Economic Issues Don’t Need a Casual
Approach, They Need People to act Decisively!
The Longer it Takes, the More Damage is Made.
By Dr. Lubinda Haabazoka – President – Economics Association of Zambia.
The issue of KCM is a very serious one. KCM is the life line of not only Chingola but Chililabombwe. On KCM depends the people of the Copperbelt because it’s very common to find a kitwe resident working at KCM.
Mopani has also announced that its closing two of its shafts and releasing 600 employees.
Since 2000, to be a miner is a dangerous profession. Today you are fired, tomorrow your are recalled only to be fired when CEC proposes electricity adjustments.
There are mines like FQM that post profits and are known to be above board. Lubambe mine is also a good story. Other mines unfortunately still think we are in 1999 under Binani where we can be lied to. Now a Zambian is educated and can read between the lines. I know the recent problems have got to do with the new sales tax. As implementation date approaches, market players attack.
Now Economic issues don’t need a casual
approach. They need people to act decisively. The longer it takes, the more damage is made.
The Copperbelt has established a powerful chain of Zambian suppliers and contractors. These people no longer do works in the mines therefore a large number of people have been sent destitute. Certain insiders say mines have created a buying house in SA. All procurement is done in SA cutting off the Zambian supplier. The economic reason for this is that when goods are bought in SA, the subsidiary company buying gets the refund in SA. At the border the goods pay for example 16% GST and are used by the mines directly. If the same goods were bought by a Zambian supplier, the price would contain 16% GST at the border, 9% GST charged to the mine by Zambian supplier and a mark up.
I know under GST some inputs have been excluded from GST so I wonder the reason for a buying house in SA.
It’s very evident that we can’t afford refunds because there is no transparency in them. We also can’t afford extra costs on our companies. So we need to establish something that is in the middle.
It’s so not true that mining costs in Zambia have gone up. As the Kwacha loses value, labour and electricity costs for the mines reduce because mines receive forex for final goods but for Zambian inputs pay Kwacha. For foreign inputs they pay in the same forex they sell minerals in. No mine has production costs over $3500 per ton in Zambia!!! No mine!!!! Copper is now above $6000 so why are you not producing?
When over 60% of your GDP is banked abroad, you are dead as a country because that money is out of circulation. That is why EAZ is proposing a refined SI 55.
In most cases, Zambian businesses are not malicious. They just need to be spoken to. In most cases very informally and you will see your forex back.
Look at the distribution industry. They pay all the taxes and bring in good quality goods. But they are facing heavy competition from smugglers who bring in cheaper analogues without paying taxes. No wonder Mr Chanda at ZRA has waged a war against those because they are killing legitimate businesses.
Local content in our super markets is very important.
Zambian people from independence do not know how to do business. We need to teach them. Because only the state was supposed to be the trader, the mentality of Zambians was just to work. So we need to spoon feed our small businesses if we have to help them grow. Zambeef and Parmalat are the perfect examples of companies that have helped improve cattle growers by providing them a ready market for meat and milk. Such models should be extended into other industries.
The issue about the Copperbelt needs a fresh approach to find a long lasting solution. The cat and mouse game should come to an end.