INTERNATIONAL mining company First Quantum has paid more than R7bn in taxes to the Zambian government over the past few years. It has allocated about R70m for infrastructure in areas where it operates and is setting up an agricultural programme to support 400 farmers. It will also be the first foreign mining company to list on the Lusaka Stock Exchange.I hold no particular brief for First Quantum, or for mining companies, but it is important to balance the narrow debate on nationalisation that tends to paint resource companies as thieves and governments as victims of foreign greed. The nationalisation debate raised its head at the recent mining conference in Zambia. Government officials insisted they would not go down that road again but it i s clear the issue has not been put to rest by Zambia’s recent private sector- driven economic success.

The call for state ownership of mines still lingers, fuelled by the knowledge that mining companies are currently making huge profits but paying relatively low taxes.

Ironically, the reduced state take- off is itself a legacy of nationalisation. It is the result of generous privatisation incentives the state had to build into development agreements with foreign companies to get them to take expensive and deteriorating assets off its hands after its own dismal failure to make them work.

According to the World Bank, mining contributions to Zambia’s tax revenue are about 5% of export revenue , compared with between 25% and 40% elsewhere in the world. This is arguably a direct consequence of nationalisation rather than an argument for it.

But tax incentives have a limited life span and eventually those mines will start to pay hefty taxes. And new investors not tied into those historical agreements will pay full taxes sooner rather than later if high prices, which allow them to offset start-up costs more rapidly, persist.

The nationalisation debate also does not take account of skills and technology transfer by global companies, which is equipping Zambians with the ability and experience to build their own mining companies. Corporate social responsibility budgets are growing as community demands become louder, and infrastructure spending to enable mines to operate obviously benefits communities in mining areas.

In resource-rich northwestern Zambia, hundreds of schools, houses and shops are being built in the village of Solwezi on the giant, privately operated Lumwana and Kansanshi mines, providing many opportunities for Zambians.

 Foreign investors are also stepping in to build schools, health facilities and agricultural knowhow in rural areas — something the government has paid insufficient attention to .

 While the mining companies may not be creating the employment numbers Zambia needs — about 50000 Zambians are employed on the mines — thousands of jobs have nevertheless been created over the past decade.

 And huge mining investments and activities are increasing economic activity — and drawing in investment in other sectors — increasing the state’s revenue from downstream taxes such as income tax and VAT.

 But despite sharply increased foreign direct investment, Zambia remains a high-cost and uncompetitive operating environment. For example, labour productivity on Zambia’s mines is about seven times lower than that of Chilean workers in the copper industry. There is a high reliance on imported inputs throughout the chain of business because of the poor industrial performance resulting from an unsupportive policy environment. Transport costs are high and border delays place an estimated 25% surcharge on transport prices.

 This lack of competitiveness is not about revenue as much as it is about devising better policies and more effective strategies to allow the government, in partnership with the private sector, to build a more sustainable and diversified economy.

Part of this policy upgrade has to be about greater transparency from the government on how it spends revenue derived from investors from mining and other industries.

 Zambia is a signatory to the Extractive Industries Transparency Initiative and is likely to become a compliant country later this year. This will not only push mining companies into greater disclosure, it will also make the state’s revenue receipts and expenditure more transparent.

 That should help to inform a proper national debate on the issues that does not rely on narrow populist arguments and finger-pointing that serves only to deter foreign investment.