By Antonio Guerrero
Digging deep: Companies mining in Zambia face high taxes
The World Bank is asking members to support a controversial $3.75 billion loan to Eskom, South Africa's state-run power utility. The loan would be used to finance improvements to the country's ailing energy infrastructure, following a 2008 energy shortage. According to South African public enterprises minister Barbara Hogan, $3.05 billion would be earmarked for completion of the Medupi Power Station, which will become the world's largest dry-cooled coal fired power plant. Environmental groups say the project will destroy the region's environment and have called on Eskom to explore low-carbon options.
Elsewhere in the region, the International Finance Corporation (IFC) will invest $100 million in the Africa Infrastructure Investment Fund 2 (AIIF2), an equity fund that seeks to improve basic infrastructure. The equity fund plans to raise some $1 billion, which will be invested in a wide variety of infrastructure projects throughout sub-Saharan Africa.
After hiking mining taxes last year and canceling development agreements with foreign mining companies, the Zambian government says it does not plan to cut tax rates. Foreign mining companies are asking Zambia, which is Africa's largest copper producer, to restore development agreements that granted them incentives. Finance minister Situmbeko Musokotwane says that authorities may restore some incentives and that they already granted operators a concession by dropping a 25% mining sector windfall tax. Zambia increased the corporate income tax rate to 30% from 25% and hiked mining royalty payments to 3% from 0.6%.
Olusegun Aganga, a former Goldman Sachs managing director, was appointed as Nigeria's new finance minister by acting president Goodluck Jonathan. The banker's appointment has sparked hopes that he will help boost economic growth. Aganga has stated that Nigeria's problems do not lie in its resources, but in their mismanagement. On Aganga's agenda is overseeing a delayed federal budget and eliminating consumer fuel subsidies.