Lacklustre mineral laws costing Zambia dearly
By Jeff Kapembwa
Lusaka – Zambia, like other countries endowed with mineral resources, is losing an estimated US$1 trillion in revenue annually due to investors harbouring corrupt deeds.
This is contrary to the resolution made by Southern African Development Community (SADC) recently calling upon all 15 member states, endowed with vast mineral resources to promote equal share of proceeds (beneficiation) with the investors they harbour.
According to Zambia Extractive Industry Transparency Initiative (EITI), the country’s quest to be world leader in copper production is being frustrated by some unscrupulous company owners using Zambia’s laxity in mining laws to exploit the country.
And they are involved in acts of corruption and illegal deals, resulting in the country losing an average US$1 trillion annual in unsecured revenue.
Zambia is presently ranked seventh among the top 10 copper producers globally and is competing with other countries including Chile and China.
But the shortcomings in legislations laws to keep in check those flouting the law are costing the country dearly, the EITI says in its report.
The 51-member EITI findings show that Zambia the situation is compounded by delays to review the Mines And Minerals Act and compel the mining companies that have invested in the country to disclose who are the rightful owners.
This lacklustre in legislations has resulted in some illegal and corrupt deals including transfer pricing of the minerals mined in the country.
The findings suggest that there is need to review legislation or the country may probably lose more in revenue given the latitude extended to mine owners.
An urgent review of the Mines and Minerals Act if expedited EITI said will ensure beneficial owners of such companies are identified and will assist in curbing the vice that is not only rife in Zambia but rampant in many mineral extractive countries.
Siforiano Banda, the head of EITI at a recent stakeholders meeting noted that there is need to review the law and curb the practices that were ‘robbing’ the country of much needed revenue.
“The lack of access to beneficial ownership information of key players in the extractive industry by law enforcement and other competent authorities is a significant impediment,” Banda says.
He said this lack of vital information, made it impossible for authorities not knowing or being able to trace some of the dubious activities.
“There is need to empower the relevant authorities and assist them to identify the actual owners of the companies or indeed the persons who are responsible for such activities for onward action,” he said.
Financial institutions that are essential in the fight include banks, which have the information of actual beneficial owners and can assist prevent the misuse of corporate vehicles in the financial system.
Many countries, including Zambia, face various challenges when implementing measures to enable the availability of accurate beneficial information.
These are in addition to legal owner of the corporate vehicle as it is not collected and sufficiently verified at the time the corporate vehicle or crime is committed or at any stage throughout its existence.
“This frustrates the efforts of law enforcement and other competent authorities to follow the money in financial investigations that involve corporate vehicles.” Banda added.
SADC Heads of States at their annual summit held in Victoria Falls in 2014 resolved that member states needed to devise laws that ensure mineral beneficiation to bolster domestic economies.