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Situmbeko Musokotwane

LUSAKA – Zambia has asked commodity trader Glencore’s Mopani Copper Mines for unpaid taxes after an audit of the subsidiary, leaked earlier this year, revealed it had underpaid mining dues, Minister of Finance and National Planning Situmbeko Musokotwane has said.

But Zambia is leaving the door open for a deal with Glencore.

Dr Musokotwane told Reuters recently that the Government hoped to resolve the long-standing issue and was giving Mopani a chance to respond.

Mopani has been accused by some non-governmental organisations — most recently by campaign groups in an open letter signed by a group of European parliamentarians — of tax evasion and of causing widespread pollution.

Two weeks ago the European Investment Bank, the European Union’s lending institution, said it had frozen all new loans to Glencore and its subsidiaries, citing “serious concerns” over the commodity trader’s governance.

Most of the claims stem from a pilot audit commissioned by Zambian tax authorities, which leaked earlier this year.

Glencore has repeatedly denied the allegations in the audit report and says they are based on an incomplete study.

The commodities giant, which has said it believes it will be completely exonerated, had no further comment on Monday.

“The Zambia Revenue Authority has asked Mopani to pay more money in underpaid taxes, but they must be given a chance to respond,” Dr Musokotwane said in an interview.

Dr Musokotwane did not detail how much was owed, but he said Mopani had been asked to pay more.

He said if the company’s response did not hold up to scrutiny, it would be hit with a bigger tax bill.

“If their answers are satisfactory, we will go by what they submit, but if they are not satisfactory we will adjust their tax liability upwards to the figure that the Zambia Revenue Authority has asked them to pay,” he said.

“We are very confident that this matter will be resolved amicably and are just waiting to hear from Mopani,” Dr Musokotwane added.

Glencore is the world’s largest diversified commodities trader and listed on the London Stock Exchange in May.

Mopani, in which Canada’s First Quantum and the Zambian state own minority stakes, has generated more than US$380 million in tax payments to the government since its privatisation in 2000, through royalties, import and customs duties and income taxes.

Reports from South Africa say Glencore is still fighting negative investor perception that its corporate governance was at best dogdy.

Glencore chief executive officer Ivan Glasenberg brushed off the suggestion that there was any real problem at a press conference when releasing the company results in South Africa.

At the start of June, the European Investment Bank said it was investigating Glencore following accusations of tax evasion by non-governmental groups and a leaked draft of a Zambian Revenue Authority-commissioned study that accused the trader of inflating mine costs and of undervaluing its minerals.

Mr Glasenberg said Zambia Revenue Authority is carrying out a full audit on the group’s Mopani copper project. “I believe when the full audit is done at the operation we will be fully vindicated.” – REUTERS

By CHRISTINE CHISHA

GOVERNMENT has disclosed that the K1 trillion to be used on an urban roads rehabilitation programme will be paid by mining companies.

Minister of Finance and National Planning Situmbeko Musokotwane said this is money that the mining companies owe the government in taxes.

He said in 2008, mining companies had a dispute with Government over corporate taxes, variable income taxes and mineral royalties but the matter was resolved after meeting, and the mining companies are now paying arrears.

“The arrears that the mining companies are paying have created extra revenue that has been channelled to infrastructure development and rehabilitation of urban roads,” he said.

Dr Musokotwane said another potential source of the money will be the selling of bonds on the international market at US$500 million. Part of this money will be used for the urban road rehabilitation programme.

He said this in Lusaka yesterday during the recording of the Ministry of Finance and National Planning television programme, Culture Remodelling.
The programme also featured Minister of Works and Supply Gabriel Namulambe.

The theme of the programme was infrastructure development, progress and financing arrangements.

Dr Musokotwane said most roads in urban areas have had their useful life, hence the need to rehabilitate them.
He said there is nothing political about infrastructure development, rehabilitation and construction of roads.

He said when an economy is growing, there is always need to grow infrastructure to match the expansion of the economy.

Dr Musokotwane said if it was political, the private sector would not have joined in infrastructure development but they foresee more growth of the economy, which will result in high demand for more and better infrastructure.

He said more investment is coming despite this being an election year because investors have confidence in the government.

Dr Musokotwane said a review of the growth of the economy will be madebetween July and August.

He said the economy is no longer stagnant but is growing and it is only right to improve the infrastructure.

And Mr Namulambe said works on major roads are progressing well because most contractors are on site or just waiting to sign contracts.

He said some of the major road projects are the Chipata-Mfuwe, Sesheke-Senanga, Isoka-Muyombe and for the Kalabo-Sikongo roads.

Mr Namulambe expressed disappointment that some Kitwe residents were stoning the machinery moved to the site to start the road rehabilitation.

He said that the MMD government wants to ensure that more roads are constructed to ease movement of goods and people.

Mr Namulambe said it is a pity that his predecessor, Mr Mike Mulongoti is condemning the construction and rehabilitation of roads on the Copperbelt when he is the one who promised that township roads would be worked on.

He said K19 billion has been allocated for feeder roads on the Copperbelt in this year’s budget and K6 billion has already been released.

Mr Namulambe commended mining companies such as Mopani Copper Mines and Konkola Copper Mines for supplementing Government’s efforts by rehabilitating some township roads on the Copperbelt.

He said President Banda should be commended for initiating and completing development projects started by President Mwanawasa.

He said Mr Banda has shown that he is a responsible leader who wants to improve the lives of all Zambians.

LUSAKA, May 21 (Reuters) – Zambia’s economy is likely to grow beyond 7.0 percent in 2011 largely driven by investments in mining and infrastructure, Finance Minister Situmbeko Musokotwane said on Saturday.

“We are set to have very good growth in 2011. The numbers will be revised around July-August and I expect a very good number, even above 7 percent,” Musokotwane said at a media briefing.

He added: “Infrastructure development is going to be part of the growth process for Zambia.”

Zambia planned to invest 1 trillion kwacha ($216.7 million) in the rehabilitation of urban roads and the money would come from a $500 million international bond and additional tax revenue from the mines, Musokotwane said.

The International Monetary Fund in March projected Zambia 2011 growth at 6.8 percent.

Zambia’s economy grew 7.1 percent in 2010.

Musokotwane also said that inflation was not likely to exceed the 8 percent end-year target following Zambia’s bumper maize harvest of over 3 million tonnes.

Zambia’s headline consumer inflation slowed to 8.8 percent year-on-year in April, a rare example of easing price pressures in Africa caused in part by a drop in the cost of basic food.

(Reporting By Chris Mfula, Editing by Olivia Kumwenda)

LAP Green shares frozen
By DARLINGTON MWENDABAI

ZAMBIA has frozen LAP Green Network’s 75 percent shares in Zamtel in conformity with the international community’s decision to freeze all assets belonging to Libya following the unrest in the Arab country, Zamtel managing director Hans Paulsen said in Lusaka on April 15.

The international community has been freezing some Libyan assets dotted across the globe. Mr Paulsen said Zamtel will not be affected by the new development and there is no need for customers to worry.

He said Zamtel will continue to operate normally and Government will oversee the affairs of the telecommunications company. Lap Green held 75 percent shares in Zamtel while the Zambian government is a minority shareholder with 25 percent.

Mr Paulsen was responding to questions from journalists during a media breakfast at which the company unveiled a new Zamtel brand and logo dubbed Live Life Today at the Taj Pamodzi Hotel in Lusaka.

“I can confirm that Lap Green’s 75 percent shares in Zamtel have been frozen, just like the Minister of Finance and National Planning [Situmbeko Musokotwane] intimated to Parliament recently. This means Zamtel will not have to touch the shares for now,” he said.

He said no dividends will be paid out at the moment until such a time when the matter is resolved but he was, however, optimistic that Government, which owns 25 percent in Zamtel, will help to ensure that the company’s operations are not affected.

He said the continued unrest in Libya will not have an impact on the operation of the company and its market share.

In a ministerial statement last month, Dr Musokotwane said the UN Security Council resolutions 1970 and 1973 were likely to affect Lap Green’s shareholding in Zamtel but would not affect the operations of the company.

Dr Musokotwane assured the nation that freezing Libya’s stake in Zamtel would not affect the operations of Zamtel but the shareholder, Lap Green.

“There is a likelihood that the shares in Zamtel held by Lap Green are covered by the UN Security Council resolution 1973 and those shares are likely to be frozen,” DrMusokotwane told Parliament then.

“My Government will ensure compliance in the management of these assets in line with the UN resolutions in the same manner as set out in connection with the shareholding in Zamtel,” he said.

In a ministerial statement last month, Minister of Finance and National Planning Situmbeko Musokotwane said the UN Security Council resolutions 1970 and 1973 were likely to affect Lap Green’s shareholding in Zamtel but would not affect the operations of the company.

Dr Musokotwane assured the nation that freezing Libya’s stake in Zamtel would not affect the operations of Zamtel but the shareholder, Lap Green.

“There is a likelihood that the shares in Zamtel held by Lap Green are covered by the UN Security Council resolution 1973 and those shares are likely to be frozen,” DrMusokotwane told parliament then.

“My Government will ensure compliance in the management of these assets, in line with the UN resolutions in the same manner as set out in connection with the shareholding in Zamtel,” he said.

And Zamtel has launched a new brand logo dubbed, “Live Life Today” which replaced old brands Cellz and Zamtel on-line effective on April 15.

“Zamtel has three brands that required supporting in the market namely Cellz, Zamtel and Zamtel on-line. As you know, supporting multiple brands effectively in a market is costly as opposed to having a monolithic brand,” he said.

Mr Paulsen said to achieve that, a market study last year was conducted by Steadman Group, in which customers referred to the old Zamtel brand as poor, old, boring and tired.

He said the old brand prior to the privatisation of the company lacked customer appeal and resonance and needed a visual revamp and repositioning.

“The company is here to stay and will give the Zambian populace the best telecommunication solutions. In the next five years, the company will grow its market share to 25 percent,” he said.

Currently, the company has remained with 20 kilometers to finish putting up a fibre network heading to the Southern Province, following the completion of similar works on the Copperbelt.

Once the fibre network has been laid down, subscribers will continue to enjoy telecommunication services immediately, at affordable rates as the new brand states.

And Zamtel has launched a new brand logo dubbed Live Life Today, which has replaced old brands Cellz and Zamtel on-line effective yesterday.

“Zamtel has three brands that require supporting in the market namely Cellz, Zamtel and Zamtel on-line. As you know, supporting multiple brands effectively in a market is costly as opposed to having a monolithic brand,” he said.

Mr Paulsen said to achieve that, a market study last year was conducted by Steadman Group, in which customers referred to the old Zamtel brand as poor, old, boring and tired.

He said the old brand prior to the privatisation of the company lacked customer appeal and resonance and needed a visual revamp and repositioning.

“The company is here to stay and will give the Zambian populace the best telecommunication solutions. In the next five years, the company will grow its market share to 25 percent,” he said.

Currently, the company has remained with 20 kilometres to finish putting up a fibre network heading to the Southern Province following the completion of similar works on the Copperbelt.

Once the fibre network has been laid down, subscribers will continue to enjoy telecommunication services immediately at affordable rates as the new brand states.

By CYNTHIA MWALE

SAUDI firm Menafea Holding intends to invest US$125 million in a 5,000-hectare farm in North-Western Province this year and in building 2,000 housing units in Lusaka South multi-facility economic zone (MFEZ).

The project is expected to create employment opportunities in Lusaka and Northw-Western Province and link up indigenous small-scale farmers to a ready market through outgrower schemes.

Menafea Holding board member Khaled Alrajhi said the company plans to invest the funds this year and will grow pineapples and build a factory to produce juice.

This is contained in the latest issue of the Zambia Development Agency (ZDA) Spotlight publication availed to the Mail on March 1.

Mr Alrajhi said Menafea will build 2,000 housing units in the Lusaka South MFEZ under the same agreement, signed with Zambia’s investment promotion agency.

“We have been granted 5,000 hectares of land to grow pineapples using the latest technology and are going to put up a factory to produce juice for local consumption as well as export,” Mr Alrajhi said.

ZDA director for investment promotion and privatisation Muhabi Lungu said more Saudi investments were expected in Zambia.

Last December, Finance Minister Situmbeko Musokotwane said Zambia did not regard leasing farmland to foreign investors as a form of ‘colonialism’ and was encouraging countries from the Gulf to invest in its agricultural sector.

Zambia is getting ready to launch a debut $500 million eurobond after receiving a B credit rating from Fitch this week, Finance Minister Situmbeko Musokotwane said on Today.

Dr Musokotwane told Reuters in an interview the rating will also help Zambia attract more investors, stating that investors who did not know about Zambia will now be interested because of the rating.

He explains that with this rating it means Zambia is now ready to issue the $500 million international bond.

Zambia has been contemplating a foreign currency bond issue for several years although its plans were blown off course by the global financial crisis.

The rating given to Zambia Africa’s biggest copper producer is the same as that assigned last year to Angola, the continent’s second-biggest oil producer.Nigeria, Africa’s leading crude producer, also has a B rating.

Fitch said the ratings reflect the marked improvement in Zambia’s economic performance since 2003 driven by improved macroeconomic stability, economic liberalisation, rising private investment and production in the mining sector, and more recently, a strong agricultural performance.

Zambia’s resilience in the face of the global economic crisis gave further support to the credit assessment. The economy has grown at an average of 6.3 percent a year since 2006 and accelerated to 7.1 percent in 2010, Fitch said.

The agency also noted falling inflation and strength and stability in the kwacha currency as pillars of the country’s growing economic stability.

Standard & Poors and Moodys are also expected to announce ratings soon./QFM

Zambia, Africa’s largest copper producer may secure a credit rating by March this year to enable the Southern African nation attract more portfolio investors into the country and develop infrastructure.

 

The ascendance of Zambia to a credit rate status will undoubtedly push it forward and enable it to start issuing various international bonds as much as USD 1 billion to undertake infrastructure development and accelerate economic growth.

 

Mr Situmbeko Musokotwane finance minister of Zambia said that government may next month receive a final report on the country’s sovereign credit rating and enable it undertake various development programs through issuance of international bonds and other programs.

 

Mr Musokotwane said that Government will soon obtain a rating from Standard and Poor’s rating agency after which it will undertake various programs intended to accelerate the sixth national development plan launched recent by president Rupiah banda in which the country needs to mobilize USD 26 billion between the period 2011 to 2015.

 

He said that we are very near in receiving the rating and I don’t think it should take more than a month. Government concluded talks with S&P on the possibility of Zambia having a sovereign credit rating in December last year.

 

Recently, Mr Caleb Fundanga governor of Bank of Zambia said that discussions were concluded last December after Government appointed two rating agencies Fitch Ratings and S&P rating agencies to provide an independent and prospective credit opinion on Zambia. Government also appointed JP Morgan as transaction advisers. A team from the rating agency came to Zambia and held fruitful deliberations with both Government and the BoZ officials last year.

 

Last December government stated that it was preparing to accredit for sovereign credit rating and enable the country raise funds for rail and energy projects from the sale of its first ever international bond to the tune of USD 1 billion. Once admitted to the sovereign credit rating, Zambia intends to sell its first international bond and raise USD 1 billion for rail and energy projects as economic growth accelerates.

 

Mr Musokotwane had told reporters that the Government had started the process of acquiring the sovereign credit rating before it could issue out its first international bond. A team of experts was at the time evaluating the economic investment potential, political risks and the future of the economy. The credit rating will indicate the risk level and is used by investors intending to invest abroad, taking into account the political risk. It was the government’s vision that Zambia was expected to have a higher credit rating once the procedure is completed.

 

He said that we are now in the final stages of completing the procedures and we want to tap into the international capital markets to help finance the building of power plants and railway as economic growth accelerates. Zambia will be part of the African countries such as Kenya, Ghana and Angola that wish to raise finance for rail and power projects from international capital markets.

 

He added that Zambia abandoned the plan to seek credit rating and sell a bond abroad in 2008 after the global financial crisis sparked a sell-off of emerging market assets. A bond is a debt investment in which an investor loans a certain amount of money, for a certain amount of time to an entity at a certain interest. Zambia had by the third quarter last year hoped to have its first sovereign credit rating before proceeding with the bond sale soon after.

 

(Filed by Mr Mathew Nyaungwa SteelGuru Correspondent Zimbabwe)

Republican President Rupiah Banda has warned Zambians against emulating the revolts that have recently engulfed North African countries ahead of this year’s general election.

President Banda says Zambia is a democratic country and that elements of violence should not be tolerated at all costs.

The President has expressed sadness at the ongoing protests in Libya and advised political leaders in the country to concede defeat when they lose elections other than resorting to fueling violence.

President Banda says Zambia is a role model to the Arab world because the democracy people are pressing for was attained in 1991 and that people should not contemplate revolts when the MMD bounces back in power.

And President Banda has rubbished the statement attributed to second Republican President Fredrick Chiluba he will revive local and international dribbling skills to rig the forthcoming tripartite elections.

The President has wondered why Dr. Chiluba’s statement is attracting a lot of significance now and not when the former President was supporting the opposition Patriotic Front.

And commenting on the assertions by dismissed works and Supply Minister Mike Mulongoti’s that Dr. Chiluba advised him to fire him, the President Banda said he does not receive instructions from anyone.

President Banda was speaking at City Airport in Lusaka this morning shortly before his departure for Eastern Province where he is expected to officiate at this year’s N’cwala traditional Ceremony of the Ngoni people on Saturday.

The President who is accompanied by first lady Tandiwe and Finance Minister Situmbeko Musokotwane is also scheduled to commission some government projects./qfm

President Rupiah Banda will this week launch the construction of the 97 billion kwacha Chipata – Lundazi road in the Eastern province.

This will be during his five day tour of the province.

The President who is expected in the province, Wednesday will travel to Lumezi Constituency in Lundazi District where he will flag-off the repairing and tarring of the road.

President Banda is also expected to officially open the newly constructed Protea Hotel in Chipata before proceeding to Sinda, where he will inspect some infrastructure projects which include a new bridge.

This is contained in a statement released to ZNBC news in LUSAKA, Monday by the President’s Special Assistant for Press and Public Relations, Dickson Jere.

Mr Jere says the projects highlight President Banda’s commitment to building a better future for Zambia, by establishing security, stability and prosperity for all Zambians.

He said the President has worked successfully to create strong foundations on which to build tomorrow’s Zambia.

Mr Jere said the President will also hold a public meeting where he will deliver his message of peace and unity ahead of the General Elections later this year.

While in Eastern Province, President Banda will also join his family members in unveiling a tombstone of his late mother, Mrs. Sera Banda, who is buried at his farm in Chipata.

President Banda will be accompanied to Eastern Province by Finance and National Planning Minister Situmbeko Musokotwane and other Senior Government Officials.

Since coming into office in November 2008, President Banda’s Government has constructed and rehabilitated several kilometres of roads and built 87 new bridges.

By NANCY MWAPE

GOVERNMENT is concerned with the high poverty levels in Zambia and low per capita incomes despite significant strides made in growing the economy over the last decade.

Situmbeko

Minister of Finance and National Planning Situmbeko Musokotwane said in the past few years, the economy has been transformed with the private sector playing a significant role, gross domestic product growth being high and sustained at above five percent since 2003.

Dr Musokotwane said Government has managed to contain fiscal deficit to sustainable levels while inflation has reduced to single digits.
The minister said this in a speech read on his behalf by Finance and National Planning permanent secretary Anthony Undi at a Public Expenditure Review workshop organised by the World Bank in partnership with the Economics Association of Zambia and Caritas Zambia.

Dr Musokotwane said Government focus is to improve the living conditions of the majority Zambians, especially those living in rural areas.

“Government recognises that despite the achievements that have been scored, challenges remain. Although poverty is now lower than it was a decade ago, it is still high. Rural poverty has not receded with many of the rural communities living in extreme poverty,” he said.

He said Government has stepped up efforts to accelerate investments in infrastructure and social sectors such as roads, schools, hospitals, clinics, agriculture, energy and water.

Dr Musokotwane said despite all the positive developments, it is legitimate to ask whether the country has maximised benefits out of the available resources and whether public spending has resulted in improved quality of services especially for the majority rural poor.

Speaking at the same function, World Bank senior economist Julio Revilla said Zambia has made strides in macro economics based on adequate economic policies and not just copper mining.
Mr Revilla said structure reforms as well as fiscal monetary and exchange policies have resulted in a stable macroeconomic environment of low inflation.
He, however, noted that Zambia remains too dependent on copper exports and increasing revenue remains a challenge.

“Despite fast growth, Government spending remains constrained by resources. It will be difficult to increase revenues in the next five years and this remains a challenge,” he said.

Mr Revilla said budget execution has improved with spending directed towards education, roads, health and agriculture but poverty and inequality has not reduced.

“Poverty reduction is a difficult goal to achieve through budgets on an annual basis but Government must identify programmes that have an impact on reducing poverty,” he said.