Pragmatic approach a must

WITHOUT delay, Zambia’s economic turbulence requires pragmatic approach to avoid falling into a deep national crisis.

Currently, all macro-economic fundamentals have drifted into a negative status, signaling low production in critical sectors of the economy.

Inflation rose to 17.4 per cent in November from 16 per cent in October this year while the exchange rate is hovering around K21.30 to a United States dollar.

This year the economy is projected to contract, after a similar economic nose-dive in 1998, and certainly, this calls for practical interventions.

It is for this reason that Government has crafted the Economic Recovery Programme (ERP), which builds on the Economic Stabilisation and Growth Programme (ESGP).

As articulated in the document launched a few days ago, Government has laid out choices to be implemented over the next four years, providing a road map of strategic policy actions required to revive the economy.

This is no small assignment though!

The Government will need to engage the private sector and thrash out all encumbrances, particularly in the mining sectors, which is mainly driven by foreign entities.

On one hand, Government and some other interest groups believe that mining firms need to give more in terms of taxes, considering that they are exploiting rich natural resources.

Rightly so, copper is now fetching US$7,988 a tonne on the international market, an attractive price for mining firms to make reasonable profits.

But on the other hand, the Zambia Chamber of Mines, an umbrella organisation of mining firms in the country, has been complaining about an unstable tax regime, which they insist results in double taxation.

The chamber has proposed that Zambia should treat mineral royalty payments as a deductible expense in order to avoid double taxation and attract more investment.

According to the chamber, the mining companies end up being taxed on income that has already been paid over as a royalty – a situation referred to as double taxation.

Matters of this nature need to be resolved as the Government implements the recovery programme or else it will just be an academic exercise.

Yes, the programme is anchored on restoring macroeconomic stability, attaining fiscal and debt sustainability and dismantling the backlog of domestic arrears.

The Government is also aiming at restoring growth, diversifying the economy and safeguarding social protection programmes.

But all the five strategic areas can only be explored effectively if all sticky issue are ironed out not only in the mining sector, but also in other critical industries such as tourism, which as too many payments for tourists compared to other countries such as Zimbabwe.

Foreign tourists would rather tour the Victoria Falls from the Zimbabwean side while lodging in South Africa. This imbalance has been talked about years on end!

Quite alright, Government invited input from Zambia Association of Manufacturers, Zambia Revenue Authority, Indaba Agricultural Policy Research Institute, Zambia Association of Manufacturers and the Zambia Chamber of Commerce and Industry.

But the state must equally involve the same strategic partners in the implementation, monitoring and review of the economic recovery programme.

The Zambia Chamber of Mines must be involved too! Many a time, the Government and captains of industry have differed over taxation and other policy matters because the private sector is not carried along in implementation and monitoring phases.

Carrying them in all the phases will be helpful!