Zambia is home to the Mopani Copper Mines, one of the biggest copper mining operations in the country. Despite being a country extremely rich in natural resources, Zambia remains one of the twenty poorest countries in the world. According to the documentary “Stealing Africa,” a film about MNCs in the Zambia, nearly all copper mines are owned by corporations. Stealing Africa is a film directed by Christoffer Guldbrandsen and produced by Hendrik Veileborg to create awareness about the poverty situation in Zambia and bring to light the inequalities that's taking place in this African country.
Glencore is one of the main corporations in Zambia, which retains more than 70 percent of the Mopani Copper Mines.(citation here) Copper is an essential commodity in the global economy, and in the past 10 years the copper mines in Zambia have had copper extracted from them which is worth more than 29 billion U.S dollars.(citation here) So how can a country that is so rich in natural resources still be among the top 20 poorest countries in the world. According to the film, this is the result of inequality, injustice, and unfairness. Money flowing out of the developing countries like Africa is ten times more than the actual money flowing back into these same developing countries. Copper prices are on the rise yet, that has not caused a decrease in poverty because, multinational corporations like Glencore which take up a huge part of Zambia’s copper mines have cheated themselves out of paying the correct amount of taxes, or any at all.
Glencore was founded in 1974 by a businessman named Marc Rich. The company is the world's largest integrated commodities trader and has a yearly turnover of nearly 180 billion U.S. dollars.(citation here) Glencore’s yearly turnover is eight times more than the gross national product of Zambia. Guy Scott, vice president of Zambia, admits that Zambia will be much better off financially if the corporations actually pay their taxes in the correct amounts that they owe.
Tax avoidance by foreign companies has caused poverty to increase to extreme measures every year in Zambia. Between 2001 and 2008 copper prices nearly quadrupled for copper in the market, yet corporate profit tax from the mining sector stayed exactly the same and foreign countries paid nearly nothing in profit tax to Zambia. (citation here) Transfer pricing is one of the major reasons why foreign corporations have not paid their dues. Transfer pricing is when you shift profits from a high tax country like Africa to low tax countries like Switzerland, where you won't be taxed as much or correctly in order to avoid paying those high tax fees altogether. According to Nicholas Shaxson author and journalist, this is done by multinational groups who have subsidiaries all around the world, who trade with each other and manipulate their data for accounting proposes. These subsidiaries will buy products such as copper and oil for a low price and sell them for a higher price which in return causes a big revenue gap. However, they will not be taxed in the tax haven because the purchases that were made took place outside of Zambia. This is a reason why much of Zambian copper is not sold on the open market. Instead, the copper is sold internally within the same multinational corporations. Switzerland is one of the biggest importers of Zambia copper. All copper produced in Zambia is sold internally to Glencore within Switzerland boundaries.
Zambia remains one of the poorest countries in the world despite it being the home to rich and natural resources like copper. Lack of tax revenue from the foreign corporations is what has caused this African country to suffer. These acts of fraud and injustice which take place in corporations have harmed Zambia residents where 60 percent of them live on 1 dollar a day. The film ‘Stealing Africa’ is an eye-opening story about global trade where natural resources’ and money only flow one way, out of the country. This Zambian story is only one part of a mysterious puzzle where rules, morals nor the law determine how investors pay their taxes in Africa.