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Friday, May 29, 2020

Elias Chipimo Jnr urges caution on Changing Mining Taxes

Economy Elias Chipimo Jnr urges caution on Changing Mining Taxes

Elias Chipimo speaking at the press briefing at the NAREP Secretariat
Elias Chipimo speaking at the press briefing at the NAREP Secretariat


We note the directive by President Edgar Lungu to the Minister of Finance and Minister of Mines regarding the regulations passed in the 2015 budget increasing mineral royalty tax rates from 6 per cent to 20 percent on open pit mines and 12 percent on underground mines. While we welcome the President’s stated commitment to more dialogue and stakeholder consultation, there are some difficulties that arise and will need to be carefully considered as we move forward at this time of high economic uncertainty and hardship.

As a starting point, a key lesson is to never undermine the importance of stakeholder consultation or to merely give it lip service. The budget proposals on the new royalty rates were introduced by the PF itself and no one else. They should therefore have consulted stakeholders before they presented and defended their proposals to Parliament. The fact that this was not done – as is evident from the President’s directive, reflects a concern about how the process going forward will unfold. Will we again hear that the Ministers have been directed to have more stakeholder concultations when things do not turn out as planned? We therefore urge the Ministers to be as wide in their consultations as possible and not limit their dscussions to the mining companies. NGO’s, political parties, ordinary citizens and individuals with expertise in these areas should also be engaged without making the process too long or protracted.

Secondly, most Zambians are acutely aware of the limited room for manoeuver that has been brought on by the excessive expenditure of the current administration which has contributed to the delayed implementation of development projects and non-payment of many government obligations. The budget was presented in anticipation of the mineral royalty taxes being levied at the new rates and if as a result of consultations, these rates are to be adjusted downwards or payments based on them are to be deferred, the government must explain how they will plug the resulting revenue gap. They must clearly explain how they will carry out the expenditure side of the budget without the anticipated revenue. As NAREP, we believe there are ways to resolve this matter and have always been willing to promote an approach that benefits the nation.

Thirdly, a regular meeting with industry leaders from the private sector should be held regularly with the President with a view to finding solutions to the bottlenecks being experienced by the private sector. The biggest single contributor to government revenue is PAYE. The bulk of this is generated from companies in the private sector and probably from less than 600,000 individual citizens and residents (out of a polulation of nearly 15 million). PAYE delivers even more revenue than mineral royalty and company taxes. It is patently unfair and unjust to keep criminally taxing the few Zambians that are fortunate to have a paid formal job with earnings above the tax threshold just to have the same money being recklessly applied. Spending over Kw11 million on each of the 18 by elections (as well as local government elections) that have been undertaken since October 2011 is something that any self-respecting administration would not feel proud of. The fact that some of these by-elections were as a result of defections promoted by the PF itself calls into question whether they proiritise the nation over their political survival or the other way round.

Finally, we believe that government must take bold steps to reassure the nation and the local and foreign investor community that they mean business and are determined to run our economy prudently. Continuous trips abroad to speak at forums and sign cooperation agreements are not the tricks that will dig us out of our economic mess. Controlling unnecessary expenditure, hitting the ground in Zambia to meet with and listen carefully to local stakeholders and reforming our tax collection system are some of the steps that need to be taken instead. We have all that it takes to make our country prosperous. That has never been the issue. The key to unlocking our problems has always been leadership. President Lungu must rise up to this responsibility sooner rather than later, for the sake of Zambia.

Elias C. Chipimo, Jnr.
National Restoration Party (NAREP)

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  1. The thought government was like a bus stop or tuckshop…..

    The is simply no one in PF with any brain matter to arrest the current situation




  3. We need a body of experts encompassing all fields,a ‘think tank” of some sort in Zambia.We are not moving fast development wise.Ba Chikwanda might be jobless when ECL comes back from China.We are in a mess.

  4. The Chamber of Mines is not an institution to listen to over mines matters. They are just the PR front for these mines. They are paid lots of money by the mines. They are a useless institution. All their members are not patriotic to this country but just serving the interests of mine investors. Mr. Chikwanda knows them.

    • The matter addressed by brother Elias Chipimo is very serious. This is an issue of economic management of our potentially rich country. I am sure the PF leadership have heard. Actually, I have a feeling that President Lungu could make a good President if the technocrats provided him with the truth and facts. Let the President schedule routine consultative meetings with the Economics Association of Zambia (EAZ), Economic Advisory Council, ZACCI, ZCSMBA, Chamber of Mines to address sector specific issues. The President should chair the meetings. Cabinet Office and Special Assistants to HE should actively follow-up implementation of resolutions and continuously feed the President. I am sure HE is taking note of the constructive criticism from HH, Chipimo and many others who love Zambia.

    • The opposition contributes to the betterment of the policies of the party in government through constructive criticism of which HH, Edith Nawakwi, Elias Chipimo and to some extent, Dr Ludwig Sondashi. They should continue to criticise and remind the party in power of the policy promises made during campaigns. The PF was very strong in that area though the sour after tastes of name calling (Cabbage, Nyamasoya) spoiled the brew.

      Nationalisation of the mines is the worst prescription. The Zambian government simply does not have enough resources to invest in the mines and at the same time fund social services. What has made China, Viet Nam, South Korea is foreign private sector investment. The host governments provides the conducive environment and clear-cut regulations on revenue…

  5. Developing economies are more vulnerable to external and internal shocks than developed economies. This is essentially a structural issue. Since the developing economy is typically a mono-economy, the solutions for absorbing shocks can vary but largely center on political stability and economic diversification. The wage bill and the energy bill must by definition account for the bulk of the expenditure of the national revenue. Consequently, the New Mining Policy must be approached with pragmatism. Yes, there is need to maintain mining operations but at the same time there is need to improve revenue from the mining sector to Government within a global setup. The US dollar is strong but the cause is not the New Mining Policy.

  6. The only way forward in all this confusion is for the mines to be owned by Zambians. These foreign entities just played cards well and the government has buckled under pressure. Get one thing straight, mining companies, later on foreign investors have no interest in paying taxes and will throw all the tantrums to achieve that. Since just making noise about the increased mineral royalty tax rate failed to persuade the minister, they now grouped themselves and cut back on copper exports thereby causing the shortage in foreign currency and hence the depreciated Kwacha…..very simple to see. The winner in this whole matter, the foreign investors, the losers-the Zambian people!

  7. Good points sir..BUT..don”t just be theoretical but be a good economic manager closer to “home”……… pay salaries you owe. If you fail on such basics how will you practically deal with more complex issues such as those you have wonderfully articulated when (or is it if) you become president

  8. Here we go again. Let gov’t rule decisively instead of including Stakeholders.

    I am not clear what Mr Chipimo is saying about the Mines here. Previously he seemed in favour of letting the Mines continue without checks on VAT and seemed against the hiking up of Taxes.

    Can opposition work with gov’t please on serious matters looming due to natural causes.

    I do agree the gov’t should leave off changing new Mining Tax.

  9. Yes I agree those tax policies were reckless of the PF, and those stakeholders who put pressure on Chikwanda including blackmail by the Past news. But this is what Edgar has boldly moved to correct, remember that he was not President when all this nonsense started, there was Sata and then guy scott.

  10. Chipimo should have read the budget. He would have found that the new tax for underground mines is 8% and not 12%. Better to read and study the matter than to rush to issue press statements.

  11. Let me present my views and welcome crititism. I have personally observed most african nations and learnt that their development depends directly on the first presidents who took power after independence .Their mission and vision and how they settled down. If they were war-ravanged,in supremacy contest. If looted, the successive govts are just a continuation. We need God’s intervention.

  12. Mr president-Narep i have a question for you and all presidents of the rest of the political parties in Zambia.
    Has the privatisation of the mines worked to our expectation or it has failed?
    You politicians tell us the truth remember if this problem is not resolved now, any new president elect will find it and it will help us the electorates to fire you.

  13. The private sector has always had a good hand in the mines. All that the Chiluba government did in the 1990s was to sell its 51% shares in the parastatals. 49% was owned by the private sector of which Anglo-American was one. The think tanks like Economics Association of Zambia should run a column in our most read newspapers to educate Zambians. Projects that require huge investment capital and expertise will always be required and the developed world command a big share of it. Even our late populist President Sata realised this and turned to the Chinese he had had no regard while in opposition. If foreign capital is bad ask why ECL will be in Asia for 2 weeks seeking the same foreign investment. Mugabe who detests the West so much is using a foreign currency, the USA Dollar!!! Be real.

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