Former Bank of Zambia (BoZ) governor Caleb Fundanga has observed that continuous change of policies is the worst form of instability in an economy.
Dr. Fundanga said that if policies are changed every time and then, it creates instability in the economy which in turn sends a signal to prospective investors to hold back their investments into the economy.
Dr. Fundanga said this was why he is not of the idea of the reintroducing windfall taxes in the Mining industry.
The former Central Bank chief has observed that if the country is able to monitor, using the existing framework, how much is produced in the Mining Industry and how much taxes are due, the government could be able to extract something from the mining companies.
He said that if this measure is not enough, the country can look at other strategies of benefiting from the mining industry without taxing them.
Dr. Fundanga has advised that one way of benefiting from the mining industry is for the country to increase domestic content of copper production by ensuring that inputs that are used in copper production are produced locally as opposed to importing them.
He said this measure in turn can create employment in the country.
He has also suggested that the other alternative that the country can do is to ask the Mining companies to train local people in technical skills to avoid a situation where experts are brought from outside the country to work in the mines.
The former BoZ governor was speaking in an interview with Qfm news.
You are taking to a gang of thieving masquerading as a government who according to their own acknowledgement are USELESS.
This sounds like GREEK to the villager in statehouse
Dr they think economics is like a monkey jumping from one tree to another….
Isukulu batata
By allowing a bunch of misfits to take the mantle of power is a testament to the kind of people we Zambians are. What happened to our collective wits to democratically elect into office people who are so obviously and evidently clueless about governance? The president for example, acts like a mad man, yet we went along with his outlandish promises and handed him an important position as president of the republic! It’s time to reflect on our collective psyches and exorcise that which makes us so gullible as to listen to charlatans and actually vote them into power! The price we are paying for being such mindless voters is too high. Lets repent and promise to do better at next election.
Dr Fundanga.
How long were you in that position of BOZ with the power to introduce what you are suggesting?Did you not just enjoy with the rest of your MMD bigwigs?
Sounds like sour grapes to me.
Whilst this is good advice the question is has it been made in good faith?
Well articulated Dr Fundanga. Only on windfall tax i disagree with you. Windfall implies bonus. Why should we not benefit from Bonus? Windfall tax should be tied to the unit price [bonus price] of the red metal on the international market; That price should be arrived at by technocrats in the mining sector and ZRA and indexed, and reviewed, in our annual budget. It should be a price at which it will be expected that the mining industry will make more profits than projected; considering input costs/unit. This price should be a trigger so that should prices fall below that target, windfall tax ceases to apply and Conversely, windfall tax should be applied progressively as the price increases above the target. This will ensure Zambia benefits from the mineral resources fully.
Well spoken. It beats why anyone would object to this unless they are benefitting personally some other way. If the mining companies are benefitting from huge increases in price increase why shouldn’t Zambia benefit directly (only a share of the increase). After all the same mining companies have been cheating on pricing and not paying tax appropriately.
It was one of the best combinations Zambia had: Levy, Magande, Fundanga. However, so many doubts about this combination: Sata, Chikwanda, Gondwe
Alfred it hate to disagree, right now with type of leadership we have it will
Be a grave mistake to introduce windfall taxes, our economy is in intensive
Unit, we need to attract investments not chase it away, there is a positive way
and indirect way to benefit both economy and people without collecting too much
Taxes which will be wasted by PF, don’t forget copper is the pillar of our economy
Tax these mining companies and they will lay off more people, cut other costs like
cutting down on using local Zambian suppliers,move most of their operations overseas
You will be left with skeleton staff, We don’t have smart people in the current government to set unit prices, they are clueless on a lot of things.
@ China; i understand your concerns. Do you know that copper is a diminishing resource? Sooner than later it will not be there or will be uneconomical to exploit. So question is when are we going to benefit? and what is that indirect way of benefit apart from windfall tax? give some details atleast.
If you are not for windfall tax what are you?
Not clear why Banda cancelled windfall tax. Banda was too iffy!
Monitoring where export earnings end up and how they end up there and how much is earned also make good political economy sense. One option is for government to run one mine at least in order to build proper algorithms. It is not ethical for a private company to swindle business partners, such a government. The sharing must be based on equitable and fair business principles and practices.
That argument doesn’t make sense at all!! Every id.io.t including you knows that the earnings end up in a Bank Account? Are you telling me that any Investor will give access to their account? Obviously they will NOT – so how are you going to monitor anything?
Also, how are you going to monitor what they earn if the mines are using dubious means of taking the earnings out of the country e.g. Transfer Pricing, Artificial Management Costs, etc!
Though I don’t support Sata, remember that Sata only introduced SIs 33 and 55 because the Mines and Investors like Ilovo at Zambia Sugar were flouting our laws. Even Magande supports SIs 33 and 55 in today’s article. Caleb doesn’t make sense today – its sour grapes isn’t it – he is still crying for the loss of his Job and his wife was MMD…
the pf guys have no ears..their minds are so much into borrowing..lazy bones..
Continuous change of policy is not the worst thing for Zambia!
Sata and his PF relatives have discovered something EVEN WORSE. That is no policy at all! And every Minister says he has a different policy that he says “is Government policy”. The only consistent policy that PF has is a no-policy total confusion!
Very poorly written article