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I would like to comment on Minister Biti’s statements that he made before the senate recently regarding monetary gains from the mining industry.
Minister Biti was quoted telling the senate that, “Last year, we only got US$44 million from the mining industry yet they exported over a US$1 billion”. The minister did not provide similar statistics for other sectors of industry so that informed comparison of product sales and corporate tax relationships can be made.
How does the stated cost and corporate tax relationship in the mining industry compare with other industries that are foreign-owned such as the sugar estates, tobacco traders, cotton traders, insurance companies, banks etc? I think Biti should provide more numbers to compare the various sectors.
Minister Biti runs the national budget, sits in parliament and attends cabinet meetings; he has the power to influence levels of corporate tax and mining royalties. What is the Finance minister doing or planning to do in terms of shaping policies on corporate tax and mining royalties that are more favourable to our country?
If the mining industry has great profits, why is Zisco up for sale? It is known that Zimbabwe has huge deposits of iron, coking coal and limestone which are key raw materials for Zisco. One can argue that Zisco if it were operating efficiently at full capacity would benefit the country much more than the platinum mines.
Zisco employs a lot more people per tonne of ore mined and more jobs are created locally in related industries such as transport, coal supply, foundries, metal fabrication and steel making. Iron and steel also find use in every other sector of our local industry including manufacturing, agriculture, mining and construction. On the other hand, products from the platinum mines do not have a ready market or downstream processing in Zimbabwe. So there is much to benefit from Zisco running more efficiently.
In the past there was a policy that gave new investors tax holidays for up to five years for the purposes of attracting foreign direct investment. It was mentioned around the days when BHP set up Makwiro Platinum Mine that BHP was given such a tax holiday. Instead of a tax holiday could the state instead convert these five years to a time of acquiring equity in the new industries? Money that would have come to government as taxes would then be used to purchase a shareholding in the new ventures, say up to 15% shareholding over the five years.
I also want to mention that for more than 10 years there have been press reports that Zimplats has on offer a 15% shareholding that can be bought by government or indigenous business people. This offer has not been taken up for all these years. Does this mean that Zimbabwean locals and the state do not have money to purchase this 15% shareholding in Zimplats? What has government done to facilitate acquisition of this 15% Zimplats stake by locals? Maybe Zimbabweans in the Diaspora can be mobilised to purchase this shareholding — it has been said that the Diaspora contributes quite a neat sum to our economy.
My appeal to Biti is: Please do not go the nationalisation route; we have seen the performance of state-run companies which is not impressive at all. Facilitating investment by indigenous business people in the mining sector would be a great thing to do — we have seen indigenous business people in telecoms, banking and other sectors working hard to harvest a profit from their investments.
It’s not always clear that the major shareholder in parastatals desires to harvest a profit from its investment — at least it doesn’t judging by perennial pumping in of tax money into parastatals with no profits being made for the majority of the years.
BY S. HWAMANDA
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