While Zambia see-saws over its mining tax regime, the DRC has overtaken it as a copper source, writes Victor Kgomoeswana.
Johannesburg – The African week went by pretty quickly for me, especially with the Monetary Policy Committee (MPC) of the SA Reserve Bank leaving interest rates unchanged. I need to pay off those debts, while the current rates last.
This MPC meeting happened while African finance ministers and a number of central bank governors met in Addis Ababa, continuing on that long road towards the alignment of Africa’s fiscal and monetary policy landscape.
Back in South Africa, Eskom gave us another grim reminder of the power crisis hovering above and leaving most people whispering in the dark, even as unions are calling for the axing of the chairman of the power utility.
Egypt also had to ration its electricity supply due to a fuel shortage. How’s that for Cape to Cairo? Our cricket team bowed out of the semi-finals, setting up their opponents for a final clash with Australia – although I would plead with my fellow South Africans to stop using the C-word this time around.
Tanzanians are making headlines for their decision in parliament to restrict the importing of labour. Nigerians went to the polls, and my toast of the week will take us back to Nigeria.
However, this week I am writing a Letter from Zambia, which is where I was for four days as part of an economic a mining briefing hosted by Stanbic Zambia. My visit brought home yet another issue that is holding back the African growth narrative: indecision and lack of clarity on policy.
Come back home, Lungu!
One of the newspaper headlines on Friday simply called on President Edgar Lungu to cut short his visit to China, which he undertook on Thursday, to come back to solve the challenges facing Zambia. This was about, among other thing, the perennial mining royalty tax standoff. For more than 10 years, the Zambian government has not been able to say how it intends to tax mining.
Mining is the mainstay of the Zambian economy, but how big a deal is it to the Zambian economy?
I heard many conflicting estimates, first in Ndola and Kitwe in the Copperbelt, then in Lusaka. However, the African Development Bank estimated that mining contributed 86 percent to the foreign direct investment inflows and 80 percent of export revenue in 2013. That is not small change!
Zambia is not a new mining economy, with some of the investors in Zambia’s copper, lime, cement and emerald mining going back several decades with the land of Kalusha Bwalya and Chris Katongo.
What is the stand-off about?
Taxation, royalty tax, windfall tax maybe, income tax, the list of variations goes on – and has for a long time too.
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