By Agness Changala
USA-based Zambian professor Cecil Mbolela says Finance minister Dr. Situmbeko Musokotwane’s argument that reinstating subsidies on essential commodities entails cutting expenditure on the vulnerable is factually incorrect.
And Prof Mbolela, an Adjunct Professor at Governance State University in University Park, Illinois, United States, said he does not understand the metrics Dr. Musokotwane is using by saying the attractive mining policies are working because the data doesn’t support his statement.
Giving his views on Friday’s budget to Daily Revelation, Prof Mbolela said funding of free education or hiring of teachers or finding Constituency Development Fund (CDF), are not funded by revenue from mining operations, due to subsidies, tax incentives on the mines.
“So the idea that reinstating subsidies will mean cutting expenditure elsewhere is factually incorrect. Besides, funding of education is once a term but the cost of a 25 kg bag of mealie meal per family is bi-weekly,” Pro Mbolela said.
He added that the biggest expenditure in the Zambian budget is the cost of mining subsidies.
Prof Mbolela said a cut on the mining subsidies will move more resources into the revenue column and should set Zambia to take control of fiscal policy which is progressive.
He said if UPND and all opposition leaders in Zambia wish to create a fair wealth distribution that would make mining a 50/ 50 win for Zambians and investors, they should create tax breaks for Zambian businesses so that they too could realise the cost of living adjustment saving that actually keep pace with inflation among other solutions.
Prof Mbolela said government should be aggressive as Botswana to demand fair and reasonable tax revenue that will make the mining a 50/ 50 win-win for Zambia and investors.
He said what is fair is a matter of justice and not mathematical or political theories when Zambians, not even members of Parliament don’t know the true revenue being extracted in Zambia by investors.
Prof Mbolela said the concern here is the distribution of mining wealth tilted towards investors and not tricking down to Zambians who are the owners of the mining resources.
He said Zambians should demand and determine what fair distribution of wealth from the mines is and not leave the concern to deals consummated behind closed doors.
And Prof Mbolela said to the contrary, per the balance of payment data, on the Bank of Zambia website, the mining revenue for contribution to the GDP was 11 per cent in 2021 under former president Edgar Lungu compared to only three percent in 2022 under President Hakainde Hichilema.
“Additionally, the total exports of cobalt and Gold under ECL was higher, with $0 exports in Colbalt under HH in the same year,” he said.
Prof Mbolela said the attractive policies in the mining sector talked about by the finance minister may be attracting investors to access Zambia’s natural resources.
He however, noted that there is no nation under the sun, not even the most recent models to economic wealth creation like Chinese, Saudi Arabia, United Arab Emirates and even Botswana that could have done so by sacrificing taxable revenue from national resources in change for the International monetary Fund (IMF) loans and subsidies.
Prof Mbolela said Zambia was better off raising revenue from her natural resources, service her debt and continue to create new wealth from other industries.
He said the IMF and investors will not create conditions for the fair distribution of wealth from the mines.
“It never happened under KK and it won’t happen under HH, no way,” Prof Mbolela argued.
He observed that Dr. Musokotwane has been finance minister before under MMD and he was in the forefront of selling mining tax policies to attract mining investors.
The Prof said belief in Zambia’s mining subsidies as a fiscal policy that one day will benefit Zambians is as outdated as the belief that snake oil will cure all diseases.
He added that mining subsidies never worked under MMD and will never work under UPND.
Prof Mbolela said the reason subsidies don’t work is because revenue loss for Zambia is revenue gain for home countries where the mining corporations are chartered.
He also said the cost for environmental cleanup are borne by the Zambian taxpayers.
The Prof said the cost of road repair damaged by transporting copper will be ultimately be borne by Zambian tax payers too.
