Africa loses $1.4bn per year to mining investors

Open Society Initiative for Southern Africa (Osisa), a Johannesburg-based foundation, has said Africa loses over $1.4 billion annually to investors who come to the continent on the pretext of helping the countries utilise their mineral resources.

Osisa programme manager for media and ICTs Dr Dumisani Moyo said this on Monday at Dream Valley Park and Lodge in Lusaka, Zambia, during the opening of a two-week Journalism Summer School (JSS) training.

“People say Africa is rich in resources, but its people are poor. This is true because Africa has a lot of natural resources, which if properly utilised can transform the economy of the continent.

“However, the challenge in the continent is capacity and expertise to utilise the resources and because of this, we call for support from the developed world companies. In the end, the companies that come to

extract the resources reap the major part of the benefits, leaving the countries with little,” he said.

While referring to Malawi’s uranium mining at Kayelekera, a venture owned by Paladin (Africa) Limited, Moyo said most of the countries that have engaged foreign investors to help them extract their mineral resources in the Sadc region have cried foul.

He said just like Malawi, Zimbabwe has also lost huge sums of money to mining investors who decided otherwise in the course of the mining project.

“There is research which shows how much investors in natural resources are reaping from Africa. Over $1.4 billion has been lost annually between 2008 and 2014.

“In addition to this, the investors evade paying tax. They come with pledges, sign agreements and roll-out their projects knowing they are exempted from tax, but when the tax-break period drags to expiry dates, they start to change tunes and eventually suspend their work,” said Moyo.

He said this has happened in Malawi and Zimbabwe, among others, and this means the countries have lost because the expectation was that after the tax break, governments would collect more revenue from the investors.

Chris Chinaka, one of the renowned journalists and facilitators from Zimbabwe, said tax-breaks African countries give to mining investors has created room for them to abuse the contracts to their advantage.

“The tax-break ideas came as a way of attracting investors, but now look, most of the investors are changing tunes before the tax-break period expires and the calculations show it is the investors who

benefit more from the mines than the hosts countries because the expectation is that the benefits would increase if the investors are taxed,” he said.

However, Chinaka blamed the media for over-looking the abuse and challenged them to develop strong interests in mining and always probe for more in the deals and agreements involving foreign investors.

Currently, Zambia, Malawi, South Africa, the Democratic Republic of Congo and Zimbabwe are among countries in the Southern Africa Development Community (Sadc) region where mining activities are taking place.

However, Zimbabwe and Malawi have been victims of the suspension of the mining deals before the expiry of the tax-break, but after years of heavy mineral extraction.

Paladin is yet to resume its operations at Kayerekera Mine in Karonga after suspension of its activities due to what the company said was the slump in spot price of uranium on the global market.—Sharra is reporting from Lusaka, Zambia

—Caption: Kayelekera mine owners were given tax-breaks, among other incentives