Mining firms remit little in taxes

Published: 03 December 2013

Mining companies operating in Africa are benefiting more from natural resources and remitting little in taxes and royalties to their host governments which is drawing back the value chain linkages that promote economic growth, a senior official has said.

Speaking at the 2013 Africa for Results Forum held in Harare yesterday, Mines and Mining Development Minister Walter Chidakwa said growth was actually being taken out of the continent as most countries are still operating on a colonial model which gives 100 percent access to mineral wealth to foreigners.

"In Africa, you hear of 40 percent growth in taxes and 110 percent growth in profits and consequently because all our countries allow 100 percent ownership of the means of production and we all allow 100 percent dividend remittance out of our countries, it basically means 110 percent growth has actually gone out of the country.

"We have been operating on a model which gave access 100 percent to those that sit somewhere outside Africa. The model was that our benefit would come through the creation of primary jobs because mining is a primary sector," he said.

He said this had created primary incomes for the locals instead of middle incomes which are ordinarily the driver of economic development.

He said one mining company had invested $900 million in the country in terms of equipment, machinery and technology but was recording $4,5 billion on their balance sheet which should have been due to Zimbabweans who are the owners of the land.

Minister Chidakwa added that mining companies in Zimbabwe were always calling on the Government to give them tax breaks and tax incentives.

"A few days ago l was saying to one company, you are asking for tax incentives, but what will we get as a country? Because if it is not the primary jobs with a primary income, then we get the taxes and the royalties. This is why in Zimbabwe we say, without fear or apology, that when you come here, the fact that you have applied your geological expertise to find that mineral you are mining does not make it yours.

When it comes to the balance sheet of your company it must come as a contribution to the people of Zimbabwe," he said.

"I said to one company, you are still renting offices here in Zimbabwe but if it was in another country, you would have perhaps built a 35 storey building. Why can you not do so here if you are committed to staying for the next 50 to 75 years that our mineral reserves will be in existence," he said.

He bemoaned the companies who had listed on some international stock exchanges on the back of the investments they had made in Africa to raise money which was not contributing to the development of the continent.

Minister Chidakwa also said that African countries should work together on adding value to each other’s minerals instead of trying to do it individually.

"Primary sector developments results in primary jobs which brings primary income, but when you add value to our resources, you get value added jobs and incomes and begin to create middle income which also begins to create economic growth of the continent as a whole," he said.
- herald