The Lusaka based Bank of Zambia said in a statement that revenue from the mines in taxes is poised to grow to about USD 3 billion during the 2011 fiscal year with the ongoing expansion and setting up of various units in the copper rich nation in the past few years.
Governor Dr Caleb Fundanga said in a statement that the increase is expected to surpass the USD 800 million generated in revenue from taxes realized from the mines which has in turn contributed greatly to the treasury in the last few years. The mines used to contribute about ZMK 4 billion few years ago but the figure grew to ZMK 1.3 trillion last year and this is a great contribution to the economy compared to the previous years.
There has been debate in Zambia among various players over the re introduction of the windfall tax which was estimated to contribute USD 415 million annually in revenue if the government had maintained the windfall tax. The regime was introduced in 2008 under the Mines and Minerals Act but was reviewed a year later after government feared would suffocate the industry which was flourishing because of the growth in investment by various globally reputed mining companies.
And the country’s Gross Domestic Product had last year increased to 7.1% last year from 6.4% and that the increased economic developments in the country would grow the economy slightly above the 7% targeted by the government this year.
According to Fundanga, the GDP growth in 2010 from 6.4% in 2009 was largely driven by positive developments in the agriculture construction and mining sectors. The record high maize harvest of 2.8 tonnes and higher copper prices and production levels and growth in the construction sector were the major fundamentals to the growth of the economy.
Growth in the construction sector emanated from increased residential, commercial and public infrastructure construction projects across the country by both Government and the private sector. Zambia envisages that the predicted growth of GDP would prosper the country into attaining about eight percent or more in the budget.
Economic growth was essential for Zambia to defeat poverty, although the Central bank noted that the growth must be accompanied by job creation for the citizenry.
However, Mr Fundanga warned that Zambia should actively consider diversification of the economy from the traditional copper mining which has been spurred by high metal prices but there is need to plough back the resources from copper into diversification of the economy to facilitate growth.
The earnings from the mines were good with revenues of about 45% accruing to the country from taxes while shareholding in the mines grew from 15% to 25%. Meanwhile the central bank warned that the country’s inflation was likely to stagnate about eight percent during the first quarter of 2011 because of factors that include a seasonal increase in selected food items including fish, fresh vegetables and beef.
Inflation was further upped chiefly by the growth in money supply last year that allowed the Food Reserve Agency, a wing of government tasked to market and sell maize within and outside Zambia to buy the corn from the bumper harvest of 2.8 million tones that the country achieved in 2008 to 2009 farming season. The annual money supply grew to 30.8% at the end of September 2010.
The Bank is optimistic of working harder to ensure that it helps slow down monetary inflation and ensure a good GDP growth through appropriate policy formulation to contain reserve money growth and contain inflationally pressures.
(Filed by Mr Kapembwa Sinkamba SteelGuru Correspondent Zambia)