A mockery to FCTC: Renowned Tax avoidance BAT opens Giant Cigarette plant in Zambia’s Tax Free Zone

By Chris Zumani Zimba

  1. British American Tobacco (BAT) opens a giant cigarette manufacturing plant in Lusaka

87089425-waving-flag-with-british-american-tobacco-bat-logo-against-clouds-and-sky-editorial-3d-rendering.jpgOn 30th Novembr, 2019, Zambia’s Minister of Finance Dr. Bwalya Ng’andu officially opened the $25million British American Tobacco (BAT) Zambia Cigarette Manufacturing Plant in the Lusaka South Multi-Facility Economic Zone (MFEZ)1. In his speech, Dr. Ng’andu also said that ‘the plant represents the kind of development government is determined to have that enhances the inflow of Foreign Direct Investment’, he stressed.

And at the same event. BAT Zambia Plc General Manager, Mr. Kimesh Naidoo said the Zambian market holds potential in creating more upstream and downstream employment through the tobacco industry development.

  1. BAT, a globally renowned Tax Avoidance firm now operating in Zambia’s Tax Free Zone

In April this year, a European firm, Tax Justice Network exposed and revealed in their investigative report a range of mechanisms used by BAT in 2016 alone to secretly shift income made in poor countries equivalent to over 12% ($941 million) of its pre-tax profits annually to BAT Holdings Ltd, a UK-based subsidiary where BAT paid almost no corporate income tax2. The report noted that BAT avoids paying tax in poor and middle countries by charging itself royalties, rerouting loans through tax havens and paying interests fees on loans made between regional offices3.

Prominent on the list of victim African countries losing millions of dollars annually from BAT in tax avoidance practices is Zambia, Kenya and Uganda2. From face value, it simply means that BAT is brutally but secretly stealing from poor Zambians just like in other countries through such tax avoidance schemes.

As we speak, this is the company that is now running a giant cigarette manufacturing plant in Zambia’s Lusaka South MFEZ. According to the Zambia Development Agency (ZDA), “the MFEZs blend the best features of the free trade zones (FTZs), export processing zones (EPZs) and the industrial parks/zones concept and create the administrative infrastructure, rules, regulations etc that benchmark among the best dynamic economies”3.

This means that BAT is on serious tax holyday for now as they enjoy the luxury of manufacturing millions of harmful products-cigarettes daily and weekly for domestic, regional and international market and will freely be dancing into huge business profits every month while many Zambian poor continue to fall ill or die for ignorantly consuming their toxic products.

  1. Conclusion-the gesture is a serious mockery to Zambia’s WHO FCTC commitment and Tobacco control Interventions

As tobacco control advocates, we know that the aforesaid development is an overt assault as well as mockery to Zambia’s commitment towards localizing the Framework Convention on Tobacco Control (WHO FCTC), a WHO UN Treaty which was designed to address and eradicate the growing public health challenge of the globalization of the tobacco epidemic. The WHO FCTC Convention entered into force on 27 February 2005 and was ratified by Zambia on August 21st, 2008.

Consequently, Zambia being a Party of this global health treaty that has been ratified by 180 countries by 2017, the SADC state is obligated to implement comprehensive tobacco control laws and regulations in order to reduce and control the threat of a tobacco epidemic, such as use of large pictorial health warnings, bans on smoking in public places and tobacco advertising or increases in tobacco taxes and prices among many regulations measures.

Clearly, trade seem to have won over public health in this case which is unfortunate4. However, we are here to ensure that the Zambian government adhere to its FCTC commitments and policy obligations as well as make sure that BAT is made to start paying for helping to increase the national disease and death burden by virtue of opening this giant cigarette manufacturing plant in Lusaka’s tax free zone4.

Chris Zumani Zimba is a prolific Political Scientist, Policy Analyst, Author, Blogger, PhD Scholar, Researcher, Consultant, and Public Health Advocate.

With reference to this article, Chris is Lead Researcher and Director with Centre for Advocacy and Research on Tobacco Control in Zambia (CARTOCAZA).  Thus, this publication is a product of and belongs to CARTOCOZA

Contacts: Chriszumanizimba.cz@gmail.com or chriszumanizimba@yahoo.com; +260 973 153 815.

REFERENCES

  1. Lusaka Times, (2019 :1), ‘‘Finance Minister opens a cigarette manufacturing plant in Lusaka’’, accessed from https://www.lusakatimes.com/2019/11/30/finance-minister-opens-a-cigarette-manufacturing-plant-in-lusaka/
  2. Tax Justice Network (2019:1), “BAT shifts nearly $1bn out of developing countries into one UK office”, accessed from https://www.taxjustice.net/2019/04/30/bat-shifts-nearly-1bn-out-of-developing-countries-into-one-uk-office/
  3. http://www.zda.org.zm/?q=content/multi-facility-economic-zone-mfez
  4. Ministry of Health, WHO and UNDP, (2019:1-2), “Investment Case for Tobacco Control in Zambia”, a Paper Presentation at Intercontinental Hotel, 27th February, 2019, Lusaka, Zambia

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s