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Zambia seeks to change its

mining policy

Resource nationalism seems to be strengthening among Zambians and the government has proposed changes to the country’s policy on mining that will subject investment deals in the sector to more public scrutiny and Parliamentary approval.

Author: Ronald Mwila

As Zambian leaders debate whether or not the country is getting enough benefit from her mineral wealth, the Ministry of Mines and Minerals Development has come up with a draft policy for the sector that proposes a number of changes investors may find unfriendly.

Among the changes proposed in the draft policy are that the country shall not offer tax holidays in the mining sector but instead develop a friendly tax regime for mining investment. Further, all development agreements signed with investors would be subjected to public scrutiny and must be ratified by the National Assmebly before taking effect.

According to the draft mining policy, which seeks to replace the one of 1995 that was anchored to attracting investors into the mines as the country privatised the industry, any fiscal provisions in any agreement will be subject to public scrutiny and be gazetted before taking effect.

These new measures, if the policy is ratified by Cabinet, are likely to pacify many Zambians who are angry at what they see as the government’s failure to protect national interests when privatising the mines. Such agitation shaped the mood of the country’s last general election, in which populist opposition candidate Micheal Sata promised to assume control of all privatised entities so that local people could benefit more. For that, his Patriotic Front won Parliamentary seats in the copper-rich Copperbelt Province, traditionally a stronghold of the ruling party.

On fiscal incentives, the draft policy states that these shall be provided “in exceptional circumstances” only with the approval of an inter-ministerial team that includes experts from the Ministry of Finance and National Planning and Parliamentary ratification. The draft policy also proposes a periodic review of any concessions given to investors to reflect changes in macro-economic and market conditions.

Under the current policy, the government has the prerogative of negotiating development agreements with investors and giving them any incentives deemed necessary to enhance the investment’s viability without seeking Parliamentary approval.

Other proposals include facilitation of indegenous Zambians’ participation in mining ventures, which will be guided by the recently-enacted citizens economic empowerment Act.