Reuters reports that President Rupiah Banda expects the ruling Movement for Multi-Party Democracy (MMD) to score an easy victory in this year elections which he said will be coming in a matter of months.
Speaking today in Johannesburg at the Reuters Africa Investment Summit, President Banda said that he hoped to win with an even larger margin.
“I expect to win. My wish and my hope is that we win with a larger margin than what happened the last time when I stood as president,” he said.
President Banda would not give a date for the poll but said it was coming soon, indicating it would take place before September.
He described the PF-UPND pact as a concern, but said his administration’s economic record, with last year’s growth rate of 7 percent, and should be the same this year, should see him through comfortably to a second term. “We should come out with a bigger majority,” he said.
Mr Banda also said that, this year, he expected the economy to grow a rate of between 7.1% and 7.5%. “7.1 percent is what we are hoping to get and we are hoping it could go up a little bit more,” he said. “7.1 to 7.5 percent is what we are hoping for.”
With a B+ credit rating obtained from Fitch last week, Mr Banda said Zambia would proceed with a $500 million global bond before elections due by September. The proceeds of the bond would be earmarked for infrastructure, in particular transport, power and housing.
“We need the money now to continue developing our infrastructure. Our economy is growing and is going to need good roads,” he said. “We are going to need to fix electricity,”
Mr. Banda also said the government would focus on diversifying the economy, which remains heavily reliant on copper mining, and growing industries such as agriculture and tourism.
[pullquote]”The issue of windfall tax is a major issue. Everybody is talking about it in the country. The opposition are hoping to use it as a major tool against me but I think we will be able to explain it to the people,” he said.[/pullquote]
The President also said that Zambia is seeking to encourage foreign investment in land, in particular for biofuels to offset its heavy fuel import bill, although he said that he was aware of the pitfalls and would ensure that land was “not given away”.
He also said that he would also seek to increase competition in the power sector to try boost efficiency at dominant state electricity producer ZESCO.
Privatisation of inefficient state enterprises was also a possibility, he added, citing last year’s sale of state-run fixed line operator Zamtel to Libya’s LAP Green Networks that led to a reduction in call charges.
“It is not government’s role to own industries and try to run them,” said Banda. “We’ve tried it before and it was a disaster.”
On windfall tax, the president reiterated Finance Minister Situmbeko Musokotwane’s last night statement that government would not impose the populist windfall taxes on copper mining companies.
The President ruled out windfall taxes for mining companies currently enjoying record copper prices, saying that changing the rules for foreign investors was plain bad business.
With an election looming in the next six months and copper at $10,000 a ton, Banda is under pressure to maximize revenue from the sector, but said he would not be lured into a move that would damage the country’s long-term prospects.
“There are agreements between us and the companies. When they come, we agree to the ground rules for them to be there,” he told the Reuters African Investment Summit in Johannesburg.
“It is not good for business to keep shifting just because the prices have changed. We have got to have principles and lines which we are going to follow.”
[pullquote]”We have done an audit of three mines and that is going to bring us more money after the audit,” he said. “From one or two of these companies we already have in excess of $200 million.”[/pullquote]
Copper fell to below $3,000 a ton in late 2008 — shortly after Banda came to power — but has since recovered sharply on the back of a resumption in demand from resource-hungry Asian economies, most notably China and India. It hit a lifetime high of $10,160 on Feb 14.
“The issue of windfall tax is a major issue. Everybody is talking about it in the country. The opposition are hoping to use it as a major tool against me but I think we will be able to explain it to the people,” he said.
Banda also said a tax audit of mining companies conducted under the umbrella of the Extractive Industries Transparency Initiative, a voluntary minerals code, should allow the government to recover more than $200 million in unpaid dues.
“We have done an audit of three mines and that is going to bring us more money after the audit,” he said. “From one or two of these companies we already have in excess of $200 million.”