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“Mozambique Is One of the Countries Where the Least Amount of Money from Mineral Extraction is Returned to Local Communities” – UN

“Mozambique Is One of the Countries Where the Least Amount of Money from Mineral Extraction is Returned to Local Communities” – UN

Data from the United Nations Research Institute for Social Development, shared by Sasol, indicates that Mozambique is one of the countries that least returns the money from the extraction of mineral resources to the communities hosting the projects, the Carta de Moçambique news portal reported on Wednesday 7 February.

According to a comparative analysis carried out by the United Nations organisation, cited by the website, the Mozambican state concentrates 90% of the revenue from the extractive industry in central bodies, leaving 7.25% for the province of origin and only 2.75% for the host communities.

The agency explains that Mozambique’s strategy for decentralising revenues from the extractive industry is far below that implemented in Brazil, Peru, Bolivia, Indonesia and Nigeria. In Brazil, for example, the state returns 66 per cent of revenues to the areas where the resources originate, while in Peru 55 per cent of revenues are returned. Bolivia, on the other hand, returns 41 per cent, surpassing Indonesia, which returns 15 per cent, and Nigeria, which returns 13 per cent of the revenues generated by oil exploitation.

In the comparative analysis shared by the South African multinational, Mozambique’s policy of returning money from the extractive industry to the areas where the resources originate is equal to that implemented in Colombia (10%) and only surpasses those implemented in Ghana (7%), Papua New Guinea (5%) and Ecuador (2%).

As well as being one of the countries that gives the least amount of money back to the host communities, Mozambique is one of the countries that calculates the amount to be given back to the communities based solely on revenue from the Production Tax, ignoring the other taxes levied on this industry, such as VAT (Value Added Tax), IRPC (Corporate Income Tax) and IRPS (Personal Income Tax).

According to the United Nations Research Institute for Social Development, Brazil, for example, calculates the amount to be returned to the host communities of hydrocarbon extraction projects from production tax revenues and those derived from their participation. Peru uses production and income taxes. Nigeria, Mexico, Ecuador and Indonesia calculate from the sector’s total taxes.

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The UN institution emphasises that, in its calculations, the Mozambican government does not include revenue generated from taxes paid in kind by Sasol (through natural gas), so the money returned to the communities of Pande (Govuro) and Temane (Inhassoro), in Inhambane, where the petrochemical company operates, is based exclusively on revenue generated from taxes paid in cash. The analysis also states that the country has one of the lowest percentages of production tax (6%). Colombia, for example, charges between 20% and 25%, while Ghana charges 10%.

It should be noted that in 2022, according to the General State Account, the government transferred a total of 44.7 million meticals to a group of 22 communities affected by the extractive industry across the country, compared to 73.9 million meticals transferred in 2021. Of this amount, the communities of Pande (Govuro) and Temane (Inhassoro), in Inhambane province, where Sasol operates, each received 6.2 million meticals.

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