By Patson Chilemba
Former Finance minister Ng’andu Magande says Zambia will retain its downgraded status as a lower income country for some years to come, urging the government to ensure more contribution from mining, among several undertakings.
Magande said the government must in the next budget look at ways of increasing the contribution of the mining sector to the national revenue basket.
“They have to especially that the price now is so high and people are still saying it’s going to continue to be high. So the government must come up with some kind of mechanism to share a little bit more from the mining companies. But that requires therefore not only the big mining companies. What about the chaps who are getting gold in Mumbwa, what are we doing about them?” Magande said to Daily Revelation Media. “What about the guys in Ikelenge, what about the people in Mansa who are digging up manganese? So the opportunity now should be for the government to say we are a rich county but with poor people, with also a lower GDP. How do we tap all these monies from around?”
Magande said the government could come up with a tax that was appropriate for the small scale miners, but do so that they would need structures.
He said if he were still finance minister he would have already thought of decentralising the Ministry of Mines, as there was currently little known about the mining that was happening in all the corners of the country.
“We should decentralise the Ministry of Mines so that perhaps you actually have even provincial offices that are going to handle mining in places like Chadiza…like Western Provinces, so that they start capturing all this mining revenue,” Magande said.
He said it would be a long time before Zambia regains its middle income status, arguing that for instance in agriculture, because of the high prices of chemicals and fertilizer,some farmers were reducing their production.
“So we might be seeing actually a lower kind of agricultural production, and that’s where we have been getting a bit of our GDP. But most importantly, it’s the mining industry. So depending on what happens, I was informed somehow perhaps not reliably, that even KCM for example for them to start producing 10,000 tonnes of copper you are talking of some 3-4 years for them to settle down. I think even First Quantum, the famous $1.5 billion they are putting they are talking of another three years before they start producing,” Magande said. “So it’s not really something you can say next month or next year we are going to be able to produce enough to again move to middle income. It might take us a bit of time. And that’s why it’s important that we realise that because of this timeframe we better stop just making all these noises as if we are fighting an enemy. This is something that we all have to put our heads together and start working on so that the country can move back and then it means that at the point we will be able to continue to recruit teachers and medical people as they graduate.”
Magande said just the fact that KCM and Mopani were not on the market, the country was losing $20-30 million per month, saying they should be brought back into the production line especially with increased copper prices on the international market.
“With a better price now perhaps what we have been losing around $20 million then we will be earning $50 million. So that is the GDP, that’s how it increases,” he said.
Magande said Zambia’s downgrade meant that the capacity to borrow money from the open market has been minimized, saying when the PF came and went on the open market they were told by multilateral institutions that the country was middle income with enough capacity to pay, but what became unsatisfactory was that they got so much of the appetite and over borrowed.
He said unless the country managed to get the facility from the IMF, the country could not go in the market to borrow.
“Its like between me and James Ndambo, James Ndambo can walk in FNB in Cape Town and they will give him one billion. Me I walk through there they will start saying but where is your security?” said Magande.
He said to get back to the middle income status, Zambia needs to increase its GDP and per capital output, but said the steps the country must take to get to that are complicated because part of the downgrading was on account of the country’s negligence of the sectors that would help to build the GDP, such as education and the problem with Covid-19.
The World Bank has re-classified Zambia to low-income status from lower middle income, for the 2023 financial year because of the deterioration of Gross National Income per capita estimates recorded in 2021.
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