Government needs to increase revenue from Mines

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Lumwana Mine, one of the mines in North Western province

By Cleb Fundanga

Zambia as a country is gifted with an abundance of natural resource. The biggest injustice one can point out is how government has failed to critically implement measures that will regulate mines as well as provide technical and financial assistance to indigenous Zambians in the mining industry. The national budget of 2017 saw a gross reduction in revenue collection from the mines compared to 2016. This points to two aspects that the Mine Workers Union of Zambia (MUZ) has addressed being accountability and transparency. The Mineral Value Chain Monitoring Project (MVCMP) which is in the process of being enacted is a great step in curbing the continuous loss in revenue government is facing but it does not address the issues critically.

Government must invest in small scale miners by creating a co-operative that not only provides technical assistance in mining but financial as well. The key element of such a co-operative is to act as a parent to these small scale miners, through monitoring and assessing their growth and potential. Organizations like the Development Bank of Zambia and Zambia Development Agency are also key players in this industry. A co-operative that partners with Development Bank of Zambia has the capability to link and carefully align small scale miners with the right facility to help with the growth of a respectful mine. It should be noted that the majority of the individuals in the mining industry fail to grow their business because of a lack of education in the financial sector and with that creates a system of traditional mining whose end products end up on the black market with zero revenue gain for government. The Zambia Development Agency also has a critical role to play in this plan. Zambia currently has a number of small scale mines looking for investment from foreign entities and the Zambia Development Agency should be investing more time in workshopping with small scale individuals to draw up action plans that will make these mines more accessible to investors looking at opportunities in Zambia. Through a co-operative this is possible as it will provide a database that will ensure adequate information will be at the fingertips of the agency. Foreign direct Investment in the mining sector in Zambia still has a lot of room to grow and stake-holders must play an aggressive role to ensure our biggest resource is capitalized.

A co-operative further helps government in revenue collection if managed properly. A mineral stock exchange can be implemented through the co-operative where precious mineral dealers have access to a floor where small scale miners offer their minerals to potential buyers. This allows government to monitor the exchanges in turn taxing them accordingly. It is critical that the co-operative invests in creating an environment that is attractive to the miners and buyers to ensure transparency.

The 6th Zambia Alternative Mining Indaba (ZAMI) is kicking off and concerned Zambians are hoping stake-holders will start looking at such practical solutions to helping the growth of our mining sector.

 

Chipindi Caleb Fundanga

Investment Consultant

Institute of Finance and Economics

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3 Responses to Government needs to increase revenue from Mines

  1. How many years has Zambia been relying on mining? How many times should Zambians should be told that no country has relied on commodities for sustainable economic growth. If Oil producing countries are now diversifying their economies what more with Zambia that relies on low value mineral like copper?

    Blago
    June 20, 2017 at 4:45 am
    Reply

  2. EUROPE,THERE ARE NO MINERALS,BUT IT IS HEAVERN ON EARTH.SO IS AMERICA.AFRICA HAS WHAT IT TAKES,HENCE, WE END UP HAVING CITIES LIKE LUSAKA.WHAT IF AFRICA DID NOT POSSES THESE MINERALS BUT EUROPE AND AMERICA DID? WHAT WOULD BE THE PICTURE OF AFRICA? I FAIL TO UNDERSTAND.

    Y
    June 21, 2017 at 9:37 pm
    Reply

  3. @y Europe and American also at one time say during the industrial revolution had some of these minerals,but they depleted them to feed their industries,so the only place they can get them now, on this planet,cheaply is Africa,they’re even contempleting exploring outer space when they’ve dugup all the motherland has to offer leaving deep holes in the ground with very much little to show for it!

    The realist
    June 22, 2017 at 11:22 pm
    Reply

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