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Alba Iulia
Tuesday, May 26, 2020

Private sector is struggling – Zambia Tax Platform

Economy Private sector is struggling - Zambia Tax Platform

Minister of National Development Planning Alexander Chiteme handing over awards to various recipients on behalf of Government institutions and private sector companies during the Labour Day Celebrations in Mbala on 1 May 2018. – PHOTO | CHIBAULA D. SILWAMBA | MNDP
File:Minister of National Development Planning Alexander Chiteme handing over awards to various recipients on behalf of Government institutions and private sector companies during the Labour Day Celebrations in Mbala on 1 May 2018. – PHOTO | CHIBAULA D. SILWAMBA | MNDP

The Zambia Tax Platform is concerned with the measures set out in the 2020 national budget aimed at stimulating the domestic economy.

Zambia Tax Platform Coordinator Ibrahim Kamara says it is evident that the private sector in the country has continued to struggle despite being recognized as the engine of growth.

Mr Kamara said government arrears have contributed to tight liquidity in the economy, while borrowing from the domestic market has crowded out access to finance for businesses to expand.

He said the long term pressure placed on the private sector by the accumulated domestic arrears has also contributed to the declining growth rate of the economy.

“Domestic arrears have increased to K20.2 billion Kwacha in 2019 from K15.6 billion in 2018, a staggering 29 percent rise given the already struggling economy”, he said.

Mr Kamara sais government has proposed to spend only K2.3 billion in 2020 toward the dismantling of domestic arrears which means only 11 percent of the bill will be settled by end of year 2020.

He said this amount is not sufficient considering that suppliers have been affected and their businesses slowed down due to non-payments by Government.

Mr Kamara said it is therefore critical that government prioritizes a consolidated approach to creating an enabling environment for the private sector to flourish especially SMEs who constitute more than 90 percent of the formal sector.

He said to achieve this, government must increase allocation for dismantling domestic arrears to not less than 40 percent of the total arrears to mitigate the slow-down in investment into the productive sectors.

Mr Kamara said government must also consider offering SMEs rebate on turnover tax against potential jobs created such as a 1 percent rebate on tax for every 5 formal jobs created to promote job creation while according government an immediate increase in revenue from PAYE.

He said government should further consider immediately setting up an SME Development Fund to spur economic recovery by directing 2 percent of corporate tax into the fund.

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  1. Lets progressive minds contribute without calling each political insults. I suggest Order finance and invoice discount to be enahased by commercial banks through a proper enabling environment. the only thing a Chinese contractor beats a Zambian one is capabaility to raise funds at cheap interest . Knowing our Zambian contractors with their appetite for cars and others things, we can restrict the finance to buying of material without giving them hard cash so that they go buy themselves 12 kilometres ( not kilograms) of sausages for show off and runx for a nipa girl friend. they can always get their profit after presentation of certificate of completion .

    • We cannot really expect local SMEs to flourish when preference is given to foreigners, especially the chinese! They import raw materials from china, manufacture in zambia in gated communities, where hundred if not thousands of unskilled chinese labourers have been brought. No jobs are given to locals. Huge tracts of land are being sold to the chinese while the land belonging to locals is grabbed by cadres!
      Africa is cursed with alot of greedy. corrupt leaders like Mr. Lungu. There is no hope. In the past our chiefs sold our land and our bodies as slaves to europeans. Today, its our politician who are selling us. Though chiefs are not innocent either. They sell thousands of hactares to foreigners. We will be left with nothing.
      So any talk of “solutions” is pointless. It seems to me…

  2. Very brilliant proposals. There’s no institution that can finance a govt order today. SMEs received part payments in May for this year the rest of the months there’s nothing. NAPSA has even taken some tenants to Court for failure to pay rent. SMEs just show unpaid invoices whenever they are asked to explain why they are defaulting. It’s very embarrassing. Now everyone is just chasing suppliers to Mopani to have orders financed. Naikosa

  3. When government spurs economic growth in the private sector for SME’s the reward of a growing tax base will be their’s. How will they correct more taxes now when their policies are killing even once thriving small businesses with huge tax burdens, yet fail to correct taxes from far areas like zambezi and chavuma for example. Have a system maybe like the one Zanaco has where you can ensure that taxes are not only collected from businesses in urban but from those in rural areas too, by bringing tax pay points near them. by implementing a differential tax system for those in urban and rural areas e.g less tax percentages for businesses in rural areas will encourage people to set up businesses in rural areas thereby bringing growth and development to such places.

  4. Continued. Firstly the government must make it convenient for taxpayers to pay their taxes by bringing tax pay points near and not make it complicated for them. Secondly a differential tax system for businesses in rural and urban areas has the potential to not only bring development in the rural areas but increase the tax collection pool as well as economic activity in the country. Why am I saying differential; Take a teacher or nurse for example how are they encouraged to leave the comfort of town to go work in rural areas and the a answer is an extra benefit of rural hardship allowances. The allowance acts as an incentive to bring much needed trained and experienced professionals to the rural set up so this is the effect a differential system may have if implemented correctly. ZRA…

  5. His Excellency has assured us that he is looking into the problem of these payment arrears, mealie meal prices, load shedding, electricity imports, job creation, building more roads and schools and health centres. He says these things when he lands at ZAF Lusaka airport. Please let him do his job, although you know that there no action to back his words.
    Me I am forming an opinion about who will get my vote in 2021.

  6. Any growth stimulation in the private sector has been spunned. In road construction contracts were awarded to some Zambians? They « sold » the contracts to foreigners. The same happened in mining concessions. Ceec was set up to assist Zambians but most of the loans issued are now bad debt or remain unpaid. Instead of destroying parastatals they should have been revamped and thé insurance industry for instance is a good example. The same applies to hospitals and education.

  7. #Let_the_Truth_be_Told!

    Let every person be subjected to governing authorities. For there is no authority except from God,and those that exist have been instituted by God. Therefore whoever resists the authorities resists what God has appointed,and those who resist will incurr jugdement. For rulers are not a terror to good conduct. Therefore one must be in subjection not only to avoid Gods wrath but also for the sake of conscience.

    Issued by
    Moral Clarity Media Team

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