Zambia, and how the love of money harms society

Tax evasion by a mining company in Zambia has come to my attention this week.  Zambia is an African nation blessed with many natural resources and a country where we as a Church gladly serve as part of our World Mission work. Managed well the revenue generated from the extraction and sale of the abundant natural resources could be, potentially, a great source of income for Zambia. However, this has not been the case. These mineral reserves have been a curse for the majority of the population meaning poverty for most, in the midst of plenty - for some.

This issue has come to a head this year in light of elections which will be taking place across Zambia later this month. There is not much ideologically that separates the main parties, politics here tend to have more to do with personalities. However, the use of the county’s natural resources is in issue which engages all parties. The key concern is this: that mining multi-nationals are being accused of a lack of financial and fiscal transparency, violating the human rights of their employees and showing a disregard for the environment.

One multi-national operating in Zambia in particular has hit the headlines this year: Mopani Copper Mines, one of Zambia’s biggest producers of copper and cobalt. It has been reported that Mopani ‘sold’ its Zambian copper and cobalt at a price lower than that set by the London Metal Exchange to its Swiss parent company, Glencore. Glencore hedged and then sold on the copper when the price was higher so as to maximize profits. Between 2003 and 2008 it is reckoned $700m was made in this way. According to World Trade Organisation (WTO) figures in 2008, over half of Zambia’s copper production was ‘exported’ to Switzerland. Cobalt received the same treatment. Moreover, you may also be interested to hear that Mopani received 48m Euros in early 2005 from the European Investment Bank (EIB) to help contribute to sustainable development in Zambia. This funding has since been stopped.

There is a Memorandum of Understanding with the Zambian Government which gives Mopani a number of tax reduction and exemptions. Yet still Mopani claims to make no profit further reducing its fiscal obligations. A recent audit reported Mopani resorted to the following ploys to evade taxation in Zambia:

• Overestimating the costs of mining and extraction
• Underestimating the volume of production
• Price-fixing and avoiding competition.

Aside from violating good practice in line with OECD guidelines the more important issue is that the greed of this multi-national company has prevented huge sums of money from being re-invested into Zambia, thus keeping Zambia poor.

Jesus tells a story about the fruits of such shameless greed: the parable of the Rich Fool (Luke 12: 13-21). A man stores all his earthly treasures up in barns, and when these barns are full he tears them down to build bigger ones. He flatters himself and is overjoyed at all he has made, at just how rich he has become: “it’s all mine!” He plans early retirement and on spending the rest of his life taking it easy. The message for this man from God is clear-cut: “You fool.” This is how it is with those who pile up riches for themselves but are not rich in God’s sight – the treasure they store up here for themselves will not last. There is no space for greed in God’s kingdom.

Being rich in God’s sight is far more important than any profit margin, revenue level or tax-evasion scheme we could ever dream of devising. For Christians this richness means loving God and living for Him. The Bible, God’s word for us to live by, demands that we do all we can to alleviate poverty. So I ask that you join with me in praying for the people of Zambia as they go to the polling stations on the 20th September. That the government they choose to elect would take a bold stance against the greed of multi-national co-operations whose conduct would have Zambians remain in the grip of poverty.

You can also take a stand against tax evasion by following this link to a Christian Aid petition: http://www.christianaid.org.uk/ActNow/trace-the-tax/

Further links on this issue:

http://www.guardian.co.uk/business/2011/apr/17/glencore-denies-copper-tax-allegations

http://www.guardian.co.uk/business/2011/jun/07/glencore-rebuff-zambia-unpaid-tax?INTCMP=ILCNETTXT3487

http://www.ft.com/cms/s/0/8e968330-8c3b-11e0-b1c8-00144feab49a.html#axzz1XBQnsl4j

http://www.actionaid.org/2011/07/whose-side-our-government-mining-companies-or-its-people