Economic Miracle Makes for Taxing Times in Zambia

Sunday Market, Lusaka by Flickr user mvcorks

I pass a shiny new shopping centre on my left, flanked by marketeers selling ‘traditional’ sculptures, jewellery and copperplate handicrafts on the pavement and an enormous parking area full of new cars to my right. This is not quite the scene I imagined when I heard I would be travelling to Lusaka – this disatisfying juxtaposition of sanitised informality and aspirational urbanity. But I’m even more surprised when my eye is drawn by a necklace identical to one I have at home. Brightly coloured, it has red, purple and yellow wooden beads and flowers. I’m puzzled. My necklace came from the Amazon, but today I’m in Lusaka, thousands of miles away, passing the Sunday market. So where did it come from? I wonder. Brazil? Zambia? South Africa? China?

I don’t manage to discover the necklace’s the exact origins but a bigger truth is revealed in that oddly  – that Zambia is increasingly inter-connected to the wider regional and global economy and that this is bringing many changes. With its status as a Highly Indebted Country well in the past, Zambia’s economy is now growing at around 6% per annum and the country is nearing middle-income status. However, despite this African economic miracle, many Zambians remain poor and hungry, with Zambia ranked 68 out of 81 countries compared on the 2011 Global hunger index, 68% of the population living below the poverty line and life expectancy at birth just 45 years.

So, in such a dynamic and complex economic context, how can civil society organisations identify, and advocate for, the changes needed to benefit the poor?

CAFOD partner, the Jesuit Centre for Theological Reflection (JCTR) are addressing these challenges with a mixture of research and analysis, theological reflection and innovative tools. Their Basic Needs Basket  compares the cost of a basket of the basic necessities of life (beans, maize, housing and water) with the income of different categories of workers. As well as illustrating, in vivid detail, the economic situation of ordinary families in Lusaka, it shows in strikingly simple terms the shortfall that exists in a context of rising food and energy prices, despite a growing economy. Most striking of all are the difficult choices that families have to make between paying the basic access costs for public services such as health and education, and eating, clothing and housing themselves. Too often there is simply not the cash. Where else then, could this money come from? JTCR have taken up this challenge in their rigorous analysis of the Zambian tax system.

Exposing the multiple paradoxes of Zambia’s economy – JCTR showed that not only were revenue streams coming from taxation insufficient to fund public services – they were also shrinking, despite overall growth in the economy. Tax revenues from the mining sector – despite record copper prices, royalties taxes were held at a well-below industry standard of 3%, with many (foreign-owned) companies also benefitting from tax incentive schemes that enabled them to avoid tax, whilst those employed in the formal sector carried a disproportionate burden. Rich analysis, yes, but with tax seemingly such a dry and technical subject, how could civil society build up the momentum needed to press for change?

Making the most of the space for political competition of the 2011 elections in Zambia by holding radio broadcasts, TV phone-in shows, public lectures and community forums, JCTR made tax an election issue. Outreach teams brought the subject to communities in the districts and a weekly newspaper column ensured that the subject was never out of the media. Within a short time, all the major parties, including the then Government, were making promises on taxation, and the opposition swept to power on a raft of tax-election promises. JCTR’s next challenge was to make sure the Government made good on their promises. To do this, civil society needed to speak with a clear and united voice.

Joining together with other civil society organisations, JCTR facilitated a joint-proposal for new tax justice measures, such as a windfall tax on extractives industries, cancelation of loopholes in foreign investment and tax-credits for the disabled and pensioners, and submitted it to the Ministry of Finance and National Planning.  Already, some of these proposals have become law, the most significant of which being an increase in the extractive industries royalty tax from 3-6%. The challenge now will be whether civil society in Zambia can continue to engage public and politicians alike on tax issues in a post-election context, and ensure that the country’s rapid growth is able to benefit all Zambians, and not just the few.

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