Opinion

OPINION: Exploitative multinationals a threat to Zambia

A system of conveyor belts lead through the concentrator plant at the Nchanga copper mine, operated by Konkola Copper Mines Plc, in Chingola, Zambia, on Thursday, March 17, 2016. Konkola Copper Mines is a unit of Vedanta Resources Plc, the mining company founded by Indian billionaire Anil Agarwal. Photographer: Waldo Swiegers/Bloomberg via Getty Images

For many developing nations of the world, an endowment of widely coveted natural resources is as much a blessing as it is a curse.

Although the extraction of these resources provides a means for public revenue, job creation and other socio-economic benefits, the gap between potential and reality is, more often than not, widened by mismanagement, corruption and other preventable factors. At least this much is true in my own Zambia, where for decades precious little has accrued to the people.

Of course, as fate would have it, this experience is not universal.

While generations of Zambians have earned a pittance from the extraction of their nation’s natural resources, outsiders have made off with vast fortunes. By some estimates, multinational mining corporations have defrauded the country of nearly $3 billion (R44.77bn) in copper revenues since the sector was privatised in 2001.

In 2011 these same firms only paid 2.4 percent of the $10bn of their copper export revenues in tax. To put things in perspective, this meant that Zambians employed in the mining industry have historically paid a higher tax than their multinational employers.

Although to us, and countless other citizens of the developing world, these inequitable circumstances are nothing new. Save for the rare exception, these capitalist merchants of the mines employ the same entitled, abusive and unlawful tactics of past imperialist powers. It’s fitting then, that some appear to think themselves emperors in their own right.

Since Vedanta Resources acquired a majority stake in Konkola Copper Mines (KCM) in the early 2000s, Anil Agarwal, Vedanta’s chairperson, has fancied himself Zambia’s most valuable partner. And, to some extent, this is true.

In the 15-odd years since his company’s acquisition, KCM has grown to become the single largest mining company in Zambia, and in turn the country’s largest private sector employer. Moreover, the company’s direct and indirect contributions to Zambia’s economic and infrastructural development have been, and continue to be, tremendous. To be sure, Zambia would not be the copper producer it is today without the likes of KCM.

 

But since the downturn in global copper prices in 2016, what was arguably once a valuable partnership has grown increasingly toxic. In these last few years KCM has suffered from dreadful mismanagement and under-performance, and found itself entangled in a series of labour and environmental scandals, all the while shirking its fiscal obligations to the government.

What’s more, Vedanta has repeatedly failed to co-operate with tax regulations, including the new mining tax regime. And the company repeatedly failed to uphold commitments and agreements on investment, production, and management of KCM, opting instead for coercion, and blackmail and fraud to bend Zambia, its generous host, to its will.

Although this is to be expected from a company owned by the likes of Agarwal who, lest we forget, is known to boast of his African exploits to his peers, behaviour truly befitting of a king. Despite this, the Vedanta chairperson had the audacity to publicly “warn” Zambia against the steps it is taking to divorce its abusive partner, Vedanta.

Earlier this month ZCCM-IH, the state’s copper investment holdings company and minority stakeholder in KCM, filed a provisional liquidation petition with the Lusaka High Court. In effect the move is designed to oust Agarwal’s incompetent and indifferent Vedanta Resources at the perennial urging of multiple mineworkers unions, residents of the Copperbelt region and yes, even prominent opposition politicians.

Nevertheless, Agarwal claims to know the wants and needs of the thousands of Zambians this measure is meant to address. His claim that Vedanta’s ousting will “only hurt the nation’s hard-earned democracy and investor-friendly status”, is demonstrably false, if not outright threatening. The truth is that the ongoing ouster is one small part of the government’s broader effort to stand up against the greatest existential threats to Zambian democracy and economic stability – exploitative multinational corporations.

This process is not, as Agarwal and other Vedanta executives would suggest, a precursor to nationalisation of the mining sector. Rather, it’s an attempt to revitalise KCM, one of the greatest assets at Zambia’s disposal.

To be clear, KCM’s assets will not be seized, partitioned and sold to the highest bidder. Instead, KCM will remain in operation under the government’s supervision as new investors are identified and engaged in a civil and co-operative manner.

Those who criticise the undertaking, like Agarwal, offer only contrived, self-interested evidence, which pales in comparison to the legitimate grievances held by government and its constituents. Zambians are right to believe they are due more than the scraps brushed to them by Vedanta and other relentless abusers.

Indeed copper is one of our most valuable non-renewable resources, and we mustn’t allow disingenuous foreign interests to delay or obstruct our taking advantage of its potential.

Securing a prosperous future for KCM and the rest of Zambia is contingent on our finding partners that share our ambition, as Vedanta once did. If we fail to do so, and stay the course of previous administrations, we will be protracting our own abuse. Should this happen, we will have only ourselves to blame.

Sunday Chilufya Chanda is media director of the Patriotic Front party of Zambia.

 

(Source: BUSINESS REPORT)

6 Comments

  1. kanyata Mubita

    Fifteen years is too long a period for one, let alone a Government of a nation to realise that they are being exploited by a dishonest partner. No matter how incompetent, it hard not see that our own governments are complicity in this pillage of our natural resources through incompetence, ignorance and corruption. To blame multinationals for this mess we find ourselves in seems to me to be failure to accept responsibility. And once we are irresponsible, it is practically impossible to fix the problem. By the way, why have these problems of dishonest investors not been experienced in Chile?

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  2. Kavendish

    inasmuch as I’d like to advocate to the fact of exploitation by multinationals, most of the harm has been done by our government(s) due to irresponsibility, corruption & incompetence. Yes they have exploited caused harm but you need to realise that the government let them do so. The problem is with our governments we cannot even manage what God has entrusted with (natural resources) ninshi twaima twaya mukubeta abene naibaikalila kumyabo anti iyo investors. surely we don’t need to be calling people to flood our country when all we need is Machines & information to manage our own resources. we are now complaining of the problem we ourselves caused. Bringing another investor is not a solution, they too will neither care about the people nor the land ,because this is not their home. they only come here for business get our money leave & we see them go & all we get ma change & they blind fold the government. let’s be our own investors let’s invest in what we have been blessed with. we’re giving away our blessings & complaining of the poverty we’re left with. That’s being irresponsible indeed. can we for once by all means, try to do things for ourselves Zambia. it may take time to see the positive effect maybe not now & we now may not benefit, but our future generation. Let’s have a future mindset please. Let’s make our pride for once & maintain it. As far as I can see aka kasembe kesu kaletukomafye.

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  3. DEEP THROAT

    It won’t matter how many times we say this or cry. Nothing will change for the better, unless our leaders start to think, act and lead as politicians. National leaders are politicians, so politicians must always act as national leaders.
    This means, any politician must start looking at national issues including resources from a public national perspective.
    This idea and practice of giving responsibilities to individuals who have no idea of public policy formulation will simply bring down the nation. We have quoted Chairman Mao before that ” the correctness and (or) incorrectness of a political policy decides everything”.
    The other problem we face is tribal politics. When one has been given a national duty, one’s loyalty must be to the nation and the appointing authority. Others, we limit available personnel with capacity to effectively run the nation. At the level of our development and educational and professional attainment, there should be little difficulty but for our biases for anyone to find capable personnel to help run this nation.
    Results of our unavailability is that foreigners are taking away our resources for a song. They only pay wages and haul our resources to their countries. How long can this go on for? For as long as we refuse to avail ourselves to serve. So, the fault is as much to the individual as it may be yo appointing authority. The result is all of us are miserable losers.

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  4. Truth man

    In order to produce you need to invest money and in this case (dollars ) the equipment and most of the other production materials come from abroad which a mining company has to buy in dollars .I will only be convinced on the issue of Zambianisation if someone points at a company which is being run by Zambians 100% and is a success .Otherwise most of the time it is net losses! And asking the government for a bail out e.g.Kafue nitrogen chemicals, Mulungushi textiles, Zambia Railways etc. What we need are strong laws to punish tax evaders . In the U.S. if you evade tax and are convicted you can go to prison for 25years. But here in Zambia we have simplified the law because the culprits are mostly Zambian business men and women including our Members of parliament who own various businesses and don’t pay tax.

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  5. Daniel Banda

    The problem is that we are followers while they are leaders in every thing. Coupled by the opportunism for wealth it’s unlikely that we can achieve economic independence. If it’s not the West it’s the East both are exploitative. We can only change our status if our education can produce indigenous scientists using local knowledge and raw materials to produce finished goods for export as it used to happen at Ng’ombe Ilede here in Zambia and Timbuktu in North Africa historically. When and where did commerce tip in favour of foreign investors or is it because our trading partners outside Africa have wiser at business while we are content with bribes and the use of foreign languages which we have to learn at the expense of science for development and wealth creation. What Africa has learnt faster than anything is the misapplication of religious principles and approaches to create self imposed prophets some of whom have become stinking rich out of poor souls the trade methods brought by missionaries.

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  6. Leonard

    I think as Zambians we have learnt a good lerson. We well come every investors with respect thinking they have money, when they come to ZAMBIA they come with nothing but using our own natural resources as issuelity to the world Bank to access Loans to start Companies in ZAMBIA.

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