Report: African countries losing millions
Poor African countries rich in minerals are losing tens of millions of dollars in revenue that can be used to fund health, education and other social programs because of tax breaks and low royalties they have given to mining companies, said a report released Wednesday.
The mining companies have been given tax concessions or low royalty rates because the contracts signed with the governments have been negotiated in secret or government ministries have wide discretionary powers that lawmakers have no say over, said the report.
Titled "Breaking The Curse," the report is the work of a coalition of international and local non-governmental organizations that includes Actionaid International and Christian Aid. It covers seven Africa countries: Congo, Ghana, Malawi, Sierra Leone, South Africa, Tanzania and Zambia.
The report estimates low royalty rates have or will cost South Africa, the continent's biggest gold producer, up to $359 million a year in revenue. Similarly, another top African gold producer, Ghana, is losing $68 million a year in revenue, and Tanzania, the continent's third largest producer, $30 million a year in income, the report said.
"African mining tax regimes need to be reformed to ensure that African governments are able to collect a fair share of mining rents to fund their national development plans," said the report.
"In some countries this would require an increase in the rates of royalties and other taxes; in others this would require a stop to the practice of negotiating tax breaks for individual companies in secret contracts."
The report points out that the seven African countries covered have lost the chance to collect huge sums of revenue at a time when global prices for metals are coming out of a five-year boom that ended last year.
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