Zambia’s economic performance has remained generally resilient despite hurdles experienced in 2018, the country’s Ministry of Finance has affirmed. The nation’s Finance Minister Margaret Mwanakatwe says the performance was supported by relative macroeconomic stability and less volatile commodity prices, particularly for copper.
According to the country’s Chamber of Mines, a regulator for the industry, four big mines dominate Zambia’s copper production, complemented by several smaller players who also play an important role. All the mines are backed by a wide range of respected international investors.
The Zambian government, through its investment-holding company ZCCM-IH, is a minority shareholder in nearly all of them. It is therefore the biggest shareholder in Zambia’s mining industry.
It emerged earlier in January that mining companies operating in Zambia have failed to show how higher taxes introduced this year will affect their profitability. According to Zambia’s Permanent Secretary for Mines, Paul Chanda, the country’s Mining Ministry had asked individual mining companies to provide financial models by Friday last week on how the new taxes would impact them, but none had done so.
At the time, only two mining companies had responded, asking for more time to offer an explanation.
The country, which is Africa’s second-largest copper producer, recently introduced a new 10% tax when the price of copper exceeds $7,500 per tonne.
At the same time, Zambia also plans to replace value-added tax with a sales tax by April to help bring down mounting public debt. The government wants to know how the new taxes will affect production and profitability, thereby effecting the country’s economic growth.
In December, the Chamber of Mines said that as a result of the changes, more than 58% of Zambia’s copper producers would be loss-making at current prices. The recent reforms may affect the African nation’s economic growth prospects.
The World Bank said in April, 2018 that Zambia’s economy is forecast to grow by 4.5%, lower than previous projections by the lender, because of the expected impact of poor rains.
The Economics Association of Zambia (EAZ), through its President, Lubinda Haabazoka has said most countries in the region have recorded economic growth of 3%, compared to Zambia’s growth of about 4%. This is despite challenges such as an increase in the fuel prices, which was caused by high crude prices on the international market at that time.
Meanwhile, the country’s President Edgar Lungu recently stated that Zambia had recorded a favourable economic performance in 2018 with a single digit inflation rate.
He noted that the country had a stable electricity supply, relatively stable exchange rate and a single digit inflation rate which he said were some of the factors that contributed to the positive performance of the economy.
President Lungu has since said that in 2019, his government will work to improve on investments that will benefit the entire country. He added that the country will need to boost productivity at all levels.