AMBIA Association of Chambers of Commerce and Industry (ZACCI) and Zambia Consumer Association (ZACA) have joined other calls for government to reverse the law restricting entry of the fourth mobile phone service operator.

ZACCI president Geoffrey Sakulanda says the larger the number of players on the market the better because this help costs go down and consumers to benefit.

“ZACCI supports Government efforts to liberalise the economy, when we have more players in the industry doing business becomes cheaper although we should see to it that these providers do not form cartels,” he said.

Mr Sakulanda said that even as the new players are entering the market issues of better and improved services should not to be over looked. And ZACA executive director Muyunda Ililonga said the restriction of the entry of more mobile phone service providers was anti-competitive. He said if the government reverses the statutory instrument to make the mobile sector more competitive, the consumers will have a wide choice and not be limited to a particular operator.

Mr Ililonga said the introduction of the fourth mobile provider is good for the consumer’s welfare adding that it will reduce the cost of the products.

The government should remove all barriers and fully liberalise the sector so that the consumer’s welfare is not undermined.

Government through the Ministry of Communication and Transport issued Statutory Instrument No. 111 of 2009 that has prevented entry into the fixed telephone and mobile communication networks markets up to 2014.

The reason Government gave was that allowing unrestricted entry into the mobile market will result into the market having more market players fighting for a few subscribers which might eventually force others to exit the market due to unattractive profit margins despite prior substantial investment in their mobile network operations.

Government noted that in this regards, for another entry to occur into the market, Zambia is supposed to attain a certain level in both subscription and potential which will warrant continued profitability of all market players.
[Zambia Daily Mail]

THE SABMiller-owned Zambia Breweries plc. that produces and distributes Coca Cola have called for fair application in ‘tax holidays’ following a Mail expose that Pepsi was given a five-year K10.8 billion tax holiday by former Finance and National Planning Minister Situmbeko Musokotwane.

It is like the age-old ‘cola’ wars all over again where the two arch-rivals try to out-do each other in sponsoring sports or coming up with new unique products except this time the ‘war’ has been brought to the Zambian soil.

Leading the attack is Zambian Breweries corporate affairs director Chibamba Kanyama who has expressed “concern” about “competition” issues in the tightly contested industry, which he feels must not apply ‘exclusively’ at the expense of possibly discriminating other companies.

He said it is important for Government to ensure that trade policies are also fair.

This was after the K10.8 billion tax holiday to Varun was exposed by the Mail on Tuesday. Dr Musokotwane instructed the Zambia Revenue Authority to award the tax holiday to the company that produces Pepsi Cola.

“We would also love to have a tax holiday, if the opportunity arises,” Mr Kanyama said, adding that Zambian Breweries has never been awarded a tax holiday on any of its products despite ‘massive’ investments it has made in Zambia.

“We haven’t had a tax holiday on VAT and excise duty. Our concern here is on competition. I think policies and programmes should apply to everybody in the industry,” he said.

He said VAT and excise duty should apply fairly to all companies in the industry to promote fair competition.

Conversely, Trade Kings Limited, a local manufacturing company, says the tax holiday incentive is open to irregularities and abuse by certain companies, especially foreign ones.

Company corporate affairs manager Bright Chunga said in a separate interview that some foreign firms have closed their companies after the expiry of the tax holiday incentive.
“I recall at some point, Government gave some furniture shops and others dealing in suits a tax holiday but most of them left after the expiry of the period. So this incentive can encourage irregularities,” he said.

Dr Chunga said since the establishment of Trade Kings in 1995, it has not received a tax holiday.

“Trade Kings has never ever been given a tax holiday since inception,” he said.

He said the investment licence is the only tax holiday which applies to every established company.

Dr Chunga said the Investment Act stipulates the types of tax holidays that apply to various investments.

“I know of a tax holiday which applies when a company invests over US$500,000. However, there is another type of holiday which is discretional. This is what the Investment Act stipulates,” Dr Chunga said.

Tax deferments are a fairly normal practice as long as a statutory instrument (SI) is signed and extenuating circumstances are provided before the tax holiday is given.

Tax experts say this is not the case for Pepsi Cola.

According to the Zambia Daily Mail it was “highly illegal” for Dr Musokotwane to defer a consumable tax such as VAT.

Minister of Home Affairs Kennedy Sakeni has since directed the police to ensure the law takes its course in the matter.

He said that his ministry is in possession of information on Dr Musokotwane’s suspected wrongdoing in respect of Varum beverages deal.

“It should be noted that the ZRA Act empowers institutions to investigate and prosecute wrongdoing and this is best done in collaboration with other law enforcement officers to do so,” Mr Sakeni said.

Brian Lingela at the Zambian Anti-Trust Unit said his commission may investigate the matter to ensure there are no ‘competition’ breaches.
[Zambia Daily Mail]

GOVERNMENT revenue amounting to K12 billion has been kept in an account at a private commercial bank in Lusaka since January, contrary to regulations that such should be immediately transferred to the central bank.

Times investigations reveal that this money is tax revenue collected by the Zambia Revenue Authority (ZRA).

The money has been lying idle for the last 11 months in the said account referred to as ESCROW account.

It has also been revealed that the K4 billion payment in a transaction President Michael Sata intervened and stopped midway, was to be made from the ESCROW account.

It is not yet established how many other transactions have taken place in the said account.

The President disclosed at a swearing-in ceremony in October this year that there was a “scam” in which ZRA was about to pay K4 billion to a “fake” clearing firm operating scanners at the northern border town of Nakonde in Northern Province.

Mr Sata immediately instructed the Zambia Police Service and the Ministry of Finance and National Planning to block the payment and investigate any other transactions that could have been made from State coffers to pay the firm.

The president noted that the scanners at the border post belonged to the Zambian people through the ZRA.

“This morning, ZRA was supposed to pay K4 billion to a front of somebody who was in my office but the scanners which are at Nakonde belong to the Government of the Republic of Zambia through ZRA,” Mr Sata said when he made the disclosure in November.

Documentation has also revealed that the same local commercial bank is holding US$1 million belonging to Mpundu Trust Limited, whose source is unknown.

The Times has learnt that the named local commercial bank received instructions from a Cabinet minister in the previous regime to open this account.

The Drug Enforcement Commission (DEC) has since opened investigations into the matter.

President Sata recently instructed law enforcement agencies to investigate how a private bank account belonging to Mpundu Trust Limited, got to hold a colossal sum of $1 million.

The president gave the directive in the wake of revelations that Mpundu Trust had unexplained funds in one of the commercial banks in the country.

On the basis of the colossal amounts involved, the president felt that it would only be fair and prudent for the DEC in liaison with other law enforcement agencies to professionally and systematically investigate the matter.

Recent media reports revealed that Mpundu Trust was linked to former president, Rupiah Banda.

[Times of Zambia]

SOME bakeries in Lusaka have increased their prices of bread despite President Sata’s appeal in October to bakers not to go ahead.

A Daily Mail survey around some parts of Lusaka revealed that some bakeries in Garden compound, Northmead and Kabwata area have increased by K200 to K500 respectively.

The some bakers who declined to be named attributed the increase to the high cost of doing business while others said they will also adjust their prices upwards next week.

In Kabwata a loaf of Family bread which used to cost K5,000 will now cost K5,900, Standard bread will cost K4,900 from K4,000 while bread rolls will sell at K5,500 from K5,000.

A notice at one bakery stated that the increase has been necessitated by increasing input cost.

“This serves to inform you that bread prices have been adjusted upwards with immediate effect. This has been necessitated by ever increasing input cost,” it read.

In Garden compound bakeries are expecting to increase by K200 and this has been received with shock.

Gideon Manda, a resident of Garden Compound said the cost of living in Zambia has become too expensive adding that some people cannot afford to buy bread at current prices.

“I am shocked that bread has become too expensive now, we as parents will not be able to provide a decent breakfast meal for our children because most of our children depend on bread, “he said.

Another resident Kelly Chileshe said they unjustifiably trying to hike prices in a bid to make a killing because of Christmas and New Year celebrations.

Agnes Nkoma, a Kabwata township resident, called on Government to intervene in the matter and ensure that prices of bread are stabilised in order to reduce the cost of leaving which she described as expensive.

“Some of us are not employed, we cannot afford to buy bread anymore and this is what we consume almost everyday. We will be very glad if government consider reducing the price, “she said.

Meanwhile Zambia Consumers Association executive secretary Muyunda Ililonga says consumables such as bread are expensive for the majority of Zambians adding that Government should ensure that the cost of living in the country is reduced if poverty levels are to reduce in the country.

Mr Ililonga said the reason being advanced by millers for the increase in the price of bread is not substantiated.

He said some millers have attributed the increase in the price of bread by K500 to the weakening Kwacha against the US dollar.

Government recently authorised the importation of 20,000 of wheat and 5,000 tonnes of wheat flour to supplement the current shortfall of 60,000 tonnes of wheat.

[Zambia Daily Mail]