ECONOMIST Highvie Hamududu says a bad mining fiscal regime has heightened Zambia’s economic ruin.
He is calling for an urgent mining indaba to intelligently debate the issue of Zambia’s mineral royalty tax.
“The call is for an urgent holding of a mining indaba, to clean up the mineral royalty issue that will incentivise investments in the mining sector,” Hamududu said in an interview. “The real solution in that economic recovery plan is reliant on what will come out from the mining indaba. So the government must quickly call for a mining indaba and we hope that they will come with a responsible fiscal regime that will attract investments in the mines.”
Hamududu, who is Party for National Unity and Progress (PNUP) president, fears that if that does not happen, “then forget about macro-economic stability for a very long time.”
“The macro-economic stability right now, numbers show that it can only come from a rebooted mining sector. But the mining sector has been affected by this unattractive fiscal regime, especially the mineral royalty issue of non-predictability and sliding scale,” he explained.
“So, the government must quickly clean up the mineral royalty tax and make it attractive – that is the only way it will open up investments in the mining sector and increase production.”
Hamududu said “very soon their (government’s) Mopani, where they are involved, they will see that the mineral royalty, the way it is now, is not correct.”
“It completely takes away profitability of mining. If we don’t address the issue of mineral royalty, Zambia will not even benefit from the increasing copper prices. That will make us not reboot the economy!” Hamududu warned. “So, a mining indaba is important for the government to agree on more attractive fiscal regime, especially around the mineral royalty. That will be the biggest game changer!”
He further pointed out that one of the reasons the country’s economy had not recovered was because: “the mining sector which brings in forex has been affected by a very bad mineral royalty or mining fiscal regime.”
“This has held back investments in the mining sector which ordinarily was supposed to be doing well because of the good copper prices,” noted Hamududu.