The mystery of Zambia's mining millions

http://www.christianaid.org.uk/ActNow/blog/june-2012/zambia-copper-mining-tax-justice.aspx

On my recent trip to Zambia, it was hard to reconcile the smiling faces and openness that greeted me with the unforgiving reality of the country's poverty. Normally I’m a Middle East specialist, and I’m used to fairly formal cultures, so when I was greeted off the plane by Christian Aid’s staff and given enormous hugs, I began to believe what I’d been told: that Zambia is an incredibly friendly and upbeat country.

The laughing children and the ongoing celebration of Zambia’s footballing triumph at the African Cup of Nations made it difficult to grasp the fact that more than 60% of the population live in poverty. It was harder still to imagine how a country that is so rich in natural resources can be so poor in material terms.

On our way to the northern region, we passed truck after truck loaded with copper. Globally Zambia ranks seventh in copper production, and currently the world trading price of copper is at an all-time high. Yet Zambia ranks just 164th in the human development index, and has a shockingly low life expectancy of 49 years.

Where are the profits from such a potentially lucrative mining industry going?

I didn’t have to ponder this question for long.

In Zambia’s copperbelt region I met Pastor John Manyembe, a member of Christian Aid partner the Council of Churches in Zambia which has been campaigning for greater transparency and financial accountability of companies that work in the mining sector.

We took the example of a mine just down the road from where we met, one of the biggest in Zambia.

“We expect a lot of tax to go into the national treasury,” said John.

“We don’t know how much is being paid, but the figures we do have show they are not paying much.”

It's a story I heard time and time again, from individuals, communities, campaigners and partners. The overwhelming message was that the companies taking wealth out of their country were not giving anything back.

“I pay my rates to the council, and also VAT when I buy my groceries and I pay for other services like water rates,” said Harriet who has a market stall in Mufulira.

“We expect when we pay that we should get services – clean water, garbage collection, street cleaning etc. So the mines should also pay the right taxes.”

It’s a crazy notion – that the poorest of the poor can pay tax and yet those that are richest, and making huge profits, can be unwilling to do so. Zambia's government estimates that some unscrupulous mining companies may owe the country up to $1 billion in unpaid taxes. What difference could that make to Zambia? A staggering one when we consider that Zambia’s external debt in 2011 was $1.6 billion.

Countries like Zambia need fairer international tax rules to stop companies from dodging the taxes they owe.

A lack of transparency in global financial system allows companies to hide the profits they make in countries like Zambia. They do this through shifting profits through tax havens.

Christian Aid estimates that the amount dodged by unscrupulous companies in developing countries is $160 billion. This is revenue that could pay for essential services, schools, hospital, clean water and infrastructure, services crucial to those living in poverty.

Join us as we call on David Cameron to show leadership at the G20 in Mexico next week, to end tax dodging and to work with his fellow G20 leaders to build a more transparent global financial system. Act now (see action button on CA web site)

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