By Jane Chanda
United States of America Ambassador to Zambia Michael Gonzales says corruption and exploitation in Zambia’s mining sector are undermining the country’s potential for economic growth.
He said the mining sector, which generates more than 75 percent of Zambia’s export earnings and 40 percent of government revenue, was plagued by corrupt practices, including bribery, tax evasion, and environmental degradation.
In a speech delivered at the Transparency International Zambia (TI-Z) 2024 Anti-Corruption Conference in Kitwe yesterday, Gonzales emphasised the need for transparency and accountability in the mining sector, citing the example of two fictional mining companies, one company prioritised short-term gains, bribed officials, and exploited local laborers, while the other company operated transparently, prioritised local beneficiation, and invested in community development.
Gonzales noted that Zambia’s Financial Intelligence Center (FIC) identified mining as a primary sector for illicit financial flows, costing the country $500 million in tax revenue this year alone, stating that this staggering loss of revenue was a stark reminder of the urgent need for greater transparency and accountability in the mining sector.
Gonzales pointed out the importance of cooperation with the Zambia Extractives Industry Transparency Initiative (ZEITI) to promote transparency in the extractives industry by publicly releasing information about companies’ production and revenues, as well as the need for greater transparency in the licensing process, including publishing license applications and approvals online.
“The U.S. government is supporting the Zambia Revenue Authority to strengthen its ability to audit mining companies’ financial reports,” Gonzales stated.
He added that the U.S. government was also supporting the Zambia Extractives Industry Transparency Initiative (ZEITI) to promote transparency in the extractives industry.
He stated that the mining cadastra’s practice of publishing issued licenses via its online portal significantly increased transparency, but greater transparency in the process by which applications were reviewed and approved, transparency in license transfer decisions, and further elimination of opportunities for individual human interventions in processes would only make the mining sector stronger.
“I have heard credible stories about license holders checking the online portal map only to see that another entity has assumed ownership of their license,” he stated
“We have heard concerns from mining sector stakeholders about the government’s decision to move away from the Flex Cadastre online platform, which is widely considered the global gold standard for transparent cadaster management,” Gonzales added.
He stated that government provided assurances that the new system would provide yet even greater transparency and tighter controls over processes, while meeting Zambian legal requirements.
“I think we are all eager to see the new system, with its improved transparency and accountability functionality, when the Ministry of Mines launches it on Thursday,” the ambassador stated.
Gonzales noted that Zambian citizens and their partners closely watched the issue of mining companies evading tax obligations, stating that as the government addressed fiscal pressures, it was essential to hold companies accountable for submitting required reports and paying their dues.
“We hear loud and clear from transparent and accountable mining companies that they welcome this and that this is a core expectation in a partnership with an investment destination to ensure that the citizens of a country receive tangible and meaningful benefit from the resources they possess, while operating under a consistent and predictable regulatory and oversight framework,” he stated.
The ambassador emphasised that holding companies accountable for complying with regulations would require credible consequences for offenders, and also highlighted that Zambia’s natural heritage extends beyond underground minerals to include national parks, landscapes, wildlife, and timber.
Gonzales also pointed out that Zambia’s hardwood timber, including Mukula, was being sold illicitly overseas, with locals receiving only minimal payment while transnational criminal organisations reap millions of dollars.
“A lack of enforcement of protected areas has sadly resulted in Zambia having one of the top five rates of deforestation in the world, with some estimates showing that the country loses up to 300,000 hectares per year. One practical step that Zambia can take to combat this problem is to strengthen law enforcement agencies and accountability institutions, including the Department of National Parks and Wildlife, ACC, NPA, DEC, and FIC,” he stated.
Gonzales noted that despite Zambia’s tight budget, properly resourcing agencies could help stop illicit financial flows and capture revenue to fund essential public services like education, healthcare, and infrastructure, and that investing in law enforcement and accountability institutions would be a cost-effective measure, yielding significantly more revenue than its cost.
The ambassador added that, Zambians must demand concrete, decisive action from their institutions and elected leaders to root out corruption at all levels and insist on transparency and accountability.
Gonzales also emphasised the need for legislative and regulatory reforms to empower accountability institutions and allow them to function independently.
He also stressed the importance of a free and independent press in exposing corruption and holding those in power accountable.
He noted that corruption and exploitation were not limited to the mining sector, citing the example of Zambia’s natural heritage, including its national parks, forests, and wildlife, which were being threatened by illicit activities such as poaching and deforestation.
Gonzales stated the need for greater transparency and accountability in the management of Zambia’s natural resources.
