs, increased tax contributions and forex, as much as creating wealth for the entrepreneur.

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Mines evading tax, Zambia Revenue Authority boss tells international forum

Mines evading tax, ZRA boss tells international forum

************** UPDATE: 30 Nov 2014 **************

the above link seems to have disappeared, so I’ll link to an OECD link of Tax Evasion in Zambia instead

Tax evasion in Zambia

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How Does Neopatrimonialism Affect the African State? The Case of Tax Collection in Zambia

Abstract:

Following the neopatrimonialism paradigm, it can be hypothesised that in African states informal politics of the rulers infringe on the collection of taxes and in turn reduce state revenues. This article tests this proposition for the case of Zambia. The main finding is that there is no linear correlation between a neopatrimonial system and the collection of taxes.
Neopatrimonial continuity in the country is evidenced by three factors; the concentration of political power, the award of personal favours and the misuse of state resources. Despite this continuity, the revenue performance has increased considerably with the creation of the semi-autonomous Zambia Revenue Authority. This demonstrates that the effect of neopatrimonialism on public policy in the African state is highly context-specific and dependent on the interaction with additional variables. Donor pressure has been the most important in the Zambian case. In order to apply neopatrimonialism for further empirical work on public policy in the African state, these additional variables have to be incorporated into the analysis.

How Does Neopatrimonialism Affect the African State? The Case of Tax Collection in Zambia

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Son of former Zambian president Banda jailed

ANDREW Banda, the Zambian ex-diplomat and son of former president Rupiah Banda was on Friday sentenced to two years in prison after being found guilty of corruption.

Andrew Banda, 53, was arrested in 2012 on charges of soliciting a kickback from Italian company Fratelli Locci, which was awarded a contract to build roads.

In passing the sentence, Magistrate Joshua Banda said he had considered mitigation presented by the defence that the accused was a first time offender.

But he said a “custodial sentence” was necessary and “therefore I sentence the accused to 24 months, but both parties are at liberty to appeal.”

More at Son of former Zambian president Banda  jailed

Reuniting Africa: Infrastructure

It was delightful to hear news that Kenya in collaboration with the Chinese government will be investing $13.8 billion to build a railway line to link its port city of Mombasa with the capital Nairobi. It is hoped that the line will eventually extend to the landlocked countries of Uganda, South Sudan and Rwanda. This is great news not only because of its Pan-African connotations, but also because it’s a step forward towards getting Africa’s infrastructure interconnected and closer to global standards ( for example to the level of the Eurotunnel).

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Whenever foreigners come to Africa to visit, they always exclaim how challenging and long it can take to get from one place to another in certain areas. It’s incredible how disconnected Africa remains. The same applies to movement of goods (a factor essential for commerce and business). Often and comparatively with say Asia, it takes longer (and costs a lot more) than must necessarily be to send goods, or receive goods from one African country to another, which is not desirable.

The vastness and distances may be a problem, and environmental degradation such projects cause is also a major consideration, but that doesn’t mean that there are no workable solutions to such challenges. Often the cause of inaction or lack of progress appears to be bad politics and selfish financial interests, which end up  frustrating well-meaning projects whose economic and social benefits could be significant for a country and its neighbours, and far outweigh the negative impacts.

Take Malawi for example. Mota Engil the Portuguese conglomerate was contracted by the government of Bingu Wa Mutharika to construct a port in Nsanje (see animation of the Nsanje Inland Port via YouTube), at great expense to the Malawian tax payer.

The  project was part of a project known as the Shire-Zambezi Water Way, and whose total cost was said to be US$6 billion would have reduced the cost of importing goods by 60%.

The Malawi section of the project took years to build, and costed the Malawian government €25 million dollars. Now, almost 2 years after the sudden death of Mutharika, the first ship is yet to sail to the port. There is little or no dialogue about the way forward, the current Malawian president is in no rush to resurrect the project, even when the Malawi Trade & Investors Quarterly Magazine in 2007 wrote that Malawi spends at least US$200 million annually to import or export goods via ports in Mozambique or Tanzania. My question is this: isn’t reducing the cost of imports for landlocked countries in Africa a priority to the whole of Africa? Shouldn’t it be a priority to all Africans? Think about it… look at the US, or for that matter the European Union, and their policy of free movement of goods.

How can the countries in Africa, let alone the continent ever develop when leaders do not collaborate or are only too willing to impede such meaningful projects before they even commence? Why can’t African leaders (including the chiefs of the African Union, SADC, COMESA and African Development bank) begin to practise continuity, and put pressure on the stakeholders to get to grips with the project? Of the countries who signed the memorandum of understanding of the Shire-Zambezi Water Way, why does it appear like no one is actively seeking to resurrect and resume the project ( Is the said feasibility study Mozambique was demanding underway? If so what is the progress on that front?), since it’s undeniable that there will be mutual benefits to the greater economy of Southern Africa?

Looking at half-hearted comments from those who think they have something to lose (other shallow comments from here), you will find that the Mozambicans have to shoulder part of the blame for the stalling of the project. Against all appearance of conventional wisdom, it seem they have been dragging their feet from throwing full support behind the project, with talk of environmental assessments, etc and greater emphasis of development of roads?? Can such a massive project have been commenced and physical construction at Nsanje began without first assessing or undertaking an environmental assessment?

I’m not convinced. Either there’s something about this project that ordinary folk like us have not been told, or there was a massive miscalculation on the part of Mutharika to begin building the port. Else, it was visionary (see YouTube marketing clip ‘overselling’ the idea here), a quality often lacking within leadership across Africa.

Having said that, it is more likely than not, that the reason some people in Mozambique are unwilling to fully support the project is to do with the alleged financial loss they expect if goods are able to go straight into Malawi or Zambia and Zimbabwe, and not via Beira or Nacala.

Such a selfish narrow viewpoint undermines any potential benefit a new transportation link may create for the region. Surely, a thoughtful and better-informed African leader would have recognised the overall impact (e.g. jobs, increased trade, tourism, easier flow of resources, cheaper import costs and societal advancement)  the port will have not only to the Mozambican towns near Nsanje, but also to the greater Southern African economy of Malawi, Zambia and Zimbabwe, or even to Rwanda and Burundi.

Very few African countries geographically formed themselves into the shape they currently take. In fact only Liberia and Ethiopia were never colonised, but even their national polity formation had a lot to do with regional colonial activity around and about them. Thus, most decisions that determined the geographical shape of African countries were made by colonialists, a figment of history most Pan Africanists would rather forget. This to me means that it is shortsighted, regressive, a deficiency in intellect and a great fallacy (most often perpetuated by ignorance), for leaders of African countries today to be fighting against each other, or indeed dashing each others economic fortunes – when there is every chance that had colonialism never occurred (as we understand it), Africa could have ended up as a vast continent of undivided Kingdoms, each with access to the sea. Something that would have looked like this:

644px-Colonial_Africa_1913_Gold_Coast_map.svg
What Africa may have looked like if colonisation hadn’t occured. What Africa may look like in the future, hundreds of years from now

That is precisely why Uhuru Kenyatta must be applauded for the visionary Mombasa Nairobi railway link.

Similar Links:

Peter Mutharika attacks Malawi govt. for ignoring ‘Ndata’ University, Nsanje port in budget

MALAWI: Dream fades for inland port project

The Shire Zambezi Waterway Project is still a priority says Sadc secretariat [August 2013]

Malawi, Mozambique agree deal on Nsanje World inland port [April 2013]

Nsanje Inland Port Mw