Extractive industry plays key role in the development of global economy – Tonela

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Extractive industry plays key role in the development of global economy – Tonela

5:41 CAT | 15 Jun 2023

Mozambique’s Minister of Economy and Finance, Max Tonela, recognised in Maputo on Wednesday the importance of the extractive sector in the development of the global economy.

Minister Tonela was speaking on behalf of the prime minister at the opening ceremony of the first International Conference on Taxation of the Extractive Industry, held under the motto “Energy Mineral Resources as a Vector for Global Economic Sustainability”. The event arises from the need to improve the country’s performance in raising revenue in the sector.

The two-day meeting aims to, among other objectives, discuss and share international experiences regarding the management of processes to ensure energy and economic sustainability, as well as the development of countries rich in mineral and energy resources.

“We are all aware of the essential role that the extractive industry plays in the development of the global economy, particularly in promoting employment, technological development and in the generation of tax revenues, fundamental to boosting infrastructure and social well-being,” Minister Tonela noted.

He added that an international meeting to discuss taxation of the extractive sector was important to ensure a fair and equitable approach to the use of these exhaustible natural resources, as well as to promote transparency, combat tax evasion, strengthen cooperation between countries and allow an approach to issues of sustainability and the promotion of tax justice.

Tonela underlined that Mozambique has high potential in mineral resources, including natural gas, which constitute an asset that must, in the first place, contribute to raising the quality of life of all Mozambicans.

“This sector has a growing share of the country’s GDP, expected to reach 16% [of Mozambique’s GDP] in 2030 and is currently contributing to the increase in the country’s exports,” Minister Tonela said. “In this context, several regulatory measures have been taken by the government to remove barriers to investment, ensure transparency and guarantee a greater contribution from the sector to the development of our country.”

The Economy and Finance Minister also said that the establishment of the Kimberley Process Management Unit in the country – responsible for managing security procedures, internal control and the marketing of precious metals and gems – is one of the measures that the government has decided to operationalize in this context.

“We note with satisfaction that, as a result of this step, we have registered a progressive increase, year after year, in data relating to the production and export of gold and precious stones, which contribute to an increase in state revenue,” the minister said. “We are a country that has been implementing, for 14 years, the Extractive Industry Transparency Initiative. Although there are challenges, we intend to go further, ensuring greater transparency, promoting the improvement of national instruments of good governance and deepening legal and fiscal reforms to strengthen tax collection.”

Max Tonela believes that the extractive industry sector can and should contribute more to Mozambique’s socio-economic development, as there is still a lot of fiscal space to be explored.

“In our view, taxation should be carried in such a way as not to overburden companies,” the minister continued, “but also to ensure that they assume their responsibility in the pursuit of sustainability and equity. In this sense, this conference presents itself as a valuable opportunity for government representatives, companies, experts and civil society, to, together, and frankly, hold a debate and find innovative solutions on the challenges associated with taxation in the extractive industry, given that responsible taxation is a fundamental pillar to guarantee fiscal justice and the well-being of communities.”

Also speaking at the opening ceremony, the President of the Tax Authority, Amélia Muendane, stressed that holding the conference in Maputo would allow ideas to emerge that would help the government design policies to improve tax collection in this sector.

The conference is attended by officials from the Tax Authority of Mozambique (AT), representatives from the International Monetary Fund (IMF), national universities, companies in the sector, alongside national and foreign experts and civil society organisations, and ends this Thursday.

Source: Ministério da Economia e Finanças de Moçambique / Media Release