“Zambia has the potential to become a disability champion in the African region” – UN expert

By Brenda Zulu

“There are good opportunities to achieve the realisation of rights of persons with disabilities in Zambia,” today said United Nations Special Rapporteur Catalina Devandas, while urging the Government to fully implement a number of well-formulated and well-intended policies and strategies.

“Zambia has the potential to become a disability champion in the African region, provided that the Government makes it a priority to implement the policy and legal framework on disability,” Ms. Devandas said at the end of her first official visit* to the country to assess the level of enjoyment of the rights of persons with disabilities. 

In  a press release, the UN expert highlighted numerous initiatives by the Zambian authorities to improve the protection framework for persons with disabilities, including the strengthening of the Zambia Agency for Persons with Disabilities, the production of a National Disability Survey, and the significant efforts undertaken to make its social protection framework inclusive of persons with disabilities.

In that regard, she encouraged the Government to continue advancing in the areas of accessibility, education, health, and employment, through the adoption of the necessary measures required to ensure the implementation and enforcement of the Persons with Disabilities Act and other relevant policies.

  

On the other hand, the Special Rapporteur also identified urgent challenges to be addressed, such as the stark disparities between rural and urban areas in relation to accessibility and availability of services. In addition, Ms. Devandas highlighted the situation of persons with albinism, who live in constant fear of being attacked and killed for their body parts, and urged the authorities to protect women and girls with disabilities, who are at heightened risk of sexual and gender-based violence.

The human rights expert also drew attention that the situation of persons with psychosocial or intellectual disabilities is of particular concern: “Deprivation of liberty on the basis of disability remains an accepted practice in Zambia,” she said pointing at the widespread assumption that persons with psychosocial or intellectual impairments have no legal capacity due to the lack of ‘mental capacities’.

During her stay, the Special Rapporteur visited the Chainama Hills Hospital in Lusaka and the psychiatric unit of the General Hospital in Ndola. “I was particularly appalled by the conditions of the psychiatric unit in Ndola, where persons with psychosocial disabilities are deprived of their liberty without their informed consent, are subjected to seclusion and forced treatment, including forced sterilization of women with disabilities,” she explained.

While she welcomed the efforts undertaken to draft a new Mental Health Bill, she urged the Government “to close the mental health settlements where persons with psychosocial disabilities are confined in remote areas of the country, and to invest instead in adequate and comprehensive community-based supports services.”

Other major challenges encountered by the independent expert are in the area of access to justice. “Complaints of abuse and discrimination by women and girls are mostly overlooked, and the majority of court buildings are inaccessible,” Ms. Devandas said. “Deaf persons are denied access to justice on equal basis with others, as sign language interpretation is not provided in courts.”

The UN Special Rapporteur visited the cities of Lusaka and Ndola, where she met with a variety of senior Government officials, and held discussions with persons with disabilities and their representative organizations, other civil society actors, the UN system, and international cooperation actors.

The UN Special Rapporteur will present a report to the Human Rights Council in 2017 on the main findings of her visit.

(*) Check the Special Rapporteur’s full end-of-mission statement: http://www.ohchr.org/EN/NewsEvents/Pages/DisplayNews.aspx?NewsID=19890&LangID=E 

Change in Mineral Royalty Tax is not a risk to Zambia’s sovereign sustainability

By Brenda Zulu

The Zambia Chamber of Mines dispel assertions in the Post newspapers of Monday, April 25,2016 by Moodys, lead Sovereign analyst for Zambia, Zuzana Brixiova that the proposed changes to the Mineral Royalty Tax(MRT) in the Mines and Minerals Development amendment Bill, before the Zambian Parliament, are a risk to sovereign sustainability.

According to a Press Release made available to the Africa Interactive Media (AIM), the announcement of changes to the mining fiscal regime in the 2015 national budget, the Chamber of Mines and its membership have been engaging government and other relevant stakeholders through a constructive dialogue process.

It must be noted that the disastrous consequences of the MRT regime as it stood, would have resulted in virtual death of the mining sector, something which would certainly have not boded well for the country. The industry together with government was looking for a longterm solution that would take the industry through the next 20 to 30 years. Increased production is fundamental to increasing government revenue.

It must be realized that having high nominal tax rate does not necessarily result in positive revenue. A realistic revaluation of tax rates that sustains the taxed sector is more progressive than an unsustainably high rate one that ultimately only serves to destroy the target sector.

What is an ideal mineral tax regime? It is one that delivers the maximum benefit for a country’s citizens from its mineral resources. Maximum benefit to the citizenry might not necessarily be the same as maximum benefit to the Government, in terms of tax receipts.

For example, a healthy mining industry has significant multiplier effects within the wider economy that far outweigh its contribution to the national coffers.

Studies by the International Mining and Minerals Council (ICMM) have shown that for every $1 generated by mining, at least an additional $3 are generated elsewhere in the host economy. In addition, for every one direct mining employee, employment is generated for further 3-5 employees elsewhere in the economy.

The broad aims of Government minerals taxation policy must therefore be to generate immediate and lasting revenue in a manner which:

• Has no adverse impact on the health of the Industry.
• Encourages (or, at least does not discourage) the investment needed for future development, which is the pipeline of future tax receipts.

Royalties are a blunt instrument; they are not sensitive to the distinctive circumstances of each mine. As MRT is based on production, it has no regard for costs – which will always vary between different mines. So, two mines with completely different cost structures and profit levels might end up paying the same royalty tax.

In fact, a mine can be making a loss and still have to pay the royalty – that is precisely what is happening across the Industry at the moment. Some loss making mines might even have to borrow money in order to make the payments.

A country report (No. 15/153, June 2015) by the International Monetary Fund (IMF) suggests Zambia’s MRT rates are too high.

“A comparison of prevailing royalty rates in 2014 shows that, at 6%, Zambia’s royalty rate was among the highest fixed rate among copper-producing countries.

A World Bank report (Making Mining Work for Zambia, June 2015), also suggests the country’s MRT levels are too high. “Zambia’s mineral royalty rates have in recent years tended to exceed the global norm, even before the rate jumped temporarily to 20 percent on open-pit mines in 2015. Most major mineral producers charge less than six Percent.”

According to the table below based on trends in Taxation by KPMG Global Mining Institute

Comparison with other national mining taxation regimes

COUNTRY ROYALTY CORPORATE INCOME TAX 

Australia 2.5%-5 % 30%
Brazil 2 per % 25%
China 0.5%-4 % 25%
Ghana 5% 25%
Indonesia 4% 25%
South Africa 0.5%-7% 28%

DRC 2% 30%

Zambia 30% 6%-9%
We in the mining industry have been restructuring our operations, lowering our costs and contemplating investments which improve our efficiency and try to keep people in work. But what are the right measures when we’re dealing at the level of an entire country.

This basic truth is tremendously encouraging for us in Zambia, for it tells us that despite the serious situation we currently find ourselves in, there is a way out. This explains why we, as an industry, are calling for a national strategic consensus among all stakeholders to promote the growth not just of the mining industry, but of the economy in general.

The long-term objective is a diversified high-growth economy in which the mining industry is no longer the sole contributor, but simply one of many industries selling products and services, creating jobs, and generating wealth for Zambia’s people and tax revenue for Government services.

Recent public pronouncements by His Excellency, President Edgar Lungu on the absolute necessity for a growing, diversified economy are encouraging, and show the government is alive to the need for such a transformation. As an industry, we stand ready to work with government, and all other stakeholders, to help make this a reality.