Re-introduce subsidies, Prof Mbolela urges govt

By Agness Changala

A US based Zambian Professor Cecil Mbolela has pleaded with the UPND administration to re-introduce subsidies on fuel, mealie meal and electricity to lower the high cost of living which is threatening to spiral out of control.

And Prof Mbolela, an Adjunct Professor at Governance State University in University Park, Illinois has challenged President Hakainde Hichilema to explain how much he has extracted from the mining corporations compared to his predecessor Edgar Lungu, since he continually compares himself to the previous administration.

In an interview with Daily Revelation Media, Prof Mbolela explained that since the current government had extended subsidies to the mining corporations, the same should be extended towards the poor ordinary Zambians who were having to bear the high cost of living at over K270 per 25kg bags.

He said once subsidies are re-introduced, millers as well as the farmers can be getting relief from the government and they will not even be passing costs to the consumers.

“Now if you took that money that is going to the corporations, and you subsidize mealie meal, you can actually give free mealie meal to the Zambians because the cost of copper at 8000 United States Dollars per metric tonne compared to 1.22 Dollars let’s say for mealie meal, that’s literally nothing,” Prof Mbolela said. “So basically, what I am saying is that if you took even half of subsidies that are going to the mining corporation, and you diverted those to the Zambians it will lower the cost of mealie meal on the Zambians because the millers as well as the farmers can be getting relief from the government and they will not even be passing those costs to the consumers.”

“So just that policy change itself could benefit Zambians a lot. It is
not even to change anything, it’s just that you are taking the subsidies from the mining corporation and you are giving some of those reliefs to the Zambians.”

He said the same argument being made about mining corporations being
in need of tax relief, Zambians too are entitled and that it was one of the first things President Hakainde could have done.

“Just making that pronouncement and it lowers the cost of mealie meal substantially because the cost is because the government removed subsidies. It has nothing to do with the supply and demand it’s just that the cost of production of maize, packaging and the delivery to the consumers is more and therefore, it’s out of that the consumers are paying more regarding the cost of consuming maize. But if you just reversed that and gave the relief to the Zambians, you would see immediate impact on the cost of mealie meal. That’s exactly what the PF was doing,” he said.

He argued that if the country is not getting adequate taxes from the mineral assets then there will be no money for revenue to cater for socio and economic needs of the country.

“They (UPND administration) are very pro corporate, mining corporations. Another good example I would give you is I think the issue of the KCM, just recently, I don’t know whether the President has addressed the country, to kind of engage the Zambians …why he decided to give back the mine to Vedanta. I don’t know if that has been done,” Prof Mbolela said. “What I do know is they have 80 percent ownership of KCM … So the point I am trying to say is I think … they have been given tax relief as well they are not going to pay taxes for four years. I don’t know whether that’s true or not, the details are not really there but the point I am simply saying is the very fact the
President hasn’t addressed the country and also engage the country in the spirit of transparency to explain why he has made such a decision. It looks like the foreigners are the ones getting access to resources and Zambians are not getting much.”

The Professor, author of the Book “Zambianisation Copper Mining Reforms of 1964 to 1980”, said when it comes to helping Zambians there were always excuses, always explanations about why certain things could not be done.

“When it comes to foreigners, there is a logical reason why they are given tax
relief and I don’t understand what tax relief is about because copper
concentrates have gone high. So I do think that the very fact that the government of Zambia currently is not extracting much revenue from the
mining corporation, it mean that they don’t have the money that is being returned in Zambia,” Prof Mbolela said. “And if you don’t have the money that is being returned you cannot do things to improve the country and help
the Zambians the same way I am talking about if Zambians don’t have
the special funding, they can’t engage in activities other than spending money on commodities.”

Asked what he thought should be done from the fiscal and monetary policy to end up with a win win situation for the Zambian people, Prof Mbolela said as long as expenditure remains the same and income is static, the economic equation could not be balanced.

“What you need is an inflow of cash from our reserves, from our assets. If we are not getting the taxes from our assets, then we don’t have the money that we are retaining. As a result, we cannot help the Zambians. You cannot raise wages and you cannot invest into new businesses that will benefit Zambians. You cannot engage in local projects that will give money to the Zambians and then from there
Zambians will not be able to benefit as beneficiaries of those projects by
doing business to the government,” he said.

Prof Mbolela argued that even if the Central Bank may raise interest rates, to stop the Kwacha from bleeding against foreign currencies that would still not suffice because there was not enough foreign exchange reserves in the economic to sustain the local currency, something he said could only be achieved by increasing revenue like from the mining sector.

Prof Mbolela further challenged the UPND administration to tell Zambians how much in terms of revenue was being extracted from abundant mineral resources like sugilite, copper, gold, nickel and everything
available, as compared to how much the PF administration the was getting from the mining industry, since the President was in the habit of comparing his administration to the one he removed from office.

“I have noticed they don’t talk about that because the last time I checked, you can go and check on the Bank of Zambia (BOZ) website. The last time I checked the figures, last I saw anything closer to a billion, over the mining corporation was when president Lungu was in
power,” Prof Mbolela said.

Asked to give his views on the government’s decision to give Konkola Copper Mines back to Vedanta, Prof Mbolela said this should have been an opportunity President Hichilema to repossess the mine and make Zambia the majority owners at KCM.

He said as the matter was being litigated, he could have found new investors, and asked them to pay off the owner of KCM, whatever legal fees and monies which were involved.

“And tell him it’s just bad business, we don’t want you in Zambia we want to start afresh with a new investor. Pay him off and start again renegotiating the revenue sharing to make Zambia have even 50 percent
ownership in the mines” said Mbolela.

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