We’re not crazy, we are very patriotic – Musokotwane

We’re not crazy, we are very patriotic – Musokotwane

By Fanny Kalonda (The Mast)

TWO, three years from now the economy will be at its strongest ever in the history of this country, says finance minister Situmbeko Musokotwane.

He explained that the problems being experienced are temporary adding that investments government has been talking about take time.

Addressing the Economics Association of Zambia 2024 summit held at Ciela Resort, Dr Musokotwane said the mines that had closed are now back to life and those that threatened to leave have not done so.

“So I think the information we have as a result of all these changes definitely next year we will begin to see upward in the production of copper and that will continously be increasing. By 2027 it will be more than a million tonnes of copper for the first time ever in the history of this country. More than a million tonnes and new mines as we speak there is a flurry of explorations. I am very confident, this government is very confident, that the target of three million tonnes of copper is going to be attained. Let’s not confuse current problems that we face because of the drought with the outlook of the economy. Two, three years from now the economy will be at its strongest ever in the history of this country,” he said. “These are just temporary problems coming from the fact that these investments We ve been Talking about, they take time. So the full benefits will begin to be seen two years from now. But already starting next year we will definitely see improvement and there is no way out there, there are no shortcuts to this. There are no shortcuts to this.”

Dr Musokotwane said the government is not crazy in its tax policies but is being patriotic.

“Transforming an economy is a very important thing but unfortunately it also requires us to change the way we do things. When this government came into office, we were very clear. We want to expand the mining sector, pushing copper production.

Our target is three million tonnes. What did we do to encourage [that]? What we did to encourage this production are the very things that many of you condemn us for. You think we are crazy, we are not crazy. We are not crazy we are very patriotic, nationalistic but we know what to do to raise the production,” Dr Musokotwane explained.

He further explained that in the 1960s, Zambia produced more copper than Chile and was richer than Chile, “but we made the mistake of not encouraging further investment in the mining sector”.

“So production levels stagnated,” Dr Musokotwane he said. “We have failed to push production to go up.”

Dr Musokotwane said Zambia’s tax regime is a bit more punitive than other countries.

“So this is not about tax holidays. It’s about putting things back to normal. By any measure of logic, how do you expect 20 million people to benefit away from this industry when the people were only three million? Tell me, is that possible? It’s not possible. So students, don’t expect bacon, sausage, cornflakes at this level of production. It’s impossible. But you want to live the way you used to live, it’s simple. Let’s produce more. So in wanting to produce more, this is why we had to ask ourselves a question, what is the problem here? Why is it that Chile which produced less than us today they are producing five million tones of copper? Why is it that Congo DRC our next door neighbour who 15 years ago they were only producing about 400,000 tonnes of copper, today they are almost reaching three million tonnes, what’s the difference?” he explained. “The difference is that the way we taxed this industry, our taxation thing was far excessive. In excess of what everybody else. So we had to adjust the tax and of course when we adjust the tax, you say, okay let’s see that Chileans do, let’s see what the Canadians do, let’s see what the Russians do. So we had to bring down that tax regime to what the other mining companies are doing. This is where you hear people accusing us saying, ‘oh you have given them tax holidays blah blah blah’. That is laziness. Laziness in terms of wanting to get a little bit to find out what the truth is. Because if people had not been lazy, they would have been asking themselves the question, ‘can we see how the Canadians tax, can we see how the Austrialians tax, can we see how the Ghanaians tax, how the Botswanas tax. If people do that, and of course these days infomation is available on the websites, if you do that you will discover that contrary to what you are preaching, what people preach to you, these messages of further pushing you underground … you discover that in fact even after the adjustment that we made Zambia still taxes a little bit more.”

Dr Musokotwane said by understanding the policy, critics would understand that Zambia taxes a bit more in the sector than other countries.

“Our tax regime in Zambia, average, is a bit more punitive compared to other mining countries – Canada, Australia, Congo DR and many others. Check for yourselves. So this is not about tax holidays, it’s about putting things back to normal. And as we did that you can see the way the response [has been]. After more than 12 years of no mine opening in this country because of this oppressive regime that was here in terms of taxes, just this week, you have seen for the first time a new mine opening. After 12 years or so and this is the biggest nickel mine in Africa employing almost 9,000 people. First time as we speak,” he said.

Dr Musokotwane said economic transformation is required in Zambia.

“Transformation must take place. This is what we are saying here. As we transform the economy, we must take into consideration basically two things. Firstly it must be transformation in the context of adaptation and resilience to climate change. Transform, yes, but please take into account the response and the resilience to climate change. I think for me, economic transformation is basically about creating an economy that is better suited to provide for the needs of its citizens. That’s what transformation is,” he said. “We know that there are so many grievances citizens are facing. Some don’t have jobs, some would like to support themselves not necessarily in employment. Some, perhaps you are a young person, you would like to have a good education. All these grievances whether in the economic or social field the ultimate answer is that the economy must be such that it can support all these things so that we can live better as human beings.”

Dr Musokotwane said the country needs to produce consistently, year after year, and register a stronger growth in gross domestic product.

“So to get to that economy that delivers more, that is economic transformation. From an economy that is basically where citizens are basically… a living on the verge of tipping in the poverty, squalor, to an economy where we don’t worry about where we are going to eat, how we are going to educate our children. All these happen because the economy is transformed to be able to deliver to us as citizens better. I hear sometimes people say but the economy has been growing, there is still poverty. Yes. The key word here is sustained growth. Sustained growth year after year. The China that the world admires today in terms of the transformation it has taken them 30 to 40 years from when the reforms started. I think the reforms started around 1978 when I was still, I think I was doing fourth year at the University of Zambia…” he said. “So if you think that reform is a one day affair, to have growth in one or two, three years, then after that we shall all be living like the Danes… we are deluding ourselves. Transformation must be sustained over a long period of time. What is important is that year after year we must see improvements. Year after year we should see improvements in the economic growth. The taxes that we collect, the services that we deliver to the people on the basis of the revenue that we collect, so transformation my friends is not a one, two, five-year affair. It is a long term affair if you want to live like the country I mentioned. But year after year there must be improvement.”

He added that transformation also involves “transforming ourselves as human beings.”

“You cannot transform an economy unless you change the way you think. Unless you change the way you do things. Because for these changes to take place, you yourself must change. The human being is under enormous pressure,” said Dr Musokotwane.